As an ATOM holder, I am presented with a dilemma for my holdings. I can delegate these holdings to help secure the network or I can keep the tokens liquid and use them to transact on the network. I’d like to propose adjustments to delegator bond requirements that will alleviate this dilemma thus allowing a holder to participate in delegation, network security, and governance while still retaining optionality for transacting with ATOMs.
A short story of how delegation works today: I own 100 ATOMs and decide I’d like to be involved in network security and governance. I delegate these atoms to a few validators to help decentralization. After a few days, I have a friend that wants some ATOMs to learn more and get involved. I go to my ledger to send them some ATOMs only to discover that I have to wait 21 days before I can send any of my ATOMs! I am aware that as a delegator, there is some portion of my ATOMs that could be slashed (and accepted this risk when I delegated) - but I didn’t imagine that delegating would prevented from using some of my ATOMs on the network. I start the un-bonding process and now question if it makes sense to participate in network decentralization and governance with any of my ATOMs or keep them available for transacting.
I believe that for most ATOM holders the above realization will be non-obvious and unpleasant. Certainly a bond and lock-up period are important aspects for proof-of-stake networks - these make up the stake. However, the bond does not need to represent 100% of the delegator’s balance. For example, today, with a slashing rate of 5%, if I delegate my 100 ATOMs to a validator I am at risk of having 5 ATOMs slashed should the validator double sign. From my perspective as an ATOM holder and delegator, the other 95 ATOMs should be liquid for immediate use since they are never at risk of being slashed.
I’d like to hear thoughts and counter arguments on the above example and experience. I don’t imply that the bond must be lowered to 5% but that it should be lowered from 100%. Lowering the bond requirement would provide a more pleasant and welcoming experience for ATOM holders to become delegators to help secure and govern the network.