Validator commissions

As a validator I have noticed that the only way I can increase the amount of delegation I get is to be at the top of the rankings within Terra Station. It doesn’t matter how much I help in telegram or how many brainy Luna tweets I put out. If you are not ranked at the top, your delegation numbers will fall. This makes sense and that is how I would choose my validators as well.

The commission charged now effects this and any validator raising commissions will see an immediate drop in rank and delegation numbers. I have watched with sadness as one of the biggest community supporters (smartstake) drop over 20% of his delegation when he started charging commissions after 6 months of 0 commissions. He now doesn’t rank high enough in Terra Station because of his commissions so it is unlikely he will be able to grow much and will likely see those numbers continue to slide.

I am set to raise my commissions soon and under the current system I know what will happen. I have a much smaller delegation and have hefty bills for my enterprise grade node.

The current system is a race to the bottom and will lead to further centralization of voting stake. Only the absolute cheapest infrastructure or biggest whales and insiders will grow their delegations with 0% commissions and we are already seeing that.

To add to the problem, the validators that were selected to be the anchor validators (insiders and investors?) get 6% commission but very few people even realize this.

I think we need to find a way to make it profitable to run high quality validators because the alternative is massive centralization and poor network infrastructure.

I propose we make the network minimum 6% to match the commissions anchor validators are already receiving.

I run the LunaOrbit node and this is my first post on Agora!

Thanks for your consideration,
Justin

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+1 – Thank you so much for starting up this conversation @Justin – Love to come up with a plan to set the 6% minimum commission, which can apply to all validators within the active set (100 nodes) and maybe make changes to Terra station that removes ranks of delegation return, but lists all active validators and rotates them so everyone gets a chance to appear towards to the top, assuming they remain performant.

Right now from all the messages, we’ve heard in various telegram groups most folks think commissions come from their pockets, and not that this commission comes from the reward pool generated by the validator. Most networks POS networks also rank the validators by voting power, but maybe we try something different.

Overall, excited to get this conversation started and have other validators chime in with their POV.

Cheers,
Angel of Marte Cloud

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I understand how you can see the current commission raising as a problem but not sure if the minimum 6% commission would solve that, I have not been closely following the evolution of the ranking but as of now only 3 out of the top 25 validators have commissions under 5% therefore it would seem like most people remain even if there is a raise from 0 to 5-10% right?

I definitely agree that the anchors validators need to be broadened at some point though

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fully agreed with your post.

  • 0% wars - most new validators can encourage people to try their service and 0% criteria is one thing that helps market. perhaps it makes sense for newer validators to continue to have a short timeframe of 0% commission while others have a minimum threshold commission (say X%)
  • Lido indeed had an interesting set of picks despite citing community engagement as one of the two key criteria (security being the other one). it was surprising to see none of the community validators getting picked. 43m Luna is currently divided between the selected 9 validators. While broadening the list is a good step, the impact is essentially irreversible already as the delegations are going to remain there with no way to redelegate (and there wont be any motivation either to redelegate even if it was possible)

Other things that can be done in Terra Station to encourage decentralization:

  • Keep ranking new validators on top as is the case today
  • Keep commission as a sortable criteria
  • Randomly sort the validators everytime terra station is loaded
  • Remove delegation return as a validator specific input (keep it at the overall network level)
  • Increase uptime window to 30 days (2/3/4 weeks) to highlight validators that are performing well over prolonged period

Rationality for above:

  • remove the decimal point preference over delegation returns
  • still provide ability to allow people to pick validators based on commission
  • provide more quality assessment for performance by showing validator performance over a month instead of 17 hours

btw: love the work that LunaOrbit, Martecloud, and TerraBites is doing in the community.

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