from that post:
Consistent with the thinking behind selecting 50 as the initial number, validator sustainability will be key to determining whether the proposal passes. Validator sustainability is related to the amount of fees moving through the network. The amount of fees is tied directly to network utility.
So as network adoption and utility increases, fee volume increases too. Higher fee volumes can support a larger validator set. A proposal to increase the validator set should then be more likely to pass as the network’s utility grows.
Currently, most blocks have zero transactions, and those with txs have 1 or 2, so fees are pretty low. Validator revenue is from commission, as far as I can tell.
I’m looking for the post about how blockchain held the promise of decentralizing finance, but has just maintained the trend of channeling more money to people who have the most money. Did ChainFlow write that, or someone else?
If I vote yes on this proposal:
- it won’t be because of ideas of network decentralization
- (I think network decentralization won’t happen via expanding the validator set, at least not right now with the current distribution of stake, as explained in the charts above. I think decentralizing stake has more to do with validator reputation among REGEN holders, unless we create a parameter / software change that changes the way commission and block rewards are distributed, as mentioned in community conversations months ago, or the way Desmos works, distributing block rewards equally regardless of voting power),
- nor about financial viability
- (the income of validators in dependent on 1) how much REGEN is staked with them [commission] and this won’t change by expanding the validator set unless the expansion leads to re-delegation away from current validators, and 2) how many blocks they validate [block rewards] and this will change for smaller validators, it may even cut in half for smaller validators, but as far as I know, this income source is relatively small at the moment, especially since there are so few transactions on the network right now. That income, minus their costs, gives the operator net income, which has many variables. Current estimated income ranges from USD $21,500 (validator #1) to $664 per month (validator #49). That lower end in enough for a single-node cloud validator and a full time person earning just above minimum wage in Ecuador, but I don’t know if that counts as “financially viable.” Depends if validating for Regen Ledger is their only source of income. Running a node in that way takes only a couple hours per month of attention, so I think it’s financially viable in Ecuador, even if it’s not very secure. Probably not financially viable for someone living in a penthouse in Singapore).
- nor about opening the set to testnet participants
- (there were apx 175 testnet participants, and we’re not going to expand the validator set to 175 this month, so choosing 75 seems arbitrary. The 4 highest-ranked inactive validators are actually offline, as far as I can tell, based on the fact that
ART3MIS.CLOUD [ranked #5 among inactive validators] just made it into the active set for a few hours, while those ranked 1-4 didn’t make it into the active set. Therefore I assume they’re offline. So using the list of inactive validators on Aneka seems inaccurate as a way to gauge interest of potential validators.).
If I vote yes, it will be in order to open the validator set to the possibility of more validators who are engaged in local and bioregional regeneration in their lives beyond computers, so that they can use validator income to sustain their regenerative activities.
Would CadCad be useful for doing an economic analysis?
I am not sure how to calculate validator income in a very precise way, and I don’t know advanced mathematics, and I don’t know enough programming to do precise CLI queries of the network data. So I’ve taken the “tail” of the current validator set (validators ranked 21-49), taken the average change in delegations between those validators, extended that out to 75 validators, calculated the percentage of delegations each validator has, and then redistributed the current bonded REGEN among all 75 validators based on that percentage. Why do it this way? Because those are my assumptions.
For the finances, I took Akik Takat’s two-week income and commission rate and used that to estimate the income for other validators. It’s all in the spreadsheet linked in my earlier post.
The net result: if the active set is expanded to 75 validators, and the current bonded REGEN is re-delegated as in my simulation, then the current 50 active validators lose 5% of their current commission income. The price of REGEN has varied between USD $2.08 to $2.24 over the past 24 hours, that’s a 7% change. So, in concrete terms of validator financial viability, I think the validator set expansion will have relatively little impact compared to:
- validator reputation among REGEN delegators (the single biggest factor),
- commission rate (the easiest factor to modify),
- USD price of REGEN (based on the mix of token utility and market volatility and speculation),
- validator operations model (capital and operational costs; how many chains do you validate for),
- validator personnel payments (is this your main source of personal/family income?).
I have updated all this in the spreadsheet linked in my first post in this thread, so you can download it and modify it if you want. Here are two charts that show the simulation.
The impact of commission rate here is very visible: Tavis Digital has 2.4 times more delegations than Akik Takat, but charges 2% commission instead of 10% commission, and therefore has lower estimated monthly income.