As part of a team operating one of the Hub’s validators (PRO Delegators), let us address some of the points you’ve raised.
Firstly, it’s important to clarify that the following answer reflects our own perspective on the matter and may not necessarily be shared by all other validators. Let’s begin by explaining the rationale behind our expected validator’s decision to opt into a chain or not. The initial step involves conducting a professional-grade due diligence process. This includes reviewing the project’s vision, the chain’s code, the team’s history and legitimacy, the competitive landscape, the value proposition, and a detailed roadmap, among other factors. If the project passes this review process successfully, the next step is to assess the proposition itself from an economic standpoint. The project must present coherent revenue expectations and a realistic forecast (inflated numbers here would raise a red flag for us).
Examining the revenue share mechanism is the next crucial part of the process. It needs to be well-balanced to compensate all parties correctly. Validators must see their long-term operating costs covered. To achieve this, the chain has various options to explore. For example, a deposit can be made to an NTRN contract to distribute the validator’s share directly to cover the minimum operating costs per entity (similar to what Neutron has opted for in this proposition). The advantage of this solution is that it covers the validator costs and bypasses each validator’s %fee mechanism, which can vary greatly among the set.
The staker’s share should be sufficient to compensate for the collateral risk of securing an additional chain. Many options can be explored here as well. Consumers can send a share of their rewards directly to stakers and/or deposit into a community treasury. The latter presents an interesting opportunity for consumers as it would be reused as Protocol own Liquidity (PoL) by the Hub. This would generate revenue for the Hub and, by extension, for the stakers, as this revenue should translate into a higher price tag for the ATOM token itself.
In conclusion, from our perspective, the opt-in system is not expected to see a huge turnover from the validators. The selection process and research required to run a new chain under PSS will take considerable effort and time. Therefore, once the decision is made, we don’t anticipate changing our minds in the short term. We see this as a long-term partnership with the consumer chain, which, once agreed upon, is an agreement that you don’t want to renegotiate more than once a year. Renegotiations can only happen if the projections deviate significantly from the initial expectations.
