Ways to maintain a diverse active collator set

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"If we are talking about setting up some kind of filter and so on, I think it can help to some extent, but as we know if we’re talking about large organizations with a lot of resources, it won’t hurt them to fund their nodes to stay on the active network. "

Self-staking is a risky and costly business. It’s not a matter of access to funds, but rather a risk-reward ratio question. Financially speaking, having to commit $1M for 1 month (until they get delegations) vs 1 year has a fraction of the risk. So, unless these organizations are already sitting on these token reserves as part of their investment strategy (my case for the “wallet” collator), then, getting and keeping enough tokens to fund a collator may not make sense if they cannot secure delegations.

“probably some kind of kyc, on-chain registars might help solve this problem to some extent. the only thing is that this rule is easily circumvented. but in that case the organization would need to change the name and so on. in some ways, it departs from the idea of being - permissionless and decentralized.”

On-chain registrars are a decentralized ID solution, so I don’t think there is any departure here. Also, a registrar could be pretty strict in its ID procedure. I know this is not customary, but a registrar could demand entity paperwork and disclosure of relationships with other entities. After all, registrars get paid for their service.

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12

It seems like there is general agreement on increasing the bond, but a poll will hopefully let those who haven’t commented also voice their opinion, so here is one:

  • Should the initial (locked) bond be increased to join the network as a collator?
  • No, I don’t think this will help maintain collator diversity.
  • Yes, I think this will help maintain collator diversity and it should be set to 1M GLMR / 10,000 MOVR.
  • Yes, I think this will help maintain collator diversity and it should be set to 2M GLMR / 20,000 MOVR.
  • Yes, I think this will help maintain collator diversity but I think it should be set to something else and I will add a comment below.

0 voters

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13

we’ve seen it again today where binance brought in their 4th collator on Moonbeam Synclub-2 and pushed out another fellow collator.

So there definitely should be a change to keep a diverse collator set and not being controlled by just a few entities sharing 4 collators each

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14

It is self-explanatory that the minBond needs to be adjusted.
Since the adjustment from 10k GLMR to 100k GLMR the token went from 5+ $ to 0.35$ so the effective minimum bond is now 14x less then it used to be or even more.
That’s why I voted for the 2m option in the poll above.

I’d also love to see filters in the official staking app to make DueDilligence easier for the ecosystem users.

Polkadot/Substrate Portal does the same and even preselects some filters to make life easier.
“One Validator Per Operator” for example is preselected and would be an awesome fit to be implemented in the app along with an “only with identity” filter.

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I agree to the proposal to adjust the min bond to 2m GLMR tokens. I think it will help keep the stability of the collator set and the security of the network. Thanks for beginning this important debate.

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I am glad to see that the collators have joined the discussion. I’m wondering if the main goal is to have 100 active collators in Moonbeam / Moonriver, and if the min bond is increased to 1/2 M, then with the next expansion of the set, probably only VCs/large organizations will be able to get into the active set, since it will simply become impossible for small organizations. if we think that 1/2M is not such a big amount now, then in the future it may grow significantly.
what do you guys think about this?

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Thanks a lot Jim for having compiled such a good description of the current situation and the possible ways to improve it.

We have seen how much community collators are involved in giving support to other fellow members of the MOVR/GLMR ecosystem and how well community collators perform in terms of monitoring and backup. Feeling a part of something is what pushes us to do it with dedication and love for detail. This community support, not of collators, but of the whole MOVR/GLMR participants has been one of the key elements of the project’s identity.

That has to be protected in my humble opinion.

The way to do that offers and accepts many options, but the easiest and most logical one is raising the min. bond. Over time, if needed, it can be changed again. A combination of that one with #2 would be my preferred option.

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Orbiters is still giving an opportunity right bud.

Even now if you notice the last few collators who joined are whales. Increasing the bonding amount means they cant withdraw it unless they leave so would make the whale think twice.

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For sure what we’re proposing now can be reversed in the future!
If $GLMR goes back up in price we’d be surely happy to lower the bond again.
This is not a set-in-stone number for eternity.

I raised the exact same concern in Kusama Polkassembly in the discussion about lifting the minimum commission for validators Polkassembly

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I believe the team should control the entry of collators and not allow any one company to manage multiple collators. Increasing the entry threshold would completely eliminate the entry of small collator companies. Or let the community vote to add new collators.

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Jim, thank you for raising this issue and making us pay attention to it, I join the vote. All the guys who were selected by the team and took an active part in the early testing deserve a place in the active set. Time has shown that community collators are in no way inferior to large companies in professional terms, this is confirmed by uptime and the overall stability of the network, which many of us provide. My voice is 2m :handshake:

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I can hardly see the proposal can help diversify the set with smaller independent collators as they are unlikely to attract such a large investment. But I agree that it at least can make it harder for larger entities thus preserving those independent collators that we still have in the active set. Moreover, given the drop in prices the current dollar value of minimum bond is too small. So I voted in favor.

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I also voted in favour of a 2m bond, although it will shut out independent collators forever to enter the active set. On the other hand, smaller entities already stand no chance to enter the active set and we now also have the orbiters program, to which smaller entities can apply (it has, however, its own difficulties, as seats are already allocated). Weighing in both pros and cons, I still find it essential to raise the min bond. Otherwise we end up in a situation where VC funded staking teams and venture funds take all active seats with 4+ collators each.

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I agree with Jim’s proposal. I think that due to the current price the amount should be increased to a minimum amount. I think it is a correct way to delicately take care of the stability of the network on the collators, and as Sik comments, if the price of the glmr token increases in price, it can be reverted again or make a new proposal. I agree with an increase in the minimum amount, since this will make people who enter have to think about it twice, since an increase in the min bond will make them see that they have an effort and responsibility. We also saw some checkers without producing blocks for many rounds, this will mean that due to the amount that will be needed to enter, the least these things will not happen, since the investment is greater.

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First of all, I would like to thank Jim for spearheading this conversation, and for everyone who contributed. The foundation has been following the discussion, and we’ve been really impressed with the thoughtfulness of the comments - we’ve learned a lot from the discussion in this thread.

We’re taking the discussion back to the engineering team to talk about the mechanics of making this change and whether this would need to be in a runtime upgrade. We will post back here with an update once we have clarity on that.

Separately, we also saw the 19-person poll; which was great but it’s triggered debate inside the foundation whether we should generate more community involvement and feedback before it goes to a full vote.

We will come back with an update in about a week’s time.

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@sicco-moonbeam

What does the foundation think about this? that it is mandatory to have a way to contact them in case there is a problem and also the same nominators can contact them if they have doubts, because it seems unfair that when there is a problem, they cannot be contacted.

and most surely contact with entities and establish no more than 2 collators, per entity

In any case, it could be taken to a community vote, but it might create a power struggle in the vote. ( vcs - cex vs comunity)

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27

I see 3 ways to adjust the collator rewards without adjusting tokenomics or enabling slashing (which we should avoid for now).

  1. Adjust the pool size (collators and/or orbiters)
  2. Adjust the min collator deposit
  3. Enable/disable collator deposit delegation rewards

There are some technical limitations around #1, so we should keep that as a constant for now, but it will be an important variable after these limitations are removed.

#2 has been discussed already above, there are multiple reasons why this may be a good idea.

For #3, the collator bond is currently earning rewards as if it was delegated to the collator, this can be turned off to make the minimum bond more effective.

Currently, compared to simply delegating, running a collator will always increase total rewards, no matter what the minimum bond is (since the bond is generating the same rewards as simply delegating, running a collator is just gravy on top. So anyone with enough to post the entire bond is still strongly incentivized to do so.

If the bond no longer earns rewards, it will be easier to dial in the rewards % where it’s no longer as attractive and possibly not worth the effort to run a collator if are in it only for the money.

We should discuss what the appropriate reward for new (and existing?) collators should be. IMO it should be somewhat higher than just delegating, enough to make it viable but not too much people only do it for yield generation. Once we have this target reward number we can solve for the other values.

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hey @artkaseman , although what you say seems interesting to me

More than adjusting the rewards of the collators, the aim is to find a way to have diversity in the active set and not be plagued by the same entity or a few large organizations

leaving out the small collators

It has been discussed that raising the self bond, necessary to set up a collator, be increased, so that it is less likely that a company will make a monopoly (more risk by needing more glmr)

In addition, with the drop in the glmr/movr price, the necessary threshold in $$ terms, has dropped considerably, so the above makes more sense.

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Did a quick spreadsheet. Looks like at a required self-bond of 900K and self-bond rewards at 0%, there is no incentive to run a collator vs. delegate

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Thank you @stakebaby for the calculation.

In general I like the idea of reducing the inflation rewards on the self bond to 0%. This directly translates to higher delegation rewards because the total block rewards per node stay constant but the self bond doesn’t participate anymore.

Starting the calculation with the assumption that the expected rewards from collating shouldn’t be higher than delegation rewards using the minimum node size to become active is in my opinion misguided because it directly translates to incentives for collating. The whale can effectively lock in the right to draw a stable 20% commission forever while nodes grow over time and dilute infltion rewards for delegators. This starts the moment the node enters the active set since ultimately nodes should tend to grow towards the mean total stake.

I argue that at the time of bonding the collator shouldn’t have a direct incentive to collate. Over time the mean total stake on every node will rise and every existing collator will enjoy higher future rewards compared to delegating but that doesn’t favor a single operator. This is already incentive to start collating but the additional rewards come later in time.

Also the assumption that in case of delegation the user would be able to capture the highest APY of the active set is not relistic for the same reasons. It’s more likely that the mean APY can be expected if the delegations are spread out across existing active validators and ech one of them tend to move towards the mean APY over time.

If I use the geometric mean of the total stake and APR I get to the 1 million self bond as break even point

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