[Proposal] Increasing rewards for secure node owners to 5 %


#1

Hello.

I would like to propose increase of rewards for secure node owners from 3.5% to 5% and deducting those 1.5% from the miners.Reason for this is increasing profitability of secure node owners to a satisfying level, as in the moment of writting this there are total 1070 nodes with daily profit of 0.24 ZEN. My prediction is that this number will rise to 3000-5000 secure nodes by the time payments go live. This will make daily profit 0.08 - 0.05 ZEN a day, which just isnt going to keep a lot of people holding on to their secure nodes, and we will have a flood of ZEN on the market of dissapointed secure node owners.

Second suggestion is to also suggest raising the requirement for stake each month by 10%. This way all the extra ZEN gained from secure nodes would stay there until the moment people want to close their secure node, and thus not influencing the market.

This is first raw proposal made by me, so I am bound to make some people angry, but I welcome you to join the conversation and add your suggestions on this proposal.


#2

Running a secure node was never meant to be an alternative to mining or trading. The reward is a stipend used as an incentive to cover the maintenance of the node and help decentralise the network.


#3

It is great to see so much support for ZenCash by looking at the large number of securenodes coming up within the last couple of days, but as Trololino has pointed out, it’s a double-edged sword because each secorenode stands to earn less ZEN as the amount of securenodes increase. I am not sure how the 3.5% was decided upon, but at the current rate that securenodes are being spun up, it doesn’t seem like it will be enough of an incentive to keep people interested in maintaining a node and/or creating new ones.

I think the idea of securenodes/masternodes is a huge step for the cryptocurrency community that allows the average person to take part in the decentralization process to take back control from the centralized institutions that we are all too familiar with. I really hope that the team behind ZenCash will reconsider the incentives of running a securenode so that normal people like myself can continue to support this cryptocurrency. Thank you for reading!


#4

I like this idea. zen is going to help millions one day. node owners are pivotal to the success of this project


#5

Perhaps implement a sliding scale reward structure that scales with number of node owners in order to retain current nodes whilst incentivizing new ones to be added to the network? I can crunch some numbers if needed.


#6

Change from 3,5 to 5% is good idea because if secure nodes will not be profitable for people, nobody will make secure nodes. It is also risk to make secure nodes because there is as i know no way to have wallet in other, safe place, not connected 24h to internet (especially when all secure nodes are on public list). Zencash team should consider this change.

Raising the requirement for stake each month by 10% is not good idea. The team should use marketing so at the end zencash will have much more value (more expensive node then now) and then will be also easier to get ot other exchanges or other services/products like ledger.


#7

The idea of increasing rewards for secure nodes is a much needed one and we shouldn’t be so set on the idea of stating that increasing it to a certain percentage like 5% is going to be an ultimate solution. As I write this post, we are down to .16 per node, which is going to further decrease.

We should probably update the title of this post to “Increasing rewards for secure nodes” so that we can avoid framing a specific percentage. I like Cenk’s idea of implementing a sliding scale reward structure, so it would be nice to see some numbers of how that would work.


#8

Raising to 5% might not increase the individual rewards for very long over 3.5%, as more nodes would likely come online to take advantage of the increased reward share, and balance it back out. But isn’t that what we want anyway, more nodes = more secure? So I agree.

I also agree with Cenk’s idea above by coming up with some kind of dynamically adjusting scale, to ensure that node operators always have a good incentive to keep operating.


#9

Hi, I agree strongly with Trololino, the secure node payments needs to be modified. I have attached an updated spreadsheet with seven banded scales that increases the payment by 0.25% for every increase of 500 nodes (up to 5%). Also, there is a suggested increase to the staking amount for new nodes coming onto the network as each band threshold is crossed. Existing nodes should be allowed to add to the staking amount organically via Secure Node ZEN payments, this gives an incentive to add nodes as early as possible and retain the nodes once activated.

https://drive.google.com/file/d/1UVg2VjKrmteaT8H3UKEIzgfJ9LI31D6G/view?usp=sharing


#10

Just registered to pitch in here. I agree that something should be done to increase rewards for ppl running nodes. It will not be worth it for most ppl unless they soley want to help keep ZEN decentralised. And no matter how good intended everyone might be, if it doesnt give a fair reward, ppl wont go through the all effort keeping nodes up in the long term…

just my 0.2zen.


#11

I think the reward structure should remain in place for the foreseeable future.
The intent of securenodes is not to satisfy their owners with short term monetary gains, it is to have a strong distributed network that is proportional to it’s use.
The rewards are meant to cover costs, and if I am paying an average of $10 USD per month per node then according to the calculator http://zen.lebre.net/ my costs are covered even with 10000 nodes at the current price.
I do not think we should sacrifice the long term viability of ZEN for short term gains.
Another problem that making a change to the reward structure would introduce is that it would cause a hard fork in the ZEN software which would also be potentially destabilizing.
Increasing rewards should be driven by the needs of the network and not the needs of the node owners. For instance, I could see a need to increase rewards if there are additional services required of nodes or if the number of nodes drops below it’s capacity to serve the user base.
The 42 ZEN required staking amount should not be changed, it’s real cost/value is already increasing as the value of ZEN rises. 42 is a good balance between showing your commitment to the project and placing a barrier to entry.
I think this proposal is shortsighted and not in the best interest of future stability or egalitarian ideals.


#12

@markljenkins

Thank you for playing Devil’s advocate and for sharing some perspective from the other side.

How is increasing the reward structure for securenodes sacrificing the long term viability of ZEN? It is important that people running securenodes understand this point you have made.

Why would changing the reward structure introduce a hard fork? Why couldn’t this just be implemented on the core?

I think most (if not all) of us would agree with you that the purpose of securenodes is to participate in a distributed decentralized network, but where I don’t agree with you is when you state that the purpose of rewards is to cover costs. I would argue that the purpose of rewards is to encourage people to join the ZEN network so that the network itself continues to be increasingly distributed, which in turn not only serves the user base, but the entire project itself.

Whether to increase the rewards for securenodes or not should be a more nuanced discussion, rather than just saying things like “3.5% is not enough, it should be 5% so we get more money!” or “No it shouldn’t because it would destabilize the network.” It would be a much more reasonable approach to show the pros and cons of increasing the rewards for securenodes, from both a technical and generic perspective.

For example, I think it would be great to increase the rewards for securenodes based on a dynamic scale (as others have pointed out), while also adding additional services for the nodes to perform to further the idea of decentralization and redundancy.


#13

it is good idea - base should be i think 1000 nodes and 3,5% (even if less nodes), then +0,25% for every increase of 500 nodes (average in month/week). If there will be 2 or 3k nodes and 3,5% + price will not change much then probably many people will stop securenodes (or not join) because of no profit from it. I know that we help network but for many people $$$ is main reason.


#14

I think that the secure node reward should remain at 3.5%. The point of the nodes is to secure the network and if the people that run the nodes make some profit even better. Even with 5000 nodes someone running a node will make 18 zen a year. 18/42 = 45% annual return if you don’t count the vpn cost. With current zen prices and a $10 vpn that will be a 35% annual return. That is more than enough incentive to run a node in my opinion.


#15

Keep in mind that any % that is removed from the miners will be viewed as a negative move from there perspective. Unless the extra 1.5% is going to come from the DAO pool or the Core Team pool so the miners will continue to get 88% of the reward I think that there would be a lot of resistance.

That the larger the reward the more node there will be, so increasing the secure node % may have no impact on your own return for each node in the long run.

Also keep in mind that the secure nodes are not intend to be a substitute for mining or as a POS system. They are intended to provide a service to the network, with a minimum amount of payment to cover running costs of the node.


#16

@revolve2evolve

Thanks for your thoughtful reply, I do believe this topic deserves an in-depth discussion.

One thing that makes such a discussion difficult in my opinion is the lack of real data on which to base decision making. Secure nodes are still as of this writing more than a week away from going live with the current rewards in place so we don’t even really know how the current setup will actually play out. Since this configuration is unique in the crypto world, I don’t think anyone can really give an answer based on anything but speculation.

Here are some of the questions I would want answered before changing anything:

What is the current and expected demand for secure shielded transactions?
I’m guessing that most of the secure nodes setup for this project have not seen any real transactions other than challenges from the tracking system. The infrastructure we are building now seems to be for expected future growth which is fine, but how much capacity is really necessary? It would be great to see some stats for secure transactions and actual load on the network.

What are the goals and priorities of secure nodes?
Secure Nodes serve several functions, some are network and technology driven and some are community participation and incentive driven. It seems to me there needs to be a balance to the different goals. I do not believe that just covering costs is a disincentive since there are so many other ways to participate. If anything the narrow margin of profit on node rewards means only those operators who are dedicated to the project will continue and those just looking for larger profits may be dissuaded. Ultimately secure nodes are a large centerpiece of what makes ZEN unique among cryptocurrencies, they are a very important differentiator and should not just be treated as profit centers.

What are the impacts of changing the reward structure?
I do not actually know for sure if changing the rewards would require a “hard fork” - I think people have different definitions of that term as well. Before making any decisions or changes I would like to know what exactly has to change. I believe the current rewards for mining and node operation are very basic decisions that are coded into the zen daemon, but I don’t really know what I’m talking about. Wherever the changes are made, hard fork or not, there are sure to be impacts. At the very least I would think that every thick wallet and node software would require an update?

I believe the founders of this project had a lot of previous experience with cryptocurrencies and wanted to setup a system that was more fair and accessible to more people. I will not presume to know their complete motivations, but it seems like they were striving for some higher ideals such as complete financial privacy, a distributed governance system and a global secure network accessible to all. I would like to see their vision play out for a while before making changes, especially when the changes would enrich only a few.

I am also operating a few secure nodes and as much as I would like to personally profit from the undertaking I would hate to see the ZEN project derailed by what I can only characterize as greed at an such early stage.


#17

@markljenkins

Those are some very good points that you have made and I appreciate the well-thought out response. I am hoping that the ZenCash team can have these types of conversations themselves so that we can continue to grow the network to be as distributed and decentralized as possible. For those who are just seeking profit, they can do so by supporting another cryptocurrency that meets the requirements that they are looking for.


#18

@markljenkins @revolve2evolve

Your arguments have been a delight to read. At the time the article was written the number of nodes was at 1020. Currently, they are 1820 nodes. I think although this idea can be put off right now, practically if the 5% increase was put in effect then at the price Zencash trades presently 36.66, it does not really offer a barrier to entry to people and we would just see more nodes spinning up. I think on one hand although over-dilution of the reward is an issue, and on the other as long as secure nodes as profitable more and more nodes will be coming.

I personally believe that around 3000-4000 nodes this current rapidity of nodes being created will decrease and as long as a barrier to entry is not created for secure node creation an increase in the rewards will just amount to more nodes being created. So we should wait for the per day reward [ currently at 0.14 ] to stabilize and then discuss incentivizing secure node owners with 5%.


#19

I would like to see a higher reward for someone willing to stake a much higher quantity of tokens. Or perhaps some other benefit for being willing to stake say 500 or 1000 tokens.


#20

Interesting proposal :smiley: