QIP-1: Proposal to include QUIL staking requirement for nodes

[dtrop]

Hey Quil Chads, Based on the discussion and concerns raised, here’s a comprehensive proposal for a staking mechanism in Quilibrium that addresses the key issues while maintaining the network’s core principles:

This proposal introduces an Adaptive Seniority-Based Staking (ASBS) mechanism for the Quilibrium network. The ASBS system aims to enhance network security, discourage malicious behavior, and promote long-term commitment while maintaining accessibility for new participants and avoiding centralization risks.
Introduction:
Quilibrium’s current system lacks a formal staking mechanism, which has led to both benefits and challenges. While the low barrier to entry has fostered rapid network growth, it has also potentially exposed the network to manipulation by bad actors. The ASBS mechanism addresses these concerns while preserving Quilibrium’s unique features such as the Proof of Meaningful Work (PoMW) and prover ring systems.
Core Principles of ASBS:
2.1 Seniority-Based Staking: The staking requirement is inversely proportional to a node’s seniority, encouraging long-term commitment.
2.2 Adaptive Staking Tiers: Staking requirements are tiered based on node capacity, with diminishing requirements for larger contributions.
2.3 Dynamic Adjustment: Staking requirements adjust based on network health and token value.
2.4 Optional Enhanced Staking: Provides additional benefits for those willing to stake more than the minimum.
2.5 Gradual Implementation: A phased approach to minimize disruption to existing operators.
Detailed Mechanism:
3.1 Base Staking Formula:
BS(T, S) = α * log(T) * e^(-βS)
Where:
BS: Base Staking requirement
T: Number of threads
S: Seniority score (time active in the network)
α: Base coefficient (adjustable through governance)
β: Seniority impact factor
This formula ensures that the staking requirement increases with the number of threads but decreases with seniority, encouraging long-term participation.
3.2 Tiered Staking Structure:
Tier 1 (1-32 threads): 100% of BS
Tier 2 (33-256 threads): 80% of BS
Tier 3 (257+ threads): 60% of BS
This tiered structure recognizes larger contributions to the network while preventing excessive advantages for whale operators.
3.3 Dynamic Adjustment Factor:
DAF = 1 + γ * (N - N_target) / N_target
Where:
DAF: Dynamic Adjustment Factor
N: Current network utilization
N_target: Target network utilization
γ: Sensitivity parameter
The DAF allows the staking requirement to adapt to network conditions, increasing during high demand and decreasing during low demand.
3.4 Final Staking Requirement:
FSR = BS(T, S) * DAF
3.5 Optional Enhanced Staking:
Operators can choose to stake additional QUIL tokens above the FSR. For every 10% increase in staking above FSR, the operator receives a 1% boost in rewards, up to a maximum of 20% boost.
Implementation and Transition:
4.1 Gradual Roll-out:
Phase 1 (Months 1-3): Voluntary staking with enhanced rewards
Phase 2 (Months 4-6): Mandatory staking at 50% of calculated FSR
Phase 3 (Months 7-9): Mandatory staking at 75% of calculated FSR
Phase 4 (Month 10+): Full implementation of FSR
4.2 Seniority Preservation:
Existing nodes will have their current seniority factored into the staking calculation from day one, ensuring their contributions are recognized.
Slashing and Penalties:
5.1 Tiered Penalty System:
Minor infractions (e.g., brief downtime): No slashing, temporary reduction in rewards
Moderate infractions (e.g., extended downtime, outdated software): 1-5% slashing of stake
Severe infractions (proven malicious behavior): 10-100% slashing of stake
5.2 Appeal Process:
An on-chain governance mechanism allows node operators to appeal slashing decisions, with the community voting on the outcome.
Benefits of ASBS:
6.1 Enhanced Security: By requiring a stake, the cost of attacking the network increases significantly.
6.2 Long-term Commitment: The seniority factor encourages operators to maintain their nodes over extended periods.
6.3 Fairness: The tiered structure and seniority factor prevent excessive advantages for large stakeholders.
6.4 Flexibility: The dynamic adjustment factor allows the system to adapt to changing network conditions.
6.5 Inclusivity: The gradual implementation and tiered structure maintain accessibility for smaller operators.
Potential Risks and Mitigations:
7.1 Centralization Risk:
Mitigation: The tiered structure and seniority factor prevent excessive concentration of power.
7.2 Barrier to Entry:
Mitigation: Gradual implementation and lower requirements for new nodes maintain accessibility.
7.3 Liquidity Concerns:
Mitigation: The optional enhanced staking allows operators to choose their level of commitment.
Governance and Future Adjustments:
The ASBS parameters (α, β, γ, tier thresholds, etc.) will be adjustable through on-chain governance, allowing the community to fine-tune the system as the network evolves.
Conclusion:
The Adaptive Seniority-Based Staking mechanism provides a balanced approach to introducing staking in Quilibrium. It enhances network security and stability while preserving the core principles of accessibility and fair participation that have driven Quilibrium’s growth. By recognizing both the quantity of resources provided and the duration of commitment, ASBS aligns incentives for long-term, high-quality network participation.

[ridgeway]

I vote against this proposal because it seems at odds with the purposes and spirit of Q. I agree with the detailed objections below from @Tyga and @agwm_2014

[Tyga]

Quilibrium’s current system lacks a formal staking mechanism, which has led to both benefits and challenges.

While the current system lacks a staking mechanism, this is by design, not because it was overlooked.

While the low barrier to entry has fostered rapid network growth, it has also potentially exposed the network to manipulation by bad actors.

“Potentially exposed”… erm, pardon me, but potentials and “has been” are two different things. Due to this using the former argument, I would interpret this more of a fear-mongering statement than an actual argument, which would be “In order to reduce exposure of the network by manipulation by bad actors we should implement staking…” However the counter to this argument still goes back to my initial posts above:

1. proof or an actual argument that the PoMW and current network mechanisms do not work well enough and that staking would solve those issues
2. The implication of how “a low-barrier to entry makes things worse” needs to be elaborated on as well, because I see this as a plus: if built-in, non-monetized functions of the p2p network can handle bad actors effectively, then having more nodes (even with less seniority) will essentially outweigh any number of bad actors trying to overwhelm the network.

The ASBS mechanism addresses these concerns while preserving Quilibrium’s unique features such as the Proof of Meaningful Work (PoMW) and prover ring systems.

The concerns this is supposed to be addressing haven’t really a good argument or evidence for: “other people do it, so we should too” and “bad guys are out there” aren’t good enough.

So staking just seems like added complexity to the network in order to solve a problem that does not have any evidence or an strong argument to back it up.

If anything the whole calculation combined with dynamism highlights a key issue here: you need to stake to run a node, but you earn rewards by staking which in turn gives you additional rewards-- would this not centralize this to pre-existing node operators due to them essentially being the filters of newly generated tokens used to create new node stakes?

It seems like a conflict in interest, imo, such it would create a new category of bad actors in just the sense that node operators now have a direct incentive to keep new node operators out.

With this, existing node operators can keep new operators from joining simply by only selling the minimal amount of tokens they earn. This drives the price up and further reduces the amount they need to sell. They can then use their unsold tokens to up their stakes for additional bonuses and create new nodes rather than release onto the market for new operators to join.

When prices change this proposed dynamic feature really messes with the pre-existing stakers as well.

Say the staking requirements are 10,000 tokens today, price goes up 10x, staking requirements are now 1,000 tokens. Why should I need to have 9,000 tokens still locked? I could shut my node down and restart it to get the lower amount. Or the inverse: if the price goes to 1/10th, and the new staking requirement is 100,000 tokens, should I not have to up my stake to keep current with the network requirements?

Now add the whole “seniority” discount or wanting to add/remove workers from a cluster… lol, this sounds insane and inflexible to try calculate without even considering additional mechanisms to then try to stop the gaming of such a system.