Renegotiate the deal with Stride

[highstakes]

That’s an interesting idea actually. It could help “shuffling” the active set a little bit, too.

[Govmos]

@RoboMcGobo

• Distribute ICS fee revenues equally to every validator that has opted in to secure a given consumer chain rather than proportionally according to stake-weight. […]
• Reduce the size of the validator set. […] IMO the set could be decreased by as much as 30-50 validators (or more), which would alleviate a lot of the unsustainable costs here.

This aligns precisely with the recommendations we made in our analysis:

@Govmos

While we recommend retaining the Top-N model for Stride’s core public good mission, the chain could benefit substantially by utilizing exclusion lists for certain validators. Additionally, implementing a vote power cap would lead to a more equitable distribution of rewards. This is just one of many paths worth exploring based on the overarching vision.

In our research on PSS economics, we examined the promising dynamics created by combining exclusion lists with a strict vote power cap: the-vote-power-cap

We’ve also analyzed and suggested a pathway for scaling Top-N public good consumers as revenue grows: top-n-analytic-trends

For Stride, which allocates 15% of its 500,000$ annualized revenue to the Hub (as well as a share of STRD inflation), we propose lowering the Top-N parameter to between 60% and 75%, equating to roughly 20-36 validators required to operate (while others can still opt-in voluntarily). Alongside this, a strict 5% vote power cap would ensure efficient allocation of the security budget among participants. Currently, profitability remains elusive for validators, but these adjustments present a more balanced approach to achieve potential future profitability as the chain’s revenue grows.

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Conclusions:

In summary, we recommend lowering the Top-N parameter to 75% or below, combined with a vote power cap of 5%. These adjustments provide a more sustainable baseline while awaiting future revenue growth. As the revenue increases, more validators are expected to opt-in voluntarily and adjust their validator fee parameters to share more rewards with their delegators, by lowering their validator fee.

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Thank you for reading,
Govmos.

[RoboMcGobo]

I’ve thought a lot about this as well.

The scariest thing, imo, about migrating to something like top-75% is that it introduces additional uncertainty around upgrades, as Stride will have to rely on a smaller subset of validators to upgrade on time (many of which would be CEXs).

Upgrading on time can already be challenging, so it’d require a lot of confidence that the remaining set would be able to process upgrades in a timely manner.

[Govmos]

@RoboMcGobo

Stride will have to rely on a smaller subset of validators to upgrade on time (many of which would be CEXs).

We previously proposed utilizing an exclusion list to address those validators who have caused issues in the past. While this would be a bold step, setting important precedents within the ecosystem, Stride serves as a prime example of a chain that has been negatively impacted by the underperformance of certain centralized custodial validators.

As neutral contributors, we aim only to offer a practical solution to the challenge at hand, while acknowledging the significant political ramifications that such an action could carry. Ultimately, the decision rests with Stride, and we remain committed to supporting the best outcome for all parties involved.