CONTEXT:
We apologize for the quick comment which doesn’t include our regular in depth analysis of the problematics. On this particular situation we were caught off-guard by this proposal on-chain today. We wish we had the time to get involved sooner in the discussion but we also value to leave our feedback before voting.
ANALYSIS:
Our stance on the matter is nearly 100% agreed with @Noam and we also recommend to use a formula. Removing security features for the sake that “it poses no threat today” is the number one recipe for disaster in a distant future. Indeed we think that a more conservative approach is required here. We actually think Noam’s formula is quite elegant and does provide a good security distribution along the validator set. Lastly we would also recommend to update that on an epoch basis or at each 21days network “checkmark” to avoid unnecessary regular updates.
CONCLUSION:
At Govmos (the governance arm of the PRO Delegators’ validator), we emphasize the critical and systemic role that liquid staking can pose to both price stability and network security. The LSM enabling instant conversion to LST has also made significant changes and the consequences of this are far from simple. Moreover if we take into account the likely increase in the overall hub complexity over time, removing such an important barrier to liquid staking as a vector for attack seems too risky to us. Therefore we think that another attempt to solve this issue regarding smaller validators has to be proposed. We encourage the discussion to switch to a model based approach with a formula to gradually adjust the parameter across the validator set. We align with Noam’s proposition on that front.
We will likely have to vote abstain on this proposal and we greatly encourage governance to immediately start another discussion around the model based proposition made by Noam. In that sense we would understand if the vote passes and removes the cap before eventually reintroducing it with a model based approach on a later proposal.