Economic Improvement Proposals: Next Steps

September 16, 2019

As shared with our community last week, the Algorand Foundation recently received Economic Improvement Proposals (EIP), the details of which can be viewed here.  Today marks the end of the 7 day review and feedback period (as referenced in the guidelines).  

First, we want to thank both Algo Capital and Polybius Capital for submitting their proposals and starting an important discussion amongst the group of relay node runners.

Over the course of the week, we have received feedback and alternative measures from the interested community. We received explicit support for EIP-09092019PC (Polybius Capital) from some relay node runners with the goal to allow more time to develop a more comprehensive solution and provide empirical evidence to inform additional mechanisms. We also received further  confirmation of support for EIP-09032019AC (Algo Capital). Some relay node runners support both proposals. Four relay nodes explicitly disagree with both proposals. 

Many node runners, including supporters of the two EIPs, suggested alternative or additional measures to be evaluated and included in the final EIP to ensure robustness. Specifically: 

  • Provide a revision of the Algorand Foundation and Inc supply schedule
  • Provide some form of compensation to relay node runners for the costs of extending the vesting agreement
  • Couple the (less aggressive) vesting extension with demand stimulation measures such as more staking opportunities and rewards for ecosystem building advancement
  • Consider exchanges’ role in supply dynamics and formulate preventive solutions
  • Daily vesting: min (current Algo held / inception to date allocated Algo), max 100%; Vesting forfeited in any given month be burned and permanently taken out of supply

Taking into careful consideration of the support level of both EIPs and the feedback, the EAC recommend the following actions::

  1. The foundation will put forth a vote to suspend relay node rewards for 30 days, as per EIP-09092019PC from Polybius Capital in the coming days. Only relay node runners can participate in the voting process.
  2. During those 30 days, the foundation will engage in active discussions around the proposals and comments already received, with the goal to all have considered, and the proposal which has the most support will be put to a vote.

Detailed voting principles and mechanics will be communicated in a separate note.  

We appreciate your support of our long term vision and look to work with you collectively address the challenges we face.