Is it reasonable to set min commission rate for Cosmos Hub?
Hello, Cosmos community. I’m a Cosmos geek, being a community member for the past 2 years, and I have an optimistic view of the Cosmos future. Let me share my thoughts regarding the commission rate.
In this post I want to:
- Highlight the issue of the commission rate for validators in Cosmos Hub;
- Reveal the community’s attitude to the hypothetical setting of min commission rate to 3%.
The fact is that many validators contribute to the Hub by developing tools, dashboards, explorers, and other products, covering most of such expenses by themselves. Besides, qualitative maintenance of validating nodes also needs decent resources, which probably can’t be generated by many staking providers now in full due to low commission and the bear market. It seems reasonable that validators should have more incentive to participate in the Cosmos development rather than relying on dumping their commission to attract more stakers.
There are some numbers:
38 validators from the active set (21%) charge a commission lower than 3%, having 48.8M ATOM in stake (~ 25% of total stake), including six validators with 0% having ~7M.
And if all this stake will be covered with at least a 3% fee, it would power up the whole Hub with a big part of validators operating in equal conditions. And the only thing to compete about will be providing better services and contributing to the ecosystem, having more resources for that. While delegators will share with 3% of validators just 0.6% of earned APR (20%).
Such change could be considered as an additional step to make Hub healthier in a row with the recent Tax proposal #88, which increased the chain’s tax to 10% to fund the Community Pool and led to an APR decrease of 1,7%. However, this proposal passed, supported by 99% of voters due to the obvious value for the Hub’s health.
Expected outcomes are:
*** Validators are more focused on the quality of provided services;**
*** Validators pay less attention to dump actions in order to attract more delegators;**
*** Validators involve deeper in contributing to Cosmos as a means of competition and have enough funds for that;**
*** More even delegations distribution would lead to more fair governance;**
*** The quality of validating services rises, leading to better Hub performance.**
In this context, we can see how it works in Juno and Osmosis chains with min 5% of commission rate, where this fee is charged by 86 and 84% of validators, respectively.
Dear Cosmonauts, please share your opinion on the above, and if there will be a significant group of supporters, maybe some validator would like to submit such a proposal? If you think that smth can be added to the topic, please do it. Thank you in advance!