[PROPOSAL][DRAFT] (Delaying until 1/2023 after implementation of ICS) Increase the Cosmos Hub Active Validator Set to 200 Validators (from 175)

It’s worth noting that the current amount of Atom delegated to validators #176-200 (or any other validators up to #488) aren’t good metrics to rely on, because those are inactive numbers. Atom holders typically do not delegate to inactive validators because they forego staking rewards to do so.

Any validator has the potential to draw a significant number of delegates, depending on their activity in the community, if they can do it without having to ask enough delegates to reach 700,000 USD worth of Atom (likely thousands of people) to delegate to an inactive validator and give up their staking benefits.

Atom has a theoretical maximum of 300 validators before the network begins becoming noticeably slower. (I’m a little concerned that Tendermint has a 300 validator limit – 10 years from now if/when Atom is a significant and enormous player in the cryptocurrency world, a mere 300 entities controlling the chain is tiny and makes it look like Cosmos isn’t scaleable.)

Honestly, I think, given the size of the chain, the activity of the community, the relative market cap of Atom compared to every other IBC coin, and the fact that there are 488 total validators would probably warrant increasing the active set to 300. But historically, this has been done in small increments, so rather than a radical out of the blue proposal to add 125 validators, I just erred on the side of what’s been done in the past.

Can you also share your thoughts on this one @Tritador? Because it seems you are evading this point imo… especially relevant for me to have your view on this because we have had the exact same discussion on Osmosis Commonwealth when expanding from 135 to 150 validators. And over there it did not do anything towards decentralisation… so why make the same mistake over and over again believing this time will be different?

Also on Akash there was a similar discussion and similar results.

There was a proposal to increase the validator set size from 85 to 100 raised about a year ago.

Since then, the 15 validators that have entered the set hold 1.34% of total voting power.

@Tritador, I agree that decentralization of the network should be very high priority. But, there are higher leverage ways to work toward this goal than increasing the size of the validator set.

Adding onto this point: with ICS coming up, validators will need a lot of educational and operational support. Adding 25 additional validators to the Hub has a definitively higher cost (supporting them) than it does return (no significant improvement in network decentralization).

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Increasing the size of the active set is not a fix, just a baby step. I’m comfortable leaving complex plans regarding education, taxes, and incentives to the experts.

If 25 new validators are added, this will not cause a significant number of delegates to the top 7 to rush to redelegate to bottom-of-the-list validators.

If 25 new validators are added, this will most likely not cause a significant number of new Atom entering the ecosystem to delegate to those bottom-of-the-list validators. Some, but not a huge number (though any amount helps at least a little bit).

Where increasing the active set has a chance to shine is new validators who are serious about the task and work hard in the ecosystem. For example, if you are validator #176, you’re serious about validation, you’re building in the ecosystem, you even have a community who follows what you’re working on, and you have real potential to get your name out there – you might actually end up with, let’s say 50,000 delegated Atom if you get promoted into the active set by expansion and work hard at it.

That doesn’t fix everything, but that’s 50,000 Atom not delegated to the #1 validator on the list. Every bit helps. (And if multiple new validators were to put in a similar showing, those bits help more as well.) It’s worth noting that 50,000 Atom – a huge amount in the eyes of most normal investors – currently worth about 480,000 USD at today’s price (and that’s an under $10 bear-market price), is still not enough for a validator to reach the active set today.

Without expanding the active set to lower the bar to entry, there is a practically-zero chance of the above happening – of any new validator getting multiple thousands of delegates to delegate over 68,253 Atom (currently worth about 655,000 USD at this minute’s price of 9.6/Atom) to an inactive validator and forego staking benefits. There just aren’t thousands of people with that much money to spare willing to give up staking rewards. The 175 validators we have currently are a pretty much a permanent and unchanging active set with the entry cost being so large. Only a wealthy entity (likely from validating on other chains) would have enough Atom to buy its way into the active set.

That is a different reasons for expansion than decentralisation.

Time has shown that the 50k ATOM you are talking about is in general not coming from the top ranked validators… but from the tail of validators already. So in terms of decentralisation it does not add any value to expand.

If you want more validators to take part in the validating business of the Hub in general, then we have a different discussion. There I am more keen on following your line of reasoning… but please keep the text for decentralisation out of the proposals, since it hurts more than it does good in the discussions around that specific subject.


Tritador

1m

I appreciate the feedback. I assumed some amount of the Atom that ends up delegated to a new validator would come from the top of the list, just because statistically that’s where a lot of Atom is. But maybe that’s not the case and the top of the list is mostly stake-and-forget Atom that never moves.

I’ll make some edits to soften the decentralization language and make some adds bring out the other advantages once the workday permits.

Yeah, I really hoped in the past that an expansion would work that way… but it sadly doesn’t…

I think your statement “stake-and-forget Atom” is true. People delegating in the top are often also not people very much engaged, but rather wanting to stake their coins safely and return after a loooooooooong time seeing rewards on their coins. Active people are more keen to redelegate, because they understand the value of decentralisation.
But that is also why some sort of bonus for delegating to lower ranked validators is needed. Because APR chasers will then take a bit more risk with a slightly higher APR >> and we will get more decentralisation of VP.

Thanks again for all of your feedback. I made some edits to focus more heavily on some of the other advantages of expanding the active set, softened the parts about decentralization, and tweaked some things per other comments in this thread.

Did you already do this in the original post? (not sure if I should see “edited” marked somewhere)

Yes. The edit status is rather subtly displayed with the number next to the pencil icon at the very top of the post.

But the text of the post has been reworked from the original version. The thrust is mostly the same, but the order things appear and which things are emphasized is different.

In principle I am in favour of increasing the validator set incrementally over time as this proposal is suggesting. However, I think as @ala.tusz.am said we should keep ICS in mind and the additional overhead that will come with it:

Personally, I would prefer to wait until ICS is live and we have some consumer chains up and running before expanding the validator set.

I share this sentiment, I’m concerned for how increasing the validators set with ICS approaching could impact the performance and coordination of validators for ICS.

Considering how the upcoming upgrade is important for the Cosmos Hub future, I would prefer avoid any extra risk and wait to increase the validators set after Interchain Security is successfully implemented along with the first Consumer Chains onboarded.

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For most upgrades, validators typically just use Cosmovisor, the upgrade happens at the appropriate time, and the chain goes back to making blocks. Is there something abnormal about the ICS upgrade that’s going to make it more difficult or require something extra on the validators’ ends?

Yes, ICS is not a common upgrade, because it will require that validator will run at least 1 node for each consumer chain, so this will expand the costs for validators. And in the first phase of Interchain Security will be very important to make the whole system sustainable.

Adding more validators right now, also add the risks of having no profitable validators.

More importantly once a consumer chain is onboarded, in order to successfully run a Consumer Chains it requires at least 67% of validators to run that Consumer chain. So adding more validators it will imply more risks to not reach that necessary %.

The first phase of ICS will require a lot of coordination, efforts and additional operations costs from validators. This is why I think it would be better to consider to expand the validators set once an optimal coordination is reached with the current set.

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A couple good points. I think the community needs to aim their comments at Keplr and Cosmostation. Those wallets present validators to delegators based on total stake, which only further centralizes the network.

We run nodes for both ATOM and MATIC. The wallets needs to act more like the Polygon wallet, which puts the smallest validators at the top of the list and has a banner that asks delegators to please support the network by staking with smaller validators. The Polygon dashboard also has filters where users can see validators based on total stake, performance, commission and random. Here’s a link for your reference: https://staking.polygon.technology/

We wouldn’t be against adding more active validators, but it is important to consider that hardware requirements are going way up in January with the introduction of consumer chains. We are barely profitable at spot #119 currently and our costs are about to rise, so how will validator #190 stay in business? Something to consider.

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Is the date for the ICS upgrade firm? I ask mostly because if it’s a month away, there’s no reason new validators wouldn’t be up to speed by then.

If they’re not, it sounds like the worst case scenario would be if none of the new bottom 25 validators are set up to run a specific consumer chain, it would fall on the rest of the validators to do so. I can’t imagine the huge majority of the front page of the active validators wouldn’t – isn’t ICS supposed to generate revenue for the validator and its delegators?

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Yes, the roadmap is the following:

December 2022

  • Signaling proposal on Cosmos Hub

January 2023

  • Final deployment of interchain security on the Cosmos Hub

  • Onboarding of consumer chains (Neutron, and others)

Current validators just ended the game of Chains Testnet that is preparing validators to run ICS Consumer Chains: Interchain Security by Informal Systems

So considering all the preparation done with the current set, I think the most likely scenario will be to go through the initial phase of ICS with the current validators set, unfortunately adding more validators right now brings more risks than benefits.

This is good information. What are the consequences if a bottom-of-the-list validator is woefully unprepared for ICS?

Does that just mean the validator isn’t running a node for a consumer chain and it will fall to the other validators to make sure 67% of them are doing so? (And consequently, that validator wouldn’t generate revenue from the consumer chain?)

Or is there a potential for damage to the actual Hub and not just the unprepared validator?

Going forward, there’s (hopefully) always going to be the next chain requiring coordination between validators, and the next upgrade. In an ideal world, there would never be a perfect place where everything is calm and new validators can just jump in seamlessly.

A note of clarification - ICS isn’t opt-in. If a consumer chain is approved to lease the Hub’s security, all validators must participate in securing the consumer chain.

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Totally agree with you. The timing for adding validators is not now.

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