Question 1

What is ICP, and what role does it play in the Internet Computer?

Accepted Answer

ICP is the native token of the Internet Computer protocol, connecting protocol governance, network node incentives, and the economic cycle for application computing resources. It is not the token of a single canister application or SNS application. The same ICP can serve different roles at different stages: holders can lock it to participate in NNS governance; developers can convert it into cycles consumed by applications; and the protocol also distributes ICP rewards to node providers and eligible governance participants. These uses correspond to different processes, so holding ICP, owning cycles, and obtaining governance rights in a particular application should not be treated as the same thing.

Question 2

What is the difference between ICP and cycles, and why do applications need both?

Accepted Answer

Cycles are fuel used by canisters to pay for resource consumption such as computation and storage, whereas ICP is the protocol's native token. Only after developers convert ICP into cycles can a canister use those cycles to pay its operating costs, so the two have different purposes and states. The economic meaning of conversion is more than simply “changing units”: ICP used to create cycles is burned, while cycles remain in the canister's balance and are consumed as it actually uses resources. Simply holding ICP does not mean an application already has usable cycles; the application's controller must first top up its resources.

Question 3

How can ICP be used to participate in NNS governance?

Accepted Answer

To participate in protocol-level governance of the Internet Computer, holders need to lock ICP in the Network Nervous System (NNS) to create neurons. Neurons can vote on NNS proposals, which cover protocol-level matters such as network upgrades, subnets, and certain economic parameters. Locking is a prerequisite for governance participation: ICP is in a locked state within a neuron, and the neuron then participates in voting according to its own settings or follow relationships. Voting power is not determined solely by wallet balance, but is related to neuron locking and participation; maturity generated through voting is also not the same as ICP that can immediately be freely transferred.

Question 4

What is the relationship among the NNS, neurons, and application governance?

Accepted Answer

The NNS is the Internet Computer's protocol-level governance system, and neurons are the governance units that hold locked ICP and voting settings within it. The NNS handles matters concerning the network's own rules and operations; it does not make business decisions for every application deployed on the network. This hierarchy determines the scope affected by votes: voting on NNS proposals may affect protocol upgrades or network configuration; if an application adopts an SNS or its own governance arrangement, its community decisions belong to a separate mechanism at the application level.

Question 5

How are ICP governance rewards generated and settled?

Accepted Answer

Eligible neurons can accumulate maturity after participating in voting. Maturity represents their entitlement to voting rewards under the governance rules. Only after applicable conditions are met and the relevant operation is performed can maturity be realized as ICP in the protocol-specified manner; therefore, “having maturity” and “having received freely usable ICP” are not the same state. The rewards come from newly minted ICP under the protocol, and their distribution logic is connected to governance participation rather than being paid directly from an application's revenue. The conditions for locking, voting participation, and reward realization jointly determine the outcome; a published reward rate or someone else's result should not be regarded as a guaranteed personal return.

Question 6

Why do node providers receive ICP?

Accepted Answer

Node providers receive ICP because they provide the hardware and operational capacity that make up the Internet Computer network, and the protocol uses newly minted ICP as network rewards. This mechanism is intended to link the cost of continuously providing infrastructure with protocol-level incentives. Node rewards are a network-level issuance mechanism. They are related to, but are not settled directly transaction by transaction with, the resource consumption paid in cycles by canister users: the former is a protocol reward for network suppliers, while the latter is fuel prepared in advance by applications for computation and storage.

Question 7

Which mechanisms affect the supply of ICP?

Accepted Answer

The ICP supply changes dynamically; it is not increased in only one direction. Node provider rewards and governance rewards mint ICP when protocol conditions are met and the rewards are realized; on the other hand, ICP is burned when converted into cycles, and protocol-defined burning events such as transaction fees also reduce supply. Therefore, supply changes should be understood as the total of multiple inflows and outflows, rather than by looking only at one category of rewards or only at application activity. The scale of application consumption, realized governance rewards, and node rewards can all change with network conditions and protocol rules, so a fixed inflation rate or price outcome cannot be directly inferred from them.

Question 8

What is the difference between ICP and SNS application tokens?

Accepted Answer

SNS is a community governance framework designed for an individual application or service and can have its own governance assets, proposals, and economic parameters; ICP and its NNS neurons are used to govern the Internet Computer protocol itself. The objects governed by the two are different. Therefore, holding the token of an SNS application generally does not mean obtaining protocol governance rights in the NNS, and holding ICP does not automatically mean owning that application's SNS token or application interests. When assessing rights, first determine whether the discussion concerns the protocol-level NNS or the SNS of a specific application.

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