CIP-0096

Abstract

As the network continues to grow, there is an increasing potential for the free rider problem to emerge with Validators and liveness rewards; Validators can collect liveness rewards as incentives from the network without otherwise participating in the network and adding utility. To mitigate this and encourage participation among validators operating on the network, we suggest adjusting the Validator liveness rewards cap while leaving other aspects of Validator rewards unchanged. The reduction in liveness rewards would begin no more than 5 business days following CIP approval, along the below schedule:

1. No more than 5 days business from CIP Approval: Liveness rewards set to 67% of current levels
2. +30 Days from (1): Liveness rewards set to 50% of current levels
3. +60 Days from (1): Liveness rewards set to $0.60
4. On April 30: Liveness rewards set to 0

New values in the Canton Coin DSO configuration would be set as follows for each stage:

1. No more than 5 business days from CIP Approval: Validator Liveness Reward Cap = $3.33
2. +30 Days from (1): Validator Liveness Reward Cap = $2.50
3. +60 Days from (1): Validator Liveness Reward Cap = $0.60
4. On April 30: Validator Liveness Reward Cap = $0

Specification

Updating Liveness Reward Caps

Super Validator node operators will perform 4 on-chain votes to make the following changes.

Vote 1 - Effective at Threshold:

Change issuanceCurve.futureValues.0._2.optValidatorFaucetCap, issuanceCurve.futureValues.1._2.optValidatorFaucetCap, issuanceCurve.futureValues.2._2.optValidatorFaucetCap, issuanceCurve.futureValues.3._2.optValidatorFaucetCap

From 570

To 3.33

On DevNet, followed by TestNet and then MainNet.

Vote 2 - Effective 30 days after Vote 1:

Change issuanceCurve.futureValues.0._2.optValidatorFaucetCap, issuanceCurve.futureValues.1._2.optValidatorFaucetCap, issuanceCurve.futureValues.2._2.optValidatorFaucetCap, issuanceCurve.futureValues.3._2.optValidatorFaucetCap

From 3.33

To 2.5

On DevNet, followed by TestNet and then MainNet.

Vote 3 - Effective 60 days after Vote 1:

Change issuanceCurve.futureValues.0._2.optValidatorFaucetCap, issuanceCurve.futureValues.1._2.optValidatorFaucetCap, issuanceCurve.futureValues.2._2.optValidatorFaucetCap, issuanceCurve.futureValues.3._2.optValidatorFaucetCap

From 2.5

To 0.60

On DevNet, followed by TestNet and then MainNet.

Vote 4 - Effective on April 30:

Change issuanceCurve.futureValues.0._2.optValidatorFaucetCap, issuanceCurve.futureValues.1._2.optValidatorFaucetCap, issuanceCurve.futureValues.2._2.optValidatorFaucetCap, issuanceCurve.futureValues.3._2.optValidatorFaucetCap

From 0.60

To 0

On DevNet, followed by TestNet and then MainNet.

Other Impacts

This CIP will also supersede work to be done as part of [CIP-0073](https://github.com/canton-foundation/cips/blob/main/[CIP-0073](/cips/0073)/CIP-0073.md) to allow allocating liveness rewards to non-operating parties. As a result, no additional changes will be made to allow granting of a ValidatorLicense with a default weight to an arbitrary party. For the avoidance of doubt, functionality described in CIP-0073 regarding allowing a party to create a MintingDelegation contract will not be impacted by this CIP.

Motivation

CIP-0003 was initially raised to provide incentives to operate necessary infrastructure to interact with the network and offset the initial friction associated with engaging in activity on the network. As an initial set of users has onboarded and a number of use cases have gone live, the network should shift its incentive structure toward active participation.

Adjusting the Liveness cap allows the Super Validators to signal a change in these incentives while removing the incentive to run infrastructure without active participation.

Rationale

Over the period 11/8-12/7, roughly 70% of validator rewards minted from the validator minting pool are associated with liveness rewards. The network has provided infrastructure operators with 132M CC of liveness incentives during this time. Given the growth of on-chain use cases and on-chain activity, combined with a substantial queue of new validators onboarding to the network, these incentives are likely to be no longer needed to bootstrap initial operators on the network.

As the ecosystem evolves and as more avenues emerge for acquiring Canton Coin to use to purchase traffic, Validator doing work on the network and acquiring Canton Coin via liveness rewards also provide less utility to the network as a means of facilitating participation.

Backwards Compatibility

This CIP requires no new Daml models and no other breaking changes, so it will be fully backwards compatible.

Copyright

This CIP is licensed under CC0-1.0: Creative Commons CC0 1.0 Universal.

Changelog

• 2025-12-07: Initial draft of the proposal.
• 2025-12-31: CIP approved.
• 2026-01-05: Add link to post history, and mark it as replacing CIP-0073.