Constrained Proof of Stake

[F041]

---

cip:
title: Constrained Proof of Stake
author: Gabriele GIordano <@F041>, @GabrieleGio on Bitclout
discussions-url: <8>
created: 2021-07-09

One-Line Description

A mathematical function so that PoS won't exceed 100k$ per year. It drops the interest rates very quickly after a certain amount of staked clout. The starting interest rate results relatively high at the minimum amount of staked clout to get the benefits, but not particularly dissimilar to services that give APY like BlockFi.

Explanation and Motivation

We know economical inequalities have reached a local maxima high since the 1900s. In some countries they will even surpass the historical record soon.
The crypto economy exacerbates those inequalities.
PoW has high entrance barriers.

S shaped functions, paired with PoS rewards, can create an agreed mechanism for the distribution of the spent nanos, and sustain a local equality.

Specification

S shaped functions for staking rewards, with upper asymptote based on the function of wellbeing-income, and lower asymptote, 100$ USD in CLOUT.

Which CLOUT to get considered staked? Just one's creator coin or every position in one's wallet? Up for discussion.

Use this spreadsheet to play with data, I suggest the generalized logistic sheet:
https://docs.google.com/spreadsheets/d/1_myFhiZkfJeRCiRaCHOGgI6idgM0yAHQVbFBVhpTHi0/edit?usp=drivesdk

For other details, check: https://bitclout.com/posts/33bfd2cbcc66778b08639a8df755c7f3202cfccf164f17550d10510ff5d54c9f

I have no idea on how to implement it in the core, since I just played with the mathematical concept behind the idea.

Backwards Compatibility

No idea

Test Cases

John has 1k$ staked in clout. He would get an APR, distributed monthly, between 12,7% and 12,5%, using the formula indicated in the spreadsheet mentioned previously.

Security Considerations

To avoid rent seeking capitalism, the bottleneck problem between rewards and spent nanos, and not only, one can use the PoS+ protocol to ensure just active users (with an agreed metrics, otherwise bots can automate that) get the rewards. From page 80 of the Symbol white paper you can see an idea for the weighting algorithm for this purpose.
This would also solve the problem of big accounts splitting their CLOUT across n accounts to reap higher interests. Imagine for example an 1M$ account spreading clout on 1000 accounts so they get more yearly interests.
EDIT: PoS+ paired with GoodDollar videoselfie once in a while could solve the mentioned problems. Videoselfies would keep put from staking non humans accounts, like projects, wallet profiles, bots, etc.
https://www.gooddollar.org/digital-photo-authentication-face-verification/

[HPaulson]

I think this post needs to be much much more detailed, outlining a clear problem, solution, specifics of such. and other considerations. It's not too clear what you're proposing specifically, and the motivation behind it.

[HPaulson]

I see okay. After reading over this once more & checking out your doc (Before just looked at the graph) it makes much much more sense -- and seems favorable. Two concerns:

1. In concerns you mention stopping the ability to spread clout across multiple accounts based on activity metrics. What are some ways we could measure this? Additionally, is this a negative aspect, as some accounts such as VCs or regular investors who don't wish to use the platform may remain inactive? Should they not get staking rights? In my view -- they most definitely should have the ability to stake, and we should incentivize them to do so.

2. Does it makes sense to include Creator Coins here? Since CCs are essentially clout which is already "staked" (For better or worse) in a user, I don't think it makes much sense to also have them useable in PoS. It makes much more sense, from my viewpoint, to only allow staking of pure Clout.

[F041]

1. Number of transactions (messages, posts, likes, diamonds). So more options than the formula mentioned in the Symbol whitepaper, but leaves open the problem for bots. I find weird to have a social and not use it. Then better to leave the clout in exchanges, for the cost of reduced security.
2. staked CCs can signal trust in a creator. If you remeber, weeks ago, someone talked about locking/disclousing the time period of investments. If you stake pure Clout instead of CCs, you waste more capital, using the words of maxis (and I agree with them).

[bloated-devish]

I am in agreement with @HPaulson

1. Should they not get staking rights? In my

@F041 : It sounds like we are trying to solve societal problems (like social inequality) with BC. Not that we shouldn't, but that's not the primary goal of this project.
Are we encouraging large VCs to quit the platform, so they can take the money and stake elsewhere (because the gains elsewhere would be better - in steady state)? If anything VCs are often (but not always) a large time horizon investors and are diamond hands, unlike paper hands that regulars like me are. So I am a little confused what this constrained PoS achieves?

[F041]

A constrained PoS won't surely solve societal problems, it could just show an angle of the internet with more equality.

VCs have anyway more profitable ways to make their capital work without staking. I don't agree that this proposal will make them flee, since there exists a minor trend in sustainable (in many ways) investments. One core example: the Great Reset.

Constrained PoS incentives users to use their capital here instead of somewhere else, especially if relatively low, creating a much less unequal population compared to other crypto environments. As a side effect it provides free PR. It winks to the Keynesians out there, and those libertarians that still think that constraints in a free market reduce distortions and increase stability (I forgot the labels).

[F041]

Updated in the last part