[Governance] Limit validators from 0% commission fee

I think these are all good ideas for fighting centralization (i especially like the un-bonding part).
Also, Forbole shared an idea to apply “diminishing marginal voting power” which suggests that if a delegator delegates to a large validator, then they are given a smaller % of rewards than if they delegated to smaller ones.

Large validators might try to separate into smaller nodes, but this would mean that they’d have to spend that much more to operate all of the nodes.

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My observations are as follows: People just blindly delegate to top 10, end of story, they do not care for commissions they pay even that’s why we need bonding time as variable -> this is first front of defense against blind behavior where people say “damn I am trying to delegate but I do not get rewards, what is going on ?”

And no you do not have push-out and split with this idea if you define right courve how this penaly is applied so that it’s not worth to split

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It is quite difficult to know exactly what % commission fee is enough (should be minimum) for healthy node operation due to differences in costs of all validators.

But we suggested that 0% wrong, simply because validators will need at least a small revenue to cover for their operation fee such as cloud instances, and datacenter. If Atom price goes up to (this is an extreme example for simplifying purpose) $1000, maybe 0.1% commission fee could be enough. But even if Atom was that expensive, 0% doesn’t get you anything to make up for the costs.

I do believe that having a low commission fee is not so bad as delegators will be more open to the option of delegation, but if they are constantly exposed to 0% validators, any form of commission fee (even if its 0.01%) would be considered expensive, and general perspective of commission fee among delegators will be non-existent.

So, in conclusion, yes commission fee can be cheap as long as they can cover for their own costs to maintain the business, but 0% would only get you no money and bad idea about delegation prices.

I would define on your place proposal for a flat, monthly or weekly fee off delegations on top of the % fee. :wink: Then everyone can have 0%

I am a little confused by what you are saying about “flat monthly fee”.
How would that work? Could you kindly describe a little more?

Right now you have a % fee off delegators rewards its called commission fee and can be set from 0 to max_commission. Beside that fee there can be a second - flat fee that validator receives for his operations which is not % but simply a constant he defines in range from X to max_flat_commission. Before your delegators receive rewards this flat fee would be filled first every week and ensure you can sustain service and only then delegators would begin to receive their rewards. On top of that you would have this % fee you can define as 0 and threat as bonus.

Second option you can propose to have it on protocol level that all validators 1-100 receive some flat fee of the network for every week of operations without a downtime.

This fee would be small (not to cause sybil attacks), lets say 100 or 200$ a month, so its literary 0 vs what entire network earns and ensure regardless if you are big or small you can sustain operations and are not in a loss at least on the hardware.

TBH I am fan of a second option more because its incredibly easy to implement and solves the issue you presented at least to some degree then on top of that implement this proposal to have complete solution. (Just make sure in the proposal that it can be changed by governance automatically, so we do not have to make new proposals for flat fee adjustments)

You can call it Asmodat Fee :joy: in the final proposal I’d be honored


Cosmostation agrees with this proposal.

Delegators being exposed to 0% commission fee somewhat undermines the effort of other validators trying to build a sustainable business by providing value to the Cosmos network and getting delegations in return. Validators all have different costs in maintaining their businesses depending on the services they provide, the number of people employed, the server specs they are using, etc.

Most validators, both big and small, are trying to maintain their businesses through validator commission collected from their delegators. Some validators provide value to the network, and in return set a realistic commission rate as they see fit in order to get compensated for their work and be able to sustain their business.

I believe that there is certainly room for improvement in this aspect and therefore agree with this proposal.


If for example top 3 validators than get almost all rewards and get commission, can up anonymous validator with 0% commission and call this others new validators independent validators but is controlled for the same entity.

Im not a lawyer but i work in bank fraud prevention.
Blockchains like Cosmos have public recorders.

I can write more and more but cosmos whales kill my good intentions and hope.
I predict this the day of launch, but time to time rigth?
Or better wait for rich validators delegate some alms to my validator?
Or I can look to work in another real decentralised project?


The 0% commission approach chosen by some validators, from my perspective is long term sustainable in the following cases:

  1. the validator has a big stake in the game and he can afford anyway to sustain the infrastructure from his self generated earnings
  2. the validator has a bad infrastructure so very small costs ==> he is not reliable for the long run
  3. for some reasons the validator doesn’t pay for his infrastructure (but that means that he is not in the control of the servers so they might end up being stopped anytime, so his infrastructure is not reliable)
  4. a marketing approach to attract delegators at the beginning, but that might be a double edge sword when he will decide to increase his % commission.

However I can’t say that I consider a good idea adding a limitation in the design of the protocol to restrict the possibility of adding 0% commission, instead maybe the validators that use 0% commission understand that they are not bringing much of value or confidence for the long run.


I think many validators out there are working to solve this issue of centralization. Active or not, some validators which we can call ‘whale’ are also into this topic.

It would be impossible to force the large validators to distribute their funds somewhere else, and many delegators are currently more interested in profit making than the decentralized philosophy of blockchains.

It will take time, but it doesn’t mean that we can’t do anything. My proposal draft here is just one thought, but @asmodat also has a different proposal to vary unbonding / bonding time depending on each validator’s status. I think these ideas would be helpful in achieving the level of decentralization we want :slight_smile:

For number 1, I think it deals with the idea of PoS, where number of stakes represent the power and responsibility an individual has within the network. Blockchains rely on not single, but distributed multiple nodes securing the network. Self-bond is a good number to see how much stake this validator has in the game, but too much in one basket also represents a big risk.

Number 2 and 3 are the risks which delegators cannot really see unless an accident through bad infrastructure happens (large downtime or even double sign). The history of Cosmos Hub is quite short so there is no real good reference except Game of Stakes of past testnets to see if these validators were actually thoughtful about their set up.

For number 4, yes it is a double-edge sword and I think it will take time for the market to choose reasonable ‘pricing’ for their services. But still, for us, 0% means ‘no pricing’ which would disrupt the market and not provide any incentives which was the original design of Cosmos.

To me, the reasons you mentioned are actually supporting the idea of how it is not very good to have 0% commission fee. Yes it is best if validators act upon the thought that no value is added in long run, but if this continues, I think suggesting this idea would be helpful before things are too late :slight_smile:

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Thank you David,
One of the idea was that it will be healthier if delegators are aware that paying, even a small fee, is the right idea since validator operation, as you should know as well, is not a cheap cost.

For this idea to be a much more normal thing in the market, I think it will take time, but during that time, validators should put the effort to make that happen.

If Atom, which is the first whitelisted fee token in the network, is not given as incentive of validation by 0% fee, it would be hard to imagine how the value/price of Atom will be high in the future.

This is impossible to enforce. I think I already saw an ad for a validator charging 0% fee plus a bonus. They can just add enough bonus to override the minimum fee if they want.

Cosmos can never stop people offering a bonus through a side channel. The best you can do is build social consensus that low fees are a bad idea. I wouldn’t support this proposal if it adds code, but maybe it can be a sort of declaration of social consensus that low fees are bad.

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For adding to your proposal, this could help this:

create a formula of equilibrium could be established in the commissions, so that those who have more voting power are forced to charge more commissions

Or even a large validator to pay more% of the fee to the community fund of your rewards than a small one. Thus we achieve a balance by decreasing the rewards directly in the major validators.

Another help for decentralization

The proposal of the community fund can be used so that the biggest validators maintain it, we establish a variable so that the more distributed the network the more % of the small validators come together to maintain the same community fund …

The option to cover the Fund with a constant variable depending on your voting power, this could be executed as follows:
If we set an additional commission exceeding even 100% commission for validators that approach to own 33% of the network and that this additional commission goes directly to cover the community fund by the main Validators. Depending on your% share of the network, your% contribution to the fund will be. This could help decentralization and still remains an incentive for them and the whole community through the community fund

I actually think your point is valid.
It should be best if this 0% situation could be solved without adding code, but through social consensus.

That way, like you mentioned, the marketing strategy to provide bonus to delegators with paybacks could also be prevented.

I imagine that the implementation in the code is the safest for the network. This constant actually adds value to the network by means of a self-constructed inflation (community fund) through the cost inflation of validator rewards and not from the inflation of the monetary base. Creating a small economic cycle that in my opinion is good.

The option could be given in this function to turn it off or modify the% contribution constants to the fund, in case the fund already reaches very high levels and the network is sufficiently decentralized. Although this fund would act as a support to stabilize in the decentralization making the centralization tends to disappear.

If we separate the community fund directly from the constant inflation of the monetary base, it is good and it maintains the community fund if a proposal is approved to limit the max supply. This helps in the draft that I want to present for a proposal in the supply limitation. Also to avoid the exponential growth that always have the validators with more volume in comparison to the smaller ones that also decrease their value exponentially with an inflation of the monetary base.