Inside the Internet Computer’s Adoption of Network Nervous System Proposals

A description of the process that determines how the ICP voting community decides whether an NNS proposal is adopted or rejected.

By Lara Schmid, Researcher | DFINITY

The Network Nervous System (NNS) is the autonomous tokenized system that governs the Internet Computer blockchain in a completely open, decentralized manner, allowing it to be efficiently upgraded and expanded. It oversees network operations as well as the token economics that make it possible to use canister smart contracts to build DeFi and dapps, open internet services, and enterprise systems that are capable of securely operating at hyperscale.

Anyone in the world can participate in governance by staking ICP utility tokens in voting neurons, which receive rewards by voting on proposals submitted to the NNS. Anyone who stakes a neuron within the NNS can also submit a proposal to suggest changes to the Internet Computer Protocol, the blockchain’s code, or its parameters. The minimum stake to do so is one ICP token.

Recent NNS proposals adopted by the community include motion proposals to begin work to:

Significantly, all aspects of the Internet Computer, including governance, can be modified through NNS proposals, giving the ICP community the power to guide the blockchain’s evolution and optimize it for developers, entrepreneurs, and users. In all instances, ICP token holders use voting neurons to collectively decide whether a proposal should be adopted. If the proposal is adopted, the NNS automatically executes the proposed change.

Following below is an explanation of the life cycle of a proposal and the rules that define when a proposal is accepted.

Current voting mechanism

Any user that stakes ICP tokens to create a neuron can submit a proposal by sending it to the governance canister, a canister smart contract on the NNS that stores two things:

a. Proposals, which are suggestions for how the Internet Computer should be changed that are voted on for approval.

b. Neurons, which determine who is allowed to participate in network governance.

Upon receiving a new proposal, the governance canister computes the voting power of each neuron and stores this together with the proposal. The sum of all of these voting powers also determines the total voting power that is associated with a given proposal. The voting power is freshly computed for each proposal because the neurons’ voting power changes over time. (Refer to the last two sections of this article for more information about how the voting power of each neuron is computed as a function of the neuron’s stake, dissolve delay, and age.)

Understanding the Internet Computer’s Network Nervous System, Neurons, and ICP Utility Tokens

Each proposal that is stored on the governance canister also has an associated proposal topic that specifies details concerning how the proposal will be processed if it is accepted and executed. Moreover, each proposal has an associated voting period, which determines the period of time over which votes for this proposal are accepted. The voting period is dependent on the proposal’s topic. For most proposals, the voting period is two days. The only exceptions are proposals with the topic #NeuronManagement and the topic #ExchangeRate, where the voting period is 12 hours.

Once a proposal is stored on the governance canister, all eligible neurons can vote on it. (Note: A neuron is eligible to vote on a proposal if the neuron’s dissolve delay is at least six months when the proposal is created.) If a neuron votes in favor of a proposal, the governance canister adds this neuron’s voting power to the “yes votes” associated with the proposal. Likewise, if a neuron votes against a proposal, the governance canister adds the neuron’s voting power to the “no votes” of the proposal.

A proposal gets decided as soon as either: 1) a 51% majority of the total voting power is in favor or against the proposal, or 2) the voting period ends. The decisions are made according to the following rules: During the voting period, if more than half of the total voting power is in favor of the proposal, the proposal is accepted, and if at least half of the total voting power is against the proposal, the proposal is rejected (i.e., if there is a tie, the proposal is rejected). When the voting period ends without at least half of the total voting power on either side, the proposal is rejected.
____________________________________________________________

A proposal is accepted if more than 50% of the total voting power is in favor of the proposal before the voting period ends.

A proposal is rejected if either at least 50% of the total voting power is against the proposal or the voting period ends without a decision according to the above rules.

____________________________________________________________

This means that a proposal can be rejected even if there are more yes votes than no votes — for example, if only a few neurons participated in the decision-making process.

Consider a proposal with a total voting power of 100, for instance. If there are 40 yes votes and 20 no votes when the voting period ends, the proposal is rejected. Even though there are more yes votes than no votes (40 > 20), the number of yes votes is not more than half of the total voting power, which would be 51.

Earn Substantial Voting Rewards by Staking in the Network Nervous System

Note that as soon as a majority of the total voting power is in favor of or against a proposal, we unambiguously know the final decision because even if all the remaining voters were to vote, they would not have been able to reverse the decision. To be able to make decisions quickly, we therefore do not wait for the voting period to be over to accept / reject proposals in such cases. Nevertheless, to ensure that neurons have a fair chance to earn voting rewards, neurons can still vote on proposals that have been decided but whose voting period has not ended.

Future voting mechanisms

The NNS allows the Internet Computer network to be governed in an open, decentralized, and secure manner — and has complete control over all aspects of the network. The main benefit of the NNS is that everything, including the rules of governance itself, can be modified by accepted proposals, as decided by the Internet Computer community of governance token holders. Over time, it is anticipated that the community will even evolve the rules for adopting proposals to optimize the network for entrepreneurs, developers, and users.
____

Start building at smartcontracts.org and join our developer community at forum.dfinity.org.

Inside the Internet Computer’s Adoption of Network Nervous System Proposals was originally published in The Internet Computer Review on Medium, where people are continuing the conversation by highlighting and responding to this story.

Publication date: 
10/20/2021 - 18:08
Author: 
Disclaimer

The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.