Why would I still propose to reduce the Community Fund growth?
The origin of this proposal is the Epoch Rewards discussion. Epoch Rewards on Celo are designed as a self-evolving system (with CGP 33 to activate dynamic adjustment) to dynamically adjust rewards to the protocol’s security needs: Voting and validating. However the way I understand it that system was designed for a lower amount of rewards per epoch. As a result of the over-rewarding, which mainly come from higher-than-initially-expected voter rewards, all Epoch Rewards are downscaled. If that continues for long-enough, the protocol at some point might not be able to dynamically adjust well to it’s security needs anymore.
If we want to reduce rewards to take a step towards solving that problem, there are three areas where the protocol could reduce it’s rewards:
- Voting
- Validating
- Community Fund
Validator rewards are <10% of total so no big impact. Reducing voting rewards is risky in my opinion. Reducing the Community Fund share would in my current opinion and based on the sentiment in the epoch rewards discussion below be the choice with the least risk and loss to the protocol.
I don’t like proposing to reduce the Community Fund growth but I think it’s the best option here.
To put it in perspective again:
- Currently: ~7 million CELO in the fund, ~5.5 million growth
- If CGP 35 would pass: ~7 million CELO in the fund, ~3 million growth
However, reducing the Community Fund Epoch Rewards share by 10 percentage points as CGP 35 proposes won’t solve the epoch rewards downscaling, it would just be a step in the right direction.
So if the majority of the community thinks that reducing the Community Fund growth by 10 percentage points hurts the development and growth of the community more than it would help mitigate the downscaling consequences of the Epoch Rewards over-rewarding problem, it would make sense to not propose this. It’s hard to actually measure but right now I don’t think that’s the case.
If you think (@Yaz @gabrielllemic) that either no epoch rewards should be reduced manually for now or that the protocol should rather downscale voter rewards, please chime-in here: Discussion on Celo Epoch Rewards - #32 by nambrot