Lock ZIL to common good instead of burning it

Proposals Protocol
1

Summary:

Transfer a part of ZIL transfer/mining fees to Future Salaries contract. It funds common good, increases ZIL price, makes ZIL price to reflect the blockchain value more exactly.

Abstract:

Transfer a part (exact fractions - TBD) of mining/transfer fees to DonateZIL contract configured to transfer to SalaryWithDAO contract.

This is a “clone” of an Ethereum proposal (I don’t link to because I am restricted to posting only 2 links).

Motivation:

This proposal solves two problems at once:

  1. It provides a big amount of “money” to common good producers. That obviously personally benefits common good producers, allowing them to live better human lives, it increases peoples’ and organizations’ both abilities and incentives to produce common goods. That benefits the humanity as a whole and the Zilliqa ecosystem in particular. See more in the discussion why it’s crucial.
  2. This would effectively decrease circulating ZIL supply. The necessity to decrease the (circulating) ZIL supply (by locking ZIL in Future Salaries system for a long time) is a well-known important thing to be done.

Paradoxically, it will directly benefit miners/validators, see the discussion.

Specification:

(TBD)

SalaryWithDAO = TBD

DefaultDAOInterface = TBD

The following is a quote from the Ethereum EIP, let’s port the contracts GitHub - vporton/future-contracts: Ethereum accounts bid on future financing (essentially, transfer money from the future) - smart contracts from Solidity to Zilliqa. (I am going to work on this.)

Prior to FORK_BLOCK_NUMBER, the SalaryWithDAO and DefaultDAOInterface contracts will be deployed to the network and exist at the above specified addresses.

Change the Zilliqa clients to transfer at every ZIL transfer and every ZIL mine a fixed (the exact number - TBD) fraction of the transfered/mined ZIL to a fixed account (decide the account number, it can be a random account). Every some time (e.g. first block every UTC day - TBD how often) transfer the entire ZIL from this account to the contract DonateZIL.

Because this proposal solves a similar problem, cancel any other things that burn ZIL (except gas fees) during transfers or mining. (TBD: We should transfer more ZIL in this EIP than we burned accodingly older accepted proposals, because this proposal has the additional advantages of: 1. funding common goods; 2. better aligning values of ZIL and values of tokens).

For:

The Future Salaries is the only known system of distributing significant funds to common good producers. (Quadratic funding aimed to do a similar thing, but in practice as we see on GitCoin it favors a few developers, ignores projects of highly advanced scientific research that is hard to explain to an average developer, and encourages colluding, and it just highly random due to small number of donors. Also, quadratic funding simply does not gather enough funds to cover common good needs). So this proposal is the only known way to recover the economy.

The economical model of Future Salaries is described in this research article preprint.

Funding multiple oracles with different finish time would alleviate the future trouble that the circulating ZIL (or other tokens) supply would suddenly increase when the oracle finishes.

Against:

The arguments against that come to mind are:

  • “Miners and those who pay for transactions lose money this way.” But it was explained above why it’s good for miners. Many “regular” users receive new jobs and the society improves, so the increased transaction cost is compensated for many of them. Moreover, we already burn ZIL, why not to use it this way instead?

  • “We already burn ZIL.” But why to burn if we can transfer to a common good?

  • “The ZIL will flood the system when the contract is unlocked.” As it’s explained in the extended motivation, we can lock ZIL persistently by locking it simultaneously in multiple oracles created periodically during a potentially infinite future period of time.

Poll:

  • Yes.
  • No.

Backwards Compatibility

Because transferring to the aforementioned account is neither mining nor a transaction, we get a new kinds of ZIL transfers, so there may be some (expected moderate impact) troubles with applications that have made assumptions about ZIL transfers all occurring either as miner payments or transactions.

Security Considerations

The security considerations are:

  • The DAO that controls account restoration may switch to a non-effective or biased way of voting (for example to being controlled by one human) thus distributing funds unfairly. This problem could be solved by a future fork of Zilliqa that would “confiscate” control from the DAO.

See more in extended discussion.

Extended discussion

Future directions

In the future (it should be a separate proposal) we can switch to some more sophisticated DeFi scheme (SalaryWithDAO contract does support donations in DeFi token) of converting ZIL to something like ERC-1155 tokens to be transferred to SalaryWithDAO than simply wrapping ZIL into ERC-1155 or such token by DonateZIL, to increase the future value of the tokens transferred to SalaryWithDAO.

Additional proposal for future consideration:

  • Consider (by the DAO voting) “obliging” the above mentioned DAO by a smart contract (with ownership transfer) to set the minimum oracle finish date in the future to some fixed value (need to discuss the exact number of years to lock funds for).
  • Consider (in a separate proposal) creating new oracles with shifted to father future (e.g. by one year forward once per year) the minimum finish times and spreading the transferred funds between several such oracles. It would effectively exclude some ZIL from the circulation forever.

Things to be done

  1. Do smart contract development and verification of SalaryWithDAO and DefaultDAOInterface.
  2. After the audit is finished, deploy these contracts (together with a DAO (which kind of DAO?) controlling the DefaultDAOInterface with voting tokens initially allocated by a community consensus) and create an oracle ID using the SalaryWithDAO API.
  3. Verify and deploy modified to be used with Zilliqa DonateETH (DonateZIL) from the vporton/donations app contract redirecting ZIL payments to this oracle, too.

More on security considerations

The security considerations are:

  • DonateZIL also needs to be verified.
  • The value of wrapped ZIL transferred to SalaryWithDAO may happen to decrease with time (despite that this proposal itself and some others aim to increase ZIL value), so (as it were told to be discussed in a separate proposal) need to consider alternative DeFi schemes than simply wrapping ZIL in ERC-1155 or a similar standard.
  • Future Salaries system is expected to create big unfounded bubbles of somebody’s personal tokens. This problem seems inevitable, but the existing problems this proposal aims to solve are much worse.
  • The DAO may switch to a non-effective or biased way of voting (for example to being controlled by one human) thus distributing funds unfairly. This problem could be solved by a future fork of Zilliqa that would “confiscate” control from the DAO.

Exteded motivation

There are two motivations:

  1. It provides a big amount of “money” to common good producers. That obviously personally benefits common good producers, allowing them to live better human lives, it increases peoples’ and organizations’ both abilities and incentives to produce common goods. That benefits the humanity as a whole and the Zilliqa ecosystem in particular. In my opinion (Victor Porton), this is crucial for survival of mankind because of the following reasons: a. Suppose an important scientific discovery was wrongly published and because of the wide-spread “no-republication of already published” scientific ethic it may become that there will be nothing in the mankind what would make this discovery to enter into scientific databases and/or raise reasonably high in search engines result pages. This would effectively mean that a part of science is missing in human knowledge (it could be rediscovered but not re-published due to the above described reasons). A missing part of the science would make the entire science development stuck. So, mankind would become unable to resist existential problems (like climate change or asteroid impact) and likely die completely in near future. b. There is no other known (already discovered) economical incentive to finance climate actions than this proposal. So if this proposal won’t be accepted, we are unable to resist climate change. You may assume that humanity has a way to overcome these problems and you are right: a way is this proposal.
  2. This would effectively decrease circulating ZIL supply. The necessity to decrease the (circulating) ZIL supply (by locking ZIL in Future Salaries system for a long time) is a well-known important thing to be done.

For a multi-asset smart contract platform to function as a store of value, proper incentives must be put in place to align in the growth in value of a network’s assets with its underlying security. Or put another way, the platform’s native token must be a good value capture of the platform’s aggregate asset value. If the intrinsic value of a platform’s native token is limited to transaction fee payment, its value would be determined solely by transaction demand, instead of the demand of asset storage. (nervosnetwork/rfcs/rfcs/0001-positioning/0001-positioning.md)

In other words, we need to measure the ZIL “real” value. This proposal proposes to allocate much (it probably may be more than 90%) of miner’s ZIL fees to Future Salaries contract. So the cost of ZIL will be associated with the real (“job”) value of the conditional tokens of this contract.

So, this proposal partly solves both the well-known problems of

  • decreasing (circulating) ZIL supply
  • making ZIL cost proportionally increasing when tokens’ value increases (in other word increasing the ZIL intrinsic value)

As the above mentioned RFC explains, it is good for miners/validators, because:

  • It reduces manipulation incentives such as selfish mining
  • It highly increases the security of the Zilliqa network
  • It increases the ZIL intrinsic value, so miners/validators spend less on energy per amount of money earned.
  • There is the danger (nervosnetwork/rfcs/rfcs/0001-positioning/0001-positioning.md) that without radical measures like this proposal the value of ZIL (not of Zilliqa tokens) will become zero in some future, so greatly downshifting miners/validators.