May 08, 2025 | Parameter Committee Triweekly - meeting notes

Governance Parameters Committee Updates
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Triweekly parameter committee meeting - 08 May, 2025

These are the minutes of the PCs (Parameter Committee) triweekly meeting. This is a summary based on automatically generated notes.

The purpose of the Parameter Committee is to provide technical advice and recommendations relating to protocol parameters. It discusses all parameters relating to the Cardano protocol including network, technical, economic and governance parameters.

Summary

ShengNan Li presented a staking model and explored the impact of decreasing the tau parameter, noting a potential increase in treasury outflow and a slight improvement in the Genie index, though Neil Davies questioned the significance of this change. Ryan (Cerkoryn) showcased a visualization tool for blockchain parameter changes. The meeting participants discussed a proposed increase in memory execution limits, the possibility of splitting it into two governance actions, and a Plutus parameter change, with Kevin Hammond indicating the relevant GitHub repository for publishing the rationale. Matthew Capps announced a change in work schedule and stepping down from the perimeter committee.

Details

  • Meeting Start and Agenda Kevin Hammond greeted attendees including Tommy, Samuel Leathers, Alexander Moser, Neil Davies, and ShengNan Li. Alexander Moser outlined the agenda, which included two presentations and a discussion on a proposed parameter change.
  • Staking Model Presentation ShengNan Li presented a general model for the proof of staking mechanism in Cardano, covering monetary policy, behavior of delegators and staking pools, and decentralization metrics. The model aims to assess the influence of parameter adjustments on reward rates, inflation, and wealth distribution.
  • Transaction Fee Modeling Discussion Kevin Hammond questioned ShengNan Li’s curve fitting for predicting transaction fees, suggesting a step function might be a more accurate representation due to phase transitions in the system. Neil Davies added that external factors, like price, significantly impact network activity and fees, making prediction challenging. ShengNan Li acknowledged the point and will seek better mechanisms to model transaction fees, considering both protocol updates and external effects.
  • Model Validation and Tau Parameter Change ShengNan Li showed that the model’s output for reserve and treasury balances, as well as yearly reward rates, aligns with empirical data. The potential impact of decreasing the tau parameter from 20% to 10% was explored, indicating a likely increase in outflow to the treasury and a slight improvement in the Genie index, suggesting less centralization.
  • Significance of Genie Index Change Neil Davies questioned the practical significance of a 0.02 change in the Genie index. Stef [RABIT] clarified that while Cardano is not egalitarian and has a historically high Genie coefficient, the upward trend is concerning. Kevin Hammond noted that a lower tau could lead to a more equal wealth distribution. ShengNan Li explained that the Genie index is being used to understand how changes in parameters might affect reward distribution and centralization.
  • Visualization Tool for Parameter Changes Ryan (Cerkoryn) presented a tool developed by a think tank to visualize the effects of blockchain parameter changes in real-time using sliders. The tool displays pools, their ROI, stake, and pledge, allowing users to observe how changes to parameters like ‘k’ and ‘z’ impact saturation and rewards. Different reward formulas, including linear and exponential models, are included to simulate potential pledge leverage functions.
  • Discussion on ‘a0’ and Pledge Benefits Kevin Hammond recalled that the initial low setting of ‘a0’ was intended to benefit smaller pools by easing entry into the ecosystem. Ryan (Cerkoryn) pointed out the trade-off: a lower ‘a0’ reduces the benefit of pledge. Neil Davies liked the idea of allowing large pool operators to effectively combine pools through parameter adjustments. Ryan (Cerkoryn) explained how adjusting ‘a0’ and introducing ‘L’ could shift rewards to smaller pools while still incentivizing pledge.
  • Governance Action on Memory Limits Alexander Moser provided an update on the survey regarding increasing memory execution limits per transaction and per block, noting a mixed response. Matthew Capps suggested tweeting a preview of the planned governance action to gather final feedback. Kevin Hammond proposed sharing draft metadata on GitHub for public commentary. Neil Davies emphasized the importance of using multiple official channels to announce the proposed changes.
  • Splitting the Governance Action Alexander Moser explained that due to a perceived guardrail, the proposed 25% increase in memory limits might need to be split into two separate governance actions. Nicolas Cerny questioned whether this split was necessary given the “should” nature of the guardrail and precedents with similar situations. Kevin Hammond suggested checking with the ICC on whether to proceed with one or two chained governance actions. Samuel Leathers noted that a rationale for any exception to the “should” rule would be needed for the CC’s evaluation.
  • Chained Governance Actions Kevin Hammond described the possibility of using programmatically chained governance actions, where the second action would only pass if the first one does. While this allows for a phased increase, Kevin Hammond raised concerns about the complexity for the community to understand. Samuel Leathers and Alexander Moser saw potential in testing this approach for future complex changes. The meeting participants agreed to propose the increase and the option of chaining to the ICC.
  • Plutus Parameter Change Neil Davies inquired about the status of the proposed Plutus parameter change. Kevin Hammond stated that the draft metadata combines the Plutus V2 cost model change with the first stage of the memory limit increase into a single governance action. Samuel Leathers offered to double-check if only V2 was intended to be changed. Alexander Moser asked about the appropriate repository on the Intersect GitHub for publishing the rationale.
  • Repository and Pull Request Kevin Hammond stated that the repository is “intersect mbo governance-actions” and they have admin rights. Kevin Hammond or Ryan Williams from Insect can approve the pull request.
  • Matthew Capps’ Work Schedule and Committee Involvement Matthew Capps mentioned shifting their work schedule to allocate time for self-education projects and will be stepping down from volunteering on the perimeter committee. Matthew Capps may attend future meetings as an observer and is still willing to help with extraordinary issues.
  • Acknowledgement of Matthew Capps’ Contributions Alexander Moser and Kevin Hammond thanked Matthew Capps for their help and contributions. Alexander Moser mentioned plans for proper celebrations at Matthew Capps’ last official meeting.
  • Meeting Conclusion Alexander Moser thanked Ryan and Steph, and the meeting was adjourned with participants saying goodbye and agreeing to meet again in three weeks. Samuel Leathers noted that Zang mentioned only V2.