PEP-44: Stake Weighted Servicer Rewards: R&D Reimbursement

Attributes

  • Author(s): @msa6867

  • Recipient(s): Terracelum, Inc.

  • Asking Amount: 300000 POKT

Summary / Abstract

The goal of this proposal is to fairly compensate @msa6867 for research and development, modeling, and pre- and post-implementation analysis that went into defining and implementing PIP-22 and PUP-21. PIP-22/PUP-21 was vital for network security and scalability. The scaled weighting scheme that was developed allowed for both fast deployment and significant cost savings for the community.

Abstract

The Liquify team worked hand-in-hand with @msa6867 to make the vision for stake-weighted rewards a reality. To date approximately 15,000 nodes have unstaked from the network to participate in and take advantage of the new reward structure introduced by PIP-22 and PUP-21. Using an estimate of $100 per month per node in costs to run a node, PIP-22 saves $1.5M PER MONTH in infrastructure cost. Not only is this a direct tangible benefit to node runners who consolidate, but it also gives a huge boost even to those who do not or cannot consolidate by helping stabilize POKT price by greatly reducing the POKT being liquidate each month in market sell orders to cover infrastructure costs.

Liquify cast the original vision for stake-weighted servicer rewards, authored the first draft of PIP-22 and provided the heavy lifting on the development side. @msa6867, on the other hand, added key improvements to PIP-22 needed to ensure PUIP-22 was tenable, authored the first draft of PUP-21 and provided the heavy lifting of analysis and modeling need to make the PIP-22 vision a reality.

The Liquify team proposed and was approved for reimbursement for their development effort for implementing PIP-22/PUP-21. I declined the invitation to forge a joint funding proposal as my intention had been to forego reimbursement for prior contributions should PEP-39 have passed. The Liquify team nonetheless graciously carved out 62k POKT to stake on my behalf as a gift/donation/”thank you”. Regarding PEP-39, the community has indicated that PEP-39 was the wrong vehicle for @msa6867 to seek DAO funding and advised instead to utilize the standard reimbursement mechanism that defines most other PEP funding initiatives. Hence the current proposal which seeks reimbursement, after accounting for and subtracting the 62k already pledged by the Liquify team, for my contribution to make Stake-weighted Servicer Rewards a reality.

The process of analyzing and modeling expected system behavior in response to PIP-22, adding improvements to PIP-22 as discussed below, defining the initial parameter set so as to achieve the simultaneous objectives of maximizing consolidation while maintain high QoS for DApps and fairness to node runners, writing PUP-21, and conducting post-activation system analysis has taken around 300 hours since the middle of June 2022. I am only seeking reimbursement for 160 hours of those hours.

Motivation

My main motivation, with respect to my involvement in Stake-Weighted Servicer Rewards, was to ensure that in the process of reducing overall network costs the network would remain orderly and fair, be neither inflationary nor deflationary, ensure high QoS for DApps and have the ability to incentivize less consolidation in the future as new nodes are needed to accommodate RPC growth. System observations during the two weeks following turn on of PUP-21 parameters indicate these objectives are being met.

PIP-22, as originally proposed, fell short of these objectives in several regards. Chief among them was the lack of a mechanism to incentivize movement to smaller-staked nodes in the future and the lack of a defined mechanism to keep PIP-22 from being unfair to small node runners who can’t consolidate without resorting to creating a massive inflation spike.

@msa6867 added two innovations to PIP-22 to correct these limitations. First, a knob was added to allow varying degrees of nonlinearity to stake-weighted reward. This introduces a principle of diminishing returns and can be adjusted to incentive maximum consolidation, minimum consolidation or anything in-between. (Currently it is set to incentive maximum consolidation.) In the beginning the addition of this knob seemed, to many, to make PIP-22 “too complicated.“ Now it is seen by many node runners/providers as an indispensable knob to optimize the system balance between small and large node runners; there has been considerable interest expressed recently in exploring options for exponent<1. Looking to the future, the innovation of adding a non-linear weighting knob survives into V1 even as the rest of PIP-22 is retired, since this knob can easily be added to the V1 version of stake-weighted rewards.

Second, a dynamically responsive approach to setting ServicerStakeWeightMultiplier was developed to prevent either massive inflation (leading to a flood of new nodes at a time when additional nodes are not needed), or massive deflation (leading to small nodes being starved out of the network). This innovation removes, to first order, the dependency of one node’s rewards on the consolidation choice made by other node runners.

Proposal Objectives

The goal of this proposal is to receive a reimbursement for the time spent refining, optimizing, analyzing and modeling the PIP-22 implementation and PUP-21 parameters.

PIP-22 and PUP-21 Objectives

Node consolidation objectives that are enabled by PIP-22/PUP-21:

  • Lower costs for node runners.
  • Increased network security with the increase in validator threshold caused by the stepping of PIP22.
  • Reducing node count at a protocol level allows for a faster healthy network with reduced bloating.

PIP-22/PUP-21 objectives while enabling node consolidation:

  • Prevent starving small node runners of rewards or forcing them off the network
  • Maintain WAGMI/FREN emission objectives
  • Preserve DApp QoS even on chains with less volume
  • Isolate node rewards from the consolidation choice made by other node runners
  • Avoid the draconian alternative of forced consolidation or add stake
  • Is implementable on a one-to-two month time scale

Dissenting Opinions

“This, in combination with PEP-40, seems like a lot to pay for a PIP”

The amount of compensation was calculated using the Proposal Value Model. Further, the hours input to this model were truncated at 160 hours even though many more hours than that were actually dedicated to the task. The combined spend between PEP-40 and this proposal would be 870k POKT (570k PEP40 + 300k for this proposal). This is a roughly $87k spend for a feature that demonstrably is saving $1.7M per month in infra costs and helping to stabilize POKT price for everyone.

“You were already compensated for your PIP-22/PUP-21 contribution via PEP-40. No other reimbursement should be expected.”

As was acknowledged in the comments section of PEP-40, PEP-40 focused mainly on the dev work, and the 10% carveout was in no way meant to indicate that I provided only 10% of the work to make PIP-22 a reality. The ask of this proposal in combination with the 62k gift from Liquify from PEP-40 would result in a roughly 60/40 split of total reimbursement for PIP-22/PUP-21 between Liquify and @msa6867. I believe that anyone involved in the movement of PIP-22 from inception to reality would see a 60/40 split as being reasonable.

“With Lean Pocket is this needed?”

Yes. PIP22 goes hand in hand with Lean Pocket. PIP22 has advantages over “off chain” consolidation mechanisms. PIP22 reduces the node count at a protocol level this helps make the network more efficient. PIP22 also helps improve network security by vastly raising the validator threshold. PIP22 is also fully governed by the DAO allowing them to adjust consolidation parameters as they see fit.

Further, some simple math reveals the following: even if the ENTIRE system implemented some form of Lean Pocket such that it drove average “node” cost down to $15 per node per month… by PIP-22 eliminating 20k nodes from the network that are not currently needed, it would STILL save $300k per month in costs! A $87k one time spends to accomplish this level of MONTHLY savings is a tremendous value for the DAO.

That being said, @addison, @poktblade and all the rest of the team that developed and open-sourced Lean Pocket ought also to be generously reimbursed for their contribution to the ecosystem as well. When multiple solutions all contribute to the improvement of the network, all can be rewarded. It is not “either/or;” it is “both/and”. For that matter, Henry et al at NodeForAll ought to receive fair compensation for PUP-19 to reward them for the way they and their proposal cut through what seemed to be DAO gridlock and prompted the community to take a decisive first step toward mechanisms that could bring infrastructure cost relief.

Deliverables (Completed))

  • Provided detailed analysis of original PIP-22 draft
  • Incorporated non-linear weighting into PIP-22 draft and defined a dynamic-response mechanism for setting ServicerStakeWeightMultiplier
  • Provided analysis and modeling of system behavior in response to final PIP-22 version
  • Investigated and addressed to CoreDev satisfaction all QoS and fairness challenges to PIP-22 implementation (QoS consideration for low-volume chains brought by @luyzdeleon, fairness consideration for high-QoS 15k nodes brought by @RawthiL and PoktScan team, fairness consideration for servicers of low-volume chains brought by myself).
  • Defined a construct for setting PIP-22 parameters; proposed and passed PUP-21
  • Provided post-activation analysis of system response to PIP-22 to ascertain and ensure that QoS, fairness and inflation objectives are being met within tolerable bounds.

Budget

The total reimbursement requested for this proposal is 300000 POKT. This is the amount that was calculated after capping hours at 160 and inputting this into the Proposal Value Model using premium settings similar to those defined by Liquify in PEP-40 (but slightly less due to the inapplicability of a couple line items).

Contributor(s)

@msa6867 (Mark Abinante) is the sole contributor covered by this proposal since the Liquify team has already been reimbursed via a separate PEP.

I would like to thank @Andy-Liquify for proposing a mechanism to incentivize, rather than force, node consolidation in a way that could be implemented in a one-to-two-month time scale.

I want to acknowledge the following persons or groups for their contributions to the PIP-22 process: @addison for digging into the math details in response to my initial PIP-22 analysis; @adam for his independent modeling of post-PIP-22 system behavior; @Luyzdeleon for bringing awareness to the unique QoS challenges faced by low-volume chains; @RawthiL and the PoktScan team for bringing awareness to the unique challenges faced by small, high-QoS nodes and for defining a new potential use case for enabling nonlinear weighting in a future PUP.

Copyright

Copyright and related rights waived via [CC0](http

4 Likes

Is this some joke!? 300000 POKT for 160 hours of “analysis work” of sole contributor? This is ridiculous. I hope this money grab will be downvoted heavily. Greed and shamelessness have no limits obviously.

1 Like

Thanks @msa6867

I’ve appreciated your input and contribution over the last few months

We want to encourage more people to deliver high-impact work, not less, so I’m supportive of this proposal.

c.$33k for 160 hours of work seems more than fair in my mind. And it would be reasonable to apply a discount to this sum due to the shallow liquidity and high volatility of POKT.

I appreciate that the high quantum of 300k POKT is quite triggering for many, as its value was greater by more than an order of magnitude not so long ago. However, if POKT returns to its previous levels, we all benefit, and fair play to contributors willing to trade their time for future upside in POKT in the meantime.

Saying all this, I think it is vital for the DAO to have the flexibility to fund contributors in currencies other than POKT. Partly because it is good treasury management, but also because it opens the door for more contributors to add value without having to accept POKT and avoids selling POKT when it appears criminally undervalued.

4 Likes

Thanks @msa6867

Again (I - eagle wings) appreciate all the work & commitment you’ve demonstrated thus far to the POKT ecosystem. It is appreciated and as I indicated in your last proposal, I would support a one-time payment for all the work you contributed, and at a premium.

I echo @Dermot and encourage the community to support high-impact work and that high-impact work comes with risk to the contributors. There is an opportunity cost associated with one’s time and thus being paid a premium makes sense.

I could go on and on about various models to value effort but to me, there are just a few simple measures - time, impact, value, contribution, and effort. @msa6867 touches each of these points.

@msa6867 thank you for putting the work in, for putting yourself into the spotlight which isn’t easy on any account.

2 Likes

Having worked alongside @msa6867 I can completely vouch for his abilities and work done to support us in making stake weighted servicer rewards a reality. I am 100% behind this reimbursement.

This is very unfare, you’d really struggle to find a private consultant with the same caliber and experience of @msa6867 for sub $150 an hour.

5 Likes

This is getting ridiculous. Msa needs to stop grifting pokt. Go away msa. You are definitely not the person you say you are.

I can definitely find interns that would do this for free at MIT or Wharton

Like most grants. Approval for budget should be made prior to the work unless it is an unusual exception like finding a critical bug. But all work done to improve the network should be laid out and budgeted prior to the work. I have never hired an employee or consultant with a blank check and then said hey when your done let me know how much I owe. I’ll pay you whatever you thinks fair. This is setting a horrible precedent for the dao.

1 Like

I’m not going to respond in full to all the points above, but telling a contributor to “go away” is completely unnecessary, particularly when it’s not clear what your contribution to this project has been so far.

But I will respond to this:

I wholeheartedly disagree. The DAO isn’t a corporation. No contributor should have to ask for permission before going ahead and contributing. Obviously, we need to iterate on the best method for fair and efficient compensation, but asking someone for permission before starting goes against the whole web3 ethos and what the DAO is trying to achieve in terms of increasing the number of people participating in furthering Pocket Network’s mission “to coordinate open access to the world’s public data by empowering anyone to provide unstoppable infrastructure”

5 Likes

This proposal is now up for voting

https://gov.pokt.network/#/proposal/0x168b7fe19fee953b731825f10ce5232953fffd57958508252368d713ebf07e8e

You need order and some form of hierarchy/organisation for a DAO to be successful. Otherwise it’s very difficult to coordinate and it’s pure chaos. People start to contribute, expecting to receive something in return, which may not be the case if they didn’t apply for a grant in the first place. It’s very complicated to set expectations if there are no kind of structure.

So I agree with gambo, these kind of reimbursement proposals set a bad precedent for the DAO.
It’s to be expected in the beginning while the DAO find the proper structure to operate but it shouldn’t become the norm.

We’ve experienced these exact problems in the PoolTogether DAO and after letting things run without much structure for about a year and a half, we’ve decided to work on an organisation that would allow contributors to join a team and be remunerated part time.
Teams will propose a budget each quarter and POOL token holders will vote on these proposals.

So from my experience, a proper organisational structure should be established as soon as possible.

4 Likes

While I understand that 300k POKT is a high ‘sticker price’ to see, I’ve worked with MSA on proposals, and he is incredibly diligent and brings tremendous value to our community.

I second points above - $150 for someone of his calibre is not outrageous, if we want the best, we need to compensate appropriately.

The discussion over MSA’s compensation does touch onto a bigger issue that the DAO needs to grapple with.

  1. Setting guidelines/costs for work before it’s started - it’s better that both sides know the expected deliverables and compensation before someone engages in maybe hundreds of hours of work not to be compensated, or requests a large amount of funds for their work.
  2. What to pay people? PEP-42 looks into this, but we probably need a tiered payment schedule: someone doing basic intern work shouldn’t have the same compensation as gigabrains like MSA & PoktBlade.

I don’t want to get further off topic, so will comment in more length on the other proposals, but these all tie together and should be seen as a holistic whole rather than debating each part.

1 Like

While I did not support PIP-22 because of of it’s second order consequences possibly having a negative effect on our ecosystem, I do believe in reimbursing folks for the work they do for approved DAO proposals and PIP-22 was an approved proposal.

Thanks for your work @msa6867.

1 Like

I’m against it for moral reasons. I did share these reasons with a handful of people that did vote yes. I stand by being against this proposal for strong moral reasons. I guess the people I shared it with have no morals. But that’s good for me to know moving forward