[PPROPOSAL] [DRAFT] Use MIB's upgrade handler to give Gaia the ability to use minimum commissions

Hub Proposals
6

I think this is worth backing up a step and asking a more theoretical question:

What might happen to the security of the network and the distribution of delegations throughout the validator set if minCommissionRate were to be a parameter on the Hub (i.e., One that can be changed by passing a param change proposal)?

I’d also like to step through various commission rate ideas.

  • [minCommissionRate = 0.0] We are currently seeing what happens in the validator set if there is no minimum rate. It has required no collusion to get here, so it’s hard for me to see how how parameterizing the commission rate could make this worse.
    *[minCommissionRate = 1.0]I bet we’d see a lot of people unbond rather than switching validators (Sam and I discussed this in a call earlier today) so I think the risk is less that small validators would be starved and more that the security of the network would suffer as ATOM holders choose not to stake.
  • [1.0 > minCommissionRate > 0.0] A minimum rate anywhere between 0% and 100% would hopefully reduce the risk of big, wealthy validators undercutting small teams on their validation services (i.e., Attracting tons of delegators with their 0% commission so that the small validators can’t compete and are forced out, then raising their commission once the competition is gone, a la big box stores and mom-n-pop stores).
    • The closer the minimum rate gets to 100%, the more likely delegators are to decide that staking just isn’t worth it. So I’m kind of curious if there’s also a risk that people could collude to set the rate super high, wait until the total bonded ATOM drops, and then self-delegate a ton and end up with more power than they previously had?

Some other questions I pose to the class (without having any answers myself, lol) :slight_smile:

  1. What other risks are present as the commission rate moves around, and could move around every voting period of people were really motivated to make it happen?
  2. How does the interaction of the unbonding period and voting period influence the likelihood of people colluding the encourage ATOM holders to unbond and be unable to stop before a malicious proposal goes through?
  3. I don’t fully grasp the detail of how the upgrade handler works - does it make minCommissionRate into a parameter that could be changed by subsequent proposals?
  4. Mechanically, how would the commission rate be changed in the future if this tool were to be added to the Hub?
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