It’s not very clear why this decision is made. I assumed both were needed at the same time. But if you’re withdrawing CGP-36, it seems clear to withdraw CGP-35 as well.
Fiddling with the number of the community fund at the moment makes no sense given the arguments it’s very premature. I think the community is clear that the community fund allocation shouldn’t be modified at the moment, it’s not clear to me why a decrease by 2 Million is useful for anything.
I assumed the takeaway from this call was to put the capital to use instead of reducing allocation.
Now, I’m not too sure why you want to reduce the number, even if not a lot. Governance around a specific number will rally folks to come up with new number proposals that make more sense to them.
TBH, I think community fund allocation shouldn’t be governable but rather modified via a hardfork so everyone is aligned on it and it’s harder to do.
Thank you. I, too, am of the view that CGP-35 should be withdrawn altogether with CGP-36.
The arguments and viewpoints presented against have had everything to do with pointing out the premature and controversial nature of any reduction whatsoever of this on-chain treasury.
And there does not seem to be any defensible motivation to discern for making this reduction to the community fund, at this point in time and given the current network state. To summarize from the points shared via slides + the call:
“Would decrease Epoch Rewards downscaling”
This same effect holds for decreasing validator rewards and/or voter rewards for downscaling epoch rewards. Citing this as a pro to decreasing the community fund obscures this wider fact.
“No clear plans on how to use those funds”
The moot point of on-chain governance is that human coordination is hard, and a key learning from fellow protocols (ie the Interchain Foundation) especially concerning on-chain funding is, quite literally, to not let funds “burn a hole in the pocket”. It would serve well to heed these hard-earned lessons.
This does not seem like a valid argument because an on-chain treasury of a decentralized protocol does not function via “central-planning modes” with plans, but rather via proposals, with emergent consensus. And if we simply switch out terms here using “no clear proposals on how to use those funds”, then the same has already been addressed by others here as to reasons why that would be case (such as needing dedicated focus from certain teams, or widespread confusion from unfortunate naming on parallel efforts).
“~1 million per year is still higher growth than what is currently allocated”
Unclear what is meant by this point, and unsure of relevancy given the content for advocacy herein which is for maintaining a current allocation rate
“Growth could be increased again when helpful”
Respectfully and without judgment, this seems to be a value statement more based in opinion rather than fact. And on this same point here there also exist differing opinions. Again, if experiences with other protocols can inform an indicative precedent, it would seem less likely this would be the case.
“What the protocol spends today it can no longer spend tomorrow”
There seems to be a language problem here. A community fund is hardly analogous to the concept of “spending” in the same fashion as other things, even like validator rewards and voter rewards for example. A community fund is inherently actionable (whereas other rewards are not necessarily so), and also requires further action as a collective to then “spend”. A more effective conceptual designation might be escrow, or interim allocation, or holding pool, or shared trust.
Furthermore, a detrimental downstream effect of what happens impact-wise because of this proposal is the material consequence of further concentrated funding power toward network actors and addresses which are not community-governed.
And to the claim that “A reduction in overall Epoch Rewards would be an investment in the future security of the protocol”, I would counter that “Maintenance of a community’s public fund is a direct investment in effective decentralization for the future and long-term longevity of a protocol.”
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.
Can you expand on why you think decreasing voting rewards is risky? Imo, there is far too much CELO locked in the system which is clearly causing downstream issues. Decreasing voting rewards by even 30 or 40% can only have net positive outcomes if people actually unlock their CELO and deploy it in other places.
Right now too much locked CELO is not beneficial:
Election threshold is simply too high. It would actually be better for the network if election threshold got lowered. This would allow other large funds to enter into validation so we get more true decentralization.
Too much CELO is locked and not used in other parts of the ecosystem. I would rather see voting rewards decrease more, so that people are encouraged to go and look for other opportunities to deploy their capital instead. (They can put CELO in Moola, in various Ubeswap pools, maybe in some other future projects). Having so much of CELO just locked for network security doesn’t seem super useful for growth of the ecosystem.
Withdrawing CGP 35: Reduce Community Fund Epoch Rewards share
Hi everyone,
so after some discussion in the cLabs economics team I changed my mind on the above question. Proposing to reduce might actually have more negative than positive consequences. CGP35 will be withdrawn together with 36 and we should begin thinking about what might solve the over-rewarding problem more sustainably.