Proposal #15

# Crypto.org Chain v4 network upgrade

## Summary

Dear community members,We are thrilled to announce the proposal for the next major upgrade of the .org chain to [v4.2.2](https://github.com/crypto-org-chain/chain-main/releases/tag/v4.2.2) chain-main which has been released recently.

This proposes a network upgrade for the Crypto.org Chain crypto-org-chain-mainnet-1.This proposal implies that validators and full nodes will need to upgrade their chain-maind binary from the current v3.3.9. to v4.2.2 at block height 10073800 if this network upgrade proposal is passed.

This major upgrade contains the most recent developments on the Crypto.org Chain, including interchain accounts, IBC fees to incentivize relayers, NFT transfers via IBC and x/group. The main feature to be supported is Interchain Accounts, which enables cross-chain account management via IBC.

This new binary v4.2.2 also contains the following module updates:Cosmos SDK 0.46.7, Ibc-go 5.2.0, go 1.19 and Tendermint 0.34.24.

## Context

### What is this upgrade about?

#### Interchain Accounts

Interchain Accounts implements the ICS-27 protocol on the Cosmos SDK, which simplifies the process of handling ICS standards for IBC transactions. The key feature of Interchain Accounts is that it enables cross-chain account management built on IBC. It allows one chain to create new interchain accounts on other chains, relay transactions to these interchain accounts, and submit them to the target blockchain. Hence it allows controlling the accounts via IBC transactions.

#### NFT transfer module

The NFT transfer module allows users to transfers NFT’s via IBC using [ICS-721](https://github.com/cosmos/ibc/blob/main/spec/app/ics-721-nft-transfer/README.md). This application layer standard describes a protocol for transferring non-fungible tokens between chains connected with IBC, which preserves asset non-fungibility, & asset ownership, limits the impact of Byzantine faults, and requires no additional permissioning.

#### IBC Fee middleware

We integrat ed IBC Fee middleware for incentivising relayers for IBC transfers. The Fee Middleware module is designed to allow ICS29 fee payments in this. It is built with the assumption that sender chains are the source of incentives. The Fee Middleware module enables addresses to be registered with each party involved in relaying the packet on the source chain. The fees will be paid to each party at the end of each packet lifecycle.

#### Minimum commission rate

After [discussions](https://github.com/crypto-org-chain/chain-main/discussions/861) held on Github and the discord validator channel amongst the validators, there is a consensus for a minimum commission rate. With this minimum fee, we can prevent further gamification of the zero commissions rate, causing honest validators to fall out of the top 100 active validator set. Setting a minimum commission fee will also help to further decentralize the voting power, support validator long term economic stability and maintain infrastructure quality and reduce validator churn.

According to our calculations, taking into consideration the current state of validators and delegators reward distribution, a minimum commission will approximately entail a 3% reward redistribution from delegators to validators.

For example, assuming the staking APY is 10.88% and you delegated to a 0% commission validator. Now when the minimum commission becomes 5%, the new APY will become approximately 10.88%*0.95 = 10.34%

##Governance Votes

The following items summarize the voting options and what it means for this proposal.

YES: You approve the upgrade proposal to continue with the upgrade to 4.2.2

NO: You disapprove of the proposal in its current form. Feel free to give feedback and suggestions on how to improve the proposal.

NO (VETO): You veto the entire motivation for the proposal, are strongly opposed to its implementation, and will exit the network if passed. You are signaling the proposers should not create a follow-up proposal.

ABSTAIN: You are impartial to the outcome of the proposal.

If quorum is not met or less than 1/3 of participating voting power have voted No, the proposal fails and is considered to be vetoed. In this case the proposal deposit is burned rather than being returned to respective depositors.

##Conclusion

This upgrade brings important improvements to the Crypto.org chain, such as Interchain accounts, NFT transfer module, IBC fee middleware, key component upgrades and a minimum commission rate parameter change to support the long term development and quality of our validator infrastructure.