The Helium project has a community-driven proposal system that can be found on GitHub. When a rough consensus has been achieved in the review committee, a Helium Improvement Proposal (HIP) will be marked as “approved” and then the code can be merged and deployed.
For those interested in learning more about Helium before they make investments or become more involved in the community, exploring all of the HIPs can help you make more informed decisions.
Why Reward Splitting?
All Helium hotspots earn HNT for providing Proof-of-Coverage (PoC). These earnings are automatically deposited into the wallet of whoever owns the hotspot. In other words, regardless of any hotspot sharing agreement, the legal owner of the hotspot receives all tokens. There is no way to modify this. There is no way for a physical owner of a hotspot to change it.
Some businesses have been created with the express purpose of sharing hotspots. A provider, for example, Hotspot Share, might have started by purchasing 100 hotspots. Running all of these hotspots in the same place would be counterproductive. So, these hotspots are then sent out to willing participants all across America. The company earns all HNT mined but they promise hosts that they will pay a percentage of earnings once per month.
While a disgruntled host could simply unplug or destroy the physical hotspot in order to protest any actions taken by a hotspot-sharing provider, both parties want to earn as much HNT as possible, so the agreement will typically work out just fine. However, despite the aforementioned recourse, there is nothing stopping the shared hotspot provider from changing terms or simply not paying out the rewards to the host.
With HIP 24, splitting of rewards will be streamlined on-chain. Rather than accountants having to analyze earnings per month, the earnings can be split proportionally, instantly and in a provable way. In the classic hotspot sharing arrangement, both sides will be happy. In more broad applications, this makes for easier accounting and securitization of Helium earnings.
What are Some of the Other Use Cases for HIP 24?
The list of benefits contained in the proposal is quite exhaustive, here it is copied verbatim:
- Owners could offer hosts a more favorable reward split as a referral bonus
- SaaS companies could offer services for as little as 1% of earnings
- Owners could incentivize hosts to upgrade their hotspot in exchange for a more favorable reward split
- Manufacturers could offer hotspots at a discounted rate in exchange for a % stake
- Co-inhabitants could enter into trust-minimized agreements to split the cost and earnings of a hotspot
- A large group of people could pool their money for an otherwise cost-prohibitive premium hotspot placement and split the earnings
- Hotspot owners could sell off a % of their hotspot in order to raise cash for upgraded / additional hotspot deployments
- Companies could sell off a bundled % of a fleet's earnings before they are deployed to hedge deployment risk
- Companies could sell offof a bundled % of a deployed fleet's earnings to raise cash for more hotspots
- Hotspot owners could sell off a % of their hotspot's earnings to hedge against price risk
Where does this proposal currently stand?
Discussion on the proposal is active. No final decision has been made.
What are some drawbacks or concerns surrounding HIP 24?
The first issue is a technical one. Adding more on-chain variables adds complexity for developers and will slightly decrease the performance of the blockchain. This doesn’t strike me as particularly negative, but such adjustments should be made sparingly.
Allowing the splitting of rewards will open the door to financial contracts that are currently based solely on trust. Many of them are listed above. While this is exciting, it also presents a real risk that well-capitalized players will come to dominate the space, being overrepresented in hotspot procurement, HNT accrual, and the direction of the project. Too much emphasis on the financial securitization of Helium hotspots can have the effect of suffocating the initial user base and undermining the tenets underpinning the People’s Network.
Additionally, securitization, in terms of enabling owners to set, structure, and sell percentages of earnings will require careful legal and tax considerations, especially as these arrangements may involve participants in multiple countries. It has the potential to be quite messy and to harm Helium’s reputation with regulators and tax authorities.
What is Likely to Happen with HIP 24?
Any changes to the blockchain logic are heavily scrutinized due to the massive risk of making a change to the core of the project. While the need exists, it is not clear whether this logic needs to exist on-chain. There are community-developed apps such as Patrium that can manage Helium rewards splitting off-chain. However, reliance on such apps developed by third parties is not necessarily safe just because the apps are endorsed by Helium.
For these reasons, it is unlikely that this proposal will be approved and merged any time soon. HIP 24 moving forward could really change the Helium landscape.