Set Minimum Validator Commission to 5% #10
Replies: 14 comments 18 replies
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Agree with the proposal 5%. Kooltek68 already set it back to 5% |
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Well, not much to add from my side. BloClick's been at 5% since long ago :) |
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No apps, no dex, nothing on fetch network but you want cut income for stakers. Good job!!!!!!!! |
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Mobix, resonate, dabbaflow and starfleit on the works. I think there's a buzz on Fetch's ecosystem. |
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As @juguelio has stated, the idea that there are no apps built on the network isn't true, and there are actually more on the way. Even aside from that, I think you didn't read the section where I outlined what commission is meant to be used for and how without it the validators literally are running at a loss which means the network's long-term health is up in the air. Not only that, but 5% commission means that 95% of the rewards still go to you, so it's not a cut of income in the slightest. From what we've seen, those with a commission rate set have been more likely to actually contribute to the network in a lot more ways which is beneficial for everyone, we hope you understand. This is also a matter of decentralization first and foremost, APY seeking has unfortunately caused problems for the network's decentralization and many networks have decided to take this action, leading to a positive result. So we're giving it a shot. |
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Decentralization? Little network now and you think about decentralization? Make apps decentralization isn't your issue. |
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Let's be clear here... no one is attacking staking users. I am staking and don't feel attacked at all. To your point about building out the network... decentralization is a big part of that and having a centralized validator set will definitely deter anyone from investing further in the chain. I don't think what you are asking for and this gov proposal are mutually exclusive. Development + network maturation are both key for the growth of Fetch.ai |
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So you mean they should focus on pumping the ecosystem and only then start worrying about security? Gotcha! Do you want a quick pump? Go to a meme token. Fetch is working on long-term and real use cases, that's why we need to think about security now before adoption comes to the network. |
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Agree, 5% is the norm Cosmos ecosystem wide! |
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I completely agree with the 5% by default. Less than that centralises the stake which creates huge security issues. |
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Hey all! I think this is a very important proposal and we should 100% move towards a minimum commission of 5%. I just want to say that we should make sure that the proposal is for a hard-coded upgrade that mandates the minimum. There was a similar signaling proposal before on Sifchain for a 5% min comm, but it wasn't hard coded, and there are still many validators will <5% comms. I figured, this would be hard coded but just wanted to make sure :) Also, we can fork this upgrade from another chain if needed. |
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Atom does not have a minimum fee, and they are doing well. In fact, they have gone through the same thought process previously, and did not follow through.
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To address your points in order.
Also, the link you sent about the ATOM discussion is the signalling proposal that PASSED with ATOM delegators agreeing that 0% commission validators are harmful to the network, which was what the proposal was asking - https://www.mintscan.io/cosmos/proposals/12 So if they actually did decide to put it as a protocol vote then this likely would have already been in effect on the chain.
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Agree! |
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Plus stop delaying osmosis github. |
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The MOBIX team is not the Fetch-ai team, MOBIX is owned by Datarella so this doesn't pertain to us at all. Also no, Osmosis will only list a token on the frontend if a pool is funded first with sufficient liquidity, which is once again, entirely up to the MOBIX team and their planning, or if someone else wants to create a pool through a pull request to Osmosis Frontier since the DEX is permissionless. The pool you've shown there was not created by the team. The original pull request to add the MOBX token to Osmosis Frontier was made by another validator, Cros-nest, when we thought that MOBX may be getting added there, but an official pool was not created and submitted to be added. You can even still see the pull request sitting on the Osmosis Frontier GitHub repo, as a draft: osmosis-labs/assetlists#142 Regardless, this has nothing to do with us fighting for the decentralization of the network. The idea that governance proposals can't be worked on until random tasks are completed that have nothing to do with protocol, is odd. We have many different teams whose job it is to do many different things so that tasks can be completed in different areas. |
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We support the proposal for a minimum 5%. It's been helpful in many cases before, to help with network decentralization and avoid future risks and damages in this regard. |
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The fact that a large validator has recently publicly defamed an individual from the Fetch team and then deleted the whole thread when challenged (don't worry, this was captured in full) adds further weight to this proposal needing to move forward. In my view, true decentralisation needs to be founded on a sustainable, transparent business model and to that effect, I overwhelmingly support this proposal. Potential bad actor/s hiding behind low fee's such that they have a large % of the network need to be eliminated (note: I said "potential", but based on some recent engagement I have alarm bells going off in my head). |
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I support this innovation! Of course, this will not help decentralization very much, but at least it will equalize the chances of all validators... |
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I support the introduction of the min commission. However, for legal reasons I will have to abstain. Once this discussion and voting protocol are made public (and vote is public no matter waht) we all may face legal claims from stakers around the world. Can this be decided and introduced by the company that makes the development? Any chances not to do this through a vote? |
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All changes made to the chain, especially on a protocol level require a governance proposal and for the community to decide on it through a vote, so no, the Fetch AI company cannot just make a random decision to have this be implemented. The point is to allow the community to decide outcomes, otherwise, we're not exactly acting in a decentralized way. |
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How did other networks introduce the minimum setting? Was it by vote, too? |
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Yes, every other chain did this by vote. There are no real legal concerns around this. |
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Off topic: the current APY does not encourage investors, imho. |
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After inflation, our APY is more than 1% larger than even the $ATOM APY and they seem to have encouraged investors just fine. There is only a finite amount of $FET that can be rewarded through staking so the only way to increase that APY would be either to have fewer people staking or to increase the inflation rate, which increasing inflation would only serve to drain the staking pool faster. |
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I wouldn't compare FET to ATOM at this point, but the finite amount is certainly a strong reason. |
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Currently, there are validators on the Fetch-ai Network that operate at low-to-zero percent commission. This has, unfortunately, led to further centralization of the Fetch-ai Network, not even to a benefit of the validators or the network at large.
To start with, let’s look into how low-to-zero percent commission has been identified as a centralization factor. Currently, only 26% of the total 60 active validators are running low-to-zero percent commission, yet this small set has 40% of all FET staked to them, and make half of the top 10 validators. This skew in the data shows that commission very obviously plays a large factor in how delegators are making their choice of which validator they stake with. This is even more evident when taking into consideration that nearly every low-to-zero percent commission validator has reached its current position with no foundation support. This is worrisome because it means that delegators are likely not looking into outside factors, such as a validator's contributions to the chain, involvement in discussion, uptime, whether they’ve been slashed before, etc, and are merely maximizing APY by staking without a cut, or just a minimal cut, being taken.
As for how this is not beneficial to the validators or the network itself, let's look at incentives. Validators require incentives to run, this is because running a node is not free. Even if you already own your equipment beforehand, you still have to pay for the electricity that runs the equipment. So what happens when a validator is receiving no incentive by running at a low-to-zero percent commission? What incentive is there for them to be proactive on the network and even contribute to its ecosystem or upgrade their equipment? Validators should be paid for their work because their work secures the network. It’s not sustainable long-term to run a validator node at a loss, and as someone who works for the network team, that greatly concerns me as we have to look out for the long-term success of the network.
Another reason why delegators may be seeking low-to-zero percent commission validators is that many new delegators do not quite understand how commission works, especially when they’re new to the idea of staking in the first place. When new delegators see that commission means the validator takes a cut of “their” rewards, they will likely take the route where the validator gets almost nothing. There’s also been a misunderstanding that I’ve seen firsthand with new community members, where some believed that if the validator commission is 5% and the current staking APY is 11%, then they’d only receive 6% staking APY, which leads these users to low-to-zero percent commission validators. The reality is that the commission comes from the total rewards and not the APY. So if the current APY is 10% and a validator has 5% commission, the amount they take from the APY is actually 0.5%, leaving the delegator with 9.5% APY to themselves. More concretely, if someone stakes 1000 FET for a year with 10% APY to a validator with 5% commission, there would be a total reward of 100 FET, where 95 FET goes to the delegator and 5 FETs to the validator.
Other networks in the IBC ecosystem have had discussions/proposals around this, such Osmosis, Juno Network, and even a coin such as Chihuahua Network, all of which have better decentralization than the Fetch-ai Network at this time, and although not voted on, the Cosmos EVM chain, Evmos, has also mandated a 5% minimum commission rate at launch with a comparably successful decentralization. The Fetch-ai Network has also had a discussion around a 5% minimum commission rate in November of 2021 where roughly half of the validators at the time agreed to the 5% commission rate, so there is reason to believe this would still be favourable and we’d now like to take action.
All in all, the environment of low-to-zero percent commission raises concerns for the Fetch-ai Network’s security long term and creates a toxic validator environment where validators feel the need to take losses in order to compete, which is an issue. So we believe that setting a minimum commission rate of 5% is beneficial as it then requires delegators to look into more than just the commission a validator takes, and it also means that validators will have a harder time running their node at a loss. So this helps with the decentralization and the longevity of the network.
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