TL;DR - Stride Team should reconsider their Distribution Program, as the previous delegations are having more centralized impact on the Cosmos Hub chain.
As many of you might know ATOMs distribution program by Stride Team happened weeks ago. Stride has distributed their fund tokens (425,638 $ATOM delegated) to the total of 32 different validators. And at a glance it might seem as a very good decentralization, but let’s look closer to this situation. So, 32 validators sound fair enough to split the stake and create decentralized delegations, but unfortunately looking closer it doesn’t seem to be so…
There are some crucial points before any decentralized delegation should be done and first all its existing voting power. Exactly this metric should be considered before any possible Delegation Program, as the delegator (in our case Stride Core Team) should keep in mind the possibility of network centralization in case of supporting already well grounded validators.
There should be paid more attention to details, which could solve issues related to the question of centralization of the network.
And really sad to mention this but we already have examples of this issue (centralization) in the ecosystem, when 5-6 validators are having the highest amount of voting power in total of 33% and could halt the chain with no problems.
Speaking about the current situation in the Cosmos and delegations of ATOMs that Stride team made - there are 7 validators (by the time of writing) that are having 33% of the voting power. So that’s the situation we described above, those 7 validators could halt the chain… but let’s speak more about funds decentralization!
as we look at the Stride Team wallet - cosmos10uxaa5gkxpeungu2c9qswx035v6t3r24w6v2r6dxd858rq2mzknqj8ru28
the first 6 highest amounts of delegations were made to
- stake.fish in amount of 45,343.58 $ATOM
- DokiaCapital in amount of 42,391.73 $ATOM
- SG-1 in amount of 39,849.86 $ATOM
- Zero Knowledge Validator (ZKV) in amount of 26,812.56 $ATOM
- Sikka in amount of 25,336.64 $ATOM
- Everstake in amount of 24,680.68 $ATOM
and looking at the positions that these 6 validators are taking we can easily see that 4 of them already are in the “highest voting power” team and the rest 2 are in the TOP 10-11 positions - so where is the idea of decentralization? Why do we only speak about it and give more funds for already feeded validators? Good to see that Stride Team didn’t delegate to CEX validators…
Our point is to finally start making the right decisions. Cosmos is onboarding a lot of new chains monthly and they all need to consider decentralized delegations, as we believe that the time has come! Interchain Security has heard the community and they restructured their funds delegation program, and if we push new chains to do the same restructuring in the long run we could make it. Of course chains might not have huge amounts of tokens, but if we start doing it right now with even a smaller amount of chain funds we could have a huge result in the future!
Our suggestion is to restructure and redelegate funds to other validators. The Cosmos Hub active set counts 175 great validators at the moment, so why do we stick with only the first 10? or 20? Why to not delegate to 30ish or 50ish positions or even 150…
Let’s get closer to what we suggest Stride Team to reconsider their delegations:
- compare validators who run both nodes in CosmosHub and Stride
- analyze their current position in the set in terms of voting power
- analyze contributions to make the spread list or split into equal parts
So as this was described, let’s explain it a bit more, Stride Team could delegate to only those validators who run nodes for both CosmosHub and Stride, and engage other validators to start their Stride nodes.
Secondly, the Stride Team could possibly check positions of those validators in the Active set, and consider supporting the ones with less voting power.
As for the delegations, distribution could be done in different ways, the most important is to keep the whole set decentralized.
As the Stride onboard a lot of new chains, giving more liquid staking options, we may see Delegation Program to happen in different networks more often.
The list of validators who run both nodes (Cosmos Hub and Stride) is not that huge - only 40 validators.