Resolving centralization incentives

It has been common knowledge within the Terra Community that the top validators control too much of the network, and multiple efforts from modifying Stader selections to threatening restricting Nebula airdrops have been floated to try to address this.

However, the problem seems to be getting worse, and is exacerbated by the increased staking yield that also favors moving delegations up the stack toward centralization. At risk is not just the viability and anti-corruption of the long-term Terra project, it is also the effort of competitors in the wider Crypto community (and also skeptics in the wider economy) that will look at our decentralization performance with justifiable concern.

With the increased value of the network I believe it is beyond time this is addressed in code. I am not certain it can be done this way, but I wanted to bring up some ideas here so we can create a coherent governance proposal that can be accomplished.


  • Disallow delegations to any validator that already exceeds 2.5% of voting power
  • Define a way validators can be put on restricted status where they’re still active but receive fewer rewards due to infractions, with text governance proposals deciding on detrimental behaviors (IE direct payments to stakers)
  • Spreading rewards more equally among the 130 validators so delegators aren’t induced to move up the stack

I don’t know if these measures are advisable or possible, just trying to open next stage of this discussion. IMO it’s irresponsible that we continue on present course.