TIP: 0013
Title: Lower the maximum airdrop in the Telos Initial Distribution from 40,000 TLOS to 20,000 TLOS per EOS wallet
Authors: Amplified Telos (Ian Panchèvre / telos@amplified.software)
Status: Draft
Type: Protocol
Created: 2018–10–08
TIP 13 proposes lowering the cap of airdropped TLOS tokens during the Telos Initial Distribution from 40,000 TLOS to 20,000 TLOS per EOS genesis wallet.
It is important to positively engage the EOS community upon launch. Airdropping TLOS to EOS genesis wallets accomplishes that goal. Moreover, capping the maximum number of airdropped tokens allows Telos to activate a more economically egalitarian network and diminishes the power of potentially hostile EOS actors. However, this TIP argues that 40,000 is too high of a cap. 40,000 likely exceeds the optimally sized cap and it enlarges attack surfaces for potentially hostile actors. Telos should consider a cap of 20,000.
We recognize the importance of positively engaging the EOS community upon launch. Airdropping TLOS to EOS genesis wallets pays tribute to the parent chain and may encourage EOS community members to learn more about (and even support) Telos.
Similarly, we recognize the importance of capping the maximum number of airdropped tokens. The extreme inequality of EOS — 1.6% of the addresses control 90% of the tokens — turns off prospective community members and creates governance challenges for the network (i.e., because of EOS’ onchain governance mechanisms, economic inequality translates into political inequality, and thereby undermines the network’s democratic ethos and participatory incentives).
That said, if the objective is to acknowledge EOS and engage their community, 40,000 tokens seems excessive. Although 40,000 is a mathematically elegant number from the perspective of statistical distribution, it may not be optimal from an economic perspective. An economic rationalist would argue that Telos should pay EOS token holders the maximum number of tokens necessary in order to constructively engage their community, and not any more. Beyond the optimal distribution, Telos earns diminishing marginal returns whereby more tokens result in fewer incremental units of goodwill. Meanwhile, the large pool of tokens in the Initial Distribution will dilute the value of tokens earned by active Telos contributors.
Moreover, it’s very possible that many of the EOS token holders had split up their addresses prior to the EOS snapshot, and are therefore able to accumulate much more than 40,000 tokens during the Telos Initial Distribution. A subset of these “mini whales” will likely see Telos as a competitive threat and engage in hostile acts. They may, for example, coordinate dumps of TLOS tokens to suppress its price. Or they may keep their tokens and collude with one another to wage hostile political campaigns (by voting for adversarial block producers, for example).
Given that Telos will likely engender the same amount of goodwill from EOS token holders with an airdrop of 20,000 TLOS as it would with an airdrop of 40,000 TLOS (after all, these are still “free” tokens that were never promised to EOS token holders during the EOS Initial Coin Offering), and given that a smaller cap would reduce the power of potentially hostile EOS “mini whales,” the question that naturally follows is how the reduced cap will affect the overall token distribution. Skeptics may be relieved to learn that the vast majority of EOS addresses will remain unaffected. We reference the research in this article published by the Telos Foundation as well as the EOS genesis snapshot to note the following:
A 20,000 cap will lower the total amount of tokens in the Initial Distribution from 178,473,249.31 to 149,830,672.87. The percentage of accounts affected will increase from 0.6631% to 1.2536% — approximately 98.75% of all EOS addresses will not be affected if the cap is lowered to 20,000. The number of tokens allocated to the Exchange Token Reserve Fund will likely decrease from approximately 140,279,973.96 to 117,766,908.88 (assuming another 78.6% Fibonnaci level). With a price of approximately $15 per EOS token on June 2, 2018, only addresses that stored an excess of $300,000 worth of EOS at the time of its mainnet launch will be affected by a token cap of 20,000.
Modify text in paragraph 22 of the Telos Blockchain Network Operating Agreement (TBNOA) to read as follows:
“These accounts will each be recorded as having the same number of TLOS tokens as the number of EOS on the corresponding account in the EOS Snapshot, except that each account that has a balance of over 20,000 tokens will receive exactly 20,000 TLOS tokens… and the Telos Exchange Reserve Fund which will receive 117,766,908.88 TLOS tokens.”
Discussion period is open.
This document is in the public domain.