Hello Again.
In my last analysis we found that rewards for some individuals were as high as 180% of their rewards without this proposal. We also talked about how the most heavily impacted “losers” were losing out because they have a collateral ratio and many eb16s, and that they could mitigate their downside by migrating to leb8s.
Logically, that downside mitigation comes out of the other nodes’ rewards… but, what would that look like?
Today I modified treegen again to calculate the hypothetical rewards as if everyone who still has eb16s migrated them to leb8s to the extent that their current RPL bonds would permit.
Click here for hypothetical rewards tree
Click here for Updated CSV
Click here to see the patch to treegen (based on the previous patch to implement the new formula)
The last two columns in the CSV (hypothetical, hypothetical_factor) are the hypothetical/predicted reward amount and its factor calculated from its actual interval 15 rewards, respectively.
Once again, here’s me:
| node | interval15rewards | proposed | factor | hypothetical | hypothetical_factor | delta | hypothetical_delta |
|---|---|---|---|---|---|---|---|
| 0x18845fd4aa047d6d43c934cc37aca94f85def683 | 25.0122713590862 | 21.3127893045889 | 0.852093318460127 | 16.9834290293998 | 0.679003869164016 | -3.69948205449725 | -8.02884232968635 |
So my actual decrease, assuming people rationally migrate to leb8s, is a third of my current rewards.
Once again, the biggest losers by total swing:
| node | interval15rewards | proposed | factor | hypothetical | hypothetical_factor | delta | hypothetical_delta |
|---|---|---|---|---|---|---|---|
| 0x17fa597cec16ab63a7ca00fb351eb4b29ffa6f46 | 6023.22623367632 | 3373.75553590557 | 0.560124326236104 | 3665.56845955405 | 0.608572269635096 | -2649.47069777075 | -2357.65777412227 |
| 0x22ffba127f6741a619fa145516ef4d94b90f093a | 1417.00027016498 | 406.753997115619 | 0.287052871957646 | 863.559131717549 | 0.609427640840891 | -1010.24627304936 | -553.441138447432 |
| 0xd5c4d2d852a75b54daf2138492b2e1f25a36fabe | 1217.34187352257 | 941.262160613585 | 0.773211027309771 | 750.059453710191 | 0.616145283444311 | -276.079712908982 | -467.282419812376 |
| 0xca317a4eccbe0dd5832de2a7407e3c03f88b2cdd | 2142.75795001593 | 974.570809890287 | 0.454820764931962 | 1679.20688401326 | 0.783666155106685 | -1168.18714012564 | -463.551066002663 |
| 0xb81e87018ec50d17116310c87b36622807581fa6 | 1435.60128768732 | 1546.32486240519 | 1.07712696809867 | 1232.21311775463 | 0.858325447547947 | 110.723574717871 | -203.388169932693 |
| 0x663cbbd93b5ee095ac8386c2a301eb1c47d73aa9 | 1808.81809820746 | 778.456936814446 | 0.43036772884233 | 1615.23845191381 | 0.892980036806638 | -1030.36116139301 | -193.579646293649 |
| 0xacb7cfb56d6835d9e2fa3e3f273a0450468082d9 | 1808.81809820746 | 778.456936814446 | 0.43036772884233 | 1615.23845191381 | 0.892980036806638 | -1030.36116139301 | -193.579646293649 |
| 0x895f6558f0b02f95f48ef0d580ec885056dcccc6 | 1808.81809820746 | 778.456936814446 | 0.43036772884233 | 1615.23845191381 | 0.892980036806638 | -1030.36116139301 | -193.579646293649 |
| 0x7c5d0950584f961f5c1054c88a71b01207bf9cb7 | 1808.81809820746 | 778.456936814446 | 0.43036772884233 | 1615.23845191381 | 0.892980036806638 | -1030.36116139301 | -193.579646293649 |
Many of these nodes are familiar, and Thomas still “wins” (unsurprising given his status as an outlier in raw terms). However, their hypothetical_factor tends to be higher (better), with a few exceptions like 0xd5c4d2d852a75b54daf2138492b2e1f25a36fabe.
The biggest “winners”:
| node | interval15rewards | proposed | factor | hypothetical | hypothetical_factor | delta | hypothetical_delta |
|---|---|---|---|---|---|---|---|
| 0xfd0166b400ead071590f949c6760d1ccc1afc967 | 371.75691749514 | 677.058729081032 | 1.82124043216999 | 539.524822854018 | 1.45128388326781 | 305.301811585892 | 167.767905358878 |
| 0x2fc184459069dc780b478f7e3c9ffd79e40842a3 | 449.767509478073 | 770.649998412312 | 1.71344079368161 | 614.104487568153 | 1.3653820576786 | 320.882488934239 | 164.33697809008 |
| 0xd91eecc267ff626399798040d88de62c9e70acf0 | 359.930169559552 | 655.519377559656 | 1.82124043216999 | 522.360854183628 | 1.45128388326781 | 295.589208000104 | 162.430684624076 |
| 0x84ba027280cc6cc1e592a01270c5f21a494f46cb | 291.487883004815 | 530.869518016004 | 1.82124043216999 | 423.031666772741 | 1.45128388326781 | 239.381635011189 | 131.543783767926 |
| 0xacfad9f0d80f74ad7e280a55ea025f4f09844b0f | 271.330533561145 | 494.158138203814 | 1.82124043216999 | 393.777630395746 | 1.45128388326781 | 222.827604642669 | 122.447096834601 |
| 0x9a8dc6dcd9fdc7efadbed3803bf3cd208c91d7c1 | 258.591509364616 | 470.957312270704 | 1.82124043216999 | 375.289689890765 | 1.45128388326781 | 212.365802906088 | 116.698180526149 |
| 0x327260c50634136551bfe4e4eb082281555aafae | 389.321046889459 | 253.773380940105 | 0.651835761173631 | 497.378560365655 | 1.27755374218666 | -135.547665949353 | 108.057513476196 |
These don’t fare as well as the would have if nobody migrated, of course, because their relative rewards share decreases as migrations happen. Indeed, the highest ‘gain’ in this scenario is down to 45% from 80% extra rewards.
The biggest ‘loss’ in this scenario is down to 40% from around 70% of rewards.
In conclusion, the proposal creates a very strong incentive to migrate to leb8s, which is great for protocol growth. However, there are still people who stand to lose up to 40% of their rewards, because they do not have the option to reduce their bonds further. The maximal upside is an extra 45% of rewards, going to low-collateral, only-leb8-nodes. The maximum downside is -40% and is from high collateral nodes that cannot do bond reductions further.
If we are to summarize this, the likely outcome is that:
- Anyone who can will do bond reductions until they approach 10% of borrowed.
- Low-collateral nodes with leb8s will get extra rewards at the expense of high-collateral nodes and people who refuse (for whatever reason) to migrate their eb16s to leb8s despite having plenty of RPL staked to do so.
How I’m voting:
I will vote in favor of this proposal. Nobody has taken me up on my standing offer for individualized analysis and I haven’t heard from anyone heavily impacted who wishes to express concerns. I will assume this means the worst-impacted nodes understand that bond reduction will ameliorate their downside.
My rationale, regardless of the pragmatic who-stands-to-gain-and-lose aspects, for voting in favor, is that if we had this method of rewards calculation at the time leb8s were launched, we would have grown much faster. We currently have a minipool shortage (19.4k Eth in the deposit pool and plenty of high collateral nodes with eb16s that haven’t done bond reductions despite a short beacon queue), and bond reductions will help fix it. I make no speculative assumptions on whether the impact of that growth would translate to a more favorable price for RPL.