Upcoming Changes to ICON Economic Policy

January 30, 2024

With the introduction of IISS 4.0, the ICON network is set to undergo changes that aim to enhance decentralization, adjust rewards and penalties, and overall, fortify the network's resilience. Let's dive into what these changes entail and how they impact the ICON community.

Changes for Validators

More Decentralization for a Robust Network

By increasing the total number of validators from 25 to 28 and adjusting the ratio of fixed to rotating validators, ICON ensures a more equitable and secure block production process. This not only strengthens the network against potential attacks but also opens doors for more participants in the block production.

Redefining Rewards: Aligning Interests with Security

The new economic policy introduces a revised reward system that closely aligns validators' financial incentives with their role in maintaining network security. Validators are now rewarded through block production and commissions from voters. This change ensures that both validators and voters are more invested in the network’s security and performance.

Implementing Stronger Penalties for a Safer Network

To discourage harmful actions and maintain network integrity, IISS 4.0 introduces a range of penalties. These include measures for missing blocks, validation failures, double signing, and non-participation in network proposals. The introduction of 'jailing' for validators who fail to comply with the rules is a step towards maintaining a secure environment.

Understanding the New Emission Allocations

The emission allocations have been revised:

• The ivoter parameter is merged into iprep, meaning validators set their commission rates, and the remainder of their allocation goes to their delegates.

• A new 'iwage' parameter is introduced to ensure eligible validators receive a minimum wage, promoting financial sustainability.

The Minimum Wage Concept

A notable addition in the new economic policy is the introduction of a minimum wage for eligible validators. This ensures that validators' operations are profitable or at least close to break-even, which is crucial for the sustainability of the network.

Changes for Voters

Rewards will now only be distributed to validators who actively maintain network security and have not been 'jailed' through the range of penalties discussed above. As a result, it is crucial for you, as a voter, to ensure that you are voting for productive validators. If you are a voter and delegate your stake to validators whose validator node is not online and active in block production, you will no longer receive rewards for that portion of your stake starting from the rollout of IISS 4.0.

You can find information on the productivity of validators (or P-reps) here.

IISS 4 Schedule

The schedule is an estimate that is subject to change.