Thanks for opening this important conversation. Will support this.
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Yes, of course itâs about the amount of delegation, not number of delegators. I donât think there is any implementation in Cosmos that calculates active set inclusion based on the number of delegators, but happy to be proven wrong 
Simple cap on the max tokens is a good idea, but I guess popular validators can just spawn new nodes, and gobble more of the 175 active slots. The re-delegating idea definitely needs to be worked out more, but I think it may be interesting to model.
As for inactive validators, I donât mean inactive validators without any delegations, but if you look at the 175 set, you see there are sometimes shifts between no. 175 and no. 176, especially when there are some downtime and the active validator gets jailed. If a validator does NOT want to be in the active set, I think they can just turn off their machine, then they wonât be added into the active set. No one will force them into the active set then.
About âfinancially stableâ: There are fixed costs to running the node setup depending on each validator. Cosmos is a popular network and I sincerely doubt there will be a lack of validators who wouldnât take the place of validators that will drop out. Also⌠personally I donât like to identify potential bankruptcies without clear data. If a validator is going to face bankruptcy now because they canât meet cash flow, that means to me they are already in significant liabilities (possible if they bought 400k hardware in their DC), is this the case? Or that they would just not be able to cover their costs, of which they could stop validating and eating into their assets (unless they have fixed contracts on DC or cloud that they will still have to pay regardless).
the expense for a year would amount to a couple of million USD from the community pool. Given that more chains may join ICS and increase the subsidy burden, the tradeoff between subsidy and total benefit from the consumer chain may be a net negative.
My vision here is for a patch solution. I donât think CBI should last for a year, let alone several. Youâve hit the nail on the head - itâs not a solely reliable solution and I donât think itâs worth the effort to make a short-term solution into something perfect when we could implement it and then buy ourselves time to work out a sustainable one.
A year is plenty of time to develop a longer term solution such as the others mentioned in the essay (including the max cap youâve suggested, which we called a âvoting power hard capâ). I think this solution holds more water than increasing the set size - Iâm glad it sparks interest in you as well
If I had to pick a number out of thin air, I think I would be more generous than 1% or 2% to start off - I would want to gradually reduce the hard cap and move slowly so we see how it impacts validator businesses. I could see us starting at 4.5% maybe, and then reducing to 4, 3.5, 3, etc. if things were going well and businesses were staying afloat.
Simple cap on the max tokens is a good idea, but I guess popular validators can just spawn new nodes, and gobble more of the 175 active slots.
This is the Sybil concern that we are thinking about here. Given how top-of-mind it is for commentators, developers, and content creators, I think that a big validator spawning new nodes would destroy their business reputation in the space. Unless they had enough self-delegation to make the new nodes profitable, it would be a bad long-term decision for them.
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If I wasnât clear earlier, I was talking about the subsidy for several consumer chains, not years.
~75 validators * ~400$ subsidy monthly * 6 months (hypothetical) * 5 consumer chains (again hypothetical = ~900K USD as I see it.
It defiantly is an interesting idea, but we need to run multiple simulations to get to the magic number of voting power hard cap. Most of the variables are quantitative and we can derive the hard cap % mathematically.
Also, I want to suggest another short-term solution that I think is viable without asking from community pool for the subsidy.
validator cost is 400 or ~35 Atom @21% APR and 5% validator commission we need to give them 40K Atom in the delegation. For 75 validators it is 3 million Atom.
Can ICF do this? as part of their delegation program?
I assume that running a validator at the bottom of the validator set is not profitable considering all operational costs. If we want to give bottom validators a chance to further develop their business i think more support is needed.
Therefore I would support a CBI for a limited time until other implemented mechanics bear fruit.
Furthermore i think there are still possibilities to increase decentralization without such drastical changes like a voting power hard cap. I think the chances of a negative impact (multiple nodes run by the same instituation) are relatively high.
The introduction of a staking transaction that lets you delegate to the validator set instead of a specific validator could help with better decentralization, especially if it would be possible to incentivize the use of it. It would also benefit delegators since they have lower risk regarding slashing.
Would love to hear your feedback.
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Ah gotcha, thanks for clarifying! Itâs a fair hypothetical for sure and Iâd only quibble with the idea of launching 5 consumer chains in 6 months.
Itâs a big chunk of money, but I would still imagine it allocated in tranches with plenty of opportunities to not dig ourselves in too deep if a longer term solution arises, or if earlier consumer chains become profitable quickly. Neutron is a brand new chain, but it looks like Stride is going to be second to the mark and that is an already well-established project.
I donât think asking the ICF for money is realistic. For one thing, I want the Hub to be less dependent on the foundation. Iâm really happy theyâve done their delegation program and transparency report, but I think depending on ICF delegations to to let RS scale is the same sort of issue as depending on consumer chain side solutions - itâs not Hub-controlled, and the Hub would be vulnerable to a change in opinion from a third party.
Maybe most convincingly - I want a fast solution and the ICF is not going to be fast about moving delegations. No shade, just an honest view of a big organization trying to do 75 âdelegateâ transactions with high security wallets. 
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delegate to the validator set
Thatâs an interesting idea! It reminds me of Quicksilverâs rewards/risk socialization premise, which was the inspiration behind the longer term suggestion of integrating a liquid staking solution. When picking a single provider and depending on liquid staking, there are particular risks that might not exist if we introduce some sort of purely ATOM-based solution.
Almost like a soft-cap? So ATOM-holders could delegate to âthe validator setâ and then a module would distribute them across any validator with less than the soft cap. People could still retain the right to delegate to any validator, but there could be a UI solution to encourage delegators to just choose âthe validator setâ with an averaged commission and APR.
Yes people still should have the coice between delegating to the validator set and selecting their favourite validators.
I dont think a soft-cap is even necessary. Big validators are a very important part of the ecosystem and i wouldnt want to exclude them. Governance participation and commission might be reasonable filters though but more discussion would be needed to get the right parameters.
To bootstrap this âvalidator-setâ delegation an increased APR for the users would be nice. Either through getting an increased portion of staking rewards distribution or an airdrop.
I am happy we are on the same page here. Letâs try to find a win-win solution for all the stakeholders. That are integral parts of the cosmos.
Didnât realize until now that this is a thing.
Hi all! Just catching up here.
Thank you all for your questions and conversations â seems like there are a lot of good ideas floating around.
Iâll add a bit on what Iâve read / seen above.
@Cosmic_Validator â in response to your concerns about optimizing for modelling & not having human involvement, I generally agree with @lexa 's take that:
I would further add that I am not currently aware of a strong delegation program that is fully automated. Everything seems to be some combination of objective criteria with subjective weights allocated to that criteria based on an end-goal of the entity that is responsible for the delegation.
As it relates to us, our interest is largely in ensuring that replicated security doesnât jeopardize a healthy validator set that is aligned with the philosophy and values of the Hub community. In fact, we, as a community, might even take this as an opportunity to look at the type of validator set (and thus larger culture) that we want to incentivize and support on the Hub. Obviously, in every step of this process we have a lot to do 
.
@adintium re: âOpen Public Competitionâ
I think to dive into this, we have to touch on what is peripheral to this topic:
- The validator set plays a tremendously important role in shaping the culture / security of the chain
- Culture and security is the key value proposition of the Hubâs replicated security offering
In this regard, the problem with âOpen Public Competitionâ is generally at odds with developmental efforts. For replicated security, this means that smaller operators will struggle to run additional nodes in the same way that in developing countries, local industries are usually outcompeted (with a big negative impact againt the countryâs long-term growth) by multi-nationals if they are not protected / supported long-enough for meaningful growth to be generated. We can look to the development of a lot of north-east asian countries and compare them with other countries that have had more tragic developmental outcomes if we are looking for an illustrative example here.
On the Hub, what we risk is some of our smaller, more active, and long-term validators being knocked out of the set (and thus losing their ability to participate in the network, a network which they have contributed a lot to) before there are viable solutions to the root problems. If we lose some of these validators, we lose a meaningful part of the Hubâs fragile culture.
Side Note
What would be interesting is to take this conversation about a healthy validator set and Hub culture further and to have some sort of digital ethnographic analysis about the history / impacts of the bottom half of the set.
Just off the cuff, Iâve noticed that a lot of smaller validators are much more responsive to inquiries and other requests when we email or reach out to them.
There arenât likely to be any significant changes to the ICFâs delegation program in the near term because the delegation program has just gotten rolling again (after a long hiatus), and the ICF isnât staffed in a way to manage two delegation programs effectively. Stake distribution is definitely something that weâll want to continue to think about in the long-term, but it most definitely shouldnât be considered a silver bullet (let alone an actionable item for a separate delegation program in the short-term).
Also, personally, Iâm mostly in agreement with @lexa that this should be something that the Hub community owns and manages.
Fully agree with this! How does it sound to everyone if we go ahead and draft up a temp-check proposal (something that gauges the sentiment) for the CBI aspect of this, and letâs keep a running thread to discuss the longer-term solutions?
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Hi
Maybe we could do a snapshot/poll to identify the validators that qualify as âsmaller, more active and long-termâ?
If we are only taking the bottom 75 validators from the active set, I donât think all 75 necessarily qualify under âsmallerâ.
For example: Keplr wallet (#106), Huobi (#152), Cryptocom DeFi wallet (#104). Maybe you can argue Keplr is small, but Huobi and Cryptocom probably arenât.
There are also a number of validators I would consider âprofessionalâ, for example HashQuark (#101), Blockscape (#127), Wetez (#144) and DSRV (#123). There is also stake.fishâs 2nd node on Cosmos: grant.fish (#136) which has 100% commission because itâs for their grants program. Should they also qualify for the free pass? The incremental increase on their infrastructure is likely of lesser impact compared to non-professional small âhome stakersâ.
The above are just some examples to highlight my point, Iâm not attacking any validators, just to be clear
By the way⌠if any validator from the bottom 75 would still like to validate the consumer chain, then technically they could, right? Essentially they would be able to validate without any jailing/slashing conditions?
And if they donât validate, they would still be rewarded anyway, right?
So I guess if we implement it the way it is now, it would be up to each of the validator in the bottom 75 to show their social/community commitments then (if they can afford to), which the top 100 donât have the privilege of and would need to validate regardless.
Hi all!
Iâve seen this problem debated ad nauseam elsewhere and itâs one I also am super passionate about seeing the ecosystem tackle. Thank you @lexa for your stellar work here and to everyone else for weighing in so thoughtfully. I am but a lowly hub delegator and youâve inspired me to create an account and engage (more context at bottom since Iâm new here).
The problem (my POV):
- validator incentives are imbalanced.
- validator resources (funding, reputation, insider connections) are imbalanced.
- delegator incentives are imbalanced.
- delegation outcomes trend toward groupthink / centralization.
- 7-figure barrier to entry values access to capital above all else.
- Incumbents win, innovation is disincentivized & real economic value is left on the table.
The most forward-thinking, sustainable solution Iâve seen discussed elsewhere, which I would love to see some chain implement and to hear your opinions on here is to directly tie VP% to dynamic, validator-specific minimum commission rates.
More specifically, Iâd envisionâŚ
- Validators can utilize 0% commission only at the bottom of the active set.
- A minimum floor is imposed for all validators on the commission rate which is derived by applying a static multiplier to the validatorâs VP% rounded down to the nearest integer.
-
TL;DR
minCommissionRate(stake) = floor(stake * MULTIPLIER / TVL) -
MULTIPLIERcan easily be 1 (not implemented), but is uniform if implemented. -
MULTIPLIERis probably a governance-configurable module param.
-
TL;DR
- (Optionally) Add static VP% caps (e.g. Teritori) as a deterministic guardrail against centralization.
Iâm no economist, nor have I gone through the deep interchain analysis others in this thread clearly have, but I do recall (in a past life) observing & modeling the aggregate outcomes of regulatory intercession via price floors, ceilings and subsidies and being surprised at just how often the consumer â the intended beneficiary â got the short end of the stick.
What does this buy us?
- 0% commission on-ramp at the bottom allows new validators to get their foot in the door.
- Delegators are rewarded with 0% commission returns for the additional risk of choosing validators at the bottom of the active set.
- Those higher-yield returns are effectively capped to a small percentage (gov-controlled) of total delegation, making them most impactful for new / small investors.
- Voting Power should more accurately reflect real, economic value and/or strong political alignment with delegators.
- This is simple to reason about and has no managerial overhead.
- A uniform standard that requires zero human involvement sidesteps any risk of bias.
Devilâs advocacy
- The mechanism above would require high-risk modification of the core logic.
- Change is uncomfortable. Low-commission, high-VP validators will inevitably lose delegation if they arenât providing tangible value to users. Would this pass?
- Cosmos Hub is a live, highly-capitalized and mature blockchain at the center of our ecosystem â this is not hermetic risk.
- Fluctuating commission rates will be surprising, initially.
- Transitioning would take time, requiring direct collaboration with validators.
- One entity can run multiple validators to try to absorb the same amount of voting power.
What do you all think?
Me: Iâm a hub delegator and an aspirational (non-millionaire) hub validator with a strong tech / systems background. I run validators on several chains, including stride and voted yes on ICS / #201. Iâd love guidance on how to join the active set, whatever its size, if thereâs a real path and anyone cares to share, but I am replying because these are truly issues Iâd like to see solved across the ecosystem.
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Yeah, I think if the temp-check proposal passed, the next steps would be moving into a working group to do more research about exactly what type of criteria would be involved here.
Yup, this clarity is super important! We want to ensure that the criteria (which have not been defined) is in line with the communityâs goal. Your comments are a great step in that direction.
AFAIK, they could.
Implement what? The CBI, or Replicated Security as it is now?
Something to explore together is, like you touched on, how CBI might interact with any consumer-chain side feature like soft-opt out. Does soft-opt out totally solve the problem? Does it need something complementary? Curious to hear your thoughts.
@blacklodge , welcome! Itâs great to have you here, especially with such an articulate and intriguing first post.
I think the dynamic enforced commission that you pointed out is an interesting mechanism that Iâd be interested in exploring deeper.
Ultimately, it seems like what will be needed to solve the long-term issues is a combination of better UI / UX for delegators, some kind of governance controlled lever to shift or incentivize delegations to flow downward, and short-term support (soft-opt out / customizable commission / subsidies) to keep the validator set afloat until there is a meaningful shift toward more evenly distributed stake.
Could you say more about this? In particular I am curious about which party you view as a consumer in terms of a CBI-like solution. Would it be the delegators?
Thanks again for your comments, I do hope weâll see you around more often and looking forward to continuing the discussion!
I agree. We need to brainstorm on long-term solutions to the problem.
I really like your vision. I also agreed and proposed new dynamic around tied to %VP.
I do think itâs the best way to rebalance our current model.
While having 0% comission available to bottom validators makes no sense since they definitely need any additional revenue, I do think there is a beneficial way for it.
Letâs assume top validators wonât have access to that 0% or even enforced a higher min fee.
Bottom validators could launch â0% campaignsâ for a limited period of time (ex couple months) to attract delegation from the top and also new comersâs delegation.
My âoriginal ideaâ was only to higher the min commission for top validators thus allowing bottom validators to have another leverage to attract delegations but you are taking it a step further which tbh sounds great.
I do think itâs the only sustainable way of doing things, but naturally counting on rebalance from our delegators instead of enforcing any direct VP hard cap, capital transfert etcâŚ
As lexa mentionned earlier this would probably needed some (a lot) of work but I would be more willing to spend $500.000+ from CF on that kind of application rather than trying to use CF to directly subsist our bottom validators running.
Has there been any progress on this topic? As Stride nears becoming a consumer chain, validators in the bottom set will see their losses double. This problem is not limited to the bottom set, as other validators are also unlikely to earn anything from Neutron and Stride in the next few months. A solution that supports the costs of validators is becoming increasingly necessary and urgent.
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