HIP 80: Simplifying the DAO Utility Score

[vincenzospaghetti]

HIP 80: Simplifying the DAO Utility Score

• Author: @ferebee, @jmfayal, @rawrmaan
• Start Date: 2023-03-29
• Category: Economic, Technical
• Original HIP PR: Introduce new DAO Utility Score #597
• Tracking Issue: HIP 80: Simplifying the DAO Utility Score #599

Summary

HIP-51 specifies the DAO Utility Score, which determines the distribution of HNT among all Helium subDAOs. Its purpose is to incentivize current and future subDAOs to grow the value of their services provided through the Helium DAO while also protecting the investment of the LoRa Hotspots that participated from the start to the launch of the Helium network of networks.

As the implementation of HIP-70 has progressed, multiple theoretical and practical drawbacks of the DAO Utility Score as specified in HIP-51 have become apparent. They threaten the interests of the existing IOT and MOBILE subDAOs, possible future subDAOs, and the Helium DAO as a whole.

To solve these problems, HIP-80 proposes a new, simplified DAO Utility Score, which is easier to understand and protects the interests of all participants.

The new Score no longer considers the number of Hotspots and their onboarding fees but only the square root of DC Burn and the square root of delegated veHNT. Additionally, the IOT subDAO receives an explicit guarding factor to ensure its continued funding. Because of this, the onboarding fee is no longer relevant to the new Score and all subDAO onboarding fees are reduced universally to $5 per Hotspot. A Hotspot must burn an onboarding fee towards each subDAO in which it participates.

Motivation

The existing definition of DAO Utility Score as specified in HIP-51 is ambiguous and difficult to understand. Simplifying it will make it more approachable and reduce the probability of unintended consequences. In addition, certain intents of HIP-51 are not fully realized by the existing Score definition.

On the one hand, due to an oversight in the implementation of HIP-53, no onboarding fees have ever been burned towards the MOBILE subDAO. Therefore, at launch, the DAO Utility Score of the MOBILE subDAO as defined in HIP-51 would be eclipsed by the IOT subDAO, so that much less HNT than intended would initially be distributed to the MOBILE subDAO. This could limit the growth of MOBILE, which is important to the further development of the Helium Flywheel, and, thus to IOT as well.

On the other hand, calculations show that the IOT subDAO risks being marginalized by the MOBILE subDAO in the medium term under the existing Score if current trends continue. This could cause nearly all HNT to be distributed to the subDAO treasury of the MOBILE subDAO, which would run counter to the intent of HIP-51 and could limit the further development of IOT. This threatens the health of the Helium DAO as a whole, as IOT is expected to deliver a significant contribution to the Helium DAO over the longer term.

With its V factor, the existing DAO Utility Score gives far more weight to the amount of veHNT delegated to a subDAO than to any other factor. This would enable a single large investor to favor a single subDAO disproportionately with a large veHNT delegation and would prioritize economic incentives for delegation while marginalizing the importance of network growth and utility.

Finally, if a new DAO Utility Score can be defined that does not rely on the number of Hotspots in a subDAO and their onboarding fees, the onboarding fee itself loses most of its importance. New types of low-cost Hotspots have been proposed for both IOT and MOBILE. The traditional onboarding fee of $40 would make up a large portion of the retail cost of these Hotspots. Reducing the onboarding fee can significantly reduce their cost and encourage the adoption of these new devices, contributing to the success of both networks.

Rendered View

https://github.com/helium/HIP/blob/main/0080-simplifying-dao-utility-score.md

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I suggest an edit, that we remove the 50 from the IOT floor and replace with a 1, also adding a 25% "reserve" that is split evenly between IOT and MOBILE, (each would be guaranteed 12.5% of emissions). the purpose is to prevent either subDAO to slip below 10% which I think is the minimal level that either subDAO at this point should need to maintain viability. as it is written now hip 80 on both edges of extremes doesn't quite protect mobile in the short term (while there is a period of time that is likely to see no data move) this addition also protects IOT in the mid to long term, however I admit this is more or less a band-aid and this should explicitly labeled temp (given some time frame) or we need to vote again when either a new sub DAO joins or after the time frame given expires.

[vincenzospaghetti]

The community rejected this HIP in a community-wide vote. You can check the results of the vote at helium.vote under closed votes.

[waveform06]

HIP 80 failed approval by the community on 16th April 2023 with a passing rate under the 2/3 required of 61.89%
https://www.heliumvote.com/14rmHKjpZhsnrA2j24KiGzg8teA1zAMRhVGcWVUdmTAomTrJJQf