SIP-20: Modifications to planned 1.0 mainnet parameters

Introduction

The SIP-16 proposal previously established a set of parameters for the Streamr 1.0 mainnet, and they were the best available projections at the time. Subsequent insights from testnet operations have highlighted the opportunity for adjustments to these initially planned values.

Proposed Adjustments

Alterations to the Slashing Rate

• Set the slashing rate to 1% instead of the planned 10%. Accordingly, some other parameters depend on this and should be scaled too:
• Set the flagger reward to 36 DATA instead of 360 DATA.
• Set the flag reviewer reward to 2 DATA instead of 20 DATA.
• Set the flag stake to 50 DATA instead of 500 DATA.

Introduction of New Parameters

• Set the minimum delegation period to 48 hours.

Reasoning

Slashing rate and flag parameters

The aim of penalties within the network is to deter dishonest behavior effectively, without being excessively punitive. Given the potential for false positives, it is essential that penalties remain as minimal as possible, provided they still serve their purpose in preventing misuse.

Experience from testnets has demonstrated that the system efficiently identifies and excludes dishonest participants (e.g., Operators not running nodes despite having staked in a Sponsorship) in a matter of hours.

With a 10% slashing rate, dishonest participants would have to gain over 10% of their stake in the brief period before being detected to break even. This scenario would require an annual percentage yield (APY) from Sponsorship of 43800%, a figure that is impractically high. A slashing rate of 1% brings this break-even APY down to 4380%, which is still unrealistically high, thereby ensuring that lowering the slashing rate to 1% maintains effective deterrence against fraud.

The flagger reward, flag reviewer reward, and the flag stake depend on a combination of the slashing rate and minimum stake. By decreasing the slashing rate from 10% to 1%, the flag parameters also need to decrease 10x, or else the minimum stake needs to be increased 10x to keep the flag parameters the same. Out of those two alternatives, it’s better to decrease the flag parameters, as they are still sufficient to cover the gas costs of flaggers and reviewers promoting network inclusivity via maintaining a low minimum stake.

Minimum delegation period

The forthcoming 1.0 mainnet release will introduce a minimum period for delegation. This means that delegated tokens cannot be undelegated before a certain time has passed.

This measure aims to counteract potential exploitation strategies that involve rapid cycling between delegation and undelegation to garner disproportionate returns. Establishing a minimum delegation period disrupts such strategies, rendering them impossible. Moreover, it grants Operators increased financial stability and a more predictable timeframe for utilizing the delegated funds effectively.

If you have any questions or feedback on this SIP, please join the #governance channel on the project Discord to discuss.