ICON — the blockchain project that aims to build one of the largest decentralized networks in the cryptocurrency space — has announced the release of new ICON Incentives Scoring System (IISS) Yellow paper updates.
The paper – which focuses on its underlying governance framework, incentivization model and penalization system, comes at a time when the project is preparing for its Public Representatives (P-Rep) node election campaign.
Incentivization is key
It is often said that for a blockchain protocol to retain its integrity long-term, those involved in the project must be incentivized to keep the network secure. This not only includes those responsible for confirming and validating blocks, but the entire ecosystem. As such, the team at ICON have installed an incentivization model for ICX holders – otherwise known as ‘ICONists.’
By holding at least 1 ICX coin, users will have the opportunity to vote in the upcoming September node elections. For those unaware, the ICONSENSUS campaign seeks to attract talented candidates that will be responsible for overseeing the governance of the blockchain. Notably, the 22 elected P-Reps will be tasked with block validation, network upgrades, and keeping the overall ecosystem safe.
In order to incentivize ICX holders to utilize their vote wisely, users will receive a share of the block rewards earned by their respective P-Rep. On the other hand, the ICON Yellow paper also makes note to its penalization system.
In a nutshell, ICX holders could face a penalty in the event that they vote for a malicious actor during the campaign. This is to ensure that users only vote for legitimate P-Reps, and thus, allows the network to retain its integrity at all times.
Incentives Scoring System
The main incentivization system for ICONists is based on the platform’s IISS. The overarching concept of the IISS is that users should be rewarded in direct correlation to the amount they contribute to the ICON network.
For example, when users stake their ICX coins with their chosen P-Rep, an I-Score will accumulate over time. This I-Score can be traded-in for ICX coins at any given time via the ICON Foundation Treasury.
Once again, it is important to remember that should one of the 22 elected P-Reps not perform their duties as per the governance model set upon them, they face the risk of being penalized. This can have a direct impact on ICONists too, which further highlights the importance of the election process itself.
Finally, it is also worth mentioning that the Yellow paper makes reference to the ICX issuance system. In order to mitigate the effects of inflation, and thus, devaluation for ICX holders, rewards will initially be paid from transaction fees. In the event that transaction fees are not high enough to reward network participants, only then will new coins be created.
Will ICON’s Incentivization Model Motivate Other Blockchains to Follow?
In summary, the importance of employing a fair and equal governance system is crucial in all walks of life. In the case of ICON, the project is looking to achieve the perfect balance between incentivization and penalization – two key metrics that are required for the long-term viability of any ecosystem.
It will be interesting to see whether or not any other blockchain projects decide to take a similar lead. Especially when learning about the EOS network cartel that cooperated against the network due to lack of incentives to stay aligned.
Disclaimer: This article is a guest submission and was not authored by BeInCrypto or its staff. We have chosen to publish it because we feel it may be of interest to our readers.