Proposal - Adjustments to the Stride Teams' $ATOM Distribution Program

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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

  • :tropical_fish: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.

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Thanks for the comments! Riley here, a core contributor to Stride.

You raise some good points that we agree with, for example that we should make delegations across the set and further decentralization. The specific method used currently delegates proportional to the current set, excluding exchange validators and validators with 0% commissions and commissions above 20%. This is a temporary solution.

We’ve been working hard on a more fair, democratic and transparent process. We’ll be releasing full details on Wednesday, which we think will address your points and more!

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Thanks for the response. Sounds good. Certainly exclude top10-20 and CEX validators anyway.

ICF is doing lot of work currently to have fair delegations. Easiest would be just following their delegations later this month. Let ICF do the heavy work and use the results with your own weighting.

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Really like the idea put forward by @Bro_n_Bro to incentivize validators on cosmos to validate stride also by only including those who validate both chains for future delegations.

Also going to link a commonwealth discussion on stride for those who have not seen it yet as it is directly related to this conversation: Commonwealth

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Good idea from @Bro_n_Bro
Even though we are not validating on Stride, we still prefer to see the delegation goes into the validator who contributes on both chains rather than to the top 10-20 validators.

Many liquid stake protocols are on their way, so hopefully, they can give much thought to the delegations. Ideally, the delegator should choose the validator themselves.

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Great post. Why on earth would Stride further centralize the Cosmos Hub on purpose? Disappointing, but hopefully your post will spur positive change.

We’d be against any favoritism and would fully support a delegation strategy that spread Stride’s stake across the entire active set. We would want to see a formula that gave more delegation to lower ranked nodes and less delegation to larger nodes.

If they care about the hub, spread out the stake.

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We would fully support the idea to spread a weighted stake across the entire active set, with disproportionately more ATOM going to smaller validators and less ATOM going to larger validators. Great idea that nobody could vote against.

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Thanks for the write-up @Bro_n_Bro !

It is indeed the exact same discussion we are having on the Stride Commonwealth, which is already mentioned by @SilkNodes :slight_smile:

I would not go as far to only include validators which are both on Stride and the Hub, because having decentralisation goes further than only voting power. We have to think about geography, VPS providers, but also to the parties behind the validators. We need more different teams, so having this as a prerequisitie would only mean that the Stride set would become almost equal to the Cosmos Hub, which is not what we must try to chase imo

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Thanks for putting this up!!

I support the suggestions made to the Stride team to reconsider

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Yeah, the main difference, that we raised this question before any announcements from Stride team. So, possible, we have this thread on Commonwealth due to this and we are really happy be a part of this change.

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