[Governance] Limit validators from 0% commission fee

[sunnya97]

So I (obviously) have a number of thoughts regarding this matter. There are a number of interesting ideas proposed in this thread by @asmodat, @JLiBercrypto, and others on how to help decentralize delegation which definitely warrant further discussion. But for now, I’m going to respond specifically to claims related to the original proposal.

@nodeateam

• Among 100 validator nodes, 12 nodes are charging 0% commission fee.
• Approximately 1.9M (14% of all bonded Atoms) are charged 0% commission fee.

So 12% of the validator nodes have 14% of the bonded atoms? That seems…pretty okay. That seems to suggest that delegation is pretty statistically independent of 0% commission. Now within those 12 nodes, the delegation is heavily skewed towards a few larger validators such as Sikka and SparkPool. But that just suggests that delegation is skewed for reasons outside of 0% commssion or not.

Also, sorry, super minor nitpick, but I assume there’s a typo, and it should be 19M?

@nodeateam

But, if delegators are constantly exposed to low commission fee, it would prevent delegators from choosing the validators who are actually actively making the network stronger.

Are you claiming that delegators are unsophisticated enough to take into account other factors than just price in their decision making when collectively delegating hundreds of millions of dollars of value?

@nodeateam

If profit is not guaranteed by validator node operation, continuous maintenance and investment on infrastructure and employees becomes impossible

I disagree with this sentiment. This is not how startups work, profits are never guaranteed, especially at such an early stage. Startups involve risk, and part of that is investing time and money into something that may or may not see returns this early. For most startups, the initial monetary investment doesn’t come from reinvesting profits, but from things like personal investment, friends and family, raised capital, loans, etc.

@syncnode

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

…

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.

For number 3, I contest the claim that just because a validator has access to operating infrastructure for a cheaper cost, this means that they are not in control of the servers. For example, Sikka has access to the cheaper UC Berkeley datacenter due to our partnership with Blockchain at Berkeley, and we are in as much control of our servers as any validator is with infrastructure in a data center.

For number 4, I contest the claim that increasing the commission rate in the future is a “double edged sword”. For example, Sikka is planning or coordinating the introduction of commission with the launch of a project called the SikkaDAO. The feedback and response from our delegator community in channels and community calls has been overwhelmingly positive.

@nodeateam

We are only suggesting to limit 0% commission fee, not suggesting to agree on minimum fee.

In the Cosmos SDK staking module, Commission is an sdk.Dec, meaning it could have a minimum non-zero value of 0.00000001%. For practical purposes, this isn’t really no different than 0; most clients/UIs will probably have to round that to 0 anyways. So if this is something that we want to do, deciding on a more useful minimum is necessary or preferably, this:

@nodeateam

It should be best if this 0% situation could be solved without adding code, but through social consensus.