Block Producer Pay Undermines Approval Voting and Values

1 - Unequal pay

According to the NodeOne BP revenue analysis(1), the producing BP with the most votes can get up to 6 times the revenue than the BP on position 21. Yet, all BPs have exactly the same mandate from the community and do the exact same work.

This can be compared to sending 2 soldiers into battle or 2 police officers on duty; one gets 6 times more pay than the other, because she has a wealthier family at home or comes from a wealthier city.

Many will perceive this as unfair, as a system that is rigged for those with connections to large tokenholders. It undermines community values, such as fairness and equality and therefore is not in the best interest of the community.

2 - Nonalignment of interests between community and BPs

The NodeOne analysis shows that the BP on position 21 has a monthly revenue between 220 - 250 k USD/month. One has to assume that a BP with this revenue can fulfil all its obligations to the community, i.e. block production and other executive tasks. If this basic producing BP income is multiplied by 21, it accounts for only 45 - 55 % of the total producing BP revenue.

Producing BPs, especially those with the most votes, are incentivised to spend the other 55 - 45 % of the producting BP revenue on campaigning and competition, i.e. activities that are outside their mandate and do not create value for the community.

3 - Conflict of interest

A pay per vote system incentivises BPs to seek ‘personal’ gain instead of devoting all their effort to serving the community. Hence the concerns about vote buying, BP proxys, BP domination etc. It is like saying to a school teacher or government official, we pay you to do a good job for our community, but just so you know, if you devote enough resources to campaigning against and competing with other teachers, or for liaising with big tokenholders, you can increase your income by as much as 6 times. This creates a conflict of interest between personal gain and duty for the community.

There are many real life examples that show that such a system is not in the best interest of the community. It favours egoism and corruption instead of cooperation. It works against basic EOS community values, such as transparency and cooperation.

4 - Undermines approval voting

BlockOne has chosen approval voting(2) in an effort to achieve a good election result, i.e. a result that is in the best interest of the community.
Every tokenholder has 30 stake-weighted votes. A tokenholder can cast any number of votes between 0 and 30, only one vote per BP.

The fact that the votes are stake-weighted seems reasonable, because of the higher investment and risk of large tokenholders. It does not have a direct negative effect for the community.

However, linking BP income to votes creates an incentive, especially for large tokenholders, to vote only for their favourite or associated BP in order to ensure the best ranking in the election relative to other BPs and thus increase its revenue.

In other words: The system discourages voters to consider other BP criteria that have previously been fronted as being in the best interest of the community, such as

• alignment of interests
• independance
• transparency
• cooperation
• technical competence
• not all using the same cloud service provider
• geographical distribution

Payment per vote directly undermines the intended purpose of approval voting.