The topic of a minimum validator commission has been discussed on several previous occasions [1-3]. In these discussions, both on the forums and during governance calls, no clear consensus was reached. Several questions related to a minimum validator commission were included in the 2022-Q2 Validator Survey . Twenty (65%) respondents supported a minimum validator commission in principle, with five (16%) neutral, and six (19%) opposing respondents. The median ideal minimum validator commission was 5%, with the median supported minimum and maximum being 3% and 5% respectively. (Figure 1) This signal proposal aims to determine community sentiment regarding the implementation of a minimum validator commission rate parameter that can be changed through on-chain governance.
Figure 1: The minimum (a), ideal (b), and maximum (c) percentages for a ‘minimum validator commission’ according to 31 respondents in the 2022-Q2 Secret Network Validator Survey.
Implement a parameter to set a ‘minimum validator commission’ through governance in a future software upgrade. The value should be set to 0 in the upgrade itself, with a separate proposal to increase the ‘minimum validator commission’ parameter following a successful upgrade. Currently it seems that 5% is viewed as the ideal ‘minimum validator commission’.
A recent Pull Request for Terra to implement a similar functionality can be found here: [Feature] minimum commission rate upgrade by YunSuk-Yeo · Pull Request #47 · terra-money/core · GitHub
Other cosmos chains with a similar parameter are amongst others: Juno, Chihuahua, Kujira (on its way), and Terra2. Additionally, in Cosmos SDK 0.46 a minimum commission will be baked in, however we will most likely not be upgrading to that version in the foreseeable future.
Yes - You (strongly) agree with the implementation of a ‘minimum validator commission’ parameter. AND You think this should be implemented in the near future.
No - You (strongly) disagree with the implementation of any ‘minimum validator commission’. OR You think a minimum validator commission can wait until a future upgrade to a Cosmos SDK version that features this parameter natively.
Abstain - You do not have a strong opinion on the implementation of a ‘minimum validator commission’.
Why this approach?
Separating the process into multiple proposals: should there be a parameter to set a ‘minimum validator commission’, and what should the value of that parameter be, enables voters to vote on one issue at a time. This also prevents cases where someone would like to see a ‘minimum validator commission’ parameter implemented but disagrees with the proposed value.
Arguments in favor:
- Prevent a race to the bottom (0%).
- Shift competition on pricing to competition on contributions.
- Makes uptime even more important as that will be the main way to increase rewards.
- Any value other than 0% when 100% is possible is an arbitrary number.
- Validators should not be limited in their methods to compete for delegations.
Missing good arguments for or against? Please share them below!