Recently, ICON has updated it’s ICON Incentives Scoring System (IISS), showing pre-voting staking is just 3 months away, expected in August 2019.
What is IISS and When Staking?
The ICON Incentives Scoring System (IISS) is an AI-based assessment system that accurately measures one’s contribution to the ICON network, denominated by I-score. I-score represents a quantifiable metric for “fair” distribution of ICX tokens. Simply put, IISS determines how much you’ve helped the ICON network and how you should be rewarded for your contribution.
There are three entities each ICONist will be able to choose to stake their accumulated ICX tokens to. Those entities are dApps, Ecosystem Expansion Projects (EEP’s), and lastly Public Representatives (P-Reps). Furthermore, ICONists will be able to stake their ICX in August of 2019.
Let’s say you have 2,500 ICX and you want to stake your ICX tokens. It’s important to keep in mind there is no minimum amount required for staking.
You can choose to..
- Stake 2,500 ICX with a dApp of your choice.
- Stake 2,500 ICX with an EEP of your choice.
- Stake 2,500 ICX with a P-Rep of your choice.
Or, you can stake 2,500 ICX between all 3 if you so desired to do so, as you are not required to delegate all your ICX tokens to just one entity for staking. However, each entity will likely provide greater/lesser returns based on several variables. Based on a 30% delegation rate assumption, the average ICONist can expect a 15.81% annualized reward during the pre-voting period.
Additionally, over the longer term, these rewards will be closer to 2-12% as overtime staking on the ICON network becomes more saturated, annual reward rates will gradually lower. Once 70% of the network has been staked, a minimum reward rate of 2% will be imposed.
So, What Has Changed?
According to ICON, they felt the initial design of IISS “gave P-Reps too much authority”. P-Reps can no longer decide rewards received by dApps, EEP’s, and voting ICONists.
The monthly rewards for dApps (i_dapp) and EEP’s (i_eep) have been hard-coded as 25% of the monthly rewards for P-Reps (i_rep). The monthly rewards for P-Reps have been hard-coded as a minimum of 10,000 ICX.
There is also an included variable “un-staking period” based on the percentage of the network staked. This “un-staking period” is between 5 and 20 days, depending on the percentage of the network staked. So, the lesser amount of the network staked, the more days you need to un-stake, while it’s the opposite for a higher percentage of the network staked.
Additionally, there has also been a change to the maximum issuance rate “based on stress-test scenarios”, from 15% to 20%.
“This has been changed from 15% to 20% based on stress-test scenarios to ensure security and aligned incentives given extreme market conditions.“
Regarding the recent change to the maximum issuance rate, the prospect of potential “devaluation of token price” has been a concern amongst a few people.
It’s important to note, inflation is not necessarily a bad thing. In fact, inflation can actually incentivize people to do certain things.
“Personally, yes. I think a 20% annual inflation is too high. I think most Iconists and P-Rep candidates would agree. 7% is debatable. In the early years, that may make sense. P-Reps will be deciding the inflation rate based on the variables outlined in the IISS yellow paper. That said, currently, the max inflation rate will be 15% annually.”Ricky Dodds
In light of the recent IISS update, ICON felt too much power was given to P-Reps and this “cautionary” 20% figure is not something set in stone, rather a theoretical maximum that is based on several variables related to the demand of the ICX token. So, this notion of “lowering token price” should not be of great concern.