Request for Alteration of the ICF delegation program Cycle 2

Miscellaneous
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Dear Cosmos hub validators, Stakers and community members,

Last week the ICF announced the conclusion of their Delegation cycle 2 validator selection ICF Delegations Program: Meet the Validators (Cycle 2) | by Interchain | The Interchain Foundation | Nov, 2023 | Medium. This is based on the criteria and proposal originally voiced here: ICF Delegations Policy v2.0 - #20 by ZoltanAtom

We and many other validators with many contributions were awarded with a high points rank and thereby a high delegation. There is just one problem, a point cap based on VP ranking.

Although we agree that promoting decentralisation like this is helpful, the problem with the cap is that it INCLUDES tokens staked in delegations cycle 1. Let me illustrate with an example.

Lavender.Five Nodes Posted many contributions for the delegation Cycle 1 and were awarded 430k ATOM in delegations moving them up from rank ~ 110 to 65. After half a year of additional contributions the community awarded them with another 10 spots being at rank ~55 right now. Our total delegation of 880k ATOM is now being considered for the voting power Cap. In cycle 2 we are again rewarded with a relatively high point total for a potential of 165k ATOM delegation, However this is reduced by half because of the Voting power Cap. We will lose 430k Delegations, and then gain 80k putting us at roughly spot ~110.

Meanwhile teams that didnt apply or were less fortunate in cycle 1 (for example Keplr - nothing against them just an example) are moving from place ~75 → 50 because of their delegation. This is because they are not being Capped based on VP gained from previous ICF delegations.

So all this process of Capping points is really doing is pushing out some validators of the upper 60 ranks and putting others in.

To put it bluntly, we would have been better off if we did NOT apply to Cycle 1 (as it only counted for 6 months) and then got the full amount for Cycle 2 - as it will stay with us for a full year. These kinds of Loopholes should not exist in a well designed delegation program and disincentivize contributors like us to really put in significant effort.

We propose the ICF Re-calculates their delegations with a point cap but EXCLUDES all delegations made by them in Cycle 1.

We solicited feedback from other validators and many in the top 25 of contributions felt very similar, they are being punished for contributing consistently in both last and this period. Its demotivating and will only create further friction between the ICF and the validator community.

ICF representatives asked us to email this feedback and create a forum post, we have done both and hope it can still be considered although it looks unlikely.

Best regards,
Gijs - Ertemann
Lavender.Five Nodes

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Before the final updated ICF Delegation Policy for the cycle 2 and before the application period started, the ICF requested feedback here from validators and the community and considered a lot of this feedback to update and improve the new Delegation Policy (ICF Delegations Policy v2.0). Why are you providing this feedback months later after the evaluations have been completed and the new redelegations are about to be implemented rather than months ago when the ICF was requesting feedback?

Furthermore, you were actually aware about this feedback period and even provided your own feedback about relayers (ICF Delegations Policy v2.0 - #12 by schultzie), but at that time you never said anything about the CAP points system, you are giving this feedback months later once the evaluations have been completed. Why did you think that the CAP points system was a good idea during the feedback period and you didn’t recommend any modification to the CAP points system, but now after the evaluations you want to modify the evaluation criteria that was previously agreed and confirmed?

Why do you say 430k delegations? According to the documents from the ICF about the Cycle 1 you were awarded 19 points and a delegation of 256,065 ATOM.

In the Cycle 1 all contributions were awarded equally 1 point, without considering the amount of resources, time or effort of each contribution as in the case of the Cycle 2. So, some validators who submitted many lower effort contributions received very large delegations for 6 months, other validators with fewer contributions involving more resources and time received low delegations since 1 point was awarded for all contributions. In the Cycle 1, Lavender Five received 19 points, according to your VP rank you knew that your cap would be 15 points in Cycle 2, but you didn’t say anything or recommended to modify the CAP points system. After the evaluations were completed and you didn’t like the results then you suggest to change the evaluation criteria. If you had received 15 points or less, then you wouldn’t have suggested any modification.

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Dear @Ertemann :heartpulse:

Thank you for raising this topic in a public forum, so that we can collect community feedback and ensure at the same time full transparency on these conversations.
Indeed, for a validator, the potential impact of the ICF delegation program is relevant, even more so during a prolonged crypto winter that we all had to face in the last years.

Saying so, I would like to raise a few notes about the cap system and snapshot in general:

  • the cap point system was introduced with this delegation cycle, having in our mind the will to offer some concrete sign of support and recognition to the many, many validators that are incredibly active and helpful through the whole ecosystem but that, at the same time, struggle on attracting delegators at the lowest positions. In our eyes, this was seriously compromising a. decentralization b. diversity c. the possibility of seeing more meaningful contributions emerge from new and enthusiastic teams.
  • We made the cap point one of the main focus of this year, saying this up from the very first draft of the new policy presented to the community this summer. The community was very supportive and happy to see this policy implemented. It is a concrete step towards a fairer distribution and allocation of resources towards the active set.
  • there were no objections or mentions from the community about the snapshot itself as proposed in the draft, so I finalized the one noted in the draft as it was presented.

Now, a couple of notes on your specific case:

  • We received way more applications this year, with a completely different point system that went from 1 point/contribution to up to 5 (even 10 for the upcoming valuable contribution category). The relevant difference in the number of actual points awarded to validators caused the value of the single point to drop significantly; this, in addition to a lower amount of ATOM made available from the foundation to be delegated (10 millions > 5.5 millions), means that even with the same points of last year, you would have been entitled to way less as per actual ATOM delegated so that the difference would have been sound no matter cap or snapshot. Talking in numbers:
    Cycle 1 - Per Point Atom Amount 12484
    Cycle 2 - Per Point Atom Amount 5562
    Additionally, modifying the snapshot will bring even more points to the table, significantly lowering the value of each point, which would end up around 4k ATOM each.
    In this scenario, even without cap and full 19 points as per your team scoring, you would end with a substantially lower delegation if compared to last year.
  • Even taking off the first cycle delegations, your team would fall in the category with 20 as the max cap: as per calculations, this means that even changing how we calculated the points, you would be entitled to not more than 4 additional points (19 in total), so ~16k ATOM as per today’s projection (more points in the equation = less value per point). Which, again, is still way below your last year delegation. Saying so, I do see value in your feedback, and this was something that we already noted as a possible implementation for next year’s cycle, which policy will be submitted to community attention in August 2024

I’m human, so I’m 100% aware that the policy is far from being perfect.
But at the same time, I think it represents a concrete step towards more decentralization and more enthusiastic and active contributors.

I renovate the request to the community to leave their feedback in this form to collect as much context as possible to ship a newly improved policy for next year. At the same time, I think that comparing delegations received on cycle one, which was supported by a limited policy and with far fewer applications, is definitely the wrong way to improve things. No matter how much the ICF delegations policy is going to be improved in the future, it’s unrealistic to think that it will come to a point that everyone will be happy with it: there will always be someone who will have fewer delegations than the year before, someone who will receive less than expected, or again, someone who thinks that X team doesn’t deserve so much, but this shouldn’t be reasons to change the policy and the rules on the run. Instead, it should be a perfect ground to come up together next year and think of a better-defined policy for the upcoming cycle, working in group to make it the most efficient and on point as possible considering the best interest of the most.

Cat :black_cat:

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Not realising something was a problem then doesn’t mean we cannot realise it later and bring it up now.

I acknowledge this post is late, maybe too late. Nonetheless not sharing the feedback would be worse than sharing it late.

So yes feel free to comment on lack of finding this problem earlier, but i don’t think it adds any actual value to the rest of the problem at hand.

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Thank you for the deep-dive answer. Ill be honest and say i didnt calculate through as far as you did, so this is helpful context.

  1. I understood that the ATOM per point value was lower and i don’t think that particular change between the 2 cycles is up for discussion. We were expecting a smaller delegation even with the same points total and are 100% okay with that.
  2. Thank you for calculating this through, i hope it becomes valuable context for the next cycle or a full re-calculation can be done for all parties to see how the delegation program would differ even in Cycle-2.

I just want to clarify that we are not necesarilly complaining about the fact that we get less delegations, its about the fact that the Points cap is hurting validators with higher contributions in Cycle 1 more than validators that did NOT apply or had lower contributions.

The cycle 2 program shows us that the difference in delegations between doing less than average and more than average has shrunk - especially for validators with more VP, idk yet if we will action on that but it definitely hurts the contributions we make.

We will continue to contribute and attract delegations from other parties that way and hope to see small changes to this or next cycle based on above feedback (as we were asked to post on the forum directly).

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did you mean to place this comment here instead? [Discussion period] - Cosmos Hub IBC relayer cost restitution plan - FeeGrants

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