Regen Network Proof of Authority Consensus RFC

$REGEN Coin
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This is a post to initiate conversation on the consensus changes, based on our conversations with Aaron Craelius, Will Szal and the $regen tokenomics group

Background

When Regen Network was originally conceived in mid 2017, it eschewed the leading consensus model of the time, Proof of Work, as environmentally unsustainable and speculated around the idea of an alternative “reverse mining” consensus mechanism whereby new tokens get minted when there is proof of ecologically regenerative activities. Proof of Regeneration was way ahead of its time as a consensus mechanism and the emphasis shifted towards a consortium blockchain model where a group of trusted entities would run the chain until a valid Proof of Regeneration model could be created. Later on, the Regen Network project compromised with the prevailing currents of the time and chose to adopt the same Proof of Stake (PoS) model that the Cosmos Hub launched with. Although various weaknesses of Proof of Stake were considered, it was considered the most practical and feasible solution at the time.

Now more than 3 years since the Regen Network launch, we believe that it is time to reassess Proof of Stake as a consensus mechanism. In the ideal world, PoS secures a network by making the cost of an attack so high that it is not economically feasible to carry out. This, however, depends on a token having a sufficiently high market capitalization to make such an attack incredibly costly. The REGEN token, unfortunately, has not achieved such a market capitalization to date and is only protected by early decisions around the token distribution which allocated more than one third of the total stake to Regen Foundation. PoS effectively cannot protect Regen Network alone and the rewards for validators running the network are becoming increasingly slim. Mechanisms for burning REGEN tokens to counteract the minting of tokens through PoS have been designed, implemented and are ready to deploy, but it will be a while b

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Thank you for this overview Max (and Aaron for heading up the research)!

I spoke with Regen Foundation’s legal counsel (Norton Rose Fulbright) about this issue, especially from the perspective of decentralization. After talking through the options, they outlined the following recommendation:

Plan A: Pause Token Emissions and Reduce Validator Set Size

1.	On-chain proposal to change emissions parameter to 0
2.	On-chain proposal to change the max validator set parameter to 7

These two proposals would address the specification outlined above, dramatically reducing infrastructural costs, improving the tax treatment of the token (by moving from income to capital gains), and are a no-code pathway, making it simple to implement. As we would still be with Proof-of-Stake, the composition of the validator set would be determined in a permissionless fashion. Nothing would change about governance.

One downside of this pathway is that many projects, such as Community Staking DAOs, have utilized staking rewards to help fund their work. That said, the token price is already so low that this model isn’t really working any ways as-is. One possibility to address this would be to switch permanently-locked pools to some kind of slow periodic unlock, similar to the old inflation rate.

To speak to the validator set size of seven: this number is large enough to have a decent Nakamoto coefficient, but small enough to keep infrastructure costs minimal. Validators also perform political and other infrastructural roles, and seven seems like a good number here as well. Over time we might add protocol politician roles so that stakers could delegate their vote to someone who isn’t a validator (and the politician set could be larger).

To speak to tokenomics: when writing the whitepaper, we were actually exploring having REGEN be a demurrage currency, where a portion of non-staked REGEN would be burnt each block (instead of having emissions for stakers). Ultimately it was determined tha

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I am curious about the “migration to EVM” costs estimated there. I’d love more detail on that.

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I like the idea of keeping x/Staking and reducing minting to zero. I think this would precipitate the drastic shifts needed, and could open the possibilities of migrations, radical token econ overhauls, and other processes that are needed. An alternative to that radical approach to stop minting could be another halvening process: https://commonwealth.im/regen/discussion/23072-regen-network-proof-of-authority-consensus-rfc?comment=86305

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I’d like to take a few moments to unpack the political economic dimensions of this decision (about network consensus and crypto economic incentive design).

There are two major camps at the moment. The incumbent camp, which believes that clear accountability and institutions following the current dominant (perhaps we could say liberal or neo liberal from a institutional/market paradigm) focused on legal accountability as the path to security and stability. This view tends to build crypto economic systems that are focused on PoA consortium networks in which permissions and governance are controlled by a distinct set of institutions that together maintain consensus. This approach is compatible with existing reporting guidelines and bureaucratic norms, and compatible with existing nature market mechanisms which are highly integrated with state governmental mechanisms.

The second camp is the crypto institutional (or crypto libertarian) camp which believes in radical decentralization and the ability of any network participant to prove the correctness at any given moment of the consensus or state, and to easily participate in generating consensus. Bitcoin is the largest evidence of this system working, although what the network is able to generate consensus about is very limited (the number of bitcoin in existence and which addresses hold them). Ethereum also largely follows this paradigm, and has shifted to PoS, forming a sort of bridge back into social mechanisms for coordination and governance. Regen Network inherited a lot from this paradigm in how our crypto economic and technical architecture was built.

Regen Network tried to strike a new path of synthesis with our hybrid PoA PoS approach in which the foundation endowed non transferable stake that could earn block-rewards but not, itself, be traded, fused with open market PoS approach. This is actually very innovated and novel, and many game theorsts and economists have since commented on its elegance. In

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As i comtemplate this more, and coming out of our conversation on the tokenecon wg call today (notes: The AI workspace that works for you. | Notion) I would say we should:

Balance the need for swift and pretty significant action in order to reorient and refocus the community and generate confidence in markets
and the need to balance support for csDAO members.

I would argue we may consider a slightly higher number of validators than 7, given the very significant value many of our validators have historically and presently produce for the community and the value of decentralization. perhaps instead of 7, we could consider 11 or 17?

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image
image1000×983 183 KB

System archetecture diagram from Jan 2018
with smaller bioregional validator set, and seperation of governance from security.

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I am increasingly seeing a move to ICS with cosmos hub as not only viable, but cheeper, easier and better.

Still lots of questions.

Here are the details as outlined by the informal team working in biz dev for ISC adoption:

First, we need to cover the cost of validators running hardware. For that, we suggest the simple following formula:

where X = number of validators targeted by the consumer chain

Second we need to cover the economic security of the stakers providing security to the consumer. We use the following formula:

(Nap*S)
where N = targeted % of voting power from the Cosmos Hub active validator set ; a = targeted net APR for stakers ; p = ATOM price ; S= number of bonded ATOMs

Lastly, we include a payment that will be redirected to the community pool and benefit the Cosmos Hub as a whole (i.e, not just opt-in validators and their stakers)

(1+ B )
where B = % to be converted in ATOMs sent back to the community pool

The complete formula is now the following

(X600$/month12+NapS)(1+B )

so what Regen needs to figure out is how much security do you ACTUALLY need. Regen likely has far more validators than required. Our understanding is that you only need security = TVL.

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Given my limited exposure to the Cosmos ecosystem, I initially assumed that Regen Network would receive substantial support from other Cosmos chains due to the differences in market capitalization. I also believed that operations would be smoother, with better control of the chain and enhanced network security through a more interconnected mesh. However, this post suggests otherwise.

The challenges and complexities detailed here are indeed exhausting. This strengthens my inclination towards migrating to an EVM-compatible chain. This post underscores the limitations and technical burdens of managing a Cosmos-based chain, which seems unworthy of our continued investment in time and resources.

Transitioning to an EVM chain such as Ethereum mainnet, Arbitrum, Optimism, Base, or Polygon offers a more promising future. We can still maintain our stake in REGEN as a DAO with robust support from these platforms. Despite potential resistance from key stakeholders like Gregory, this approach aligns with our goals.

On an EVM chain, we can effectively govern our protocol, mint high-integrity ecocredits, provide liquidity, and focus on regeneration without the overwhelming technical management issues. By migrating to the Ethereum mainnet, we can mint REGEN and distribute it across major Layer 2 solutions like Arbitrum, Optimism, and Base, leveraging their advanced technical infrastructure and liquidity hubs.

While I acknowledge the technical complexities involved in establishing operations on these platforms, Optimism stands out as a particularly efficient choice. Additionally, forming strategic relationships with liquidity providers like Klima on Base could further enhance our ecosystem. Arbitrum, with its robust infrastructure and interest in innovative RWA platforms, also presents a promising opportunity.

However, I remain realistic about the potential hurdles and the possibility that our proposals may not gain traction. Should the migration to an EVM chain be rejected, a

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Feels like there are many options here and there is no obvious correct way.
We shouldn’t feel tied to a direction, we are on a journey that can have many turns.
Perhaps try some of the less costly/impactful ones first.

ICS is interesting but doesn’t solve a great deal, Cosmos are keen to keep Regen I imagine.

The route has to be what is best for Regen and the Marketplace.
Would ICS or a EVM encourage more adoption?

Validators paid in eco credit is interesting too, shows commitment to the cause. I like this.

I’ll come back with more thoughts when I have them.

Hope everyone is good.

Pete

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I encourage that the decision criteria include the end user (eco-credit buyer) perspective. In that regard, simplicity and transparency are key ingredients to successfully market the eco-credit tokens. I admittedly struggle with some of the terminology and confess to a limited understanding of the options being considered. With that acknowledgement, please also consider the voice of the credit class creators who need a platform that accounts for and valorizes “ecosystem services” that will be perceived trustworthy by prospective eco-credit purchasers and enable easy gain sharing among regenerators.

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Reduce Staking Rewards and Allocate to Liquidity Expansion

To optimize financial sustainability and market visibility, we propose reducing validator staking rewards by 50% from the current 10% inflation rate and reallocating the saved 5% to liquidity expansion. Specifically, we will set up single-sided liquidity pools paired with strong assets, based on volume. This shift will lower operational costs while increasing trading volume and visibility for the REGEN token. Enhanced liquidity pools will facilitate automated eco credit retiring through trading fees, thereby promoting ecological regeneration and supporting the core mission of Regen Network.

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Thanks for the detailed research, Max and the tokenomics WG. I would just like to echo that Regen was incredibly innovative in 2017 and continues to be a pioneer in the space. In my opinion, cutting issuance to 0% on a proof of stake network feels like a nuclear option; a rational economic actor would likely cease validation and move elsewhere. At current prices, a 10% issuance on the token is only $300k of sell pressure, which seems insignificant for a quality project like Regen. In my view, the main issue for poor price performance is more related to token distribution and ease of access. The app chain thesis is valid, but adoption doesn’t seem to be there because there are fewer network effects compared to the monolithic or modular. I would propose considering two steps forward, either or both of which would be effective in my opinion:

  1. Broader token integration.
    The Regen blockchain can still exist, reward validators, and serve a purpose, but it needs to expand beyond the siloed Regen Network and communicate with other chains and protocols. If Regen wants to be the credit registry of the people, the token should be accessible to anyone. Right now, if someone wants to buy Regen tokens, they have to set up a Keplar wallet, get Osmosis tokens somehow, swap on Osmosis DEX, purchase Regen tokens, approve Regen Network, and withdraw. Speaking as someone who did not start my crypto journey in the Cosmos ecosystem, that process feels cumbersome and could deter potential supporters who may be interested in the project.
    Currently, on platforms like Arbitrum, Base, OP, etc., I can swap any token on numerous DEXs to receive whatever token I want, and I just need a bit of ETH dust to do so. Even easier, I can open up my Telegram, paste a contract address, and buy any token on Solana in seconds. The amount of people that see one tweet about a project and decide to buy a little bit on a whim is massive (myself included, total degen), so the lower the barrier to entry, the b
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Here is an overview of the option of a complete migration from regen ledger, and the golang module approach of building on the cosmos SDK, to EVM (should be a similar amount of time and effort to port into the solana virtual machine as well). I am not advocating this, but was curious and think that MORE INFORMATION IS BETTER to evaluate different options at this juncture.

This was generated by chatgpt, using GPT 4o

Summary and Breakdown of Phases and Options

Project Overview

Translating Cosmos SDK modules (ecocredit, group, gov, data) from Golang to Solidity for EVM smart contracts and integrating them as an “smart contract embassy” with linkage back to Regen Ledger using a bridge service (Gravity Bridge, Axelar, etc.).

Phases and Estimated FTE Hours

Phase 1: Requirements Analysis

  • Tasks: Detailed analysis of Cosmos SDK modules, understanding requirements, documenting specifications.
  • Estimated Hours: 80-120 hours
  • Duration: 2-3 weeks for one senior engineer.

Phase 2: Design

  • Tasks: Designing architecture for Solidity implementation, identifying equivalent constructs, creating design documentation.
  • Estimated Hours: 120-160 hours
  • Duration: 3-4 weeks for one senior engineer.

Phase 3: Implementation

  • Tasks: Writing Solidity contracts, adapting logic from Golang, ensuring security and gas efficiency.
  • Estimated Hours per Module:
    • Ecocredit Module: 200-250 hours
    • Group Module: 150-200 hours
    • Gov Module: 150-200 hours
    • Data Module: 100-150 hours
  • Total Estimated Hours: 600-800 hours
  • Duration: 15-20 weeks for one senior engineer.

Phase 4: Testing and Validation

  • Tasks: Unit testing, integration testing, functional testing, security audits.
  • Estimated Hours: 160-240 hours
  • Duration: 4-6 weeks for one senior engineer.

Phase 5: Deployment and Maintenance

  • Tasks: Deploying smart contracts, initial maintenance, ongoing updates.
  • **