A new home for TACo means self-determination – an opportunity to restructure the protocol, further create conditions for independent stakers to thrive, increase compatibility with other Web3 infrastructure, and prioritize the service’s stability, reliability and longevity.
Although TACo has asked for very little from Threshold – particularly in relation to the spend on non-active tBTC stakers and DAO bandwidth – Threshold has nonetheless given TACo a great deal; community, prominence, mindshare, ideas, enthusiasm, reputation, token liquidity, subsidies, the list goes on. None of this is taken for granted, and migrating elsewhere will be a complex undertaking.
There’s also no perfect moment for an uncoupling of this significance. We’re right in the middle of TACo’s go-to-market epoch, when external perception of service stability is absolutely vital. That is why I’ve historically attempted to protect TACo’s promising customer/partner growth by fending off proposals that would modify the protocol governing TACo nodes, and undermine said stability. This state-of-affairs – regularly needing to insulate TACo from the impact of network-level modifications designed for tBTC’s problems – has itself become an issue. Customer acquisition for Web3 infrastructure is difficult enough without a turbulent backdrop in which TACo’s product needs are a secondary concern.
So, TACo’s destination will be researched, designed and presented over the coming months. The utmost priority today is setting up a transitional scheme for TACo that guarantees service continuity, minimally impacts our adopter pipeline, and lays the groundwork for a successful migration. At the center of this are TACo nodes – many of which are in live DKG cohorts, actively managing real-world customer data. Therefore, TIP-100 involves the following:
- TACo nodes will continue to earn the same yield (3.75%) for the entire transition period, on tokens still authorized to TACo. To fund this, all already-minted T will be allocated to the TACo transition period and migration.
- TACo nodes which remain active and reliable over the course of the transition period will likely accumulate a larger ownership share of the new TACo network, relative to those who do not.
- TACo nodes may be eligible for a fixed, stables-denominated subsidy during the transition period, funded by NuCypher.
- TACo nodes that are active during the transition period and migrate to the new network will also be distributed fees, once it reaches a milestone sum.
In order to achieve this – without a further T mint – the following changes to TACo’s protocol are included as part of TIP-100, should it pass:
- All TACo nodes will be regularly tested for availability and correct configuration with ‘dummy’ DKG rituals. This monitoring will directly impact reward and subsidy eligibility.
- Nodes deemed to be inactive or unreachable will not receive rewards or subsidies.
- Beta stakers will not receive any rewards, but will continue to run TACo nodes as per their agreement with the DAO under TIP-67.
- All TACo authorized stakes will be subject to a rewards cap, where up to 15m T will earn rewards at 3.75%, and all T above this threshold will not earn any rewards, but will be deauthorized and withdrawable shortly after this proposal passes.
- All stakers will have the option to fast-forward the 6-month deauthorization delay and deauthorize + withdraw up to half of their stake immediately. The remainder will be subject to the previously agreed 6-month deauthorization delay – that is, it will remain locked until a deauthorization is initiated and the delay completes as normal. Note this partial deauthorization is opt-in, so if the staker takes no action, all T will remain authorized until they do (and will continue to earn 3.75% yield). There is no deadline for this partial deauthorization. This will similarly be deployed shortly after the proposal passes.
- TACo authorizations with new accounts will not be possible during the transition period.
TACo has many dedicated stakers, some of whom have operated nodes since the NuCypher Worklock era. In the same way we don’t take Threshold for granted, we don’t take our stakers’ trust and commitment for granted. We’ve tried over previous months to minimize disruption so we can focus on making TACo stakers profitable. Now when disruption is unavoidable, we’ve secured a properly funded transition scheme/period to minimize the risks and maximize the upside – i.e. a new protocol designed entirely around TACo’s needs.