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Using a linear or exponential function in practice right now would cause just Sikka and Sparkpool raise fees to 4% or 5%. Two validators raising fees won’t cause a catastrophic effect where ATOM’s price is held hostage.
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What entry cost is being removed? The same parameters are kept. There is currently an entry cost of 30k ATOM for a validator to enter the pool and if a linear or exponential function were in place new validators and even old validators without with less than n% of the total network could still offer a zero fee if they want to just like now. In practice 80% or 75% of our current validator pool could still offer 0% fees depending on what percentage is used as the initial point of the function.
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Using a linear or exponential function, ATOM holders will still be offered 0% fees if there are validators willing offer it, it just won’t be possible to be offered by entities controlling a high percentage of the network.
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The majority of current delegators choosing heuristic is simple. Delegate to the ones at the top. Thanks to that heuristic current top validators don’t seem to be have that problem even though most of the validators with lots of capital are using a fee around 10% to 15%. Using a linear or exponential function someone brand new controlling 5M should still be able to offer 4% just like stake.fish, if they want to. So multimillionaire validators won’t suffer.
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This is already happening without any fee intervention. Sikka has servers in Berkley causing them to offer a 0% fee pretty much guaranteed thanks to a subsidized server farm. However if we do some arithmetic a minimum fee of 4% in 8 M at 11.87% inflation at a 4% fee is 37984 ATOM in extra revenue. Compare that to Polychain’s 12M at 11.87% inflation at a 20% fee yielding a total of 306234 ATOM in regular revenue. It’s only 12% of Polychain’s yearly revenue. So the balance of power doesn’t change due to a minimum increase of fees as you can see.
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Repeated nodes are already a concern some have voiced that has little to do with this proposal. In practice seeing a validator purposely repeating nodes is a red flag for delegators who should be concerned if said validator is willing to bend the rules and find loopholes in order to increase revenue.
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What cost are we talking about? 200k$ is currently the entry price and shouldn’t be affected by the increase of a minimum fee for validators holding a huge amount of voting power. Lowering that value implies delegators just stopping delegations altogether causing a dramatic reduction of the staking ratio. During the past few weeks many validators have raised fees and this ratio hasn’t moved significantly. The cost of validation has actually risen but that is due to more delegators with their ATOM entering the staking pool. As of today that’s the only factor that has an impact on cost of entry for validators.
The original proposal is aimed to reduce the current voting power of top validators which currently hold a massive voting amount. So, this issue has to be addressed in order to not risk ending up like other blockchain projects where a tiny fraction of entities held most power which in the end produced a stagnant project where users and developers left the project in search of a more balanced approach (i.e. Steemit).
Personally I would use a function that starts below 1% of stakes so that small and indie validators don’t run on fumes like jacksteroo suggested , but starting at 1%, 2% or even 3% I think it’s a sensible middle ground.
