Implementing minimum fee tiers is an intriguing concept on paper; however, we harbor reservations regarding its potential impact on stake distribution, primarily for two reasons:
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The first concern is tied to the low capital turnover within the active set. The share of redelegations in relation to the overall staked amount is minimal. Furthermore, the stake distribution has shown little change over the years, as evidenced by the chart below:
Despite the addition of new validators to the active set, the vote power has remained consistently unchanged among the top 15 validators. -
The second concern revolves around the prevailing wallets that continue to exhibit validators sorted by their existing vote power, contributing to a self-reinforcing phenomenon. Many users, lacking a full understanding of stake distribution, often make random selections from the top-listed choices. This behavior is reflected in the fact that most Google search clicks are concentrated on the top-listed links. Users tend to perceive the top validators as safer, perpetuating a false notion. To address this decentralization challenge, the sorting mechanism needs a revision, rather than adjusting the minimum fee.
In response to this issue, we propose a collective effort to implement sorting based on quality-driven metrics, such as missed blocks and, by extension, the participation rate. These factors can positively drive competition within the validator set. Alternatively, we recommend each wallet display validators in a completely random manner, prompting users to manually choose their sorting criteria before selecting their preferred validator(s).
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