ICON, the decentralized “blockchain of blockchains” has published a new yellow paper which describes in detail some changes to the incentives and governance of its network. The overall goal of the changes is to encourage true decentralization across the ICON platform.
Preparing for Public Representatives elections
ICON is currently on a path to decentralization, which it calls ICONSENSUS. Within any decentralized network, there is a need to ensure that incentives are aligned across all participants. Furthermore, there should be no incentive for participants to collude against the good of the network. This has been a consistent problem with EOS, where the delegated block producers who run the network have been found to operate in cartels.
In September of this year, the ICON network will mark the first milestone of ICONSENSUS with the election of its P-Reps. A P-Rep is a Public Representative, which operates a full node on the ICON network. During the election period, token holders in the ICON network, called ICONists, will vote to decide on who will serve as the 22 P-Reps.
Therefore, the yellow paper prepares potential P-Reps and token holders for what they can expect from the network’s governance model, along with incentives and penalties.
The new incentive model is called Delegated Proof of Contribution, meaning all network contributors, including ICONists and P-Reps, are incentivized according to their level of contribution to the network.
However, a penalty system was also introduced, thereby disincentivizing malicious activities. For example, a P-Rep could be fined with Validation Penalty for proposing an invalid block, or a Low Productivity Penalty if he is found to be inactive for a period of time.
In addition, as a means of limiting inflation across the ICON network during times of high throughput, the yellow paper introduces a further token burn mechanism. The rewards for network participants will first be distributed from the newly created block transaction fees. Where the value of the transaction fees exceeds the total reward value, the excess ICX tokens will be burned, and if the value of the transaction fees is lower than the needed rewards, new coins will be minted.
Trust and transparency seems to be critical factors for ICON. Given the precedent of collusion demonstrated by the EOS nodes, it will be intriguing to see if the new governance model and features that ICON is introducing prove sufficient to protect the integrity of the network.