From 9513803b43f46200bc35b772b841f2666b993d52 Mon Sep 17 00:00:00 2001 From: tjain-mcc <62672378+tjain-mcc@users.noreply.github.com> Date: Wed, 26 Jan 2022 19:06:31 -0600 Subject: [PATCH 1/5] Create HIP 51: Helium DAO --- HIP 51: Helium DAO | 214 +++++++++++++++++++++++++++++++++++++++++++++ 1 file changed, 214 insertions(+) create mode 100644 HIP 51: Helium DAO diff --git a/HIP 51: Helium DAO b/HIP 51: Helium DAO new file mode 100644 index 000000000..43c6d08af --- /dev/null +++ b/HIP 51: Helium DAO @@ -0,0 +1,214 @@ +Authors: Tushar, Shayon, James (JMF) + +Category: Economic / Technical + +Status: Work in progress + +# **Summary** + +This proposal outlines economic and technical constructions with the aim of scaling the Helium Network to support new users, devices, and types of wireless network protocols. + +We propose that each wireless network supported by Helium (LoRaWAN, Wifi, 5G — referred to as wireless network protocols or WNPs) has its own subDAO with its own token (referred to as wireless network tokens or WNTs). The key specifications of the WNT such as proof-of-coverage rules, data credits rewards, and consensus mechanisms are governed by each WNT DAO. + +The aim is to create an economy such that the underlying HNT-Data Credit burn-and-mint equilibrium remains undisturbed, and Proof-of-Coverage rules and miner emission amounts are dictated by the corresponding wireless network’s sub-token. + +The technical model requires that the entire Helium Network lives at some proposed base layer (L1). All accounts and transaction activity happens at this L1. All subDAOs operate as economic and governance layers (L2) with their respective WNTs acting as native tokens for this purpose. Each L2 also runs software to calculate WNP specific items (eg: all the proof of coverage code that exists on the current LoRaWAN network to determine hotspot rewards) and the L2 validators who have staked WNTs come to consensus on these calculations. + +# **Background** + +For the Helium Network to grow to global scale in number of active devices and users it is necessary to develop economic and technical primitives that will support that scale across various wireless networking technologies. + +[HIP 27: CBRS 5G Support](https://github.com/helium/HIP/blob/master/0027-cbrs-5g-support.md) provides a broad discussion of 5G WNP specific data credits mechanisms, and [HIP 37: Omni-Protocol PoC](https://github.com/helium/HIP/blob/master/0037-omni-protocol-poc.md) outlines an incentive model as well as proof-of-coverage rules for the 5G Network. This is a three-part proposal that builds on such existing work with two primary aims: + +1. Provide a general structure for onboarding new WNPs to the broader Helium Network, with mechanisms in place to ensure that protocol-specific attributes such as proof-of-coverage rules, data credits pricing, and block validation are within control of the emergent WNT DAO. +2. Specify the implementation of the structure proposed through detailed onboarding proposals for the LoRaWAN and 5G networks, described in [HIP 51: LoRaWAN DAO](https://docs.google.com/document/d/1fqy3JLdoP8YgOULx-sE_24xOL1UL9esHu_Ctju4iGcg/edit) and [HIP 52: 5G DAO](https://docs.google.com/document/d/1rg9VK28S8bWOeKNiKXUipsLsBxLjuHH7AnVe6TjKw4I/edit). + +The technical and economic design decisions of the Helium Network today have been made around the flagship LoRaWAN Wireless Network Protocol. In order to support new networks and devices, there are two core problems to be addressed: **blockchain scalability** and **WNP specific incentive alignment.** + +This proposal outlines two constructions to address the aforementioned core problems: + +1. *Blockchain Scalability* We propose that each WNP has validators who operate software to calculate WNP specific items (eg: all the proof of coverage code that exists on the current LoRaWAN network to determine hotspot rewards). Validators stake WNTs and are rewarded by WNT inflation. + +All non WNP specific transactions (simple transfers, burning HNT to DC, etc) occur at some high throughput, low latency base layer chain on which the overall Helium Network lives. + +1. *WNP Specific Incentive Alignment We propose that each WNP operate as its own sub-DAO within the broader umbrella of the Helium DAO. WNP Sub-DAOs are able to issue WNTs to their stakeholders and WNT denominated governance controls WNP specific attributes.* + +# **Motivation** + +There are three key drivers for proposing that consensus and execution for each WNP occur at some base layer chain, while the economic and governance layer for that WNP is separated from the native token of the overall Helium Network + +1. *Scalability -* Each WNP has the ability to run its own code for WNP specific items +2. *Native Tokens Provide Separation of Governance Each WNP effectively governs its Proof-of-Coverage rules, data pricing, and rewards distribution mechanisms. This structure provides significantly more self-sovereignty over the structure and direction of the WNP.* +3. *Composability Implies Utility -* If the overall Helium DAO base-chain is able to support smart contracts, it is possible to imagine a variety of novel use cases for HNT as well as each of the WNT tokens. Some examples here are signaling strategies (yield aggregator DAOs that take HNT from passive holders and stake to specific WNPs based on market conditions) or money markets (liquid borrow-lend markets for greater delegation to validators or leveraged staking). + +There are two key drivers for WNPs to operate as sub-DAOs beneath the overall Helium Network through their corresponding WNTs + +1. *Curation and risk expression* WNTs allow network participants and speculators to indicate support for a given network, which can inform distribution of emissions and developer resources. For example, if HNT holders bond a large number of HNT to a particular WNP, the HNT denominated rewards for that WNP increase and help accelerate the flywheel for that WNP. +2. *Onboarding new protocols* WNP DAOs provide an easy framework for addition of new wireless protocols where the broader Helium DAO delegates some portion of HNT emissions to each WNP DAO. + +# **Stakeholders** + +This proposal impacts all current and future stakeholders in the Helium Community. + +# **Construction** + +We propose that each WNP operates as its own subDAO within the broader Helium DAO, while both DAOs exist on a single base L1 chain. Each WNP has its own economic and governance layer through its subDAO, which comprises all WNT holders. + +[https://lh4.googleusercontent.com/KYORnsFb3X0X42t64FscUArcDZBjXyopik_AaZTN7tLvxYRL5-s1nvd1WY3X4vJA5mWe1_XN_miwDoRXhU70YV_txsO5Y_mWFbVrx6byNinT--khit2AEAYl4GMO0Vm_lL49BB05](https://lh4.googleusercontent.com/KYORnsFb3X0X42t64FscUArcDZBjXyopik_AaZTN7tLvxYRL5-s1nvd1WY3X4vJA5mWe1_XN_miwDoRXhU70YV_txsO5Y_mWFbVrx6byNinT--khit2AEAYl4GMO0Vm_lL49BB05) + +All subDAO specific addresses across all WNPs on the network will live on this L1 chain. All tokens exist on the L1 chain. The L2 is for calculation and computation purposes only. + +Before we can define the WNP specific economic structures, we need to outline how the rewards are split between WNPs and how to fund the earliest stages of development for new WNPs. + +### PoC Model Background + +HIP 27 originally introduced a concept to allocate a portion of unrewarded Data Transfer rewards (up to 30% of the DC Bonus Pool) towards Proof-of-Coverage rewards for new wireless networks, such as 5G and Wi-Fi. The approach was presented and discussed at the DeWi Community Call and Discord. While the concept was generally well received, we fell short of coming up with a technical implementation that would be sufficiently difficult to arbitrage. As a result, we chose to truncate HIP 27 to focus on implementation of a chain variable for DC / cellular data conversion ratio and revisit economics and implementation of PoC for non-LoRaWan wireless network types to a future HIP. + +### PoC Incentive Model for HIP 50 + +Currently, under HIP-27, non-LoRaWAN gateways are only rewarded based on data transfer and those rewards are based on the 1 DC burn = 1 DC equivalent earning principle laid out in HIP-10. That reward bucket is currently, as of January 2022, limited to 35% of total HNT issuance per epoch. Any HNT from that bucket that is not allocated to Data Transfer rewards is reallocated to LoRaWAN PoC rewards. + +**We propose three significant changes to the reward bucket structure:** + +### Remove division between PoC and DC reward buckets + +After HIP-10, the vast majority of DC rewards are reallocated to the LoRaWAN PoC, which has made the distinction between the buckets nominal. Given this reality, we propose a merging of the two rewards buckets. + +The value of the bucket will equal the combined value of the existing DC and PoC buckets and will be adjusted along with all other rewards buckets on the existing rewards schedule. + +Existing reward curve by reward type: + +[https://lh4.googleusercontent.com/aCKlXePHuivkp8IFK5-VLifO-xw8WKOpArn9OCiobOW0WjpHcPBtogNqvDBLofH8q4lcMFtnP0XZZlGq3v247AA3Syqq6RKK0Pr6-_xKjv4DTPmmbSAJ5XIrSNaLHt9Y3py8My_v](https://lh4.googleusercontent.com/aCKlXePHuivkp8IFK5-VLifO-xw8WKOpArn9OCiobOW0WjpHcPBtogNqvDBLofH8q4lcMFtnP0XZZlGq3v247AA3Syqq6RKK0Pr6-_xKjv4DTPmmbSAJ5XIrSNaLHt9Y3py8My_v) + +The new reward bucket would be a combination of the “Network Data Transfer” and “Proof of Coverage” rewards above. + +### Split PoC rewards between wireless protocols based on a quadratic equation that accounts for DCs burned and active devices per WNP + +The success of the Helium network is contingent on its ability to find real world applications that burn data credits via data transfer activity. Therefore, the incentive model should be designed in a way that promotes wireless network protocols (WNPs) that accomplish that goal. Additionally, the scale of each WNPs participation network should also be taken into account, so as not to overly disadvantage early protocols with lower DC burn rates. To accomplish this propose the quadratic equation below: + +Each protocol would be assigned a ‘score’ per epoch: + +$$ +\textup{Protocol Score} = \textup{WNP DCs Burner} * {\sqrt{\textup{WNP Active Device Count}}} +$$ + +Once each protocol has a score, the % of total Epoch PoC rewards assigned to each WNP will be assessed by comparing the individual score to the sum of all scores: + +$$ +\textup{Percentage of POC Rewards per WNP} = \textup{WNP Specific Score} \div \sum (\textup{All WNP Scores}) +$$ + +To put this into context, if you have two networks with 50,000 and 500,000 devices each, the smaller network would need approximately 3 times the DC burn to have a comparable protocol score to the larger network. + +Most importantly, this model gives us a framework to add new WNPs in the future without having to design reward splits on an ad-hoc basis. + +### Implementing a ‘cold start’ bucket to help fund early stage networks that don’t yet have meaningful DC burn + +The Lorawan protocol on Helium benefitted from having a built in ‘cold start’ reward system via PoC rewards to help fund the growth of the network. Under the new model, a network that doesn’t have any DC burn would not have any way of rewarding it’s early users, so we are proposing a 10% ‘cold start’ reward bucket that is carved out from the combined PoC/data rewards bucket. Under this system, any WNP that has been live for sub 1 million epochs (approximately 2 years) would evenly split 10% of all HNT rewards. Additionally, if a specific WNP had enough devices or was burning enough DCs to receive 10% of the larger PoC/data rewards bucket, it would be excluded from the ‘cold start’ rewards bucket. + +If no WNP ‘qualifies’ for the cold start bucket, those rewards would be reallocated to the regular PoC/data reward bucket. + +### Definitions and calculations for Omni-Protocol PoC incentive model + +**DC burn used in PoC split calculation**: DC burn is not limited to data transfers per WNP. The calculation also includes fees associated with other actions, including, but not limited to, gateway assertions, token transfers, and gateway relocation fees. + +**Wireless Network Protocol (WNP)**: Wireless network type is a computer network that uses wireless data connections between network nodes and utilizes a uniform, standard set of rules that determine how data is transmitted between different devices in the same network. (i.e. LoRaWan, 5G, Wi-Fi, NB-IoT etc. all different wireless network protocols). + +**Frequency of PoC reward split recalculation**: Manually adjusted on a frequency at the discretion of DeWi unless and until an auto recalculation feature is built into the protocol + +**Active Device**: Active devices are the subDAO's definition of devices creating valid coverage during the epoch + +## *Bonding Curve Specification* + +WNT are issued against a bonding curve with issuance, redemption, and transaction fee parameters set by WNT governance. Each WNT can set the shape of its curve. + +We suggest that all WNT bonding curves take the shape P = S^k where k > 1, and P represents Price and S represents Supply. The quote currency is the WNT and the base currency is HNT. + +For a given amount of HNT deposited to or withdrawn from a given WNP bonding curve, the increase or decrease in supply and price is given by resulting change in the area under the curve. The integral is given by + +$$ +\int_{S_a}^{S_b} S^k = \frac{1}{k+1} (S_b^{k+1} - S_a^{k+1}) +$$ + +The shape of the curve for k only slightly larger than 1 is as follows + +[https://lh3.googleusercontent.com/9BO0qb90HKiWDHreSWemmZhEmjSiPKJKsiEi1lMENNzV2StUtx1qiwYFPg5NDR4JZux5YgmL_ia99yjgY0O1-QUbnjvDo0qgq8G0TJTWq53AAF8XNI4xaYKKBjqpW2Y5eq7NbvuS](https://lh3.googleusercontent.com/9BO0qb90HKiWDHreSWemmZhEmjSiPKJKsiEi1lMENNzV2StUtx1qiwYFPg5NDR4JZux5YgmL_ia99yjgY0O1-QUbnjvDo0qgq8G0TJTWq53AAF8XNI4xaYKKBjqpW2Y5eq7NbvuS) + +The main consideration in designing this bonding curve is that it’s difficult to balance the positives of reflexivity with potential sharp price movements in either direction — this shape is close enough to linear to mitigate some of those issues. + +## **Rewards Distribution Mechanism** + +We provide an end-to-end description of data transfer, proof-of-coverage, and consensus rewards for a given WNP under the Helium Network. + +*Data Transfer Process* + +For each WNP, we propose that a device looking to receive coverage across the network purchase Data Credits by **purchasing and burning HNT**. + +The device **subsequently burns those Data Credits** in the name of the hotspot or set of hotspots once data has been transferred. + +The device then **relays the receipt of this transaction** to the set of validators for the WNP. + +The WNP validator set then **relays this information to the HNT emissions contract** in order to determine the HNT amount to be distributed to the WNP subDAO for all rewards distribution. + +At the end of each epoch, the **WNP validator set prepares the distribution for mining rewards** denominated in the WNT to each hotspot based on coverage provided. + +*Proof-of-Coverage Process* + +The WNP subDAO defines the rules for proof-of-coverage challenges. In a given epoch, Challengers, Challenges, and Witnesses **relay the results of challenges to the WNP validator set** in order to distribute proof-of-coverage rewards denominated in WNT to relevant devices. + +*Consensus Process* + +The WNP subDAO defines the rules for consensus, and **distributes a portion of WNT emissions in a given epoch for WNP validators.** + +[https://lh3.googleusercontent.com/VIycvHCtq1nZtXyAC8haZw6xF1sBHcs8GVRPFX3-lAFtsR-HflGQyGUc7tAjs8R4VPS7HP_5A0rJRsAr_G0kiOZJSxM80t3_ukgdutd15XdQerDkrx0IZH27BJjQRbLP2oVQjZ8_](https://lh3.googleusercontent.com/VIycvHCtq1nZtXyAC8haZw6xF1sBHcs8GVRPFX3-lAFtsR-HflGQyGUc7tAjs8R4VPS7HP_5A0rJRsAr_G0kiOZJSxM80t3_ukgdutd15XdQerDkrx0IZH27BJjQRbLP2oVQjZ8_) + +*Emissions Calculation* + +At the end of a given epoch, the HNT emissions contract **performs a tally of the data credits transferred across WNPs**. The emissions contract subsequently distributes the determined amount of HNT to a **WNP subDAO multi-signature wallet**, the addresses of which comprise the set of validators of that WNP. + +*WNT Issuance* + +Each WNP DAO then **submits the entire amount of HNT into its bonding curve** in order to mint new WNT for hotspots and validators participating in data transfer and proof-of-coverage. + +In a given epoch, if the WNP Hotspots were to receive some amount of HNT from the Helium DAO, the WNP subDAO multi-signature wallet distributes a **corresponding amount of newly minted WNT of equal market value** as per the bonding curve to the hotspots in its network based on its mining rules. + +*Note that all new issuance in the WNP bonding curve through HNT emissions are distributed to hotspots and validators. External capital entering or exiting the bonding curve does not post any liquidity risk to WNP devices.* + +*WNT Issuance* + +If a given address wishes to redeem their WNT, they can **“sell” against the bonding curve** to receive the market rate of underlying HNT. + +The transaction involves sending the required amount of WNT tokens to a **burn address**, and receiving the determined amount of HNT tokens from the **WNP subDAO multi-signature wallet**. + +The address **relays the message of the sale to the set of WNP validators**, which then adjust the position of the bonding curve in the following epoch after adjusting for all other sales and any new issuance. + +*Transaction Fee* + +A WNP **subDAO governed transaction fee** is placed on issuance and redemption of WNT tokens on the bonding curve. This fee is charged in HNT and we suggest starting it at 0.3% of all transactions. This HNT fee is immediately submitted to the WNT bonding curve. + +For example in a given epoch, if the 5G bonding curve had trading volume of 100,000 HNT and brought in 300 HNT worth of transaction fees, that 300 HNT is resubmitted to the curve increasing the price of WNT according to the equation. + +## *Fair-Launch Mechanism* + +The bonding curve mechanism is susceptible to bot frontrunning. We borrow from [Strata protocol’s fair launch mechanism](https://www.strataprotocol.com/docs/learn/fair_launch) to ensure that early participants in any WNP DAO are protected from this attack vector. + +The fair launch mechanism described involves a gradually steepening bonding curve such that the area underneath remains fixed with each unit increment in time. + +[https://lh4.googleusercontent.com/CDZiML8YFE5BOwSbjT5GUjejATCIqUpLF85XDfIjjm_semkSZOklnj9cMMG1Kd4yoGjoLbw-Gelvj4M-XI7bM77gOe6yVXRS22jxv-UZlHHIV1hF-Il15AZOPSd_1Si9ouAGb0Yp](https://lh4.googleusercontent.com/CDZiML8YFE5BOwSbjT5GUjejATCIqUpLF85XDfIjjm_semkSZOklnj9cMMG1Kd4yoGjoLbw-Gelvj4M-XI7bM77gOe6yVXRS22jxv-UZlHHIV1hF-Il15AZOPSd_1Si9ouAGb0Yp) + +This ensures that bots are unable to atomically frontrun network participants. . + +# **Clarifications** + +We set the following economic constraints in order to ensure an equilibrium within each subDAO and the overall network + +1. HNT remains the unit of buy-and-burn in order to maintain the HNT flywheel. Data Credits are universal, in that they can be created by burning HNT and are usable across any WNP. +2. Mining rewards for hotspots in a given WNP are distributed in the corresponding WNT +3. WNTs can be traded on secondary markets but are redeemable for HNT as per the primary market defined by its bonding curve. New WNTs can be minted by depositing HNT into the bonding curves as well. +4. Each WNP can set their own WNT emission schedule and distribution. + +# **Open Questions** + +1. Should the subDAO multisig be composed of WNP validators or some delegation chosen by WNT holders through governance? +2. What does a migration process look like for the existing implementation onto the new structure outlined? +3. What governance procedure should be used to whitelist specific WNP DAOs? From 6d394033f53b6b33a54f68094e986113e707b76a Mon Sep 17 00:00:00 2001 From: Abhay Kumar Date: Wed, 26 Jan 2022 22:17:05 -0800 Subject: [PATCH 2/5] Rename file to markdown --- HIP 51: Helium DAO => 0051-helium-dao.md | 0 1 file changed, 0 insertions(+), 0 deletions(-) rename HIP 51: Helium DAO => 0051-helium-dao.md (100%) diff --git a/HIP 51: Helium DAO b/0051-helium-dao.md similarity index 100% rename from HIP 51: Helium DAO rename to 0051-helium-dao.md From 8ddd71243faa5836fb041e7dada0507909a70ac1 Mon Sep 17 00:00:00 2001 From: Abhay Kumar Date: Wed, 26 Jan 2022 22:46:07 -0800 Subject: [PATCH 3/5] Initial formatting --- 0051-helium-dao.md | 453 +++++++++++++++++++++++++++++++-------------- 1 file changed, 316 insertions(+), 137 deletions(-) diff --git a/0051-helium-dao.md b/0051-helium-dao.md index 43c6d08af..9404a47bc 100644 --- a/0051-helium-dao.md +++ b/0051-helium-dao.md @@ -1,214 +1,393 @@ -Authors: Tushar, Shayon, James (JMF) - -Category: Economic / Technical - -Status: Work in progress - -# **Summary** - -This proposal outlines economic and technical constructions with the aim of scaling the Helium Network to support new users, devices, and types of wireless network protocols. - -We propose that each wireless network supported by Helium (LoRaWAN, Wifi, 5G — referred to as wireless network protocols or WNPs) has its own subDAO with its own token (referred to as wireless network tokens or WNTs). The key specifications of the WNT such as proof-of-coverage rules, data credits rewards, and consensus mechanisms are governed by each WNT DAO. - -The aim is to create an economy such that the underlying HNT-Data Credit burn-and-mint equilibrium remains undisturbed, and Proof-of-Coverage rules and miner emission amounts are dictated by the corresponding wireless network’s sub-token. - -The technical model requires that the entire Helium Network lives at some proposed base layer (L1). All accounts and transaction activity happens at this L1. All subDAOs operate as economic and governance layers (L2) with their respective WNTs acting as native tokens for this purpose. Each L2 also runs software to calculate WNP specific items (eg: all the proof of coverage code that exists on the current LoRaWAN network to determine hotspot rewards) and the L2 validators who have staked WNTs come to consensus on these calculations. - -# **Background** - -For the Helium Network to grow to global scale in number of active devices and users it is necessary to develop economic and technical primitives that will support that scale across various wireless networking technologies. - -[HIP 27: CBRS 5G Support](https://github.com/helium/HIP/blob/master/0027-cbrs-5g-support.md) provides a broad discussion of 5G WNP specific data credits mechanisms, and [HIP 37: Omni-Protocol PoC](https://github.com/helium/HIP/blob/master/0037-omni-protocol-poc.md) outlines an incentive model as well as proof-of-coverage rules for the 5G Network. This is a three-part proposal that builds on such existing work with two primary aims: - -1. Provide a general structure for onboarding new WNPs to the broader Helium Network, with mechanisms in place to ensure that protocol-specific attributes such as proof-of-coverage rules, data credits pricing, and block validation are within control of the emergent WNT DAO. -2. Specify the implementation of the structure proposed through detailed onboarding proposals for the LoRaWAN and 5G networks, described in [HIP 51: LoRaWAN DAO](https://docs.google.com/document/d/1fqy3JLdoP8YgOULx-sE_24xOL1UL9esHu_Ctju4iGcg/edit) and [HIP 52: 5G DAO](https://docs.google.com/document/d/1rg9VK28S8bWOeKNiKXUipsLsBxLjuHH7AnVe6TjKw4I/edit). - -The technical and economic design decisions of the Helium Network today have been made around the flagship LoRaWAN Wireless Network Protocol. In order to support new networks and devices, there are two core problems to be addressed: **blockchain scalability** and **WNP specific incentive alignment.** - -This proposal outlines two constructions to address the aforementioned core problems: - -1. *Blockchain Scalability* We propose that each WNP has validators who operate software to calculate WNP specific items (eg: all the proof of coverage code that exists on the current LoRaWAN network to determine hotspot rewards). Validators stake WNTs and are rewarded by WNT inflation. - -All non WNP specific transactions (simple transfers, burning HNT to DC, etc) occur at some high throughput, low latency base layer chain on which the overall Helium Network lives. - -1. *WNP Specific Incentive Alignment We propose that each WNP operate as its own sub-DAO within the broader umbrella of the Helium DAO. WNP Sub-DAOs are able to issue WNTs to their stakeholders and WNT denominated governance controls WNP specific attributes.* - -# **Motivation** - -There are three key drivers for proposing that consensus and execution for each WNP occur at some base layer chain, while the economic and governance layer for that WNP is separated from the native token of the overall Helium Network - -1. *Scalability -* Each WNP has the ability to run its own code for WNP specific items -2. *Native Tokens Provide Separation of Governance Each WNP effectively governs its Proof-of-Coverage rules, data pricing, and rewards distribution mechanisms. This structure provides significantly more self-sovereignty over the structure and direction of the WNP.* -3. *Composability Implies Utility -* If the overall Helium DAO base-chain is able to support smart contracts, it is possible to imagine a variety of novel use cases for HNT as well as each of the WNT tokens. Some examples here are signaling strategies (yield aggregator DAOs that take HNT from passive holders and stake to specific WNPs based on market conditions) or money markets (liquid borrow-lend markets for greater delegation to validators or leveraged staking). - -There are two key drivers for WNPs to operate as sub-DAOs beneath the overall Helium Network through their corresponding WNTs - -1. *Curation and risk expression* WNTs allow network participants and speculators to indicate support for a given network, which can inform distribution of emissions and developer resources. For example, if HNT holders bond a large number of HNT to a particular WNP, the HNT denominated rewards for that WNP increase and help accelerate the flywheel for that WNP. -2. *Onboarding new protocols* WNP DAOs provide an easy framework for addition of new wireless protocols where the broader Helium DAO delegates some portion of HNT emissions to each WNP DAO. - -# **Stakeholders** - -This proposal impacts all current and future stakeholders in the Helium Community. - -# **Construction** - -We propose that each WNP operates as its own subDAO within the broader Helium DAO, while both DAOs exist on a single base L1 chain. Each WNP has its own economic and governance layer through its subDAO, which comprises all WNT holders. - -[https://lh4.googleusercontent.com/KYORnsFb3X0X42t64FscUArcDZBjXyopik_AaZTN7tLvxYRL5-s1nvd1WY3X4vJA5mWe1_XN_miwDoRXhU70YV_txsO5Y_mWFbVrx6byNinT--khit2AEAYl4GMO0Vm_lL49BB05](https://lh4.googleusercontent.com/KYORnsFb3X0X42t64FscUArcDZBjXyopik_AaZTN7tLvxYRL5-s1nvd1WY3X4vJA5mWe1_XN_miwDoRXhU70YV_txsO5Y_mWFbVrx6byNinT--khit2AEAYl4GMO0Vm_lL49BB05) - -All subDAO specific addresses across all WNPs on the network will live on this L1 chain. All tokens exist on the L1 chain. The L2 is for calculation and computation purposes only. - -Before we can define the WNP specific economic structures, we need to outline how the rewards are split between WNPs and how to fund the earliest stages of development for new WNPs. - -### PoC Model Background - -HIP 27 originally introduced a concept to allocate a portion of unrewarded Data Transfer rewards (up to 30% of the DC Bonus Pool) towards Proof-of-Coverage rewards for new wireless networks, such as 5G and Wi-Fi. The approach was presented and discussed at the DeWi Community Call and Discord. While the concept was generally well received, we fell short of coming up with a technical implementation that would be sufficiently difficult to arbitrage. As a result, we chose to truncate HIP 27 to focus on implementation of a chain variable for DC / cellular data conversion ratio and revisit economics and implementation of PoC for non-LoRaWan wireless network types to a future HIP. - -### PoC Incentive Model for HIP 50 - -Currently, under HIP-27, non-LoRaWAN gateways are only rewarded based on data transfer and those rewards are based on the 1 DC burn = 1 DC equivalent earning principle laid out in HIP-10. That reward bucket is currently, as of January 2022, limited to 35% of total HNT issuance per epoch. Any HNT from that bucket that is not allocated to Data Transfer rewards is reallocated to LoRaWAN PoC rewards. - -**We propose three significant changes to the reward bucket structure:** - -### Remove division between PoC and DC reward buckets - -After HIP-10, the vast majority of DC rewards are reallocated to the LoRaWAN PoC, which has made the distinction between the buckets nominal. Given this reality, we propose a merging of the two rewards buckets. - -The value of the bucket will equal the combined value of the existing DC and PoC buckets and will be adjusted along with all other rewards buckets on the existing rewards schedule. +# HIP51: Helium DAO + +- Author: [@tjain-mcc](https://github.com/tjain-mcc), Shayon, + [@jmfayal](https://github.com/jmfayal) +- Start Date: 2022-01-26 +- Category: Economic / Technical +- Original HIP PR: [#334](https://github.com/helium/HIP/pull/334) +- Tracking Issue: `TODO` +- Status: Work In Progress + +# Summary +[summary]: #summary + +This proposal outlines economic and technical constructions with the aim of +scaling the Helium Network to support new users, devices, and types of wireless +network protocols. + +We propose that each wireless network supported by Helium (LoRaWAN, Wifi, 5G — +referred to as wireless network protocols or WNPs) has its own subDAO with its +own token (referred to as wireless network tokens or WNTs). The key +specifications of the WNT such as proof-of-coverage rules, data credits rewards, +and consensus mechanisms are governed by each WNT DAO. + +The aim is to create an economy such that the underlying HNT-Data Credit +burn-and-mint equilibrium remains undisturbed, and Proof-of-Coverage rules and +miner emission amounts are dictated by the corresponding wireless network’s +sub-token. + +The technical model requires that the entire Helium Network lives at some +proposed base layer (L1). All accounts and transaction activity happens at this +L1. All subDAOs operate as economic and governance layers (L2) with their +respective WNTs acting as native tokens for this purpose. Each L2 also runs +software to calculate WNP specific items (eg: all the proof of coverage code +that exists on the current LoRaWAN network to determine hotspot rewards) and the +L2 validators who have staked WNTs come to consensus on these calculations. + +# Background +[background]: #background + +For the Helium Network to grow to global scale in number of active devices and +users it is necessary to develop economic and technical primitives that will +support that scale across various wireless networking technologies. + +[HIP 27: CBRS 5G Support][hip27] provides a broad discussion of 5G WNP specific +data credits mechanisms, and [HIP 37: Omni-Protocol PoC][hip37] outlines an +incentive model as well as proof-of-coverage rules for the 5G Network. This is a +three-part proposal that builds on such existing work with two primary aims: + +1. Provide a general structure for onboarding new WNPs to the broader Helium + Network, with mechanisms in place to ensure that protocol-specific attributes + such as proof-of-coverage rules, data credits pricing, and block validation + are within control of the emergent WNT DAO. +2. Specify the implementation of the structure proposed through detailed + onboarding proposals for the LoRaWAN and 5G networks, described in [HIP 52: + LoRaWAN DAO][hip52] and [HIP 53: 5G DAO][hip53]. + +The technical and economic design decisions of the Helium Network today have +been made around the flagship LoRaWAN Wireless Network Protocol. In order to +support new networks and devices, there are two core problems to be addressed: +**blockchain scalability** and **WNP specific incentive alignment.** + +This proposal outlines two constructions to address the aforementioned core +problems: + +1. *Blockchain Scalability* We propose that each WNP has validators who operate + software to calculate WNP specific items (eg: all the proof of coverage code + that exists on the current LoRaWAN network to determine hotspot rewards). + Validators stake WNTs and are rewarded by WNT inflation. + +All non WNP specific transactions (simple transfers, burning HNT to DC, etc) +occur at some high throughput, low latency base layer chain on which the overall +Helium Network lives. + +1. *WNP Specific Incentive Alignment We propose that each WNP operate as its own + sub-DAO within the broader umbrella of the Helium DAO. WNP Sub-DAOs are able + to issue WNTs to their stakeholders and WNT denominated governance controls + WNP specific attributes.* + +# Motivation +[motivation]: #motivation + +There are three key drivers for proposing that consensus and execution for each +WNP occur at some base layer chain, while the economic and governance layer for +that WNP is separated from the native token of the overall Helium Network + +1. *Scalability -* Each WNP has the ability to run its own code for WNP specific + items +2. *Native Tokens Provide Separation of Governance Each WNP effectively governs + its Proof-of-Coverage rules, data pricing, and rewards distribution + mechanisms. This structure provides significantly more self-sovereignty over + the structure and direction of the WNP.* +3. *Composability Implies Utility -* If the overall Helium DAO base-chain is + able to support smart contracts, it is possible to imagine a variety of novel + use cases for HNT as well as each of the WNT tokens. Some examples here are + signaling strategies (yield aggregator DAOs that take HNT from passive + holders and stake to specific WNPs based on market conditions) or money + markets (liquid borrow-lend markets for greater delegation to validators or + leveraged staking). + +There are two key drivers for WNPs to operate as sub-DAOs beneath the overall +Helium Network through their corresponding WNTs + +1. *Curation and risk expression* WNTs allow network participants and + speculators to indicate support for a given network, which can inform + distribution of emissions and developer resources. For example, if HNT + holders bond a large number of HNT to a particular WNP, the HNT denominated + rewards for that WNP increase and help accelerate the flywheel for that WNP. +2. *Onboarding new protocols* WNP DAOs provide an easy framework for addition of + new wireless protocols where the broader Helium DAO delegates some portion of + HNT emissions to each WNP DAO. + +# Stakeholders +[stakeholders]: #stakeholders + +This proposal impacts all current and future stakeholders in the Helium +Community. + +# Construction +[construction]: #construction + +We propose that each WNP operates as its own subDAO within the broader Helium +DAO, while both DAOs exist on a single base L1 chain. Each WNP has its own +economic and governance layer through its subDAO, which comprises all WNT +holders. + +![subdaos][subdaos] + +All subDAO specific addresses across all WNPs on the network will live on this +L1 chain. All tokens exist on the L1 chain. The L2 is for calculation and +computation purposes only. + +Before we can define the WNP specific economic structures, we need to outline +how the rewards are split between WNPs and how to fund the earliest stages of +development for new WNPs. + +## PoC Model Background + +HIP 27 originally introduced a concept to allocate a portion of unrewarded Data +Transfer rewards (up to 30% of the DC Bonus Pool) towards Proof-of-Coverage +rewards for new wireless networks, such as 5G and Wi-Fi. The approach was +presented and discussed at the DeWi Community Call and Discord. While the +concept was generally well received, we fell short of coming up with a technical +implementation that would be sufficiently difficult to arbitrage. As a result, +we chose to truncate HIP 27 to focus on implementation of a chain variable for +DC / cellular data conversion ratio and revisit economics and implementation of +PoC for non-LoRaWan wireless network types to a future HIP. + +## PoC Incentive Model for HIP 50 + +Currently, under HIP-27, non-LoRaWAN gateways are only rewarded based on data +transfer and those rewards are based on the 1 DC burn = 1 DC equivalent earning +principle laid out in HIP-10. That reward bucket is currently, as of January +2022, limited to 35% of total HNT issuance per epoch. Any HNT from that bucket +that is not allocated to Data Transfer rewards is reallocated to LoRaWAN PoC +rewards. + +**We propose three significant changes to the reward bucket structure** + +### 1. Remove division between PoC and DC reward buckets + +After HIP-10, the vast majority of DC rewards are reallocated to the LoRaWAN +PoC, which has made the distinction between the buckets nominal. Given this +reality, we propose a merging of the two rewards buckets. + +The value of the bucket will equal the combined value of the existing DC and PoC +buckets and will be adjusted along with all other rewards buckets on the +existing rewards schedule. Existing reward curve by reward type: -[https://lh4.googleusercontent.com/aCKlXePHuivkp8IFK5-VLifO-xw8WKOpArn9OCiobOW0WjpHcPBtogNqvDBLofH8q4lcMFtnP0XZZlGq3v247AA3Syqq6RKK0Pr6-_xKjv4DTPmmbSAJ5XIrSNaLHt9Y3py8My_v](https://lh4.googleusercontent.com/aCKlXePHuivkp8IFK5-VLifO-xw8WKOpArn9OCiobOW0WjpHcPBtogNqvDBLofH8q4lcMFtnP0XZZlGq3v247AA3Syqq6RKK0Pr6-_xKjv4DTPmmbSAJ5XIrSNaLHt9Y3py8My_v) +![existing reward curve][existing-reward-curve] -The new reward bucket would be a combination of the “Network Data Transfer” and “Proof of Coverage” rewards above. +The new reward bucket would be a combination of the “Network Data Transfer” and +“Proof of Coverage” rewards above. -### Split PoC rewards between wireless protocols based on a quadratic equation that accounts for DCs burned and active devices per WNP +### 2. Split PoC rewards between wireless protocols based on a quadratic equation that accounts for DCs burned and active devices per WNP -The success of the Helium network is contingent on its ability to find real world applications that burn data credits via data transfer activity. Therefore, the incentive model should be designed in a way that promotes wireless network protocols (WNPs) that accomplish that goal. Additionally, the scale of each WNPs participation network should also be taken into account, so as not to overly disadvantage early protocols with lower DC burn rates. To accomplish this propose the quadratic equation below: +The success of the Helium network is contingent on its ability to find real +world applications that burn data credits via data transfer activity. Therefore, +the incentive model should be designed in a way that promotes wireless network +protocols (WNPs) that accomplish that goal. Additionally, the scale of each WNPs +participation network should also be taken into account, so as not to overly +disadvantage early protocols with lower DC burn rates. To accomplish this +propose the quadratic equation below: Each protocol would be assigned a ‘score’ per epoch: -$$ -\textup{Protocol Score} = \textup{WNP DCs Burner} * {\sqrt{\textup{WNP Active Device Count}}} -$$ +![\textup{Protocol Score} = \textup{WNP DCs Burner} * {\sqrt{\textup{WNP Active Device Count}}}](https://latex.codecogs.com/svg.image?\textup{Protocol&space;Score}&space;=&space;\textup{WNP&space;DCs&space;Burner}&space;*&space;{\sqrt{\textup{WNP&space;Active&space;Device&space;Count}}}) -Once each protocol has a score, the % of total Epoch PoC rewards assigned to each WNP will be assessed by comparing the individual score to the sum of all scores: +Once each protocol has a score, the % of total Epoch PoC rewards assigned to +each WNP will be assessed by comparing the individual score to the sum of all +scores: -$$ -\textup{Percentage of POC Rewards per WNP} = \textup{WNP Specific Score} \div \sum (\textup{All WNP Scores}) -$$ +![\textup{Percentage of POC Rewards per WNP} = \textup{WNP Specific Score} \div \sum (\textup{All WNP Scores})](https://latex.codecogs.com/svg.image\textup{Percentage&space;of&space;POC&space;Rewards&space;per&space;WNP}&space;=&space;\textup{WNP&space;Specific&space;Score}&space;\div&space;\sum&space;(\textup{All&space;WNP&space;Scores})) -To put this into context, if you have two networks with 50,000 and 500,000 devices each, the smaller network would need approximately 3 times the DC burn to have a comparable protocol score to the larger network. +To put this into context, if you have two networks with 50,000 and 500,000 +devices each, the smaller network would need approximately 3 times the DC burn +to have a comparable protocol score to the larger network. -Most importantly, this model gives us a framework to add new WNPs in the future without having to design reward splits on an ad-hoc basis. +Most importantly, this model gives us a framework to add new WNPs in the future +without having to design reward splits on an ad-hoc basis. -### Implementing a ‘cold start’ bucket to help fund early stage networks that don’t yet have meaningful DC burn +### 3. Implementing a ‘cold start’ bucket to help fund early stage networks that don’t yet have meaningful DC burn -The Lorawan protocol on Helium benefitted from having a built in ‘cold start’ reward system via PoC rewards to help fund the growth of the network. Under the new model, a network that doesn’t have any DC burn would not have any way of rewarding it’s early users, so we are proposing a 10% ‘cold start’ reward bucket that is carved out from the combined PoC/data rewards bucket. Under this system, any WNP that has been live for sub 1 million epochs (approximately 2 years) would evenly split 10% of all HNT rewards. Additionally, if a specific WNP had enough devices or was burning enough DCs to receive 10% of the larger PoC/data rewards bucket, it would be excluded from the ‘cold start’ rewards bucket. +The Lorawan protocol on Helium benefitted from having a built in ‘cold start’ +reward system via PoC rewards to help fund the growth of the network. Under the +new model, a network that doesn’t have any DC burn would not have any way of +rewarding it’s early users, so we are proposing a 10% ‘cold start’ reward bucket +that is carved out from the combined PoC/data rewards bucket. Under this system, +any WNP that has been live for sub 1 million epochs (approximately 2 years) +would evenly split 10% of all HNT rewards. Additionally, if a specific WNP had +enough devices or was burning enough DCs to receive 10% of the larger PoC/data +rewards bucket, it would be excluded from the ‘cold start’ rewards bucket. -If no WNP ‘qualifies’ for the cold start bucket, those rewards would be reallocated to the regular PoC/data reward bucket. +If no WNP ‘qualifies’ for the cold start bucket, those rewards would be +reallocated to the regular PoC/data reward bucket. -### Definitions and calculations for Omni-Protocol PoC incentive model +## Definitions and calculations for Omni-Protocol PoC incentive model -**DC burn used in PoC split calculation**: DC burn is not limited to data transfers per WNP. The calculation also includes fees associated with other actions, including, but not limited to, gateway assertions, token transfers, and gateway relocation fees. +- **DC burn used in PoC split calculation**: DC burn is not limited to data + transfers per WNP. The calculation also includes fees associated with other + actions, including, but not limited to, gateway assertions, token transfers, + and gateway relocation fees. -**Wireless Network Protocol (WNP)**: Wireless network type is a computer network that uses wireless data connections between network nodes and utilizes a uniform, standard set of rules that determine how data is transmitted between different devices in the same network. (i.e. LoRaWan, 5G, Wi-Fi, NB-IoT etc. all different wireless network protocols). +- **Wireless Network Protocol (WNP)**: Wireless network type is a computer + network that uses wireless data connections between network nodes and utilizes + a uniform, standard set of rules that determine how data is transmitted + between different devices in the same network. (i.e. LoRaWan, 5G, Wi-Fi, + NB-IoT etc. all different wireless network protocols). -**Frequency of PoC reward split recalculation**: Manually adjusted on a frequency at the discretion of DeWi unless and until an auto recalculation feature is built into the protocol +- **Frequency of PoC reward split recalculation**: Manually adjusted on a + frequency at the discretion of DeWi unless and until an auto recalculation + feature is built into the protocol -**Active Device**: Active devices are the subDAO's definition of devices creating valid coverage during the epoch +- **Active Device**: Active devices are the subDAO's definition of devices + creating valid coverage during the epoch -## *Bonding Curve Specification* +## Bonding Curve Specification -WNT are issued against a bonding curve with issuance, redemption, and transaction fee parameters set by WNT governance. Each WNT can set the shape of its curve. +WNT are issued against a bonding curve with issuance, redemption, and +transaction fee parameters set by WNT governance. Each WNT can set the shape of +its curve. -We suggest that all WNT bonding curves take the shape P = S^k where k > 1, and P represents Price and S represents Supply. The quote currency is the WNT and the base currency is HNT. +We suggest that all WNT bonding curves take the shape P = S^k where k > 1, and P +represents Price and S represents Supply. The quote currency is the WNT and the +base currency is HNT. -For a given amount of HNT deposited to or withdrawn from a given WNP bonding curve, the increase or decrease in supply and price is given by resulting change in the area under the curve. The integral is given by +For a given amount of HNT deposited to or withdrawn from a given WNP bonding +curve, the increase or decrease in supply and price is given by resulting change +in the area under the curve. The integral is given by -$$ -\int_{S_a}^{S_b} S^k = \frac{1}{k+1} (S_b^{k+1} - S_a^{k+1}) -$$ +![\int_{S_a}^{S_b} S^k = \frac{1}{k+1} (S_b^{k+1} - S_a^{k+1})](https://latex.codecogs.com/svg.image?\int_{S_a}^{S_b}&space;S^k&space;=&space;\frac{1}{k+1}&space;(S_b^{k+1}&space;-&space;S_a^{k+1})) The shape of the curve for k only slightly larger than 1 is as follows -[https://lh3.googleusercontent.com/9BO0qb90HKiWDHreSWemmZhEmjSiPKJKsiEi1lMENNzV2StUtx1qiwYFPg5NDR4JZux5YgmL_ia99yjgY0O1-QUbnjvDo0qgq8G0TJTWq53AAF8XNI4xaYKKBjqpW2Y5eq7NbvuS](https://lh3.googleusercontent.com/9BO0qb90HKiWDHreSWemmZhEmjSiPKJKsiEi1lMENNzV2StUtx1qiwYFPg5NDR4JZux5YgmL_ia99yjgY0O1-QUbnjvDo0qgq8G0TJTWq53AAF8XNI4xaYKKBjqpW2Y5eq7NbvuS) +![bonding curve][bonding-curve] -The main consideration in designing this bonding curve is that it’s difficult to balance the positives of reflexivity with potential sharp price movements in either direction — this shape is close enough to linear to mitigate some of those issues. +The main consideration in designing this bonding curve is that it’s difficult +to balance the positives of reflexivity with potential sharp price movements in +either direction — this shape is close enough to linear to mitigate some of +those issues. -## **Rewards Distribution Mechanism** +## Rewards Distribution Mechanism -We provide an end-to-end description of data transfer, proof-of-coverage, and consensus rewards for a given WNP under the Helium Network. +We provide an end-to-end description of data transfer, proof-of-coverage, and +consensus rewards for a given WNP under the Helium Network. *Data Transfer Process* -For each WNP, we propose that a device looking to receive coverage across the network purchase Data Credits by **purchasing and burning HNT**. +For each WNP, we propose that a device looking to receive coverage across the +network purchase Data Credits by **purchasing and burning HNT**. -The device **subsequently burns those Data Credits** in the name of the hotspot or set of hotspots once data has been transferred. +The device **subsequently burns those Data Credits** in the name of the hotspot +or set of hotspots once data has been transferred. -The device then **relays the receipt of this transaction** to the set of validators for the WNP. +The device then **relays the receipt of this transaction** to the set of +validators for the WNP. -The WNP validator set then **relays this information to the HNT emissions contract** in order to determine the HNT amount to be distributed to the WNP subDAO for all rewards distribution. +The WNP validator set then **relays this information to the HNT emissions +contract** in order to determine the HNT amount to be distributed to the WNP +subDAO for all rewards distribution. -At the end of each epoch, the **WNP validator set prepares the distribution for mining rewards** denominated in the WNT to each hotspot based on coverage provided. +At the end of each epoch, the **WNP validator set prepares the distribution for +mining rewards** denominated in the WNT to each hotspot based on coverage +provided. *Proof-of-Coverage Process* -The WNP subDAO defines the rules for proof-of-coverage challenges. In a given epoch, Challengers, Challenges, and Witnesses **relay the results of challenges to the WNP validator set** in order to distribute proof-of-coverage rewards denominated in WNT to relevant devices. +The WNP subDAO defines the rules for proof-of-coverage challenges. In a given +epoch, Challengers, Challenges, and Witnesses **relay the results of challenges +to the WNP validator set** in order to distribute proof-of-coverage rewards +denominated in WNT to relevant devices. *Consensus Process* -The WNP subDAO defines the rules for consensus, and **distributes a portion of WNT emissions in a given epoch for WNP validators.** +The WNP subDAO defines the rules for consensus, and **distributes a portion of +WNT emissions in a given epoch for WNP validators.** -[https://lh3.googleusercontent.com/VIycvHCtq1nZtXyAC8haZw6xF1sBHcs8GVRPFX3-lAFtsR-HflGQyGUc7tAjs8R4VPS7HP_5A0rJRsAr_G0kiOZJSxM80t3_ukgdutd15XdQerDkrx0IZH27BJjQRbLP2oVQjZ8_](https://lh3.googleusercontent.com/VIycvHCtq1nZtXyAC8haZw6xF1sBHcs8GVRPFX3-lAFtsR-HflGQyGUc7tAjs8R4VPS7HP_5A0rJRsAr_G0kiOZJSxM80t3_ukgdutd15XdQerDkrx0IZH27BJjQRbLP2oVQjZ8_) +![subDAO governance][subdao-governance] *Emissions Calculation* -At the end of a given epoch, the HNT emissions contract **performs a tally of the data credits transferred across WNPs**. The emissions contract subsequently distributes the determined amount of HNT to a **WNP subDAO multi-signature wallet**, the addresses of which comprise the set of validators of that WNP. +At the end of a given epoch, the HNT emissions contract **performs a tally of +the data credits transferred across WNPs**. The emissions contract subsequently +distributes the determined amount of HNT to a **WNP subDAO multi-signature +wallet**, the addresses of which comprise the set of validators of that WNP. *WNT Issuance* -Each WNP DAO then **submits the entire amount of HNT into its bonding curve** in order to mint new WNT for hotspots and validators participating in data transfer and proof-of-coverage. +Each WNP DAO then **submits the entire amount of HNT into its bonding curve** in +order to mint new WNT for hotspots and validators participating in data transfer +and proof-of-coverage. -In a given epoch, if the WNP Hotspots were to receive some amount of HNT from the Helium DAO, the WNP subDAO multi-signature wallet distributes a **corresponding amount of newly minted WNT of equal market value** as per the bonding curve to the hotspots in its network based on its mining rules. +In a given epoch, if the WNP Hotspots were to receive some amount of HNT from +the Helium DAO, the WNP subDAO multi-signature wallet distributes a +**corresponding amount of newly minted WNT of equal market value** as per the +bonding curve to the hotspots in its network based on its mining rules. -*Note that all new issuance in the WNP bonding curve through HNT emissions are distributed to hotspots and validators. External capital entering or exiting the bonding curve does not post any liquidity risk to WNP devices.* +*Note that all new issuance in the WNP bonding curve through HNT emissions are +distributed to hotspots and validators. External capital entering or exiting the +bonding curve does not post any liquidity risk to WNP devices.* *WNT Issuance* -If a given address wishes to redeem their WNT, they can **“sell” against the bonding curve** to receive the market rate of underlying HNT. +If a given address wishes to redeem their WNT, they can **“sell” against the +bonding curve** to receive the market rate of underlying HNT. -The transaction involves sending the required amount of WNT tokens to a **burn address**, and receiving the determined amount of HNT tokens from the **WNP subDAO multi-signature wallet**. +The transaction involves sending the required amount of WNT tokens to a **burn +address**, and receiving the determined amount of HNT tokens from the **WNP +subDAO multi-signature wallet**. -The address **relays the message of the sale to the set of WNP validators**, which then adjust the position of the bonding curve in the following epoch after adjusting for all other sales and any new issuance. +The address **relays the message of the sale to the set of WNP validators**, +which then adjust the position of the bonding curve in the following epoch after +adjusting for all other sales and any new issuance. *Transaction Fee* -A WNP **subDAO governed transaction fee** is placed on issuance and redemption of WNT tokens on the bonding curve. This fee is charged in HNT and we suggest starting it at 0.3% of all transactions. This HNT fee is immediately submitted to the WNT bonding curve. +A WNP **subDAO governed transaction fee** is placed on issuance and redemption +of WNT tokens on the bonding curve. This fee is charged in HNT and we suggest +starting it at 0.3% of all transactions. This HNT fee is immediately submitted +to the WNT bonding curve. -For example in a given epoch, if the 5G bonding curve had trading volume of 100,000 HNT and brought in 300 HNT worth of transaction fees, that 300 HNT is resubmitted to the curve increasing the price of WNT according to the equation. +For example in a given epoch, if the 5G bonding curve had trading volume of +100,000 HNT and brought in 300 HNT worth of transaction fees, that 300 HNT is +resubmitted to the curve increasing the price of WNT according to the equation. ## *Fair-Launch Mechanism* -The bonding curve mechanism is susceptible to bot frontrunning. We borrow from [Strata protocol’s fair launch mechanism](https://www.strataprotocol.com/docs/learn/fair_launch) to ensure that early participants in any WNP DAO are protected from this attack vector. +The bonding curve mechanism is susceptible to bot frontrunning. We borrow from +[Strata protocol’s fair launch mechanism][strata] to ensure that early +participants in any WNP DAO are protected from this attack vector. -The fair launch mechanism described involves a gradually steepening bonding curve such that the area underneath remains fixed with each unit increment in time. +The fair launch mechanism described involves a gradually steepening bonding +curve such that the area underneath remains fixed with each unit increment in +time. -[https://lh4.googleusercontent.com/CDZiML8YFE5BOwSbjT5GUjejATCIqUpLF85XDfIjjm_semkSZOklnj9cMMG1Kd4yoGjoLbw-Gelvj4M-XI7bM77gOe6yVXRS22jxv-UZlHHIV1hF-Il15AZOPSd_1Si9ouAGb0Yp](https://lh4.googleusercontent.com/CDZiML8YFE5BOwSbjT5GUjejATCIqUpLF85XDfIjjm_semkSZOklnj9cMMG1Kd4yoGjoLbw-Gelvj4M-XI7bM77gOe6yVXRS22jxv-UZlHHIV1hF-Il15AZOPSd_1Si9ouAGb0Yp) +![fair-launch-graph][fair-launch-graph] This ensures that bots are unable to atomically frontrun network participants. . -# **Clarifications** +# Clarifications -We set the following economic constraints in order to ensure an equilibrium within each subDAO and the overall network +We set the following economic constraints in order to ensure an equilibrium +within each subDAO and the overall network -1. HNT remains the unit of buy-and-burn in order to maintain the HNT flywheel. Data Credits are universal, in that they can be created by burning HNT and are usable across any WNP. -2. Mining rewards for hotspots in a given WNP are distributed in the corresponding WNT -3. WNTs can be traded on secondary markets but are redeemable for HNT as per the primary market defined by its bonding curve. New WNTs can be minted by depositing HNT into the bonding curves as well. +1. HNT remains the unit of buy-and-burn in order to maintain the HNT flywheel. + Data Credits are universal, in that they can be created by burning HNT and + are usable across any WNP. +2. Mining rewards for hotspots in a given WNP are distributed in the + corresponding WNT +3. WNTs can be traded on secondary markets but are redeemable for HNT as per the + primary market defined by its bonding curve. New WNTs can be minted by + depositing HNT into the bonding curves as well. 4. Each WNP can set their own WNT emission schedule and distribution. -# **Open Questions** +# Open Questions -1. Should the subDAO multisig be composed of WNP validators or some delegation chosen by WNT holders through governance? -2. What does a migration process look like for the existing implementation onto the new structure outlined? +1. Should the subDAO multisig be composed of WNP validators or some delegation + chosen by WNT holders through governance? +2. What does a migration process look like for the existing implementation onto + the new structure outlined? 3. What governance procedure should be used to whitelist specific WNP DAOs? + +[hip27]: https://github.com/helium/HIP/blob/master/0027-cbrs-5g-support.md +[hip37]: https://github.com/helium/HIP/blob/master/0037-omni-protocol-poc.md +[hip52]: https://docs.google.com/document/d/1fqy3JLdoP8YgOULx-sE_24xOL1UL9esHu_Ctju4iGcg/edit +[hip53]: https://docs.google.com/document/d/1rg9VK28S8bWOeKNiKXUipsLsBxLjuHH7AnVe6TjKw4I/edit +[subdaos]: https://lh4.googleusercontent.com/KYORnsFb3X0X42t64FscUArcDZBjXyopik_AaZTN7tLvxYRL5-s1nvd1WY3X4vJA5mWe1_XN_miwDoRXhU70YV_txsO5Y_mWFbVrx6byNinT--khit2AEAYl4GMO0Vm_lL49BB05 +[existing-reward-curve]: https://lh4.googleusercontent.com/aCKlXePHuivkp8IFK5-VLifO-xw8WKOpArn9OCiobOW0WjpHcPBtogNqvDBLofH8q4lcMFtnP0XZZlGq3v247AA3Syqq6RKK0Pr6-_xKjv4DTPmmbSAJ5XIrSNaLHt9Y3py8My_v +[bonding-curve]: https://lh3.googleusercontent.com/9BO0qb90HKiWDHreSWemmZhEmjSiPKJKsiEi1lMENNzV2StUtx1qiwYFPg5NDR4JZux5YgmL_ia99yjgY0O1-QUbnjvDo0qgq8G0TJTWq53AAF8XNI4xaYKKBjqpW2Y5eq7NbvuS +[subdao-governance]: https://lh3.googleusercontent.com/VIycvHCtq1nZtXyAC8haZw6xF1sBHcs8GVRPFX3-lAFtsR-HflGQyGUc7tAjs8R4VPS7HP_5A0rJRsAr_G0kiOZJSxM80t3_ukgdutd15XdQerDkrx0IZH27BJjQRbLP2oVQjZ8_ +[strata]: https://www.strataprotocol.com/docs/learn/fair_launch +[fair-launch-graph]: https://lh4.googleusercontent.com/CDZiML8YFE5BOwSbjT5GUjejATCIqUpLF85XDfIjjm_semkSZOklnj9cMMG1Kd4yoGjoLbw-Gelvj4M-XI7bM77gOe6yVXRS22jxv-UZlHHIV1hF-Il15AZOPSd_1Si9ouAGb0Yp From 46303fd98a8f8ac6fedd0e8a4b16e0c5798a8f36 Mon Sep 17 00:00:00 2001 From: Jamie Wilkinson Date: Thu, 27 Jan 2022 13:12:29 -0500 Subject: [PATCH 4/5] Minor cleanups --- 0051-helium-dao.md | 12 ++++++------ 1 file changed, 6 insertions(+), 6 deletions(-) diff --git a/0051-helium-dao.md b/0051-helium-dao.md index 9404a47bc..17edb2f3b 100644 --- a/0051-helium-dao.md +++ b/0051-helium-dao.md @@ -6,7 +6,7 @@ - Category: Economic / Technical - Original HIP PR: [#334](https://github.com/helium/HIP/pull/334) - Tracking Issue: `TODO` -- Status: Work In Progress +- Status: Draft # Summary [summary]: #summary @@ -83,13 +83,13 @@ There are three key drivers for proposing that consensus and execution for each WNP occur at some base layer chain, while the economic and governance layer for that WNP is separated from the native token of the overall Helium Network -1. *Scalability -* Each WNP has the ability to run its own code for WNP specific +1. *Scalability:* Each WNP has the ability to run its own code for WNP specific items -2. *Native Tokens Provide Separation of Governance Each WNP effectively governs +2. *Native Tokens:* Provide Separation of Governance Each WNP effectively governs its Proof-of-Coverage rules, data pricing, and rewards distribution mechanisms. This structure provides significantly more self-sovereignty over the structure and direction of the WNP.* -3. *Composability Implies Utility -* If the overall Helium DAO base-chain is +3. *Composability Implies Utility:* If the overall Helium DAO base-chain is able to support smart contracts, it is possible to imagine a variety of novel use cases for HNT as well as each of the WNT tokens. Some examples here are signaling strategies (yield aggregator DAOs that take HNT from passive @@ -100,12 +100,12 @@ that WNP is separated from the native token of the overall Helium Network There are two key drivers for WNPs to operate as sub-DAOs beneath the overall Helium Network through their corresponding WNTs -1. *Curation and risk expression* WNTs allow network participants and +1. *Curation and risk expression:* WNTs allow network participants and speculators to indicate support for a given network, which can inform distribution of emissions and developer resources. For example, if HNT holders bond a large number of HNT to a particular WNP, the HNT denominated rewards for that WNP increase and help accelerate the flywheel for that WNP. -2. *Onboarding new protocols* WNP DAOs provide an easy framework for addition of +2. *Onboarding new protocols:* WNP DAOs provide an easy framework for addition of new wireless protocols where the broader Helium DAO delegates some portion of HNT emissions to each WNP DAO. From 196f1d00b4aca76c0f31a9a789619f713aa7cce0 Mon Sep 17 00:00:00 2001 From: Jamie Wilkinson Date: Thu, 27 Jan 2022 13:38:20 -0500 Subject: [PATCH 5/5] Add to TOC and link tracking issue --- 0051-helium-dao.md | 2 +- README.md | 1 + 2 files changed, 2 insertions(+), 1 deletion(-) diff --git a/0051-helium-dao.md b/0051-helium-dao.md index 17edb2f3b..bc1312633 100644 --- a/0051-helium-dao.md +++ b/0051-helium-dao.md @@ -5,7 +5,7 @@ - Start Date: 2022-01-26 - Category: Economic / Technical - Original HIP PR: [#334](https://github.com/helium/HIP/pull/334) -- Tracking Issue: `TODO` +- Tracking Issue: [#336](https://github.com/helium/HIP/issues/336) - Status: Draft # Summary diff --git a/README.md b/README.md index 7d81936a7..b4e80752b 100644 --- a/README.md +++ b/README.md @@ -63,6 +63,7 @@ If you have questions or feedback, please ask in [#hip-open-discussion in the co | 48 | [IP-over-LoRaWAN](https://github.com/helium/HIP/blob/master/0048-ip-support.md) | [In Discussion](https://github.com/helium/HIP/issues/319) | | 49 | [LoRaWAN Sub-region Max EIRP Limit](https://github.com/helium/HIP/blob/master/0049-max-eirp-adjustment.md) | [In Discussion](https://github.com/helium/HIP/issues/327) | | 50 | [Display All Potential Witness Beacons](https://github.com/helium/HIP/blob/master/0050-display-all-potential-beacon-witnesses.md) | [In Discussion](https://github.com/helium/HIP/issues/331) | +| 51 | [Helium DAO](https://github.com/helium/HIP/blob/master/0051-helium-dao.md) | [In Discussion](https://github.com/helium/HIP/issues/336) | ## Status key