Tweak to the Penalties and Top N Miners
PTN used to penalize miners who drifted beyond the 5% MDD mark by marking them for elimination. Elimination would explicitly bar this miner from further capturing weights on the network, which forced miners to register new keys. With the introduction of the new MDD adjusted penalty, we began to harshly penalize miners who hit beyond 5% MDD, but if their MDD had recovered within 30 days they would be eligible to compete once again.
Problem Statement
Our existing penalty reduces the returns of the miners to 1, as if they had no trades in the system. This is suboptimal, as they might still capture weight if there are other miners on the network who are currently negative in returns.
Additionally, any strategy curated from our platform will likely rely on the behavior of top miners. Trading strategies built on PTN will likely only use the most premium miners on the system. In particular, miners with a ratio of gains / MDD greater than one are interesting, with our most competitive miners regularly above 2. Outside of the top 25, our miners may have losing strategies but continue to receive rewards. Incentive needs to be mitigated here while still recognizing that more talent will likely enter the network and should have a path to capture TAO.
Proposed Changes
To fix these issues, we propose two primary changes.
- Application of penalties after scoring. If your miner has a drawdown of 10% for example, their final weight in the system will now be set to 0 instead of ranking them as if they had a return of 1.
Cutoff of weights to miners in the top 50. Miners after this point will receive no weight unless they are in the challenge period. The top 50 is chosen to give top miners a slight buffer in case their strategy derails slightly before they get no incentive. We will build our exponential decay against a maximum of these top 50 miners, instead of the total number of miners in the population.Incentive distribution will shift slightly to the top, with the top 15% of miners getting 90% of incentive, instead of the top 40% getting 90%.
Timeline
Proposal Delivery: Jun 24, 2024
PR: Jun 24, 2024
Integration: Jun 26, 2024