How can we incentivise greater decentralisation within validators?

Secret Governance
1

Hi all,

A more even distribution of delegations across validators will provide a more healthy ecosystem in the long-run. This is not to say that the existing structure is unhealthy, but rather to say that it has resulted in some unhealthy practices including 0% commission fees.

I have looked through some forum posts to try to aggregate views and see if there are any people think are useful and could do the job.

  • Raise the commission floor that validators can charge above 0% (suggested 5%)
    By creating a minimum commission that generates income for validators, more parties will be willing to run a node as they are able to cover their costs. By increasing the validator population, it is expected that the distribution of SCRT will equalise over time. However, there is an issue here that validators may propose their own refunds to delegators to retain price discrimination in the market.

  • Greater levels of slashing for larger validators
    Validators that have a larger fraction of the total voting power are slashed at a higher level. For example, a validator that has 1% of the network could be slashed 5% but a validator with 10% might get slashed at 10%. This will disincentivise delegators from delegating to this validator but it will also have a greater cost to validators for operating. This will be too complicated to implement without allowing validators to stop accepting delegators as if an individual still stakes, delegators who have already staked will now have an additional cost without having done anything. If implemented at a standard level, it will very easily result in existing validators splitting nodes.

  • Variable bonding and un-bonding times that will have longer lead times for larger validators.
    The higher the proportion of total SCRT delegated to a validator, the longer it will take for a new individual to delegate SCRT to a validator. This will reduce the return to a delegator in the short-term but will tend towards the natural APR in the long-run as the amount of SCRT missed is a smaller percentage of SCRT gained. A similar mechanism will occur on the way out with longer un-staking periods for delegators. The solution here passes the cost on to delegators if they choose to stake with large validators and is soft enough that validators won’t be incentivised to split nodes.

It appears that a good solution needs to incentivise delegators to stake to smaller validators but it cannot do it by attacking validators. The third option seems relatively healthy but it would be great to see views on these options and other views that you know of too!

1 Like
2

Hi Orageux, I think your heart is in the right place but believe that we need to keep things simple.

I agree that we need more decentralisation within validators, but I think that’s gonna have to happen by the efforts of validators attempting to attract more delegators instead of punishing others.

If we punish hard work, we will stifle future hard work.

I am not a validator.

4 Likes
3

I briefly ran across a thread about dynamic staking once. Basically users just stake their coins and a contract will place them with the next validator up…like a Congo line. This leads to diversity and fair staking practices. The problem I thought of here is that all validators don’t have the same uptime/hardware/support etc. and that’s not ideal. Decent idea and worth discussion IMO.

3 Likes
5

Agree with the opinion, had this conversation with Ian yesterday who explained his rationale behind this.

@anon60841010 @Jay-ShadowRealm-SCRT what would you think if staking was done randomly as you suggested but with bands for up-time? So when you stake, you get presented with:

Uptime %: 80-89% / 90 - 99% / 100%
Fees%: [X.] / [ Y.] / [Z.]

And you get to choose what you want?

I wonder how fees would be calculated though.

7

I like the idea of allowing all validators to have one post about their existing operations and ongoing contributions as a mean of advertisement posted on the social media channels each month.

That will allow small validators to get some spotlight which is a lot more valuable to them then larger validators.

1 Like
9

I think this is a super interesting idea, but echo the concern that removing freedom of choice from the equation isn’t preferred. I wonder if there isn’t a way to implement an option like this for those that want to simplify the choice & don’t care about network politics but still provide freedom of choice for those who have an opinion and would prefer to stake with a validator that represents their interests.

2 Likes
10

Sorry to ping an old thread but I found this topic to be interesting and wanted to say that I am strongly against any kind of unnecessary regulations.

Any kind of rules or algorithms to be implemented to incentivize decentralisation will have greater negative side effects in my opinion. We should just trust the free market and let there be fair and free competition among the validators.

1 Like