Proposal: Keep and NuCypher Hard Merge

I very enthusiastically support this proposal and look forward to seeing both teams and communities move forward with it.

(For context, I’ve been an investor in and advisor to Keep for several years, have been an active staker from day one of the September launch (got 99% of my ETH in there!) and read every post in Keep’s #general and several other Discord channels.)

The reasons I am so bullish on this collaboration boil down to:

  1. Fortune favors the bold, and both teams are proposing to their communities a strong move that makes a lot of sense conceptually - knowing there’s a ton to be worked out over time. Each could easily continue on their paths, do great work and be rewarded by it. A protocol merger is even more ambitious, and the broader market is likely to respond to that - it’s already taking notice.

  2. While trust-minimized Bitcoin on Ethereum is only the first app, it’s a huge - and hugely important - one, and our communities have a far better shot at growing the pie together. Credit to the centralized bridges for introducing the concept and getting such significant traction; now let’s show the world the right way to do it.

  3. We are pioneering a new paradigm, not just in the technology and business models, but in the way we approach open source buidling. A merger of startups would be very different; a protocol merger that combines the strengths of two teams and two communities should yield a lot more than simply the sum.

I fully agree with the positive comments about the Keep team, and chandru’s statement captures my experience perfectly: “The KEEP team is one of the [most] honest/best in class in crypto and always pushing for full decentralization and thinking long term potential.”

While I have only started to learn more about NuCypher and check out their Discord, etc., I trust the Keep team’s judgment here, and further am impressed with what I’ve seen, including videos of MacLane, Tux and others, as well as their contributions on today’s community call.

Any partnership, no matter how aligned in spirit and mission, will have challenges; as does every team. There’s a lot to figure out here, on many levels.

But each of us was drawn to Keep and/or NuCypher by some form of the promise we see in crypto generally and in these protocols/teams/communities specifically, and my experience (notice the grey beard) tells me this has the hallmarks of a winning combination.

I am excited and honored to contribute what I can to accelerating our combined efforts!

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Let’s make the future together !!! Now it is time to merge and built not waste energy with fights and vanity

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I’m in favor of this as it seems that both the Keep and NU team and communities are strong and combined they may become even stronger.

Re: stake weights, I am slightly concerned about doing it based on coin count. This would start out in Keep’s favor, but would gradually become more and more heavily skewed towards NU. Perhaps it would be better to have the relative weights of KEEP vs NU fixed at 50%?

StakingWeight_KEEP = 50%
StakingWeight_NU = 50%

A node’s weight on the combined network would then be
StakingWeight_KEEP * KEEP / KEEP_stakeable + StakingWeight_NU * NU / NU_stakeable.

This would then be straightforward to introduce new work tokens regardless of how many tokens that new asset has issued.

Additionally, I don’t see discussed here how emissions from stake drop are going to be distributed. Will KEEP be earned by all or just by KEEP stakers. Likewise for NU emissions. I don’t have strong opinions here, but would lean towards having both stakers of both assets earn both rewards. Either way I think it needs to be specified.

Additionally, it would be good to set expectations on the scope of the merger. Is the joint effort going to be on tBTC only or on the Keep / Nu networks broadly? Will both projects anticipate keeping their own independent proprietary networks operational, or is it anticipated that all future work will be on the joint network? I don’t know what makes the most sense here, but I think clear expectations should be outlined.

All in all, I love the idea of combining forces to create better products and consolidate talent and resources towards bigger ambitions. I’m very excited for the prospect.

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This might be a bit too far ahead, still, just wondering, if the hard merge can come through, which I really hope it would, does it mean that we are able to bring the merged protocol to other L1s that we intend to build bridges to as well, or is it gonna be another community voting process as we are going through now, especially on Nucypher’s side since it’s not clear if they have the same intention as KEEP regarding expanding applications to other L1s?

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I think that with the proposal and all discussions and positive feedback happening it’s clear that both networks need each other and will thrive far better together than on its own.

Aiming with v2 at maximal btc on eth numbers it’s a huge goal for all and personally I’m pretty hyped and amazed with this prospect. It gives much needed fees for node operators and economic long term sustainability on both sides of the merge.

Still not sure yet how rewards should be handled equally and just. Should they stay on either side of the merge or should get everyone both via a new token ? And how complement both rewards plans ?

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Still not sure yet how rewards should be handled equally and just. Should they stay on either side of the merge or should get everyone both via a new token ? And how complement both rewards plans ?

Under the original proposal, KEEP and NU emissions stayed in place on their respective networks. But it’s been pointed out that this disadvantages non-staking NU holders relative to non-staking KEEP holders, given NU’s inflationary supply.

That’s one of the issues we’ve been trying to design around more recently. Ideally we’d treat similar groups on each side in an equitable manner and prevent weird distortions between the two assets.

One possibility is to move emissions into the new network in the manner described here. Feedback on that approach and/or other ideas are certainly welcome!

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Interested in thoughts here from everyone on our side cc @jcliff @statelayer @benlongstaff

High level what I’ve heard is support for a hard merge with a 50/50 stake weight based on the stakeable supply on both sides… and figuring out emissions on the new network and the original networks independently. A few Keep community members have rallied most stakers around adjusting the network’s emissions before the hard merge vote.

I recognize the NuCypher community might need a little more assurance upfront to get to comfort on passive holders and LPs versus stakers. I imagine we’re pretty open as long as the move doesn’t jeopardize our splitting stake weight evenly, adjusted for emissions and vesting, etc.

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I’d love to see rewards merged, but that would depend on governance that we were all confident has the best interests of the new network in mind. It’d be a shame to have a new network run by a staking cartel trying to maximize its own profit, versus making more deliberative long-term subsidy choices.

As a staker, I’m open to “share” rewards from tBTC v2 with the NuCypher network to bring on more nodes and more applications toward a bigger network. I hope that we’d all focus on the joint network.

On the other hand, I also know we need to maintain the tBTC v1 network as long as it has users and stakers… if we don’t response to a bug or exploit it will hurt users, and it will hurt the reputation of tBTC and both networks going forward.

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One possibility is to move emissions into the new network in the manner described here . Feedback on that approach and/or other ideas are certainly welcome!

I believe the 50/50 stake weight in the new network is important for both communities to stay focused on getting TBTC v2 to market rather than discussing how different contributions should be weighted.

Having the ability to walk things back if there are unforeseen problems seems smart given that this is uncharted territory. Not sure about the burning of tokens I imagine that could create tax headaches.

Designing a graceful wind down of the existing emissions could be complex given that stakers have committed capital based on the existing schedules. I think the risk of winding down emissions would be stakers taking their capital elsewhere between the removal of emissions and TBTC v2 going live. How big a risk this is would depend on how long it takes for TBTC v2 to go live. Winding down emissions to protect passive capital hurts stakers income who have taken the risk to operate nodes. Keeping the emissions risks creating an incentive for passive capital holders to sell NU and buy KEEP which could reduce the price of NU and hurt the capital returned from running the nodes. If the stake weight to earn the new token are the same for both networks maybe the price of the two tokens is less important.

Both teams have learnt lessons in token economics how the market responds to incentives, I think a new Token presents an opportunity to make sure there are sufficient incentives in place for TBTC v2 to be successful.

Maybe there is a solution for stakers in both networks to begin accruing tokens in the new network as the incentives are wound down?

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I love the project honestly. The thought of being part alone excite me and all the best to the developers and the team…wish you great success

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怎么说呢,我觉得两个团队去融合,长远来看,一定是好事,但是短期可以会有些波动

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I fully support their decision making in this matter. proud to be investing into the future !

No matter which proposal is chosen I think we should expect to see incredible things in the future. My only question would be if Coinbase would be included in any drops?

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i thought i read some were they were one of the vcs that are staking on the network so i would assume they would integrate the drop for its users

I believe the project side has its own considerations and hopes to do better after the combination

I am new to the KEEP. And wish you great success.

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