Realigining voting power distribution

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I have seen few discussions in cosmos forum and community chats regarding how proposer bonus and higher governance voting power is causing an issue of centralisation.

I would like to propose the following as a solution

  1. Min Stake Requirement (MSR, in %)
    Every validator need to meet this Minimum Stake Requirement criteria in-order to earn any voting power on the network. It can be a simple number like 0.5% of total tokens bonded or some % of top validator’s bonded tokens.

  2. Issued VP - This is a % of voting power that’ll be distributed to all validators who satisfy MSR (Something like 50% of VP is distributed equally among all the validators, if there are 100 validators in the network who have MSR, each validator will get 0.5% each)

  3. Delegated VP - The remaining % of VP after deciding IVP is distributed to validators based on the ratio of bonded tokens

    DVP% of each validator = % of tokens bonded to validator * (TVP - IVP) / TVP

    If 100 out of 125 validators have MSR,and 50% is issued vp then remaining 50 is delegated to each validator based on his bonded tokens. Let’s consider TVP of the network is : 2,000,000 and 50% (i.e., 1,000,000) is distributed under IVP.

    If a Validator-A has 8% of all bonded tokens,

    DVP of Validator-A = DVP (VA) = 8 * (2,000,000 - 1,000,000) / 2,000,000 = 4%

    Total Voting Power of Validator - A = TVP(VA) = IVP(VA) + DVP(VA)
    TVP(VA) = 0.5% + 4% = 4.5% (in the current system it will be 8%)

    If the IVP is 30%,

    DVP of Validator-A = DVP (VA) = 8 * (2,000,000 - 600,000) / 2,000,000
    = 5.6%

    Total Voting Power of Validator - A = TVP(VA) = IVP(VA) + DVP(VA)
    TVP(VA) = 0.5% + 5.6% = 6.1% (in the current system it will be 8%)

This will help validators with less bonded tokens propose more blocks than the current system thereby helping them maximize rewards earned. I think the other proposed system of squashing proposer priority bonus is not competitive for the validator ecosystem and suggest this alternative system where proposer bonus distribution is realigned to benefit lower validators also.This will be significant to help new validators who will enter the validator set after it’s increased to 125 soon on cosmos-hub-3.

PS: If we can replace the IVP with a centralisation coefficient rather than a constant value as proposed above,we can make it exponential change which may improve decentralisation of network further.

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I think having some logarithmic function (voting power vs bonded tokens) in place of linear DVP can add more value