RFC: HOP Delegate Incentivization - Participation Multiplier


HIP-28 has recently passed, allowing for the HOP Delegate Incentivization to be renewed an additional 6 months — https://forum.hop.exchange/t/rfc-renewal-of-the-hop-delegate-incentivization-trial/852. As part of the renewal, a multiplier was discussed and has been added to the base formula.

The multiplier starts at 1.0 for new delegates and increases by 0.1 for each consecutive completed 6-month participation period, capped at 1.5x after five periods. This means that someone who would have otherwise earned 1,000 HOP will now get 1,500 HOP after the 5 consecutive periods. For the current 6-month window all delegates will start at 1.0.

Specific Details:

The specific multiplier came to consensus essentially by default as the only formula provided in the thread by me. The goal of the multiplier is to encourage long term and consistent participation in governance. However, the balance here is that the amount must not be too extreme as to avoid a centralization force. The formula I had provided felt like a good balance of that, as:

  • The max of a 1.5x multiplier provided an impactful differentiator to the formula, avoided too much of a reward gap between long tenured delegates and newcomers, and costs relatively little to the treasury relative to the current output
  • The escalator of 0.1 per 6-month trial would mean that you would have to be contributing 3 years before hitting that max 1.5x multiplier. A length of service & HOP governance experience that felt adequate to be rewarded with that type of boost.
  • The multiplier remains simple to calculate and understand, as well as fairly straight-forward to adjust variables on if determined to be to lucrative.

To add some additional numbers to this, I have taken all the delegates on Tally that have over 90k HOP (as of 6/7/2023) and determined the average HOP (511,345) and the median HOP (276,585) balances. This was out of a total of 34 delegates. At average, it would take the reward of 4,055 and bump it to 6,082. At the median, it would take the reward of 3,121 and bump it to 4,681.

Based on the voting results / feedback from the forum, it seemed there is appetite for this multiplier, just with varying opinions on the amount / length. Mainly either those who felt the formula was fine as is, or those good with the concept but looking to reduce it in some manner. During that thread, it was noted that with the multiplier starting at 1.0 for this period, there is time to discuss the formula for tweaks going forward. In fairness to those who expressed concern in that discussion, I wanted to bring forward the chance for that conversation before we enter a period where delegates start to have 1.1 or more.

Next Steps:

I wanted to bring forward this RFC to provide opportunity for additional comment & for different formulas to be provided as a separate thread to more easily focus the discussion. If there is desire to amend the provided formula, I can move to a temperature check vote on which formula to use. I’d imagine voting along the lines of:

  • Keep Current
  • [Alternative Participation Multiplier 1]
  • [Alternative Participation Multiplier 2]
  • [Alternative Participation Multiplier 3]

If no alternative multiplier formulas are provided, I will stop the process at this step.