Review ARC-0046 stacking requirements

[barnacode]

---

arc: 0722
title: Mitigate ARC-0046 effects
authors: @barnacode
discussion: #98
topic: Protocol
status: Draft
created:07/14/2025

Abstract

This ARC proposes a review of the stacking requirements defined in ARC-0046 which directly affects small miners, we find the amount we must stack exorbitant, we have not been given enough time to self-generate that amount which implies either stopping the machines or investing in ALEO's to be able to continue with our activity, we strongly urge that if you really want to achieve a strong, stable, decentralized and healthy network, you take into consideration the miners, an important part of a decentralized ecosystem.

Motivation

This ARC aims to correct the disproportion of ARC-0046 and how it affects small miners, who have made an investment believing in the project and who find themselves without the capacity to react due to both the disproportionality of the measure and the speed of execution, and through this inclusive discussion a solution can be reached that satisfies all parties involved in the network, Stacked, Provers and Validators.

Specification

Test Cases

Reference Implementations

Dependencies

Backwards Compatibility

Security & Compliance

References

[Ninana991]

I fully support this proposal this is the only way to prove that this network is decentralized and adoptable.

[velzevu2]

full support

[velzevu2]

I fully support this proposal this is the only way to prove that this network is decentralized and adoptable.
Vote.

[Myntrq]

Full support 👍

[alishah131]

Fully support this!!

[MarioMoreschini]

On behalf of miners, we urge HowardWu to review the ARC46. if you want to keep the staking mechanism we can agree but it should be reduce at least by a factor 10, or even more. Interest of all party should be taken into account - miners invest their money upfront to create a backbone for Aleo project. So we have to protect our investment and you do not change the economic rules of the game when the game start. Difficult its also not really clear but its a risk we are aware of, as the price fluctuation. BUT take out 6 months of mining activity every year its just a crazy idea. we urge to reconsider it. And as founder of ALEO take responsibility - get out of the office. and honestly tell that you have make a decision that maybe its not the best - there is no shame in error, shame is in keeping doing the error.

[velzevu2]

fully support💪🤜🤛

[ckalmighty]

I fully support this.

The staking requirement and the mechanisms by which it will be governed were rash and not fully thought out. For instance, my understanding is that in order to solo mine, you need to stake 100,000 ALEO already. Those of us who do not have 100,000 ALEO to solo mine have to join pools. Now it seems that ARC-0046 is forcing everyone to solo mine. If we couldn't afford it before, we can't afford it now. It seems like only 1 mining pool operator is even attempting to work with miners, but lots of things aren't considered such as the fact that I have tokens both liquid staked and natively staked on the network already. Those staked tokens are essentially being ignored by the pool operator, and they aren't enough to meet these requirements. The other thing I do not understand is that when my machines submit a puzzle solution, how is the network to know to look at my wallet address to check my staked tokens? For the community to have so many questions and concerns about this proposal seems to reinforce the fact that the logistics seem to be not well thought out or documented, and this proposal seems to be rushed.

There is no shame in making a mistake, the shame is in not fixing it. Fixing mistakes is what makes you honorable and the community you are trying to build will align behind you as a result. Not fixing the mistake of ARC-0046 will cause people to not only abandon you, but resent you. Small miners can't afford to lose money on machines that no longer work for them, otherwise they wouldn't be small miners.

[howardwu]

@barnacode What is your concrete proposal for this ARC? The ARC does not state what your model as you see it for proving would entail.

In preparation for your proposal, please consider the following facts:

• AleoBFT is a Proof-of-Stake network. As such, proving does not contribute to consensus and cannot be 51% attacked by provers.
  • You can learn about how Aleo's consensus works by reading the AleoBFT paper: https://developer.aleo.org/specs/aleobft.pdf
• Today, validators can technically remove the puzzle with zero technical repercussions by provers, because provers have no stake
  • As such, ARC-0046 is intended to help provers grow in stake weight (with a goal for at least 33%) to protect their own long-term business interests in consensus
• ARC-0046 was voted on by the Aleo community, for which all provers could participate, and for which this proposal reached quorum and was passed: https://vote.aleo.org/?t=accepted
  • As such, to change the proposal, you will need to convince the Aleo community to vote against what they just supported

[barnacode]

Dear @vicsn, @howardwu ,

First of all, thank you @vicsn for your valuable feedback. I am confident that, by working together, we can propose a series of actions to help mitigate the impact that the implementation of ARC-0046 has had on the mining community.

As you rightly mentioned, the enforcement of the standard by the pools is left to their discretion. I believe that by actively promoting, through Aleo’s official channels, clear information about which pools are applying the standard and which are not, we may positively influence their stance.

Your suggestion of increasing the APR based on time-bound investment commitments (e.g., 3, 6, or 12 months) also seems like a promising option that could contribute to greater ecosystem stability.

On our end, @MarioMoreschini1973 and @MarcoDaa has share our analisys and propossal here with you, and we like to know your impressions for review and futher discussion.

Additionally, we’ve noticed some uncertainty in the community around how individual miners’ staking will be handled under the new standard. Is there a defined procedure in place? The documentation refers to “delegated staking,” but we would appreciate more clarity on how this delegation to a prover will work in practice.

Lastly, we’ve seen that the discussion forums have been closed for comments. Was there a specific reason for this? Some community members are eager to participate and contribute to the dialogue—it would be great if this functionality could be reopened.

Thank you once again for your time and support. Looking forward to continuing the conversation.

Best regards

[vicsn]

As requested in the github discussion threads, Aleo Foundation has now opened a Discord channel for miners to discuss any ongoing concerns: https://discord.com/channels/700454073459015690/1395221654946447412

I believe that by actively promoting, through Aleo’s official channels, clear information about which pools are applying the standard and which are not, we may positively influence their stance.

I have reminded Aleo Foundation folks about this again, I really like the idea.

On our end, @MarioMoreschini1973 and @MarcoDaa has share our analisys and propossal here with you, and we like to know your impressions for review and futher discussion.

Provable will come out with a blog post soon (hopefully next week) addressing the raised concerns, and summarizing some of the responses in a clear and coherent form to provide clarity for all network participants, stakeholders, miners and mining pools. ARC-46 will still activate on mainnet July 31st. It will also discuss what the delegated staking could look like in more technical detail. Given that this discussion has seen a couple of partial proposals stated, we think posting it as a blog post in more detail will provide the clarity people are yearning for.

Lastly, we’ve seen that the discussion forums have been closed for comments. Was there a specific reason for this? Some community members are eager to participate and contribute to the dialogue—it would be great if this functionality could be reopened.

Unfortunately, the Github discussion had to be partially closed for comments by very recently created github accounts due to some of the harmful negative comments. Which is a pity, because some folks have brought up really valid points, which we're very grateful for. We're taking these serious, and are working hard the coming days on the blog post and alternative solutions.

[MarioMoreschini1992]

Vic, it’s a week after ARC46 went into effect, we had long discussion in Github and still – as miners – we do not see tangible steps from Aleo Team to listen to us. We made proposal and suggestions – but no feedback (post from How-Wu as you announced just confirm what we already knew ). After a week of chaos in the staking system we may already appreciate clear effects:

• Pool that do not request (still) staking, are offering a rewards for miners that is 20/30% less then pool that offer staking
• Pool that offer staking still are not able to guarantee the rewards over the staked Aleo
  Now lets talk numbers and go to the ARC46 approvals:
  In Aleo network there are now 32 validators. At the moment of ARC46 voting, first 5 qualified validators owns together already 52% of the voting power, the first ( aleo1n6c5ugxk6tp09vkrjegcpcprssdfcf7283agcdtt8gu9qex2c5xs9c28ay) alone owned 15% of voting power and 206 mil aleo.
  Overall staked Aleo by validators is 1.3 billion, if the goal is for provers to stake 33% of Aleo offer in 2 years, we have to stake from 500 mil. to 700 mil (in case the offer raise to 2 bil.).
  At current rewards ratio of 0.14 Aleo/MH, with the current mining capacity, we produce 120 mil. Aleo per year. It means 240 mil. Aleo in 2 years, to reach ARC46 goal miners are forced not only to stake BUT to buy Aleo on the market (from whom? …..).
  Despite we - as miners- are staking and not earning, Circulating in the network moved in a week from 440 mil. to 452 mil as of today (07.08).
  Provers will never have a chance to vote or balance validators, the difference its too big (validators at 10% a year, earn 130 mil. Aleo a year – just like our production) – so the disparity will stay like that and the first 5-6 validators will always decide which proposal will move on.
  So, based on pure numbers – as we already have tried to demonstrate, one of the goal of the ARC46 is not reachable (and this is crystal clear) while damaging us from the economic point of view. So make no sense to keep such limit.
  For what refer the technical explanation, why the ARC is needed – we trust you know what you are doing. BUT such limit are not bearable at all; we are sure there is a way to reach technical security while protecting miners work and investment.
  Also, and probably most important – your limit are fixed, while rewards are going down by the hours, it means end of the year we ll sit at 0.05 Aleo/MH (now we are 0.15 – 2 months ago it was 0.4) , while the limit are not changing , so not only we have to stake all our production BUT we ll have to buy because it become an unreachable limit with the current Asic.
  We need you guys to listen to us and split the problem in 2:

1. Economic feasibility and sustainability for all stakeholders (now only validators got plus – in fact markets shows selling trend as price increase and NOT from miners)
2. Technical goal and network security, we may reach the same BUT with less ambitious limit (x10?)
   Also, I like to remind that among 32 validators, 23 are Companies (with much more finance possibility then us) and 9 are private address (founder, sponsor?). One address just get rid of 130 mil Aleo at peak price, few days before today (it was the first on the validator list, now it stays lower) – coincidence? And what about the goal to keep staked and not sell? Maybe it was an internal transfer between address of validators, BUT the feeling that validators has liquidated their position its high. While miners were forced to buy at higher prices to fulfill the staking system.
   I ll propose a Zoom conference with representatives of miners, Q.A session and our demand submitted in advance.
   As you have been always open to us, I hope in your answer (just please – numbers) to confront our idea - and we have already read all the post and explation. I am open to share all our analysis , model and scenarios.
   Discord channel just replicated our Github discussion and Telegram, all miners complaining and that s all, this NO what we need.
   We need to change the ARC46 together and make the Aleo project successful for everybody.

[vicsn]

My apologies for not being able to come with a more comprehensive reply at this moment in time due to other priorities, which includes technical ARC46 adoption matters.

I can at least alleviate some of your concerns:

• future ARCs will be voted on by means of stake-weighted voting, possibly with a heavy discount against foundation stake. This system has been in development for months, and it will be live soon. I agree with you the governance system needs to be improved, and very much look forward to this new systen.
• foundation treasury should significantly decrease over time due to investments/grants to projects, perhaps even mining related, which benefit Aleo. ARC46 and all actions of the foundation are geared towards long term value increase of Aleo, as well as compliance.
• We are aware of at least one mining pool actively working on an implementation of the mining pool smart contract (Leo program) noted in the ARC46 blog post. We have been actively supporting them to resolve any issues they encountered, and look forward to help others with the implementation, to alleviate your worries about custody of the stake.

[MarioMoreschini1992]

Vic, thanks for your reply, i have been waiting to answer and talk also with different people in our group. As matter of fact we d like you and the team to focus on the following issues.... we have been waiting some time from the ARC implementation also to fully understand the effect and impact (even if till now short term).

1. ARC voting: ok, thanks - heavy it means ratio very strong, validators has more then 10 mil. Aleo, myself and most of the miners at the current day just around 5/10k. we are talking factor 1000.....
2. Long term value: here you have to clarify what for the Team is long term. long term its in general >5 years. Miners (and not validators) has invested to get return...so any policy affecting miners should take into account miners business model, not only validators one - validators invest XXX $$ in Aleo, get 10% rewards and when price increase they liquidate part of it - (as they did in the last months) - we need to pay electricity and often credit. we cannot allow ourself just to retain - if we wanted to stake, then instead of buying servers we ll have just bought Aleo and stake them, we ll at least save electricity cost and interest. So different business model has to be addressed differently.
3. Still we do believe that the goal of the ARC will not be met in order to balance provers and validators (for this was enough to introduce a ratio) or to develop a new ARC where you forbid the validators to sell the ALEO they get as rewards (i remind that 10% of 1.3 bil per year=130mil aleo, so rewards of the validators are equal a year of the Miners production) - so you may have reach the same numerical effects just blocking rewards sales (maybe at 50%).
4. yes, a pool has implemented a Leo based stake mechanism. BUT we go back to the point 2 - its not something that can fit with miners business model. that's it. Miners has to balance their ROI and make their investment profitable. You,Howard and the Aleo team do not work for free right? with the promise that in 2 years somebody will pay your salary...you have pay rent/life/transport/food. the same for us. We need to be free to cover at least our cost. and here came the biggest issue of the ARC:
5. Why the ARC46 does not fit with our business model? because the target are not realistic:

• Aleo/Mh/Day reach in middle of August the value of 0.10 and keep going down - estimated at year end 0.05 or less
• ARC limit is fixed (so, do not take into account the production decrease) so, its virtually impossible to reach the limit and this create simple consequences:
• miners has to buy aleo if they want keep mining, becasue at the current reduction rewards speed for miners our production at year end will not be enough to cover our Hash (at miners output its proportionally to staken aleo) or add capacity (and buy more aleo to allow additional hash)
• miners will leave the business and sell all the aleo at once
• i find strange that you guys did not take this into account...., in March the value of Aleo/Mh/Day was around 0.4...so as you see our business model is falling apart if our expected profitability is vertically going down.
• effect on price, after the firstr bump to 0.39, where then most of validators have sold, got back at 0.24-26 - while BTC ranging in ATH. its short term small increase - but there is not a balancing price increase to protect our investment - usually market react and discount news....here we are.
  so, i really hope that when u guys will get some time you will address our concern - all the points.
  if you want to create value long term for all the stakeholders, you have to take into account interest of everybody and their different business model (as matter of fact other leading Altcoin does not require staking)
  Some ideas to make a quick patch to this ARC - we may suggest:
  a) decrease by a factor x10 the limit and make them variable with Provers rewards that decrease overtime. so a value of 10.000 aleo today is not the same at 10.000 in 2 years - it will requires 20 times the Hash the Electricity and the investment.
  b) split the ARC limit between validators and provers (now the ratio its 1/10 - 1.3 bil. staked by validators, 120 mil. rewards for miners) so, they have to give up to staking 10 Aleo (validators rewards) for each 1 Aleo that provers has to stake - this is balanced and together with point 1 (decrease and variable limit) will allow miners to stay in the game, complying with ARC stake idea but not putting everything on our shoulders
  Hope to get feedback from you and Aleo team - thanks for your time and patience.

[MarcoDaa]

My proposal also is modular stake ..

• Modular stake (“pay-as-you-go”)
Lock a tiny base stake (e.g. 1 000 ALEO/epoch) to join mining, then optionally add stake in proportion to extra hashpower up to a hard cap (say 100 000 ALEO). Small rigs stay in the game; big rigs still guarantee network safety.
• Delegation pools with limits
Tiny miners delegate whatever ALEO they have into trusted pools that handle staking and proofs. Pools face a max-size cap (e.g. 15 % of total stake) and can be slashed for bad behavior, so no single operator runs away with the network.

ARC46 will kick all small miners because for them is impossible reach the staking program.

[vicsn]

With our smallest submission interval set at one epoch

If we take this approach, but it also takes you 100 or 1000 epochs to "save up enough" to allow you to land a solution, then we'd have to now store an extra mapping { address: num_epochs_staked_for_solution_submission }. Which is effectively tracking the duration of stake.

I think the approach is clear, still looking into what other people are coming up with in the many threads which spawned over the past days.

[MarcoDaa]

Based on the information you have released, it appears to us that for these reasons the arc is not entirely clear... because you are impacting 8% of the circulation (i.e. us) and enriching the validators, this arc will have no effect on them... we have simulated the plan given by you in detail in the following 2 analyses, if we have made mistakes let us know, and thank you so much for your support and understanding on this topic..we appreciate it very much.

Aleo Analysis.docx
Aleo Support Data.xlsx

[vicsn]

and enriching the validators

This is not a fair characterization. Miners who stake receive staking rewards just like validators who stake. ARC-46 is meant to align the entire ecosystem and will be equally beneficial for all stakeholders holding ALEO.

[ckalmighty]

@vicsn you are not taking into consideration the fact that certain pool operators, such as whalepool are ignoring any liquid or native staking already done by the miners. They are instead demanding to hold our tokens in their custody, for which the miners do not receive any rewards. In a perfect world where all miners could meet these staking requirements, sure. There is the up side of receiving staking rewards. However the reality is that most miners do not have enough hashrate nor time to accumulate 100,000 tokens to stake by the August 1 deadline.

There are several solutions to this conundrum, but the ARC as is along with pool operators such as WhalePool's approach to holding miners' tokens are not the right answer. If pool operators such as WhalePool instead consider miners' currently staked tokens as meeting the sliding scale requirements, I believe that would solve the issue for small miners being able to continue to mine. The lack of guidance in terms or implementation is the issue here. However, your idea from this post: #97 (reply in thread) I think is the solution to the worries of small miners. Creating an example Leo Program for the pool operators to use in order to query small miners' natively and liquidity staked tokens to tabulate if the miner has a sufficent on chain staked balance in order to continue mining would be the perfect solution. The pool operators do not need to hold miners' tokens in custody reducing their own liability, the miners maintain control over their tokens, the miners earn rewards for their investment into the network, and ARC-0046 gets implemented for all of the reasons that it was proposed.

Are there any downsides to a scenario such as this? Please let me know if I need to outline it more clearly and thank you for your suggestion of the example Leo program. We would just need pool operators such as WhalePool and others that are intending to or already are holding miners' tokens in custody to embrace this new approach, perhaps with the developers' and the Foundations' support/governance.

Would this require a new ARC, or an amendment to the currently approved ARC (46)?

[vicsn]

We will try our best to provide clarity for miners and pools about how to tally miner's stake in an upcoming blog post. See also #98 (reply in thread)