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Vote Power Cap Survey


ftso_au
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Sorry for the short notice, there's not a lot of time left to vote, but I thought it a worthy topic for discussion.

It's no secret, lowering the vote power cap is going to be one if not the first governance proposal ... what are your thoughts on it?

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37 minutes ago, FTSO_AU said:

Sorry for the short notice, there's not a lot of time left to vote, but I thought it a worthy topic for discussion.

It's no secret, lowering the vote power cap is going to be one if not the first governance proposal ... what are your thoughts on it?


Thanks for the heads up.   What are your thoughts?   For or agin?

 

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I wanted to quickly get the above question in to you so just asked it…. But now…. my thoughts…

 

Dunno.

 

Got no feckin idea actually.  These are complex and non trivial issues and so far I’ve just assumed that people smarter than me,  deeply steeped in the intricacies,  had made the decision to set it at ten percent.

 

So for me to want to change it I would require a fairly detailed disposition of exactly why it should change,  and to what.  One thing I have had some experience with is unexpected consequences of seemingly benign changes in a complex ecosystem of production software.

 

And if nothing else,  it’s taught me to change prod software carefully, slowly and conservatively.  In crypto we recently had a catastrophic example of algorithmic stability broken in a way that was not considered (or dismissed as unlikely) by the devs involved.

 

So again, to me, I would need more than just a gut feeling it should be changed….     detailed proposal or leave it alone is my view.

 

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54 minutes ago, BillyOckham said:


Thanks for the heads up.   What are your thoughts?   For or agin?

 

I see pro's and cons for each of the 10, 5 or 2%.

At the moment the majority of the community is deciding what a "good signal" is based on their ability to earn rewards, which has the majority of the rewards concentrated in the top 5/6. That may change when S-Assets and other dApps requiring pricing are launched.

There's enough providers sending competitive signals in the top < 30 to warrant a reduction to 5% which would improve decentralisation. On occasion, we've seen providers with 500M+ have some glitches which affects the median, which to me suggests we're too reliant on too few.

Until positions 30 - 100 are sending "competitive signals" I don't think we could warrant a cap of 2%.

If all the VP remains in the top few, attracting new players to the ecosystem will be difficult.

As for "Remove it all together" that would further concentrate the VP with too few which in the event one of those guys had issues, or was a bad actor, could have significant impact.

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1 hour ago, FTSO_AU said:

There's enough providers sending competitive signals in the top < 30 to warrant a reduction to 5% which would improve decentralisation.

Thanks for being engaged on this.  

Because this is your daily bread and butter, and because I can tell from your longstanding interactions here and your team’s informational outreach that you are sensible and decent actors in this space,  I am happy to take your experience as gospel and accept that the 5% figure would be an improvement.

I accept that more decentralised (amongst competent and fair participants) is a good thing so I will vote accordingly. Thanks for sharing your thoughts.

Obviously this is just a Twitter poll so I’m happy to vote as mentioned and would assume a real on chain vote would have further metrics and explanations made at that time.

Btw…     I’m just a fat old doddering idiot with a keyboard…   I mention my views just to add to discussion…   my views are often wrong.   :) 

 

 

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Posted (edited)

There are only a handful of the current Top 20ish performers that are near or above a 5% mark. Lowering the cap would certainly push support to some other high-quality FTSO provders. I think that making the FTSO provider network more distributed/decentralized is a great goal, and I'd vote for a lower cap, the trade-off seemingly being a slight lowering of some of my SGB earning power for a healthier network.

But what effect would lowering the cap actually have on (1) data quality, (2) decentralization and (3) rewards? I think we'd need some data before the governance vote, showing how it would likely increase decentralization and change the data feeds and expected rewards. Using historical data to model the different vote cap scenarios from the governance change proposers would be needed. If the trade-off between increased decentralization, lowered rewards and any change price feed reliability seems OK, I'd probably vote for it.

Edited by RambeauTeasebox
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Lowering the cap to spread the power around a bit is good. As has been said the quality of signals is very high and there should be more opportunities for providers to get rewarded for the investment they are making. Furthermore a little less emphasis on the reward rate would be healthy I think.

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Im philosophically in favour of reducing to 5% if that helps decentralisation. I’m trying to think through the implications. If the questions below don’t make sense, please call me out on them.

When it’s time to choose a provider, would a typical participant opt for a provider in the top 10 with the least chance of hitting 5% ? Or would they choose the provider with the best chance of winning the most rounds ? 

How much deviation among the top 10 providers do we see in terms of price proposals vs winning proposals over the past few weeks? Is that deviation statistically significant enough to affect price feed quality if participants are incentivised to distribute among the top 10 providers equitably ? 

For some reason, if the number of participants in the system goes down the reward for the providers also goes down. What happens then in terms of incentive to keep sophisticated algorithms running to generate price proposals ? What is the threshold at which 5% is not financially viable for a quality feed?

Edited by Ripley
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Posted (edited)

I'll try and respond to your questions / statements ... with my thoughts / observations.

I'll also try and be as impartial as possible, but it would certainly benefit us, at this stage, for the cap to be lowered to 5%.

If I've missed your point on any please let me know.

5 hours ago, Ripley said:

When it’s time to choose a provider, would a typical participant opt for a provider in the top 10 with the least chance of hitting 5% ? Or would they choose the provider with the best chance of winning the most rounds ? 

The majority of participants choose a provider based on RR. If providers maintained their ~10% VP and it was capped at 5%, the drastic drop they'd see in RR would force participants to look down the list. There's plenty of providers in the top 30 sending solid signals with 100% availability.

5 hours ago, Ripley said:

How much deviation among the top 10 providers do we see in terms of price proposals vs winning proposals over the past few weeks? Is that deviation statistically significant enough to affect price feed quality if participants are incentivised to distribute among the top 10 providers equitably ? 

1073624137_ScreenShot2022-06-10at6_37_40pm.thumb.png.a12e884b4bf2af84bfcee7569656275b.png

Typical submissions on BTC for any given voting round among the top 5. The reward band is tighter than it's ever been. 

The majority of the top 20 are within that range, I haven't included them for the sake of simplicity.

On lower priced pairs like XRP, we're submitting the same price down to the 5th decimal place.

Point to note: I'm not suggesting the price is right, just because "everyone" is submitting similar, but the current system rewards chasing the median.

If the VP was distributed more evenly among the top 20 - 30, the prices being submitted would be similar to what they are now, with less impact if one of the top guys strayed from the median.

5 hours ago, Ripley said:

For some reason, if the number of participants in the system goes down the reward for the providers also goes down. What happens then in terms of incentive to keep sophisticated algorithms running to generate price proposals ? What is the threshold at which 5% is not financially viable for a quality feed?

Even with the current price of $SGB, it would still be financially viable for a provider to run a sophisticated algo, with or without AI / ML at 5%. 

On the flip side, attracting new signal providers, and having 100+ quality, independent operators will become difficult when newcomers see the wealth is concentrated among only a select few. It's certainly not financially viable for many of the providers down the mid to lower part of the top 100 today.

Edited by FTSO_AU
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2 hours ago, FTSO_AU said:

I'll try and respond to your questions / statements ... with my thoughts / observations.

I'll also try and be as impartial as possible, but it would certainly benefit us, at this stage, for the cap to be lowered to 5%.

If I've missed your point on any please let me know.

The majority of participants choose a provider based on RR. If providers maintained their ~10% VP and it was capped at 5%, the drastic drop they'd see in RR would force participants to look down the list. There's plenty of providers in the top 30 sending solid signals with 100% availability.

1073624137_ScreenShot2022-06-10at6_37_40pm.thumb.png.a12e884b4bf2af84bfcee7569656275b.png

Typical submissions on BTC for any given voting round among the top 5. The reward band is tighter than it's ever been. 

The majority of the top 20 are within that range, I haven't included them for the sake of simplicity.

On lower priced pairs like XRP, we're submitting the same price down to the 5th decimal place.

Point to note: I'm not suggesting the price is right, just because "everyone" is submitting similar, but the current system rewards chasing the median.

If the VP was distributed more evenly among the top 20 - 30, the prices being submitted would be similar to what they are now, with less impact if one of the top guys strayed from the median.

Even with the current price of $SGB, it would still be financially viable for a provider to run a sophisticated algo, with or without AI / ML at 5%. 

On the flip side, attracting new signal providers, and having 100+ quality, independent operators will become difficult when newcomers see the wealth is concentrated among only a select few. It's certainly not financially viable for many of the providers down the mid to lower part of the top 100 today.

Thank you for your thoughts. That graph for BTC above speaks volume. I hope the proposal to move to 5%, whenever it comes, includes impartial fact sheets to help people know what they are voting for.

An example is typical equity research documents which have the following components:

  • Contributors
  • Verifiable Facts (e.g. what has changed since we originally started off in terms of number of providers, quality of price feeds, etc.) preferably in visual format.
  • Thesis on what the proposal if passed expects to do.
  • Risk/Counter View

The goal being that a market participant who is thoughtful/smart but is nevertheless not an expert is able to digest information quickly and is able to make a decision.

If you are not in control of the format, please consider providing this as input to those that do. I will support the move to 5%.

 

Edited by Ripley
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28 minutes ago, Ripley said:

If you are not in control of the format, please consider providing this as input to those that do. I will support the move to 5%.

I'm led to believes the first governance proposal/s will be submitted by Flare.

I'm yet to see the format, but I'll certainly put your suggestions forward, thanks for documenting. 

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