Collator Community Guidelines Revision: Reinstate Maximum of Four Collators per Individual / Entity per Network
I am proposing to reinstate the maximum number of collators an individual or entity may run on the Moonriver / Moonbeam network to four collators. Since Moonriver/ Moonbeam’s inception the maximum number of collators per individual / entity has been four and was only previously changed down to two as part of a Proposal to increase the minimum bond. For the reasons outlined below, I do not think reducing the maximum number of collators per individual / entity to two is beneficial in the long run for the Moonriver/ Moonbeam ecosystem (including for the smaller collators this change was aimed to protect).
TLDR: Based on the community discussion around this topic, it is clear that the rationale for decreasing the maximum number of collators per entity was that “we need to care about smaller collators” and I totally agree.We need to protect loyal and engaged members of our community no matter their size. Reducing the max number of collators per entity however is not the right solution and it could have harmful repercussions for Moonriver / Moonbeam’s health and growth. I have outlined below why I am opposed to reducing the max number of collators per entity from four.
● Drives away players from Moonbeam:
The reduction of max collators per entity looks undeniably like a protectionist economic policy that could drive away larger players and isolate Moonbeam away from growth opportunities. At least 1 institutional player has indicated they will walk away from Moonbeam if this is enforced. Their customers are mostly looking for stable returns; if the community at any point can unilaterally change the rules; this makes those returns very unpredictable; and in the end- there are 200 other chains they can go after.
We also need the larger institutional collators because:
○ Institutional collators are good for Moonbeam because they help reduce GLMR’s velocity: there is still a huge amount of value institutional collators bring because they lock the token and that overall increases demand and interest in the network (even if these whales aren’t as directly involved in the community discussions, etc.)
○ Institutional Collators Bring Awareness and Users to Moonbeam:
Entities like Kraken, Binance, and others, bring in users from outside the network that otherwise would not be interacting with Moonbeam.
So even if the collator entities themselves aren’t directly as engaged as some would like, this doesn’t mean they don’t serve an important function in raising the profile of the chain (as well as locking up tokens). Losing institutional collators by reducing the max number of collators per entity, or discouraging new entrants, would have detrimental impacts to Moonbeam because we could have greater token velocity and lose future new users and growth potential. So the smaller collators may get a pyrrhic victory in the short term - they may see more slots open up, but everyone’s returns would go down.
● Inconsistent & Confusing rules:
Also, as it stands right now, the rule is very confusing. People on the forum have indicated it would not be enforced for existing entities; but as the proposal is written it says:
“An entity is running more than two collators unless the community determines by governance that it is for the benefit of the network that an entity should run more than two”
“The community may use on-chain governance when any of the guidelines described in Part or Part II of this on-chain remark are not adhered to. Specific actions that may be taken (but not limited to) include:
● Removal of an individual collator or set of collators from the active set
● Slashing of collator self-bond
● Permanent ban of the entity from participating in the collating function on the network”
The way that is written, and what was actually voted on; it implies that anyone running more than 2 collators should immediately put in an on-chain proposal and ask for an exemption; or risk sanction. Just a handful of people on the forums saying “it’s fine”, is not a sufficient guarantee; because that’s not what it says on-chain.
Furthermore, laws that require exceptions are typically not good laws and are fraught with inequality and execution bias. I think you also have to consider that from the perspective of someone new to the chain looking at the ecosystem; this looks like a protectionist policy - it’s not exactly “welcoming to newcomers”.
● Uncommon policy:
I tried to find other examples of chains where this was put in place and I wasn’t able to find any. That doesn’t mean it doesn’t exist on some other chain, but it’s definitely not common. The fact that this is not a common decision within web3 is a bit of a sign it’s not something we should pursue.
● Omnibus law:
In a very real way, this rule change got “buried” in the main proposal. The abstract of Proposal 88 explicitly mentions the increase of minimum bond to 2M GLMR; as well as the establishment of common guidelines. The detailed guidelines then do mention that there is now a limit of 2 collators per entity; but it’s one single line in the proposal; and it doesn’t even mention this is a change from the previous guideline. In speaking with people across the ecosystem; the majority of them were not aware of this change until I explicitly pointed it out to them. I feel this should have been split out into a separate proposal; not combined with the increase of the minimum bond.
That being said, we do need to protect the smaller collators because they are important members of the community, they are far more active in governance; and actively partake in discussion and the future direction of the chain. But I think there’s other ways we can address this - perhaps we can ask the foundation to look at increasing the number of collators that can be in the active set; it would seem that would take some of the immediate pressure off. And perhaps there are other ways the smaller collators can differentiate from the larger ones than just a straight-up competition with APY; and the Foundation can help with that.
“Collators have a responsibility to the network to act honorably. If any of the following forbidden offenses occur, action may be taken via on-chain governance: An entity is running more than four collators in either network”
Moonriver, On-Chain Remark for Collator Guidelines and Request for Collator Self-Bond Change | Polkassembly
Moonbeam, Moonbeam On-Chain Remark for Collator Guidelines and Request for Collator Self-Bond Change | Polkassembly]