diff --git a/0051-helium-dao.md b/0051-helium-dao.md index 30136727f..7971e953d 100644 --- a/0051-helium-dao.md +++ b/0051-helium-dao.md @@ -17,10 +17,10 @@ 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. +referred to as Decentralized Network Protocols or DNPs) has its own subDAO with its +own token (referred to as Decentralized Network Tokens or DNTs). The key +specifications of the DNT such as Proof-of-Coverage rules, data credits rewards, +and consensus mechanisms are governed by each DNT 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 @@ -30,10 +30,10 @@ 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 (e.g.: all the Proof-of-Coverage code +respective DNTs acting as native tokens for this purpose. Each L2 also runs +software to calculate DNP specific items (e.g.: 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. +L2 Validators who have staked DNTs come to consensus on these calculations. # Background [background]: #background @@ -42,72 +42,72 @@ 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 +[HIP 27: CBRS 5G Support][hip27] provides a broad discussion of 5G DNP 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 +1. Provide a general structure for onboarding new DNPs 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. + are within control of the emergent DNT 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 +been made around the flagship LoRaWAN Decentralized 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.** +**blockchain scalability** and **DNP 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 +1. *Blockchain Scalability*: We propose that each DNP has Validators who operate + software to calculate DNP 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. + Validators stake DNTs and are rewarded by DNT inflation. - All non WNP specific transactions (simple transfers, burning HNT to DC, etc) + All non DNP 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. -2. *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. +2. *DNP Specific Incentive Alignment*: We propose that each DNP operate as its + own sub-DAO within the broader umbrella of the Helium DAO. DNP Sub-DAOs are + able to issue DNTs to their stakeholders and DNT denominated governance + controls DNP 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 +DNP occur at some base layer chain, while the economic and governance layer for +that DNP 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 DNP has the ability to run its own code for DNP specific items -2. *Native Tokens:* Provide Separation of Governance Each WNP effectively governs +2. *Native Tokens:* Provide Separation of Governance Each DNP 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. + the structure and direction of the DNP. 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 + use cases for HNT as well as each of the DNT 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 + holders and stake to specific DNPs 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 +There are two key drivers for DNPs to operate as sub-DAOs beneath the overall +Helium Network through their corresponding DNTs -1. *Curation and risk expression:* WNTs allow network participants and +1. *Curation and risk expression:* DNTs 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 + holders bond a large number of HNT to a particular DNP, the HNT denominated + rewards for that DNP increase and help accelerate the flywheel for that DNP. +2. *Onboarding new protocols:* DNP 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. + HNT emissions to each DNP DAO. # Stakeholders [stakeholders]: #stakeholders @@ -118,20 +118,23 @@ 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 +We propose that each DNP operates as its own subDAO within the broader Helium +DAO, while both DAOs exist on a single base L1 chain. Each DNP has its own +economic and governance layer through its subDAO, which comprises all DNT holders. ![subdaos][subdaos] -All subDAO specific addresses across all WNPs on the network will live on this +All subDAO specific addresses across all DNPs 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. +New DNPs are added to the network through Helium Improvement Proposals with HNT +denominated voting as per governance by token lock standards defined in HIP 51. + +Before we can define the DNP specific economic structures, we need to outline +how the rewards are split between DNPs and how to fund the earliest stages of +development for new DNPs. ## Proof-of-Coverage Rewards Model @@ -173,31 +176,31 @@ Existing reward curve by reward type: The new reward bucket would be a combination of the “Network Data Transfer” and “Proof-of-Coverage” rewards above. -### 2. 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 DNP 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 +protocols (DNPs) that accomplish that goal. Additionally, the scale of each DNPs 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 Burned} * {\sqrt{\textup{WNP Active Device Count}}}](https://latex.codecogs.com/svg.image?\textup{Protocol&space;Score}&space;=&space;\textup{WNP&space;DCs&space;Burned}&space;*&space;{\sqrt{\textup{WNP&space;Active&space;Device&space;Count}}}) +![\textup{Protocol Score} = \textup{DNP DCs Burned} * {\sqrt{\textup{DNP Active Device Count} * \textup{Unit DC Onboarding Cost}}} *](https://latex.codecogs.com/svg.image?\textup{Protocol&space;Score}&space;=&space;\textup{DNP&space;DCs&space;Burned}&space;*&space;{\sqrt{\textup{DNP&space;Active&space;Device&space;Count}*\textup{Unit&space;Cost&space;DCs&space;Onboarding}}&space;) 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 +each DNP will be assessed by comparing the individual score to the sum of all scores: -![\textup{Percentage of POC Rewards per WNP} = \frac{\textup{WNP Specific Score}}{\sum (\textup{All WNP Scores})}](https://latex.codecogs.com/png.image?\dpi{110}%20\textup{Percentage%20of%20POC%20Rewards%20per%20WNP}%20=%20\frac{\textup{WNP%20Specific%20Score}}{\sum%20(\textup{All%20WNP%20Scores})}) +![\textup{Percentage of POC Rewards per DNP} = \frac{\textup{DNP Specific Score}}{\sum (\textup{All DNP Scores})}](https://latex.codecogs.com/png.image?\dpi{110}%20\textup{Percentage%20of%20POC%20Rewards%20per%20DNP}%20=%20\frac{\textup{DNP%20Specific%20Score}}{\sum%20(\textup{All%20DNP%20Scores})}) 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 +Most importantly, this model gives us a framework to add new DNPs in the future without having to design reward splits on an ad-hoc basis. ### 3. Implement a ‘cold start’ bucket to help fund early stage networks that don’t yet have meaningful DC burn @@ -207,26 +210,26 @@ 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 blocks (approximately 2 years) -would evenly split 10% of all HNT rewards. Additionally, if a specific WNP had +any DNP that has been live for sub 1 million blocks (approximately 2 years) +would evenly split 10% of all HNT rewards. Additionally, if a specific DNP 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 +If no DNP ‘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 + transfers per DNP. 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 +- **Decentralized Network Protocol (DNP)**: 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). + NB-IoT etc. all different Decentralized Network Protocols). - **Frequency of PoC reward split recalculation**: Manually adjusted on a frequency at the discretion of DeWi unless and until an auto recalculation @@ -237,15 +240,15 @@ reallocated to the regular PoC/data reward bucket. ## 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 +DNT are issued against a bonding curve with issuance, redemption, and +transaction fee parameters set by DNT governance. Each DNT can set the shape of its curve. -We suggest that all WNT bonding curves take the shape P = S^k where k > 1, P -represents Price, and S represents Supply. The quote currency is the WNT and the +We suggest that all DNT bonding curves take the shape P = S^k where k > 1, P +represents Price, and S represents Supply. The quote currency is the DNT and the base currency is HNT. -For a given amount of HNT deposited to or withdrawn from a given WNP bonding +For a given amount of HNT deposited to or withdrawn from a given DNP 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 @@ -263,92 +266,92 @@ 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. +consensus rewards for a given DNP under the Helium Network. *Data Transfer Process* -For each WNP, we propose that a device looking to receive coverage across the +For each DNP, 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. +Validators for the DNP. -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 +The DNP Validator set then **relays this information to the HNT emissions +contract** in order to determine the HNT amount to be distributed to the DNP 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 +At the end of each epoch, the **DNP Validator set prepares the distribution for +mining rewards** denominated in the DNT 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 +The DNP 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. +to the DNP Validator set** in order to distribute Proof-of-Coverage rewards +denominated in DNT 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 DNP subDAO defines the rules for consensus, and **distributes a portion of +DNT emissions in a given epoch for DNP Validators.** ![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. +the data credits transferred across DNPs**. The emissions contract subsequently +distributes the determined amount of HNT to a **DNP subDAO multi-signature +wallet**, the addresses of which comprise the set of Validators of that DNP. -*WNT Issuance* +*DNT 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 +Each DNP DAO then **submits the entire amount of HNT into its bonding curve** in +order to mint new DNT 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 +In a given epoch, if the DNP Hotspots were to receive some amount of HNT from +the Helium DAO, the DNP subDAO multi-signature wallet distributes a +**corresponding amount of newly minted DNT 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 +*Note that all new issuance in the DNP 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.* +bonding curve does not post any liquidity risk to DNP devices.* -*WNT Issuance* +*DNT Issuance* -If a given address wishes to redeem their WNT, they can **“sell” against the +If a given address wishes to redeem their DNT, 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 +The transaction involves sending the required amount of DNT tokens to a **burn +address**, and receiving the determined amount of HNT tokens from the **DNP subDAO multi-signature wallet**. -The address **relays the message of the sale to the set of WNP Validators**, +The address **relays the message of the sale to the set of DNP 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 +A DNP **subDAO governed transaction fee** is placed on issuance and redemption +of DNT 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. +to the DNT 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. +resubmitted to the curve increasing the price of DNT 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][strata] to ensure that early -participants in any WNP DAO are protected from this attack vector. +participants in any DNP 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 @@ -365,21 +368,21 @@ 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 Hotspot 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 + are usable across any DNP. +2. Mining rewards for Hotspot in a given DNP are distributed in the + corresponding DNT +3. DNTs can be traded on secondary markets but are redeemable for HNT as per the + primary market defined by its bonding curve. New DNTs can be minted by depositing HNT into the bonding curves as well. -4. Each WNP can set their own WNT emission schedule and distribution. +4. Each DNP can set their own DNT 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? +1. Should the subDAO multisig be composed of DNP Validators or some delegation + chosen by DNT 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? +3. What governance procedure should be used to whitelist specific DNP 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