[Signaling Proposal][Draft]Add Liquid Staking Module to the Cosmos Hub

Add the liquid staking module to Cosmos Hub Summary This is a signaling proposal to replace the staking, distribution and slashing modules on the Cosmos hub with variants that regulate liquid staking. We call these variants collectively the liquid staking module. This proposal is a temperature check with the Cosmos Hub community. This proposal is NOT executable. No on-chain actions will be triggered if the proposal passes. Before any on-chain actions are executed, a separate software upgrade proposal would need to be posted on-chain and be voted in by governance. Developed by Iqlusion , the LSM is designed to safely and efficiently facilitate the adoption of ATOM liquid staking. The LSM is best understood as a form of regulation on liquid staking providers. It enacts a safety framework and associated governance-controlled parameters to regulate the adoption of liquid staking. The LSM mitigates liquid staking risks by limiting the total amount of ATOM that can be liquid staked to 25% of all staked ATOM. As an additional risk-mitigation feature, the LSM introduces a requirement that validators self-bond ATOM to be eligible for delegations from liquid staking providers or…

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Isn’t 25% too high? Staked ETH is less than 5% of Ethereum total supply. Staked ATOM will be mostly used my market makers (exchanges, professional investors). I’d say put the initial limit to 5%. Hard limit at 20%. Then increase from 5% to 10% has to be done via another community proposal in later years outlining the reasons for it. I wouldn’t want to flood the system with excess liquid staking capacity from the get go. Or at any other point for that matter.

Staked eth is currently 15% of total supply. And I don’t believe there is a cap either.

25% is a good starting amount

zaki_iqlusion:

A validator with 250k ATOM tokens who wishes to allow users to tokenize all their delegations must only validator bond 1k ATOM. A larger validator with 25m ATOM tokens would need to validator bond 1m ATOM

Would it not be 10k atom that is needed to be bonded in this case?

Hello

How much will it cost to add this module?
How long will it take to make this module?

I think people need to know this before proceeeding.
I wonder if this “signalling proposal” pass, will you speed up process with Atom dao accelerator or put it in gouvernance?

What does it mean for Stride or Quicksliver? did they become useless?

Fixed. And thanked you in the original

The module is finished. There is no cost.

This accelerate the adoption of Stride/Persistence/Quicksilver/Lido and hopefully they will comment on their plans.

Great! If it’s already done.

Should a tax to be put for using this module to contribute for $atom?

I wonder about centralisation if 25% of total token is using this module, look like a bit HIGH or i might not have get something.

zaki_iqlusion:

With a validator-bond factor of 250, for every one ATOM a validator validator-bonds, that validator is eligible to receive up to two-hundred-and-fifty ATOM delegated from liquid staking providers. The validator-bond has no impact on anything other than eligibility for delegations from liquid staking providers.

Without validator-bonding ATOM, a validator can’t receive delegations from liquid staking providers. And if a validator’s maximum amount of delegated ATOM from liquid staking providers has been met, it would have to validator-bond more ATOM to become eligible for additional liquid staking provider delegations.

Is this process automated when implemented? I would argue to do it automatically.

Thanks for your work on this.
Three questions I have:

• What about the rewards once the liquid stake tokens are withdrawn: do they auto-compound in cosmosvaloper1xxxx42 tokens? So with time, 1 of those tokens will be worth more than 1 staked uatom?
• It may be related to my above question, but I cannot understand what TokenizedShareRecord is and how it works. Is it possible to clarify without getting too technical?
• What will happen at the time of the upgrade, in regards to the validator bond factor of 250. Let’s imagine a validator that has 10000 ATOM already liquid staked to them via Stride/Quicksilver ICAs. In theory with the LSM in place, they would need to have at least 40 validator-bonded ATOM. But if they don’t have it at the time the upgrade happens, what would happen with the currently liquid staked ATOMs?

First of all a huge shout-out to Zaki, Iqlusion & everyone else who has contributed to get to this very well structured & clear signaling proposal & accompanying code. Awesome to see the progress made, the safety measures introduced and the direction this is headed in. Overall very aligned with this signaling proposal, and supportive all the way. Below some more detailed feedback: A. Questions & remarks directly related to what’s mentioned in the proposal: • “With a validator-bond factor of 250, for every one ATOM a validator validator-bonds, that validator is eligible to receive up to two-hundred-and-fifty ATOM delegated from liquid staking providers. The validator-bond has no impact on anything other than eligibility for delegations from liquid staking providers.” => Wouldn’t the validator-bond also impact the amount of delegation shares that can be tokenised directly by users via the LSM? The perfect use case here would be to transfer staked ATOM between wallets, for example for users who want to switch from hot wallets to cold wallets without having to unstake. • “Q&A- Who can validator bond? The validator themselves, but also any other address delegated to the…

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I wonder whether a 25% limit is too low, and whether it might make more sense to have a higher limit, like 33% or even above that, but then have a lower limit on what a single liquid staking provider could provide. Wouldn’t that also provide an adequate limit on concentration? Also, we might want to implement this proposal for a trial period, say 6 months, and then require it to be re-ratified after we have some experience and where we might want to make any changes to the percentages or the validator bond factor.

Has the LSM code been independently audited? If there are any previous reports, can they be posted to the forum?

Hey,

Firstly I want to say that in a general sense I am in support of the majority that is mentioned here.

I may be misunderstanding some parts of the proposal, so forgive me if that’s the case.

What I am seeing here is a big risk to decentralisation, a proposal that strongly favours wealthy validators. Either that or the messaging needs changing.

From my understanding for a validator with say 100k atom delegated to them needs 400 atom self bonded to allow all the entirety of their delegators to tokenize, right?

But if that same validator wanted to receive extra delegations from Liquid Staking Providers they would need to continue self bonding more and more? This is where I can see a massive centralisation risk giving a huge advantage to the biggest validators only.

I do hope I’ve really misinterpreted the proposal and this is not the case.

Thanks

@zaki_iqlusion – highly detailed pre-proposal here, thank you for putting this up. I’m in support of being on the safer and conservative side to start with. 1. Distribution of Liquid Staked ATOMs What I’m unclear about is how the liquid stakes are distributed across validators, is there going to be some form of automation or does it depend on the protocol and/or liquid staking client? It sounds like if the LSM is added, it’ll place an additional ruleset to check for the caps of going over 25% of total ATOMs staked and the cap of 250x multiple of validator self bonding. This will reign in a concentration of liquid staking and/or asking validators to self bond more to support Stride, Quicksilver, Persistence and Lido, and all other existing liquid staking capabilities? 2. The 25% cap of total ATOMs staked Is this going to be truly a concern? zaki_iqlusion: The purpose of the GlobalLiquidStakingCap is to prevent a liquid staking provider from amassing more than ⅓ the total staked supply on a given chain, giving it the power to halt that chain’s block production or censor transactions and proposals. Not only would a single liquid staking provider be prevented from…

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why would atom want to become a LSD LP?

what upside does ATOM gain from exposing itself to governance and voting power exploits?

why shouldn’t LSDs demonstrate successful product market fit and demand instead of ATOM creating a market where there is none? ETH’s unbonding time is substantially longer than ATOM and it is substantially easier to delegate across the cosmos. LSDs on ETH are a solution to a different problem. Cosmos LSDs haven’t solved any problems.

waqarmmirza: Is this process automated when implemented? I would argue to do it automatically. It is automatic. The technical details can be found here . tanned: Should a tax to be put for using this module to contribute for $atom? Can you say more about why you think a tax would be useful @tanned and what the technical implementations of such a tax might look like? Personally, I think a tax would be more harmful and helpful at the outset, because it prioritizes value capture over growth. Additionally, I think it would be outside the scope of this proposal – which simply seeks to add an already completed module to the Hub. dneorej-persistence: • => If anyone can create the validator bond, doesn’t that reduce the effectiveness of the proposed solution? An LS provider, or a strong supporter of a certain LS provider would happily ‘accept the risk of the validator-bond’ in the name of the validator. A validator may also incentivise ATOM holders to validator bond on their behalf thus not having any skin-in-the-game I think I am lacking some technical context, but as I understand, @dneorej-persistence anyone can do it, but many people…

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I’d like to add another question: what if we reach the 25% of liquid-staked Atoms. Does it mean that at that time, it’s impossible for anyone to unbond their “normal” stake, as it would drive the liquid-staking above the 25% limit?
That would be pretty detrimental for stakers to not be allowed to unstake because others liquid-stake en-masse.

So I’m strongly in favor of this proposal, and any fine points that I’ve got on it are literally that, just details. Overall, my take is that the LSM makes the hub safer.

Over the next week, I’m going to do a round of calls with all the teams working in liquid staking.

I’m also available for calls with people who have concerns about liquid staking or simply community members that have questions about this prop or the code.

I think it’s very fair to say that current liquid staking in cosmos is a side effect of how ICA works, while the LSM approach is designed for liquid staking and is not just a bolt on.

Before any vote, I’m going to expand into a lot of detail on those fine points, and hope everyone has a great easter!

why are you so eager to sign up for governance manipulation?

Can you elaborate on this please? Helpful to understand the downside.

We support this and would vote yes.

i suppose the scope of possibilities is wide depending on the initial conditions of the LSM LSD LP being proposed. If the assumption is that the entire capacity of the 25% LSD LP is immediately gobbled up, the risk is reduced compared to allowing it to reach capacity based on organic demand.

this leads to the issue of why would ATOM volunteer to expose itself to bridge risks of LSDs and their silo’d liquidity for zero compensation. cosmos LSDs have not demonstrated a demand nor utility warranting atom take them on as a counter party. LSDs in the cosmos arent like ETH LSDs which had no ability to unbond after 21 days and have a much higher bar for staking as an individual user. Cosmos LSDs dont have those problems to solve for, cosmos LSDs are searching for a problem and it seems negligent to create a market for LSDs while ATOM shoulders unreasonable risk without compensation if the unforced outcome of cosmos LSDs is failure.

It seems unwise to tie the success of ATOM to the success of untested and unproven LSD providers.

without the LSM there is no more Atom LSD ?

No, but thats kind of the point. why push so much of the LSD risk onto ATOM without any compensation to ATOM, and lack of demand/utility warranting an irreversible and hasty dependency?

i feel your comment meant like “why are you creating LSDs with this module” as if they don’t exist yet and more importantly as if they would not grow without it.

isn’t setting some limits a good thing ?
how this module could allow more potential gov manipulations than if there were no module of that kind ?

happy to learn more if i missed something.

Roughly, yes. I assume that LSDs will spread by atom APY since they compound every 6 hours or however long.

The gov manipulation is an issue if there is a substantial gap between the LSD issuance cap and number of LSDs issued.

so while i think a hard cap for LSD issuance is necessary, my gripe is mostly with the implied creation of new LSDs all of a sudden. Assuming that LSDs will grow by APY on average, i would advocate for APY being the rate at which LSDs are allowed to grow and a cap below 25% until a case for raising the cap can be made.

does the cap apply to total supply or bonded supply? if total supply, it should be substantially lower than 25%.

on the other hand, It doesnt seem likely that cosmos LSDs will be listed on CEXs, so ATOM will remain the liquid asset. it makes no sense to create an NFT LSD LP on ATOM

I very much support the LS module & appreciate the effort put into writing this piece

Couple of points:
1- Why allow any user to validator-bond? Seems to weaken the purpose of the concept
2- How is this concept better than a self-stake requirement for validators?

Thyborg:

Why allow any user to validator-bond? Seems to weaken the purpose of the concept

So that validator teams no longer need to commingle funds.

Thyborg:

2- How is this concept better than a self-stake requirement for validators?

If a validator team has many people on it they can each put their own weight behind it.

One concern

One place where I am concerned about this requirement is actually notional delegations program. We delegate to other validators on chains where we have large holdings. That includes the cosmos hub. Over the next week, I’m speaking with various LSM teams and will be trying to get a feel for how this would affect Notional and our delegation program. It is our preference to delegate to smaller validators because we would like to help people enter the cosmos.

Wont the LSM effectively increase the circulating supply by <57mm ATOM at 25% of the staked supply?

ATOM should at very least collect a 10% fee on all LSM volume* kicked back to ATOM delegators.

ala.tusz.am: I think I am lacking some technical context, but as I understand, @dneorej-persistence anyone can do it, but many people will choose not to because validator-bonded ATOM will be essentially illiquid for as long as they are liquid staked (which, AFAIK, is out of the control of the one that initiates the validator-bond). Thus, validators are most likely to validator-bond their ATOM in order to negotiate their relationships with liquid staking providers (ie, delegations can only be made to validators that have x amount of validator self-bond). Validators would seek to self-bond / validator bond for the following reason: As far as I understand, validator-bonded ATOM will only be illiquid as long as the full 250x LS cap has been filled. If let’s say there is 1ATOM validator-bonded, but only 50 ATOM Liquid Staked (out of the 250 cap) to that validator, then 0.8ATOM can be removed as validator-bond. However, since one wallet can only do one or the other (bond or validator-bond), it would mean that if the full amount of 1ATOM came from 1 wallet, that wallet would indeed not be able to withdraw. ala.tusz.am: Can that user ensure that the validator-bonded…

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Thyborg:

1- Why allow any user to validator-bond? Seems to weaken the purpose of the concept

Agree with this, see my point 2.A above.

Thyborg:

2- How is this concept better than a self-stake requirement for validators?

The main improvement here imo is that the validator-bond is related to the amount of delegations (from LS), while the self-stake requirement is just an absolute number.

Thyborg:

1- Why allow any user to validator-bond? Seems to weaken the purpose of the concept

I don’t think that feature would weaken the module, quite the contrary. I’d say that some node operator companies have their assets distributed in several cold wallets. In our case, at Stakely, we don’t leave most of our assets in our validator wallets. Having that flexibility allows many validators to participate in a more optimal way with this LSM.

In case this feature is not implemented, I’d say that there should be a way of increasing your bond-validator stake other than just self-stake.

As far as I understood, making your delegation be counted as bond-validator is optional and it does not give any benefits to the delegator. In fact, it could lock your delegation, so I don’t think a common user would use it.

A much needed feature imho to facilitate the migration of existing staked tokens to liquid representation without unbonding. Not to mention this can also prevent users to make use for derivatives & hedging to cover for unbonding periods.

A big yes here !

Hi Zaki, I am Philipp from ERIS Protocol, a LST provider on Terra, Migaloo, Kujira, Terra Classic, Juno and soon Injective. We do closely watch also Cosmos Hub and have an expansion plan in place to also support liquid staking on the Hub through ERIS. We currently have ~ 2.5 M $ TVL and have received a sizeable grant from the terra community. The prop should be split into two distinctive proposals. • Add the LSM for the ability to convert staked ATOM to LSM shares • Add the regulation These are distinct topics that also should be decided distinctively and not trying to get one through by adding the other and vice versa. The regulation favors incumbent LST providers and regulates the free DeFi market based on bad LST models! Our governance model is completely different to other LSTs, only allowing users locking the LST itself in a curve style gauge to leverage their voting power. In this way users decide both the delegations and governance and still have control over the network. As they are locking e.g. ampATOM or ATOM-ampATOM LP for Cosmos Hub they have a vested interest into the health of the system and the mentioned risks are mitigated. Users and validators…

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zaki_iqlusion: The LSM is best understood as a form of regulation on liquid staking providers. It enacts a safety framework and associated governance-controlled parameters to regulate the adoption of liquid staking I recently created a Twitter thread discussing this topic. I don’t often make threads on Twitter, so please forgive me if it’s not perfect, but it’s not essential for you to read it. TL;DR: Regulations of this kind can be bypassed through various methods. For the sake of brevity in this comment, I’ll share the most robust and difficult-to-refute bypass method: implementing MPC-based addresses directly into the liquid staking offering. This approach cannot be regulated , as the L1 wouldn’t be able to programmatically determine if it’s part of a liquid staking provider’s offering. Addresses in such a protocol would appear the same to the L1 as regular stakers. An example of how this protocol could work is by sharding a private key for any chain, storing some of the shards in a Secret Contract, and some off-chain. This means that even if the secret contract was compromised, the funds wouldn’t be lost since, for instance, 49 shares would be stored in the…

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Allow LS to exist and thrive, just OUTSIDE of the Cosmos Hub.

Yes the existence of protocol controlled private keys enables bypassing in protocol regulation and the existence of protocol controlled private keys should moderate the ambitions of people who believe that complete regulation of liquid staking is possible.

The regulations proposed here are designed to incentivize liquid staking and hub governance alignment.

zaki_iqlusion:

The regulations proposed here are designed to incentivize liquid staking and hub governance alignment.

Thanks for the response. I do think however that they will simply be bypassed and thus are the weakest part of the pitch. But again, I really like the LSM module and think it should go upstream into the SDK. I’ve been wanting that for a long time so I appreciate all the work you do.

Commenting as a Stride contributor - we support this prop and feel it balances LST safety and UX improvements well. It makes LSTs safer (global cap), validators more aligned (validator bond factor), and the onboarding UX easier.

Sharing this section from my newsletter, in case its helpful for the discussion: In addition to the points raised in the forum, here are a few limitations that, in my opinion, are worth discussing before moving forward with the proposed Liquid Staking Model: • Limiting liquid staking : While the cap proposed (25%) could be up for debate, I think that having the parameter implemented is a must for the hub’s safety in the interest of protecting it from potential attacks. Eventually the community will decide on an optimal percentage as the LSD landscape becomes more developed. However, one issue with limiting Liquid Staking is that, based on the technical implementation proposed, it won’t only apply to Liquid Staking Providers (LSDs) but to anyone using Interchain Accounts (ICA) to stake $ATOM. E.g. a DAO on Juno that natively stake their $ATOM via ICA. → A possible solution could be to apply this cap only to LSDs by separating them from other ICAs. • Validator-Bond: At its core, the idea of encouraging validators to put their capital at stake could only be beneficial for the network. However some points were not considered in the proposed implementation: • It…

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zaki_iqlusion:

The LSM mitigates liquid staking risks by limiting the total amount of ATOM that can be liquid staked to 25% of all staked ATOM

How is going to be implemented? Cex validators are already working as a sort of liquid stake model?
What if a any body make a LSD on another blockchain?
There are certain risks involved with LS and in exchange they have certain benefits. What is the need to bring this to hub if anyone want to take risk let them do so?
Why are you guys so obsessed with control? controlling every aspect of cosmos ecosystem? let it grow organically or do you have some hidden agenda to kill the ecosystem.

Is this scheduled to go on-chain soon ? I know the prop says that it was supposed to go on-chain April 14th . Thx!

hopefully we have a handful of saviors into the community to protect us all from the powerfull devils and their obsession of controlling everything on earth !

it’s amazing. amazingly ridiculous.

Last call on discussion. Plan is to go on chain on April 19

Hey, thank you so much for the last call tweet, that was awesome.

After going through the code and working with different groups that are involved directly in liquid staking in cosmos, and looking at the hubs code, and looking at the ICS code, I think that the signaling proposal should also include SDK 47+.

Eg: lsm when we have 47+, or one upgrade after.

This prevents the back port to 45 scenario, which I think can needlessly complicate things.

SDK 45 has reached the end of its life cycle, and there are some unresolved issues in 45. I don’t want the LSM to be a risk multiplier, I would much rather see it allow the hub to achieve economic greatness and greater safety.

aidan:

Commenting as a Stride contributor - we support this prop and feel it balances LST safety and UX improvements well. It makes LSTs safer (global cap), validators more aligned (validator bond factor), and the onboarding UX easier.

Yeah I can comfortably mirror this sentiment. Implementing the LSM would be a big win for the hub. The only thing I’d change about this proposal is to specify that we should do it on SDK 47 +. We should not put significant new code on the hub while it is still on 45, and then more energies can go to the 47 upgrade for ICS and Gaia.

you forgot the answer other questions I asked. But you choose the most controversial one because that’s what you want to be the forefront of this discussion.

lol.
you don’t ask questions, you’re insinuating. as always. without any proof or any constructive question. as always.

prove i’m being paid for whatever your conspiracy theory is. or say nothing.

@zaki_iqlusion @Govmos hope anyone can guide the misguided.
How is going to be implemented? Cex validators are already working as a sort of liquid stake model?
What if any body make a LSD on another blockchain? how can we limit it to 25 % or it means something else?

There are certain risks involved with LS and in exchange they have certain benefits. What is the need to bring this to hub if anyone want to take risk let them do so?

And lastly
Let A user is using the LSD model and earning the rewards and using LS atoms to earn rewards in defi. After some time the limit is reached and hence no space for new members.
B buy Atoms and brings them on chain but since the limit is reached he can only stack without LSD. Isn’t is disadvantageous for new members.

Personally, I think that we end up in a values question .

I have a feeling that LSD can improve the development of defi in cosmos. I think. I could also be tragically wrong.

As for the liquid staking module, again, I’m really voting with my gut, my gut tells me it actually does make stuff safer by preparing the chain four liquid staking as opposed to just letting liquid staking happen without any planning or forethought.

Let’s say that I’m 75% sure that this is the safest possible path and I’m also around 75% sure that this is safer than doing nothing.

Both Stride and Quicksilver will be paying into the cosmos hub. Not to mention LSD’s are currently being used. So this comment is not valid.

Hi @zaki_iqlusion in the online prop the link to the full prop text links to a non existing page on this forum or is private.
“see full proposal: here”
Would be good to create or “un-private” the actual page with the full text of the prop where it links to i think.

Editing the title of the thread changes the links.

Reverted the title to fix the link the governance proposal post. Thanks

Does this affect staking rewards?

Curious to see what Quicksilver has to say about this with your second bullet in the validator bond section. Please let me know if you hear anything.

Excellent work. Thanks for this contribution. A few items to express:

1. I think it’s really bad UX to have to unbond for 21 days in order to rebond with LSTs. So being that this module would make the process as easy as redelegating is a big plus.

2. Will this SDK module flow downstream to the zones? Meaning that any zone would be able to become Liquid Staking ready by including the module?

3. Looks like LSM introduces a global cap on the amount of ATOM that can be liquid staked (25%), seems that this could help reduce and moderate the downside risks of derivatives in ecosystem. It may be a good thing to implement some control here.

4. If a problem arose, how effective would a 14 day governance vote be in mitigating a disaster? And if a vote passes to reduce the limit of total liquid atom staked, what happens to LSTs above the threshold that are already emitted?

5. Also, how long will this run on testnet and what kinds of test scenarios will be (or have been done)? I think we should all try really hard to break this system.

Thanks!

Where are LSD’s being used? For them to function, they require a native LP that locks up more native liquidity than LSD’s claim to free up. LSD capital efficiency is a grift.

What happens when the LSM cap is reached? Stride volume dies because stride volume is almost entirely it compounding itself. so after it reaches the cap & it cant create more LSD’s, what happens to the ATOM? How is it distributed to stride stakers? will the cap be raised if it is reached? if that is the case, what is the point of this whole “regulation” LARP? LSM gives off Hard Scam Vibes, looking to manufacture the appearance of a market/demand where there is none.

Hey, Vish from Quicksilver here. Apologies for my late response. The LSM is long awaited and I’m excited to see it finally come up on the Hub. I support the LSM on the Hub, we have long been extremely bullish on the capital efficiency gains the ecosystem would witness with the introduction of the LSM. Saying that, this proposal is also used to introduce regulation on liquid staking. While one could argue that regulation might be better debated and proposed on its own, it does make sense that the best way to implement regulation would be through the LSM upgrade. With regards to the specifics of the regulation itself, it is worth noting a few things. The current structure of the proposed validator bond does have the potential to disproportionately favor larger validators. While we understand that the actual bond factor itself is low, it risks creating a situation where larger validators who can afford to put up large bonds will find it much easier to grow from liquid staking than smaller validators. This means that as the LSM facilitates the widespread movement of assets into liquid staking, this validator bond structure will put that stake into the hands of a few rather than…

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Just made a response outlining my thoughts on the validator bond factor.

Vish_Modali:

I think that the validator factor should be scaled by voting power. Thus, a smaller validator would put up a smaller amount to be eligible for a larger delegation from liquid staking providers. As this delegation increases and their voting power increases, so does their validator bond factor. This would mean that as smaller validators grow through liquid staking the “skin in the game” required would increase disproportionately. This method would abate the ‘Validator corruption risk’ mentioned in Appendix A, while giving a fair chance for validators to grow through liquid staking protocols.

In a way, it is already scaled by voting power. If validator A is half the size of validator B, and both would like 10% of their delegations to come from a liquid staking provider, validator A only validator bonds half as much as validator B.

Yeah. Currently its scaled linearly by voting power. I’m suggesting we scale it disproportionately by voting power. I think it’ll just make it easier for smaller validators to receive delegations from liquid staking protocols without harming security in any meaningful way / it will also not make it harder for larger validators as the base validator bond factor can be 250 with each validator being given a discount based on voting power.

But also the fact that others can post the validator bond for said validator also abates some of these concerns for sure. I see a situation where foundations and larger validators would put up a bond for smaller validators to receive delegations from liquid staking protocols.

But don’t see a security tradeoff for making it easier for smaller validators. As these validators grow (increasing the impact of potential malicious behavior) so will their skin in the game disproportionately.

I see what you mean, interesting idea. I think it would be good to gather some data on the mechanism and its effects if it goes live, before making opinionated design decisions. On the one hand, it may help decentralization to build such a mechanism, on the other, it may not be fair to large validators - seems like it requires more research. In my opinion, it would be best to start with a design that is minimally opinionated (doesn’t deviate too much from the status quo).

Can we add restaking/auto compounding of staking rewards to this?

compounding is already like 95% of stride’s volume. the only way LSDs can manufacture the appearance of success is to invent a market for LSDs by risking the stability of the chain through desperate LP funding and LSM manufactured demand.

I meant auto compounding for ATOM, not stATOM

i think everyone got the way you see Stride and the LSM. what’s the point of repeating it 10 times a week ?

will validators have to register as broker-dealers to use the LSM?

im not as much trying to change your mind, i assume validators already realize how shit liquid staking is and dont care about voting against delegator’s interests so long as they profit from the prop. so my goal is to make it publicly known and documented that it was common knowledge how poorly designed elements of design like the LSM were for when there is a consequence for voting against the benefit of the chain and delegator’s interests and voting records count.