NOTE: This is not a Cosmos Hub governance proposal and is simply being posted to the Hub forum to make Hub validators aware of the application process. The original discussion can be found here: Commonwealth
Overview
As a liquid staking provider, Stride protocol controls a large amount of Cosmos proof of stake tokens, which must be delegated to validators on host-chains. It is the responsibility of STRD stakers to select the host-chain validators these tokens are delegated to.
It’s time for STRD stakers to select new host-chain validator sets for Cosmos Hub and Osmosis. In order to do so fairly and responsibly, the Stride Host-chain Validator Selection Process will be used.
Two separate sets of thirty-six validators - one for Cosmos Hub and one for Osmosis - will be curated by two separate advisory councils, and then submitted to STRD stakers for them to approve or deny.
For Cosmos Hub validators who wish to apply to receive a delegation, apply here.
For Osmosis validators who wish to apply to receive a delegation, apply here.
For anyone who wishes to join the Cosmos Hub advisory council, apply here.
For anyone who wishes to join the Osmosis advisory council, apply here.
The deadline for all of the above applications is August 06, 11:59 UTC.
If you validate for both the Cosmos Hub and Osmosis blockchains, you must fill out a separate application for each chain.
Process timeline
July 18th - Cosmos Hub and Osmosis validator applications open, plus Cosmos Hub and Osmosis advisory council applications
August 6th, 11:59PM UTC - Application deadline. After this date, no applications will be accepted.
August 7th - Two five-member advisory councils are chosen - one for Cosmos Hub and a separate one for Osmosis. Advisory councils are submitted to Cosmos Hub and Osmosis governance for approval, using signaling proposals.
August 21th - Assuming signaling proposals passed, advisory councils begin to evaluate validators.
August 28th - Council members finish evaluations.
August 30th - Curated host-chain validator sets for Cosmos Hub and Osmosis posted on Stride governance forum.
September 6th - Onchain Stride vote goes live, STRD stakers vote to approve or deny new host-chain validator sets.
Background
Stride protocol is designed such that STRD stakers vote to determine which host-chain validators receive delegations. At any time, anyone is free to make an onchain governance vote to add or remove validators from a host-chain validator set. But it is always STRD stakers who have the ultimate authority to approve or deny any changes.
STRD stakers need a systematic, organized, and fair framework for selecting host-chain validator sets.
Such a framework was developed and implemented in late 2022. Called the Stride Host-chain Validator Selection Process, it was used to select a set of thirty-six Cosmos Hub validators to receive delegations from Stride protocol. STRD stakers responded favorably to the Process, and voted to approve the new validator set. Since the Process was used in late 2022, several small optimizations have been made, to make it more organized and efficient.
Much thought has gone into this Process, to make it as fair and responsible as possible, both from the perspective of Stride protocol and host-chains. Given the past success of the Process, it is hoped that the Process will again receive the support of STRD stakers through their approval of the resultant new host-chain validator sets.
Over the next few months, the Stride Host-chain Validator Selection Process will be used to select new validator sets for Cosmos Hub and Osmosis.
Why this matters
Due to the nature of liquid staking, liquid staking protocols can potentially have a negative influence on their host-chains. This can happen in three main ways:
-A liquid staking provider could delegate most of its stake to top validators. This increases validator centralization.
-A liquid staking provider could delegate to validators in exchange for kick-backs or for certain other favors. This is just plain corruption.
-A liquid staking provider could only delegate to zero percent commission validators. This deprives more deserving validators of revenue and voting power.
Many liquid staking providers commit one or more of these actions, and thereby have a negative influence on their host-chains. On the other hand, liquid staking providers can potentially have a positive influence on their host-chains. They can 1) decrease validator centralization, 2) reward worthy validators, and 3) select validators in an objective and bias-free manner.
As Stride protocol is the premier liquid staking provider in the Cosmos, it has a responsibility to use its influence to benefit host-chains as much as possible. The Stride Host-chain Validator Selection Process is designed to do just that. The Process:
-decreases validator centralization, by delegating to validators across the active set
-rewards worthy validators, by delegating to validators based on their contributions to the blockchain
-and does this in an objective and bias-free manner, by using a decentralized advisory council to evaluate validators
The mission of Stride protocol is to serve its host-chains by providing the best liquid staking experience possible. And an important part of this is fairly and responsibly selecting host-chain validators.
How it works
This section will explain in detail how the Process works.
As a reminder, over the next few months the Process will be used concurrently for both Cosmos Hub and Osmosis. There will be separate forms, councils, and governance posts for each of these host-chains.
Step 1: Applications
To be eligible for a delegation, validators must meet these four minimum thresholds:
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An uptime of greater than or equal to 99% in the last months
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A commission less than or equal to 10%
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Voted for at least seven of the last ten governance proposals
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Has been in the active set for at least three months
If a validator is eligible, then it needs to fill out an application to be considered for a Stride protocol delegation. On the application form, validators must answer two key questions. Their answers will be used by the advisory council to evaluate them. The two key questions are:
-How have you contributed to your blockchain technically in the past six months?
-How have you contributed to your blockchain socially in the past six months?
Individuals who wish to join the advisory council need to fill out an application, too. The advisory council is a group of five people who evaluate validator applicants. Anyone is free to apply to join the council, but only individuals who are knowledgeable about the relevant blockchain and are well-known and respected by the relevant community will be chosen. Stride Labs has the executive role of selecting the five-member advisory council.
Step 2: Advisory council approved by host-chain
As a check on the power of Stride Labs, an onchain signaling proposal is then submitted to the relevant chain, asking stakers if they approve of the chosen advisory council.
For example, the Stride Cosmos Hub advisory council will be submitted to Cosmos Hub governance. If Cosmos Hub governance feels the five individuals are qualified to evaluate Cosmos Hub validators, then governance will approve the council.
If governance approves the council, then it can move on to evaluating validator applicants. If governance disapproves, Stride Labs must change the members of the council, and the new council members must be submitted in a new signaling vote.
Step 3: Evaluation
Once the validator applications have been received and the advisory council has been approved by the relevant host-chain, then the council members independently evaluate validator applicants, giving each validator a score out of ten.
The five council members’ scores are then averaged out, giving each validator a final score out of ten.
If a council member has a conflict of interest about a certain validator, he does not evaluate that validator.
Step 4: Ranking in quartiles and weighting
Once each validator has a final score, validators are separated into four quartiles, based on their existing delegations. For example, the top twenty-five percent of validators are in the first quartile, the next twenty-five percentiles are in the second quartile, and so forth.
In each of the four quartiles, validators are ranked based on their final scores. The top eight validators in each quartile are chosen, resulting in a set of thirty-six validators from across the active set.
Finally, each validator is weighted to determine the share of the total delegation it will receive.
See full evaluation details here.
Step 5: Proposal submitted to STRD stakers
The resultant host-chain validator set is then presented to STRD stakers, who have complete authority to approve or deny the set.
Final thoughts
If you have any questions, comments, or observations - please join the discussion! (:
FAQ:
Why do STRD stakers have the power to select host-chain validators?
Authority to select host-chain validators does not belong to a closed group of people, but is distributed to all STRD stakers. This is the most decentralized way to do it.
Through airdrops, liquidity incentives, staking rewards, and grants - over 50% of the STRD total supply is being distributed to the Cosmos community. STRD’s tokenomics ensure that many individuals and entities get a say in deciding which host-chain validators are selected.
Are advisory councils permanent?
No. A new council is chosen each time a new host-chain validator set is made. Individuals are free to be on consecutive councils, but it is hoped that the composition of each consecutive council will be different, so that different perspectives are used to evaluate validators.
How are new host-chain validator sets selected?
We recommend larger chains should get new validator sets every six months. That would include Cosmos Hub, Osmosis, and Injective. Smaller chains should get new validator sets every year. This process is always subject to change by governance.
How are default host-chain validator sets chosen?
When Stride protocol onboards a new chain, a default validator set is chosen to receive delegations. The top forty validators are chosen, excluding exchange validators and validators with a commission in excess of 10%. For maximum neutrality, Stride protocol delegations are weighted by existing delegations.
Why should people join advisory councils?
You should join advisory councils to participate in the Cosmos ecosystem. Council members get to use their subjective judgment to help influence Stride protocol’s delegations. Also, council members have a public role, which can improve their visibility and increase the amount of attention they receive from their fellow Cosmonauts.