Raise Validator Minimum Commission Fee to 5% & Lower Validator Maximum Voting Power to 10%

Governance & Proposals
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Written by: Rabbi Jebediah (https://twitter.com/RabbiJebediah)
Main Co-Signer: Panvasi (https://twitter.com/ApeironNodes)

Summary
This is an open discussion meant to re-open and re-visit the issue of validator Maximum Voting Power (MVP) and validator Minimum Commission Fee (MCF). Currently, the MVP is set at 20%, and the MCF at 0%. Both these values are, in our humble opinions, not optimally calibrated towards the chain’s long-term health and growth. They’re relics of a previous system, and need updating. This thread aims to stimulate an open discussion on that topic; after a minimum of 14 days, the proposals will be sent to the Station for voting.

Motivation
One of the main reasons for aiming to put a hard cap on validator MVP is to promote decentralization and delegation dispersion. Giving any one validator too much power over governance represents an active threat to the entire chain. Most of the top validators have proven themselves to be benevolent so far, but it’s better to err on the side of caution when a $1B+ asset like LUNC is concerned, as we cannot predict what the active validator set will look like in the future, nor do we know who’ll occupy the top spots. Reducing the MVP from 20% to 10% would go a long way toward stopping any potential governance abuse and validator overreach.

Likewise, the MCF value needs to be increased from 0% to 5%, otherwise larger and more affluent validators can play the waiting game while “starving out” the smaller ones until the latter capitulate (which is already happening). Set wars of this type are a net-negative for the chain, since they negatively impact and diminish the currently active validator stack, and thus ought to be prevented. Human nature and game theory being what they are, most delegators will opt for no-commission validators (0%), so by forcing the entire active set up to a 5% minimum fee we hope to spur re-delegations that will further equalize voting power across the entire validator spectrum.

It is for all these reasons that we propose the following changes…

people voting
people voting1024×466 164 KB

Proposal
We propose that validators’ maximum voting power (MVP) be capped at 10%.
We propose that validators’ minimum commissions fee (MCF) be raised to 5%.

Addendum/Reminder
Since this is an open discussion, we invite everyone to participate and offer feedback… including the validators themselves. This thread is meant to serve as a locus of debate for both of these changes, but once the time for voting comes we will be putting up 2 separate proposals on the Station (one for the 10% cap, and one for the 5% fees uptick). Thank you for reading, and we look forward to your comments below! Also many thanks to Panvasi for spearheading this initiative, and to Terra Allies (SolidSnake, Bilbo Baggins, Orko) for their invaluable feedback.

Signed by: Rabbi Jebediah, Panvasi (Apeiron Nodes)
Co-Signers: SolidSnake, Bilbo Baggins, Orko

17 Likes
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I find this to be agreeable.

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These maybe your proposals that will pass. :grinning: Sounds good.

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Very much needed! Was just talking to someone about this earlier today!

I think separating into two proposals is wise.

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Talked about this a few times, but reducing VP doesn’t solve the issue, it merely opens us up to obfuscated Sybils (because there are a lot of validators running through AllNodes)

I also don’t like minimum commission rates (even as someone who’s largely against 0%) because it nullifies loss-leader biz strategies

AllNodes has a huge delegation even w/ 5% commission, would suggest rethinking why incentives are skewed in the first place

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I think this prop is easily a yes vote. I have long been a vocal proponent of lowering the voting power of the Val’s. I would actually like to see Val’s voting power lowered to 5% , but 10% VP along with 5% minimum fee is a good proposal imo. Certainty a good improvement over the current status quo.
I want to voice my opinion that I agree with the stated reasons in this prop. It is not healthy for the BlockChain as it now stands with so much voting power that can be held by a handful of val’s , much less one single val. And all val’s need to have the ability to get paid for their efforts… A 5% minimum fee is very fair and not an undue burden on the staker.
I do understand that the current #1 Val has taken steps to try to spread out the VP, but it just goes to show that the majority of stakers are simply not informed or knowledgeable enough to make a smart decision on their own in this regard. In fact I would think most are not even aware of the problem they are creating.
I will certainty be voting YES when this is put to the vote.
There will need to be a lot of people posting their support in the Discord and Twitter and anywhere else they can to help get the average LUNC staker to go cast their own vote on this one.
Good job writing this one Jebediah.

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Yeah sounds good! Let’s try to ask to the validators…
It is better to split into two proposals for a fair vote.

Good Luck!

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Hopefully, yes. We’ll give at least 14 days to the community & validators before uploading to Station.

We want to give enough time to everyone to read the prop and offer feedback.

Shalom! :pray:

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I also think that it should be 2 separate proposals.

I don’t agree with the voting power cap, at this point of time it seems like a direct attack against allnodes (i am not staked with them just because they have too much VP) who already announced that are increasing their commission to 10% a few weeks from now to address that.

I do agree that we need a minimum commission rate and whoever has 0% or less than the minimum should contribute the excess profits to the community pool (if they don’t need it to fund projects) , we anyway have problems with funding and if everyone does it, it would help IMO.

At the current crazy APR%, i don’t think it would affect the delegators much.

If i am not mistaking currently the oracle rewards are 500m /day, if the validators decide to contribute 1% of that it would be 5m/day and delegators would lose only 1k from every 100k they earn which is nothing and that’s only with 1% difference.

A 1b valued chain with a CP of ~~$200k that cannot even afford to fund devs is not going to go far.

That’s only my opinion of course.

Thank you for the proposal.

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The VP cap is not an attack on anyone, it is simply what is in the best interest of the blockchain…

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This is fine.

This I would agree with if VP was distributed evenly between ALL validators. Then it would be true decentralisation.

Otherwise, people like Duncan who have 0.05% or something will still have 0.05% while Allnodes will become 5%. Cause you said it’s a max cap, there is no min cap.

I would propose that you make it “100÷130 %” for each validator. If number of validators increase later, then you can do “100÷x %”

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These two parameters must be changed at the protocol layer to guarantee the health and sustainability of the chain, even tho the process could be painful.

Drive decentralization of VP and meaningful incentives of validators!

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This is something TargetNodes has been suggesting for quite sometime. But the Max VP of 10% is also way too high, it should be 5% but it’s a step in right direction.

Coming to the Min Commission for Validators, lots of chains does have this min set to 5%.

Both looks good.

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I strongly oppose this proposal.

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Anything coming from the Rabbi comes with a guarantee not to be in LUNC’s community interest but motivated by Terra Rebel’s own gamble at world supremacy. Else they would not bother putting it up, if it wasn’t their agenda they would not bother. The question is then how do these proposed changes benefit Terra Rebels and their dream for total dominance and control. We need strong validators to survive the upcoming attempts of TR power grabs. Who else but the validators are going to put an end to the ongoing discrace and unchecked cash grab without transparency or orverisght this group brings to our community. No thanks!

11 Likes
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As has been pointed out in other venues.

  • The 20% “cap” was originally implemented as a security measure, not as a business model, limitation to governance, nor as a tool for decentralization of voting power (outside the security case that was considered). It was specifically meant to help prevent a specific situation within the first few minutes of staking reopening. It was proposed to leave it in place after the reopening of staking since it does help no one validator from halting the chain (it takes >= 1/3 total voting power not being consensus to halt the chain, and > 2/3 consensus to sign blocks as accepted in consensus voting).

  • A person can just open (or potentially buy) multiple validators to get around any caps in terms of voting power.

  • Proof Of Stake is predicated on the principle that those who have the most to lose in the system (ie. those with the largest stake) have the least reason to sabotage their own stake.

  • It removes freedom of choice in the business model side of Proof Of Stake (ie. validators partner with those who delegate stake - it is their delegators that actually provide the majority of stake in most cases, and so it is their delegators that are securing the network in coordination with the validators hardware - it is a partnership). Forcing either delegators into selection choices that are not as helpful for them (so they just will not delegate at all), or taking away the business competition of validators to appeal on the basis of value to the delegators and network overall is harmful in the mid to long term to network stability.

  • It also messes with Proof of Stake, which is also has a security component as well (in broad terms, and stated here and here (validators - end) and here in specific terms to this network).

  • If it is governance that people are wanting to limit the power of validators in, remember that the delegators are actually the ones with the power to vote (validators are a proxy vote if their delegators do not vote, in order to keep important proposals, particularly for network security and/or the protocol, from stalling due to lack of delegate voting participation - the validator vote only counts if the delegator does not vote [even if the validator votes before the delegator - the system adjusts the vote to follow a delegator’s vote(s)]). The issue is not with validators having too much authority - those validators have been given that voting power and responsibility to vote on behalf of delegators when they do not vote (based upon the validators distinctives, actions to protect the network, and voting patters as a validator - ie. they align in partnership with their delegators). For a review of how governance was designed to work, see here, here, and here - for more info on the underlying cosmos-sdk gov module:

Conclusion:
If people really want to flatten consensus voting power to evenly distribute voting power to prevent network halting, and make it more difficult (in some ways) to create short and long range attacks, or censorship (halting) attacks on consensus voting for blocks, then their is a simple solution. Adjust the custom tendermint/ignite layer to split all consensus voting power for consensus voting (as in this process) to be exactly equal among the whole active set (each validator maintains the same percentage of voting power for consensus). However, have the custom tendermint/ignite layer still keeps track of what the consensus voting power would have been based upon stake in the system for all other aspects such as rewards, governance, etc.

The caution with this is that it can also open the door to subtle new attack vectors as well. But, it may well be worth having some independent sessions with some in the Cosmos ecosystem for technical discussion (to see if they can see any further subtleties), if not then prototyping this type of idea, and testing it out in a testnet situation, and open testing to the broader cosmos community (since they may be interested to at least test and contribute) rather than what is being proposed (in my humble opinion).

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I’m a Validator with a 5% commission fee, and I fell that cap at 5% minimum commission is a very good idea for the decentralization, for the maximum 10% I do not think is a good idea, anyone is free to up the fee as he want. One more do not make a Governance vote with the 2 parameter changem because already 2 time the 10% MPV cap as not passed, better make 2 differente vote.

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Id like to raise few unpopular points/questions here if you folks dont mind.

I see it as we are talking about giving 5% guaranteed commission to Validators because of running costs and so on. What exactly is the commitment we get in return as a community? What results achieved by the validators are a basis to give them a guaranteed payrise? Are we going to reduce this once LUNC reaches say 0.0006 again? Or above?

We seem to quickly forget recent LUNC history and events and take the current situation for granted. Sure LUNC is crabbing at 0.0001s level for a while and that can be a motivation to increase the minimum, but remembering when we were at a higher price levels, profitability was less of an issue.

I am not seeing efforts by the validator pool, generally speaking, to act towards reaching better price action again. I am not seeing accountability or any regret of bad decisions that were passed. Examples?
Introducing seignorage via 0.2% tax decrease that escalated to 50% remint policy, atrempts to VETO repeal of 50% remint, loosing half of binance support, failure to reach any significant reduction in LUNC supply, 150k failed TR investment, wasted opportunity to claim 4$ million of the multisig funds, recent due-dilligence-free allocation of 150k to the L1 team project which so far only produces Centralised and non-governance-controlable solutions.

Excuse me, but what am i gifting someone 5% of my funds for? How does it improve their motivation to work towards a higher price action and/or volume or reducing the total supply? It doesn’t. It comes for free. In my opinion such gift if not tied to some sort of commitment or mechanism that benefits from the mandatory commision - should never pass.

If the concern is lack of node profitability, then the foxus of validators should be to raise price of LUNC. Period. Wr all have bags and need to make them work. Im not expecting mirracles - but answer me this:

Is there even a common channel for all the validators to communicate and work towards a common goal? Do we as community have any goals set as to price action we want to achieve, supply we want to reduce or on-chain volume to reach?

No? Then first steps need to happen on the validators side in order for us to issue them any rewards such as raising the minimum commision.

4 Likes
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I like the cap of 10%. But I would vote to the minimum commission not fair to validators that burn a high % of their commission. So I would no.