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REP-16: transition to Review #19

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Apr 24, 2024
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REP-16: transition to Review #19

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70d6c44
chore: improve clarity
HenryQW Mar 27, 2024
139da79
REP-16: transition to `Review`
HenryQW Apr 23, 2024
7ca33f4
feat: improve clarity on the tax rate for Public Good Nodes
HenryQW Apr 23, 2024
7dccdd4
Merge remote-tracking branch 'RSS3/main' into REP-16
HenryQW Apr 24, 2024
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10 changes: 5 additions & 5 deletions README.md
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Expand Up @@ -6,11 +6,11 @@ REP stands for RSS3 Evolution Proposal, a detailed documentation proposed by the

This repository tracks all REPs proposed by the RSS3 Community.

| REP Number | Title | Proposer(s) | Type | Status |
| -------------------------- | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------- |
| [REP-1](./REPs/REP-1.md) | Purpose and Guidelines | <[email protected]> | Process | Living |
| [REP-11](./REPs/REP-11.md) | Protocol Upgrade | [BruceXC](mailto:[email protected]), [HenryQW](mailto:[email protected]), [KallyDev](mailto:[email protected]), [Nya Candy](mailto:[email protected]), [polebug](mailto:[email protected]), [pseudoyu](mailto:[email protected]), [Thomas](mailto:[email protected]) | Protocol | Candidate |
| [REP-16](./REPs/REP-16.md) | Staking Rewards Taxation Adjustment | [Albert](mailto:[email protected]), [HenryQW](mailto:[email protected]) | Core | Draft |
| REP Number | Title | Proposer(s) | Type | Status |
| -------------------------- | ----------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------- |
| [REP-1](./REPs/REP-1.md) | Purpose and Guidelines | <[email protected]> | Process | Living |
| [REP-11](./REPs/REP-11.md) | Protocol Upgrade | [BruceXC](mailto:[email protected]), [HenryQW](mailto:[email protected]), [KallyDev](mailto:[email protected]), [Nya Candy](mailto:[email protected]), [polebug](mailto:[email protected]), [pseudoyu](mailto:[email protected]), [Thomas](mailto:[email protected]) | Protocol | Candidate |
| [REP-16](./REPs/REP-16.md) | Staking Rewards Taxation Adjustment | [Albert](mailto:[email protected]), [HenryQW](mailto:[email protected]) | Core | Review |

## License

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34 changes: 25 additions & 9 deletions REPs/REP-16.md
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@@ -1,7 +1,7 @@
```
REP: REP-16
Title: Staking Rewards Taxation Adjustment
Status: Draft
Status: Review
Type: Core
Created: 21 Mar 2024
Author(s): Albert <[email protected]>, HenryQW <[email protected]>
Expand Down Expand Up @@ -32,26 +32,30 @@ The proposed adjustment will simplify the taxation formula, making the computati
Current formula as [stated in the Whitepaper](https://github.com/RSS3-Network/Whitepaper/blob/d8a86712cad0c88846c659577e0848b422b90f14/current/sections/tokenomics/network_rewards.tex#L77-L83):

$$
T_{N,\epsilon} = \min(D_{N,\epsilon} * c_{\epsilon}, (R_{S|N,\epsilon} + R_{O|N,\epsilon}) * T_{N,\epsilon})
T_{N,\epsilon} = \min(D_{N,\epsilon} * c_{\epsilon}, (R_{S|N,\epsilon} + R_{O|N,\epsilon}) * τ_{N,\epsilon})
$$

Current [description of the formula](https://github.com/RSS3-Network/Whitepaper/blob/d8a86712cad0c88846c659577e0848b422b90f14/current/sections/tokenomics/network_rewards.tex#L75):

The amount of tax collectible is capped at a maximum of $c$
times the amount of the current deposit, where $c$ is set by the
Network.
```
The tax rate τ is set by the Node Operator of a Normal Node, and is applied to the Network Rewards allocated to its $P_s$.

The amount of tax collectible is capped at a maximum of $c$ times the amount of the current deposit, where $c$ is set by the Network.
```

Proposed new taxation formula:

$$
T_{N,\epsilon} = \min(P_{O|N,\epsilon} * c_{\epsilon}, (R_{S|N,\epsilon} + R_{O|N,\epsilon}) * T_{N,\epsilon})
T_{N,\epsilon} = \min(P_{O|N,\epsilon} * c_{\epsilon}, (R_{S|N,\epsilon} + R_{O|N,\epsilon}) * τ_{N,\epsilon})
$$

Proposed new description of the formula:

The amount of tax collectible is capped at a maximum of $c$
times the amount of the current $P_o$, where $c$ is set by the
Network.
```
The Node Operator of a Normal Node sets the tax rate τ which is imposed on the Network Rewards allocated to its $P_s$.

The amount of taxiable $R_s$ is capped at a maximum of $c$ times the amount of the current $P_o$, where $c$ is set by the Network.
```

Reflecting the changes in the Whitepaper, the VSL will be updated accordingly.
The tokenomics will then be adjusted to reflect the new formula:
Expand All @@ -68,6 +72,18 @@ $$
P_{o} * 25 \geq T_{N,\epsilon} \quad \text{where} \quad D_{N} \geq 10,000
$$

To improve the clarity on the tax rate for all Public Good Nodes, The current description of:

```
For the Public Good Pool, the tax rate is set by the Network to collect donations to support Public Good initiatives and clauses.
```

is proposed to be updated to:

```
The tax rate for all Public Good Nodes is determined by the Network. These funds are deposited into the Public Good Pool and are allocated to support various Public Good initiatives and clauses. The allocations of these resources will be collectively decided by all Network participants.
```

## Rationale

The Core Developers have derived fresh insights from the Mainnet Alpha, revealing that the existing formula is overly complex and inefficient for computation.
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