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HIP 24: Transfer Percentage of Hotspot

  • Author(s): @ericmheilman
  • Start Date: 2020-12-26
  • Category: Technical
  • Original HIP PR: helium#104
  • Tracking Issue: helium#105

Summary

This proposal introduces a new transaction, transfer_gateway_v2, which will allow a hotspot owner to transfer a percentage share of their hotspot to another owner. Once a percentage share is transferred, the only way to reverse the transfer would be for the new owner to voluntarily transfer it back to the original owner. Percentage of hotspot ownership will be determinant in the payout of HNT rewards (50% ownership -> 50% of HNT, 10% ownership -> 10% of HNT, etc.). This percentage share is 'non-voting' as the ability to assert location will still be available exclusively to the original owner. This transaction can have an optional amount of HNT associated.

Motivation

The goal of The People's Network is to create a telecom network that is owned by the same people that operate it. This new transaction facilitates that goal by allowing network participants to enter into trust minimized co-ownership agreements. These agreements will take the current decentralized nature of the network one step further by allowing the ownership of network nodes to be broken down into smaller pieces that can be transferred between network participants as necessary. This will catalyze the growth of the Helium Network by reducing the need for trust in host-owner relationships as well as by automating various repetitive tasks that are currently necessary to maintain a host-owner relationship.

An additional motivation for this functionality is the fact that this enables the securitization of hotspots. For instance, an owner could sell off a percentage of their hotspot in order to raise cash to purchase an additional hotspot. In a similar fashion, an owner with 100 hotspots could auction off a bundled percentage ownership of their fleet on a market place for profit share in order to buy and deploy more hotspots. This will benefit the Helium Network as it will encourage further investment in network infrastructure.

Stakeholders

Current and future participants in host-owner relationships.

The Helium blockchain engineering team.

Feedback will be gathered by sharing this HIP in various Discord channels.

Detailed Explanation

Implement a new transaction, transfer_gateway_v2

This new transaction would require two parties to sign the transaction in order to update the gateway's ownership percentages in the ledger. The only way to reverse a transfer will be for the new owner to transfer the ownership percentage back to the original address.

Steps

  1. Current owner creates a partially signed transaction with a proposed ownership percentage as well as an optional HNT amount that is required to complete the transaction

  2. Current owner sends the partially signed transaction to the receiving owner

  3. Recipient signs the transaction and pays the DC fee to submit the transaction to the blockchain

  4. If the receiving account contains sufficient HNT balance as requested by the current owner and contains enough HNT to burn into DCs for the transaction, the transaction is accepted and the gateway's owner is updated in the ledger

  5. The hotspot appears in both the sender's hotspot list and as well as the recipient's hotspot list. The respective hotspot ownership percentages are reflected accordingly

Implement the transaction in the helium-wallet client

The Helium Wallet CLI currently supports similar transactions that could be built upon for this implementation.

Implement the transfer UI in the Helium app

The Helium Blockchain Engineering team will decide if adding this functionality to the Helium app is necessary.

Drawbacks

The only drawback consideration that has been raised so far is chain bloat.

Rationale and Alternatives

The rationale for this change is six-fold.

  1. Enable trust minimized co-ownership of hotspots
  2. Reduce the time and energy necessary to maintain host-owner relationships
  3. Enable the securitization of hotspots
  4. Allow hosts to see their hotspot and HNT earnings in real-time within the Helium app
  5. Remove DC cost associated with owners regularly paying out HNT to hosts
  6. Simplify tax reporting

An alternative design would be to allow owners to allocate a percentage of HNT earnings from a hotspot to a different address. We believe this to be an inferior / unrelated option as the owner could revoke the allocation at any time.

Deployment Impact

We believe that many helium hotspots will have a percentage of their ownership transferred after this functionality is deployed. We also believe that this deployed functionality will have a notable impact on the positive-feedback loop that is driving helium network deployment as it will reduce the friction associated with establishing relationships between hotspot owners and hotspot hosts.

Success Metrics

The Helium blockchain team will not be explicitly tracking success metrics for this transaction type addition but we expect that host-owner relationships will proliferate as they are now simpler to maintain for both parties.