76% APY Returns

Why NNS participants are getting vastly increased rewards

Over the past 6 days, my 8-year neuron (aging since 23JUN21) has been averaging 76% annualized yield. Why so high? Well, as I wrote a week ago, the NNS governance rules changed to emphasize more participation by neuron holders. Specifically, neurons can no longer follow dfinity or ICA for governance topics and governance proposals are now weighted 20x in terms of daily voting rewards (and exchange rate proposals are now weighted 0.1x). This means two things:

• Anyone who isn’t voting manually AND hasn’t updated their governance followee on their neuron is not currently voting on governance proposals.

• Voting on governance proposals has become a large contributor to your daily rewards.

In addition to that, we are in in the final days of the 30-day awareness campaign by Wenzel Bartlett, where an educational governance proposal is proposed every day. The intent of the awareness campaign is to bring attention to the two changes above and to increase participation in the governance of the NNS. So far it has been successful… voting on governance proposals have increased from ~40M votes per proposal to ~71M votes. But, with total voting at 407M, there’s still a lot of room to improve. Some of this lack of voting comes from dfinity and ICA neurons, which are abstaining from voting (which may not always be the case).

Big Picture

Staking on the NNS has become more lucrative for those partaking in governance due to the recent changes and will remain so until governance participation increases. While most days do not have governance proposals, the days that do will most likely continue to see daily rewards on the scale of 50-75% annualized. In addition, the governance structure has gotten stronger due to the increased active participation and because active stakers are now getting more share of the total ICP supply.

In terms of an investment, if you assume one governance proposal per week and ~100M votes cast per proposal, then an 8-year neuron staked today would receive an annualized reward of 26.9% (up from 21.4% under the previous rules). That could drastically improve my chances of getting $100M for my 50th birthday :)

If you have a neuron and haven’t updated your followees in the past week, be sure to add a followed neuron for governance topics.