Updates to Yellow Paper (IISS 2.0)

ICON Foundation has released version 2.0 of the IISS Yellow Paper. Note that IISS stands for ICON Incentive Scoring System. These new updates have introduced some key changes to encourage the true decentralization of the ICON Blockchain Network and ecosystem.

• Source: ICON Incentives Scoring System (IISS) 2.0: https://m.icon.foundation/download/IISS_Paper_v2.0_EN.pdf

These updates in incentive model introduce details on the

1. penalty system,
2. a new ICX issuance system that creates a situation where ICX may be burned 🔥 during high network activity, and
3. a change in the transaction fee policy.

In this post we want to focus on Penalty System and what steps ICONists (ICX Holder or stakeholder in ICON ecosystem) can take to minimize the risk of adverse impacts from Penalties.

ICON’s Penalty System

According to updates to Yellow Paper (IISS 2.0) https://m.icon.foundation/download/IISS_Paper_v2.0_EN.pdf , ICON’s penalty system has now introduced a token burning 🔥 component.

This Penalty System aims to ensure the security of the blockchain network. It also aligns the incentives of both ICONists and P-Reps (Public Representatives). The penalty system disincentives, and discourages malicious and negligent behavior by P-Reps. It also encourages ICONists to be more active in governance and perform deeper due-diligence when delegating their stake to P-Reps.

There are three (3) types of penalties outlined in the IISS 2.0:

• Validation Penalty,
• Low Productivity Penalty, and
• Disqualification Penalty.

Source: ICON Incentives Scoring System (IISS) 2.0

In summary if a P-Rep suffers a Low Productivity Penalty or a Disqualification Penalty, 6% of the delegation towards such a P-Rep will be burned 🔥. This makes it extremely important for ICONists to delegate towards secure, reliable and high quality P-Reps.

How can ICONists lower the Risk of Adverse Impacts from Penalties?

ICONists really have to think, do a deeper research, and plan properly to delegate their hard-earned ICX to preferred P-Reps. They must know that the penalties are directly going to impact ICONists and they could loos 6% of their stake multiple times...

1. ICONists should try their best to delegate ICX towards secure, reliable and high quality P-Reps who understands the core principle of Information Security and follow the best practices. Security, Redundancy, and Resiliency will be important more than ever before for both ICONists and Block Producers (P-Reps). 🔐

2. Another way for ICONists to reduce the risk is to delegate across multiple P-Reps to diversify the risk of having their tokens burned. 📈

It is also important to know that

there is nothing in this universe that is 100% secure.

There will always be some risk involved and what ICONists can do is to reduce the risk level to minimum.

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🔐 The END 🔐

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ICON Sweden applies Industry "Best Practices" in

• Information Security,
• Privacy, and
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We emphasis on fundamentals and sound principles of Information Security and Privacy in all aspects (ISO 27001/2, 27017, 27018, CSA CCM, OWASP, CIS L1, L2, EU GDPR, …). Security is our top priority. The standards and frameworks that we align to and use as guidance,

focus on, every aspect of security, for example;

• Network Security
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• Business Continuity Management
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• ....

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