Authors: Luuk (LuukDAO), Jessan (Jessan), Aaron (Thylacine)
Aligned Public Goods Bucket: QF and RPGF Rounds
Funding request: 250,000 CELO
Summary
The Retroactive Validator Rewards Program 1 (RVRP1) is a CeloPG program that issues Retroactive Grants of up to 25,000 CELO to Validator Groups based on their past contributions to the well-being of the Celo Ecosystem.
The opt-in program aims to reward active Celo Validator Groups for their past activities, including operating healthy nodes, participating in governance, creating tools for the ecosystem, actively participating in conversations amongst the validator community, and providing technical input and support.
As CeloRPGF0 only aims to distribute half of the allocated 500,000 CELO budget for RPGF programs, we request a budget of up to 250,000 CELO for this Retroactive Validator Rewards Program #1. Any unspent CELO from the Validator Rewards Program on June 31st will be returned to the Celo Community Treasury.
Motivation
Celo Validator Groups are essential leaders in the Celo Network. They are elected to build each block and to reach a consensus on whether the transactions follow the protocol’s rules.
Having a diverse ecosystem of high-quality and active Celo Validator Groups increases the resiliency and security of the Celo Network.
Recently, some smaller validator groups have articulated the growing costs of running a single validator and argued for increasing the validator rewards to compensate for these costs.
While we believe small validator groups are essential for the health of the Celo Network, especially if they actively participate in the ecosystem’s development and governance, we don’t believe making large-scale changes to the validator reward structure is the right solution.
Restructuring the existing validator reward structure could result in the following:
- Increase rewards indiscriminately of actual costs incurred and contributions made
- Remove the network safety mechanisms that reduce the cUSD spend when the price of Celo is below target
- Potential unintended consequences of changing the payouts to community funds and the underlying voting rewards.
Instead of making large-scale validator reward structure changes, we propose to run RVRP1, a retro grants program that recognizes and rewards the value contributed by validation groups.
By rewarding past net-positive activity, the program hopes to increase these positive behaviors among Validation Groups that support the Celo community and provide a path for existing and new Validation groups to run additional validators within their groups so they may add value to the Celo Ecosystem.
Metrics and KPIs
The following metrics will be tracked and reported at the end of the program:
- Number of Validator Groups who successfully apply for the program
- Publish the review framework used for RVRP1 voting
- Number of Validator Groups who received a grant
- Total CELO allocated to Validator Groups
- An assessment of new Validator & Validator Group activity for groups awarded Celo
Specification
RVRP1 will be the first Retroactive Validator Rewards Program. It aims to create positive feedback loops for active validators to continue contributing to the well-being of the Celo Network ecosystem. In addition to rewarding positive behavior, the program will also increase transparency around Validator Group activities.
How the program would operate
As this is an initial program, we aim to run it lean yet efficiently. If successful, the program could expand and improve afterward to continue supporting active validator groups. Future programs’ exact details and frequency will be determined after RVRP1 and based on other factors, such as the CEL2 transition and market developments.
Applications: Applications for the RVRP1 will open one week after this proposal passes through a public Celo Forum thread. The application thread will at least include a description of the Validator group, their past contributions to Celo, and their future intentions for contributing to the Celo Ecosystem.
Review: Five Celo stakeholders from different backgrounds will form a review committee tasked with creating a simple, data-driven review process to guide the allocation of Retro validator rewards. Each reviewer will be allocated an on-chain and revocable Role on Hats Protocol, and all votes will be held in a public to-be-created Snapshot space.
The proposed reviewers are specified in the Team section of this proposal but represent various corners of the Celo Ecosystem.
Rewards: Each validator group can apply for Retroactive rewards and earn up to 25,000 CELO. The rewards are calculated using the framework below based on public information.
If a majority of the reviewers (3 out of 5) confirm a distribution, the grant is formalized, and the CELO is transferred from the RVRP1 program multi-sig to the Grantee’s address within 72 hours.
The following metrics will be used to evaluate the Validator group’s contributions.
Metric | Description |
---|---|
Validator Score | |
Calculated by analyzing the uptime score from the past 12 months. | Between 0-5 points based on a to-be-created uptime evaluation scale. |
Governance Participation | |
Calculated by analyzing governance participation in the past 30 proposals. | Between 0-5 points based on a to-be-created governance participation scale. |
BONUS: Small Validator group | +2 points if running 1 validator, +1 points if running 2 validators |
BONUS: Additional contributions to Celo | +2 points for significant contributions, +1 point if clear contributions |
The total reward per Validator group equals the points they have scored * 2500 CELO with a maximum of 25,000 CELO per validator group.
Example: A validator group with 2 validators with 99.9% uptime that has participated in most of the recent governance votes would score 5 points at Validator Score, 4 points at Governance Participation, and receive 1 bonus point for being a small validator group for a total of 10 points = 25,000 CELO.
Timeline
The program will open for applications one week after this proposal is approved. Grants will be reviewed on a rolling basis and allocated on a first-come, first-served basis until the program ends on June 30th, 2024, or until the complete 250,000 CELO program budget has been allocated.
Current status
This is a new program built on the lessons from previous Validator Programs run by the Celo Foundation.
Payment Terms
Transfer in two tranches of 125,000 CELO. If and when the balance of the RVRP1 program multi-sig reaches 25,000 CELO, a request will be made for the second tranche. Any unspent CELO at the end of the program will be returned to the Celo Community Treasury.
Team
The proposed RVRP1 review committee will consist of the following community members:
- Eric, Governance Guardian and Celo Foundation
- Jessan, cLabs
- Luuk, Lead CeloPG Steward
- Juan, Active CeloPG Steward and Governance Guardian
- Aaron, Celo Validator Operator and Advisory CeloPG Steward
Additional support/resources
None