- Category: Economic, Technical
- Original PR: helium#428
- Tracking Issue: helium#437
This HIP seeks to discourage manufacturers from participating in or supporting large-scale cheating Hotspot deployments.
Manufacturers will be required to deposit Helium Network Tokens (HNT) in an escrow account in proportion to the rate at which they add new Hotspots to the network. These deposited tokens can be forfeited if the manufacturer is found to have been complicit in a scheme to receive network rewards for dishonest deployments, or returned to the manufacturer on a regular schedule after a waiting period in good standing.
*HIP-19 is the process by which manufacturers of Helium Hotspots can apply for and receive cryptographic permission to add new gateways (Hotspots) to the Helium network.
The Helium Network has provided a globally successful economic incentive for distributed wireless network propagation, far outpacing the growth rate of any traditional wireless infrastructure provider**.** Since its inception in 2019, the Network has grown from an initial core of 24 Hotspots to over 820,000 (as of May 2022), and at the same time, the HNT token has achieved a market capitalization of over $3 billion dollars.
The network achieves its value from its ability to offer global wireless networking coverage of various forms to current and future users. In order to maintain this value, the network must continuously demonstrate its ability to provide ubiquitous and reliable coverage, which is incentivized through a reward scheme known as Proof-of-Coverage (POC).
POC rewards have very successfully bootstrapped global coverage through what has been a majority of honest hosts setting up legitimate Hotspot placements. However, the POC scheme has been subject to dishonest actors who “game” rewards for their own selfish pursuits rather than providing legitimate coverage. This harms the majority of the community, users of the network, and undermines the Helium community’s mission of worldwide open wireless networks.
Over the past few months as the number of manufacturers has increased, so has the evidence that some
manufacturers use their powers to obtain rewards fraudulently. Manufacturers are able to obtain
rewards more quickly than other network participants, as such, they wield enormous power on the
Helium network. This HIP introduces a Token Lockup to counteract that power and further align
their interests with network success and disincentivize attempts to fraudulently earn POC rewards
themselves or with a coordinated party.
- Manufacturers of Helium-compatible Hotspots
- Long-term holders of the Helium Network Token
- Consumers of the Helium Network coverage (e.g. sensors)
- Volunteer committees (i.e. POCSWG and MCC)
Manufacturers of Helium Hotspots are given the privilege to induct Proof-of-Coverage earning Hotspots into the network in exchange for undergoing an extensive proposal and audit process managed by the Manufacturing Compliance Committee. This process seeks to ensure that a potential manufacturer has the technical ability to build and deliver Hotspots with sufficient security controls for the network.
A dishonest manufacturer can use its privilege to onboard Hotspots rapidly and deploy them in a manner that reaps Proof-of-Coverage rewards while providing no real coverage for the network. This process is informally known as gaming.
The temptation to “game” is a perverse incentive with a material economic value. As such, it can be combated in part with an upfront, revocable deposit known as *Token Lockup***.**
Under this proposal, manufacturers must deposit 1 HNT* (TBD) for every Hotspot they onboard.
The deposit is returned to the manufacturer for good behavior over the course of 24 12 months.
To keep the scheme practical, deposits must be made in advance and must be made in batches of
1_000 HNT* ***10,000 Hotspots minimum. Manufacturers whose approval pre-dates the deposit
scheme will be required to make a one-time catch-up deposit of 1 HNT for every Hotspot they have
already deployed, capping at 10_000 HNT* total.
To keep the deposit scheme effective, manufacturers must make deposits in step with their onboarding rates and may not onboard any further Hotspots when their deposit balance reaches zero. Manufacturers who continue to onboard in this condition are technically in arrears and are subject to immediate suspension of their ability to onboard new Hotspots.
*(TBD)
So long as a manufacturer remains in good standing, its deposits will be refunded at a rate of 25%
every sixth month after the date of deposit. The deposit will be fully refunded after two years.
50% every sixth month after the date of the first Hotspot onboarded from that batch.
Each manufacturer shall make its deposits into an individually-established account that is controlled by a multi-signature wallet that is held by the Foundation (TBD).
Alternatively, the manufacturer will have the option to make HNT deposits into an escrow account managed by a 3rd party staking provider. This will allow the manufacturer to earn HNT rewards while their HNT is being held in escrow. The manufacturer must independently establish an agreement with a 3rd party staking provider and submit a proposal to the Foundation for approval which specifies the method providing custodial control of HNT funds to the foundation. The funds must be in wallets and validator nodes that are 100% dedicated to supporting a manufacturer's token lock-up requirements. All existing requirements for staking must be adhered to which may further delay when the Manufacture has access to their HNT beyond the specific requirements of the HNT Lock-up period.
If a manufacturer is found to have abused their onboarding privileges, the entire balance of the manufacturer’s outstanding deposits will be forfeited and will not be returned. Forfeitures will be accomplished by token burn or token payment, under the direction of the Manufacturing Compliance Committee.
It is in the interests of the entire Helium community to recognize that token forfeiture is a drastic act and decisions about it must be made openly and rationally. To this aim, we propose the following tribunal structure in the hopes that it removes dangerous concentrations of power from any single decision-making group and defuses the inherent biases that investigative groups accumulate when pursuing allegations of wrongdoing.
Forfeiture shall occur only after a suitable trial. One group, representing the prosecuting body, and another group, representing the defending body (the manufacturer), must present the evidence for their respective cases in front of the judicial body, who shall make the final ruling of forfeiture only upon supermajority consent (TBD).
This division of roles ensures that each group vigorously pursues their own agenda while freeing the judicial group to remain impartial and responsible for determining the final action.
The right to bring forth an action under this proposal belongs solely to the Proof-of-Coverage Security Working Group*; a separate, community-organized body. The group shall use whatever criteria it deems appropriate to investigate allegations of wrongdoing and when ready, bring the case forward to the*judicial body* to begin a trial.
In all cases, the manufacturer accused of wrongdoing shall have the right to represent itself as the defending body at the trial. Manufacturers representing themselves will have a minimum of three full business days (72 hours) to prepare.
The judicial body shall be composed of the current standing members of the Manufacturing Compliance Committee and shall be in charge of running the proceedings and making the final ruling in a case.
During a trial, the prosecution and defense may only make statements and presentations that refer to evidence that has been shared with the opposing party ahead of time (TBD). The judicial body may interrupt with questions at any time.
- No double jeopardy
Once brought forth and decided, any case covering the same material allegations may not be brought again. This prevents endless attempts to gain a favorable ruling by simply repeating a trial.
- Misbehavior is scoped to violations of Manufacturer Ethics
A case has merit only if it alleges a manufacturer has violated a clause of the Manufacturer Ethics Agreement. Allegations of wrongdoing outside of the rules set forth by the ethics agreement are not within the Manufacturing Compliance Committee’s purview.