I’m working on it… it’s taken me a little longer than I anticipated because I’m a terrible writer. I should have a draft ready early next week. Apologies for the extended delay.
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Great that it won’t be only a proposal for a simple 5% minimum commission but also including your idea of ‘Any new consumer chain approved increases the minimum commission rate on staked $ATOM by x%. The increase remains in place until commissions earned from the consumer chain exceeds the USD value of the x% increase for 90 days.’, @Noam, @Damien, ourselves and many others will be strongly supporting this proposal. If you need any support for the draft please let us know
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Lol, didn’t mean to delete my post 
For those interested, was asking whether the proposal was going up and that I support the 5% minimum commission rate.
@Cosmic_Validator I’m not actually so sure if I support the continuous increase of commission rate for each consumer chain. I think there are more efficient ways to handle operational costs. Also with Atomic IBC we can likely reduce operational costs as well.
But just going to 5% in general I think would be a very helpful start.
I would suggest separating the 5% ask from the x% per consumer chain, because it increases your odds of the proposal failing, and then we’re left with nothing.
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Hey Noam!
We plan on putting this on chain shortly.
We’ve been gathering feedback and we would also agree that this proposal should be kept simple and just for the 5% commission increase.
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Would love to see this on-chain!
The point here is that it’s a variable rate. The cost to operate 180 validators (or 160 or 100 or 12) per Consumer Chain, is not economically viable or sustainable. No one has really run the numbers and anyone who has, would be disappointed by the output.
Wait for the proposal to come out, then punch holes. I’m very excited for the debate and critiques.
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5% isn’t too high. It’s actually below the average commission rate charged by most validators (even if you remove the 4-5 validators that charge 100%).
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As of September 4, 2023, the active set of Cosmos Hub operators totals 180 validators. The average commission rate of the 180 validators is ~8.2% Four validators charge 100% commissions. Removing them from our calculation lowers the average commission rate of the 176 remaining validators to ~6.12%, which suggests that 5% remains below the average commission rate currently being charged by operators actively validating on the Cosmos Hub.
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Approximately 31% of active validators (57 out of 180) have set their commissions below 5%. This statistic informs us that the proposed minimum commission rate of 5% is not extractive and seems like a reasonable standard to set.
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Increasing the minimum commission rate would increase the average commission rate charged by the 180 validators and 176 validators mentioned above by approximately 1% each, resulting in average commission rates of ~9.2% and ~7.11%, respectively.
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Beyond the figures above, based on market trends this is an inevitability. Several well-respected operators in the Cosmos ecosystem have recently announced increasing their commission rates on validators they’re running. Operators have been transparent in explaining their rationale: the current market has created an unsustainable environment that requires higher commissions. These operators reached independent conclusions that Cosmos economies require higher fees to remain operational. I don’t think a 5% minimum commission changes all that much and the benefits appear to outweigh their costs.
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I fully agree about the minimum 5% commission, and I think your additional idea is also interesting because this would create a way to incentivize ATOM stakers to perform in-depth due diligence for each new consumer chain. If a new consumer chain is very successful and brings revenues as expected there won’t be any increase in the minimum commission. In contrast, if a consumer chain doesn’t bring revenues the minimum commission would be increased. This would 100% make ATOM stakers much more involved in governance and it would make the situation more balanced and not putting all the consumer chains cost burden in validators as it is currently the case. In addition, if ATOM stakers don’t like the increase in the minimum commission from a consumer chain not bringing revenues, they can always vote to remove such consumer chain. I would however suggest that this is applied for new consumer chains joining, not Neutron or Stride, meaning the minimum commission of 5% is introduced first and then your idea would be applied for new consumer chains joining after this proposal is approved on-chain.
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I’m very much “for” the minimum commission.
I am also interested in the variable commission rate (as a function of # of consumer chains) that @velvetmilkman has been researching.
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I didnt say it should not be 5%, what i said is that i think 5% might be too high to be accepted.
Although i love statics, i dont think that the ones you stated will tell us anything about the outcome of this proposal. If we have a look at the votes of prop 76 there were big validators below and above the 5% commission that rejected the proposals and they all might have different reasons.
In fact if the 5 biggest validators that voted no on prop 76 will vote no again, this proposal will be rejected again. I dont think that anything has changes for big validators since prop 76, they dont have any problems funding their operations. If one of them said in this thread that they changed their mind, this proposal could succeed but if not i think it will be rejected.
Votings from non validator accounts have been even more in favour of NO than YES than the ones from validators so that most likely wont change the outcome.
Edit: Since @Vadim_Everstake signalled they think the proposal is reasonable, there is a chance this will pass
Hey all, Just wanted to say thanks for all the feedback and discussions that have occurred in this thread.
We at Simply Staking are in the process of placing this proposal on-chain so please keep an eye over the coming days.
Thanks!
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Thank you for putting this on-chain. It will be interesting to see which validators are against it.
I am apparently the only validator (Quokka Stake) as of now who voted no, pretty much for the same reason I’ve described in the previous forum thread:
- this doesn’t fix the issue with validators raising their commission overnight at all, unlike, for example, setting a cap on max commission
- it’s a nice way of promotion for some validators to set the commission to 0% or some small percentage temporarily to get more people to stake with them, and I don’t consider this a bad practice
- having it hard capped kills the free market vibe, it’s better to advocate and spread awareness of why do validators charge commission and how to choose a good validator to stake with instead of setting limits this way
Just to clarify, I personally do not like 0% validators (I’d rather stake with validators with technical contributions as I can relate), but I dislike the idea of setting a limit on it, it should be a conscious decision instead of a forced one. But considering the current tally, I’m the minority that thinks so, duh.
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validators voting to alter the parameters of the chain in order to pay themselves more at the expense of users is indicative of an unregistered security being issued by validators. Making ATOM into a business rather than using atom to conduct business turns it into an unregistered security. It seems like an obvious mistake to risk the most liquid token in the cosmos to change the function of atom in validators favor and users expense. Tokens should have a function, not a business model.
Perhaps, this case can be simplified as follows: Replicated Security has doubled or even more than doubled validator operation costs, and compensation from cc won’t arrive tomorrow. Nobody knows how deep atom can fall due to the market conditions.
The clear pros of raising the min fee are: validators prioritize service quality over trying to attract stakers through dumping, actively contribute to Cosmos public goods as a competitive strategy, and possess the funds for this purpose. A more even distribution of delegations leads to fairer governance. Although, initially, stakers lose a tiny part of the rewards, in the long term, they win, as the Hub becomes more stable, and efficient & atom more valuable.
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We will also vote no
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Choosing a validator with 0% commission may also seem like a good idea in order to maximize your returns. But keep in mind that running a validator is a lot of work and comes at a cost to the operator. The commission rate is a contribution to the validator that is used to help cover the expenses of running it. Choosing zero commission may not promote a sustainable network; whereas supporting validators through commission will.
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This is not the first time this debate has been brought up. In a previous proposal with a similar context, the overwhelming majority of validators and the community voted against implementing a global minimum commission.
- Proposal #12 occurred in July 2019, intending to engage the community in a debate by introducing a question on whether 0% commission is harmful. Proposal #12 went live four months after the Cosmos Hub’s genesis block, and a 0% minimum commission rate was appropriate for a bootstrapping phase where meager benefits of staking and high risk were a reality for delegators.
- Following the discussions, Proposal #76 in September 2022 landed on-chain seeking a minimum commission rate of 5%. Proposal #76 inferred flawed logic that 0% commission validators don’t “truly innovate” or “create value” for delegators and was seen as too informal.
Whilst this was less than a year ago, we believe that the context has changed with the introduction of Replicated Security.
The Cosmos Hub is growing more complex and cost-heavy. With the entrance of Replicated Security the bootstrapping phase mentioned in Proposal 12 has ended, and a development phase has begun. As the vision has developed, validators increased their commission rate to cover sunk costs, and delegators received adequate benefits for staking. Despite the progress, the minimum commission rate remains at 0%. A continued 0% policy results in unsustainable revenue for operators and centralized voting power.
The centralizing effect experienced from a 0% commission comes about in two forms:
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Due to the current lax regulation around delegators’ maximizing profit and validators fulfilling their wish, voting power focuses on validators offering 0% commission rates at the cost of stake centralization.
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There is a plausible case that due to the increased costs associated with Replicated Security and running a validator at no/low commissions, those validators are most susceptible to ceasing operations due to the extreme pressure of costs. These validators are not sufficiently supported by on chain cash flows and are susceptible to off chain volatility. From the basis of funding, the Cosmos Hub can not assure itself of the validator’s continued participation in the future. The objective is to formulate a resilient, reliable, and enduring Cosmos Hub– we see no avenue to this eventuality under a system that does not effectively monetarily support its node operators. In such a system, where validators are likely to defunct, delegators will turn to reputable large validators for safe harbour thus increasing and consolidating the voting power of the Cosmos Hub
I’m a yes vote
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0% commission is unsustainable. It is a bait-and-switch.
in3s.com identified the race-to-the-bottom problem of the tokenomics back in August of 2018 when Riot was used for communications. Sikka won that race on block 1 and made the work of many teams irrelevant since 0 profit does not make for a good business. Fast-forward to Osmosis and its imposition of a minimum commission. Sunny is a super smart guy and he learned his lesson. Why do you think he changed his mind?
Cosmostation is now changes 0%. How can we ever achieve a good degree of decentralization when one of the big guys is willing to burn cash for market share? Anti-trust laws in real life would be all over them, so why do you think that allowing monopolistic tactics are a good thing in crypto?
stakefish here! This is our new company account.
We will be voting yes. Here’s why.
CosmosHub is mature blockchain, much more than when it was first launched March 19, 2019 (4 years, 6 months ago). Because it is mature, we need to consider the stability of the network, which supports many other chains on the network. It was okay to allow 0% fee when it was first launch to attract new users to the entire Cosmos ecosystem. However, allowing it at this stage would introduce a risk that it would destabilize the ecosystem. New validator with much more resources (investors, hedge fund, bad actors) run at loss, to acquire voting power, may pose a governance risk. This is a subtle method to acquire voting power without buying it, at a fixed cost (operating validator) where as buying ATOM is a linear cost.