Codename KEaNU Proposal (T4)

Note that the sole purpose of this post is to address gaps in previous proposals with various new ideas. It is not a plan and has no special status.

Context

This proposal is largely interoperable with aspects of the other proposals (T1, T2 & T3). It assumes a Merkle drop to NU and KEEP holders, a sale of T by the DAO, an inflationary subsidy in T, and a multi-phase participation model.

It defers providing a specific percentage breakdown of allocations in favor of tackling key questions left unaddressed (and concerns raised) by the previous proposals. This includes unminted NU issuance, maximizing NU staker participation, and the uncertainty around the utility of NU and KEEP in a potential KEaNU-centric future.

Stakedrop → Worklock 2.0

We propose replacing the Stakedrop described in the other proposals with a “WorkLock 2.0”. While this is partly semantics, it reinforces the expectation that people must actively escrow collateral and run a node in the network to earn T. It also allows KEaNU to benefit from the brand recognition and success of the original WorkLock.

In WorkLock 2.0, participants would effectively be able to escrow NU and/or KEEP in order to run a tBTC v2 node and earn T. Only the T token would have governance influence over the T DAO.

For NU stakes, the WorkLock 2.0 should allocate more T to stakers with longer lock durations (up to a year) in the same manner that stakers with longer durations currently earn a greater NU inflation subsidy.

NU stakers choose between NU rewards or T rewards

At launch, the tBTC v2 software would be included as a mandatory upgrade for NuCypher nodes.

However, NU stakers would choose whether to participate in WorkLock 2.0 and receive T rewards, OR to continue receiving their NU subsidy instead, following the existing issuance schedule.

If they participate in WorkLock 2.0, they receive T (in the same manner as all other participants), and the NU inflation subsidy that they would have otherwise received is escrowed on-chain.

If they choose to not participate in WorkLock 2.0, they would not receive T from the staker allocation. Regardless, they would still be expected to run a tBTC v2 node, and would be subject to the same work allocation and slashing conditions, enforced by the same set of contracts – except these protocol calculations will primarily be based on collateral denominated in NU, rather than a mix of a growing T stake and NU (or KEEP). This group of stakers would still receive a merkle drop allocation of T, since this event occurs independently. If it is decided that staked T can be used as a reward boost multiplier, those not participating in WorkLock 2.0 would be ineligible.

If KEaNU proves unsuccessful, the WorkLock 2.0 participants can redeem their T for the NU inflation that has been escrowed on their behalf. This redemption option could expire at some future block height sufficiently far in the future that KEaNU’s success should be clear. This mechanism de-risks KEaNU for NuCypher stakers, while still ensuring a large node count for tBTC v2. Indeed, lower risk via reversibility provides a strong pull factor into tBTC v2 node operation, increasing its chance of success.

Preventing “zombie” NU/KEEP (ideas from @maclane)

There has been some discussion over whether all future activity would move from the NuCypher and Keep networks to KEaNU (e.g. PRE and other future applications).

Given the uncertainty around whether NU or KEEP would retain value independent of their roles in the KEaNU network, here are two possible solutions for the community to choose from:

  1. Don’t completely phase out NU and KEEP’s staking power in KEaNU. Their staking power can be reduced over time in favor of T, just to something meaningfully larger than 0.

OR

  1. Allocate a portion of the KEaNU DAO treasury to a “sink” for liquid NU and KEEP

This sink would provide a backstop to protect against the downside risk of NU and KEEP losing value and creating disaffected holders as described by @romamura. Each quarter, the KEaNU DAO could allocate a single digit percentage of its treasury towards acquiring liquid NU or KEEP at some specified rate (or according to a bonding curve).

3 Likes

Love the re-framing of Worklock 2.0. 1.0 was the gold standard for network and token launch, IMHO. Also, really like the hedge for NU (and KEEP) holders should TBTCv2 not pan out. On a personal note, while the proposals on the KEEP forum are appreciated and inspired this one, it wasn’t until I read this one that I felt more confident that my previous NU/worklock investment would be protected.

2 Likes

An excellent addition and what specification for hardware is required in this case, will it be enough for what is currently used by the worker?

1 Like

I’m also curious how the hardware requirements are changing.

How would this affect the Coinlist wallets/accounts?

1 Like

I wonder this, too. Some of us do not have 15k token to participate, but yet we do stake. Are the exchanges like Coinlist going to be able to let stakers choose either T or Nu rewards?