Set a minimum commission of 5% when we upgrade to sdk 47 [fully rewritten, abandoned]

The simply staking team has rewritten this proposal and they’ve done a really brilliant job of it.

Therefore, instead of submitting this very minimal proposal, please allow me to link you to simply staking truly excellent proposal:

[PROPOSAL #826][PASSED] Minimum Commission Proposal Hub Proposals

Minimum Commission Proposal EDIT 29/09 - Has been put up for voting - Mintscan EDIT 27/09 - Updated the status to Last Call as the proposal will soon go live. Any final feedback will be appreciated. Authors: Simply Staking This is a continuation of the Forum Discussion to Set a minimum commission of 5% Background of the Issue This is not the first time the universal minimum commission for validators debate has been brought up. In a previous proposal with a similar context, the overwhelming m…

Thanks very much to everybody who provided feedback here, it was quite valuable.

Specific shoutouts to

@jasonsopko, @Damien, @Golden-Ratio-Staking and @BlocksUnited for lending their vision to the revised proposal and / or spirited criticism.

I agree that these practices should come to an end; but the 5% notional standard is a significant amount. Over 60 validators have fees lower than 5%, and many of them appear to be very honest. If inflation decreases, fees increase. This may seem like a minor detail, but in the long run, for delegators it is not… 3%?

I’m open to discussions about the exact commission rate, though I think 5 is a really good place to start.

Counteroffer of 4.69420808%?

I want to recognize that there are many good validators under 5% commission on the cosmos hub. You are completely correct there.

One that comes readily to mind is SG1, and another is autostake.

Now, about what I think sunflower really did, is the exploited the range basically between 0 and 5% dropped it all the way to zero, undercut literally everybody except for the other ones priced at zero, and then immediately raised their fees. So please view this proposal as attempting to reduce the differential in common validator commissions.

Since @EurekaPi has liked this post, I’m going to adjust the above post to 4.69420808%.

I’m all for setting a minimum commission. Maybe not to 4.69420808% though

There should also be a maximum allowable change per 24 hours on commissions. For example, at Simply Staking we have it set to 1% per 24 hours to mitigate any risk of a ‘mistake’ and setting it to 100% by accident.

We use the same setting.

Do you want to make that global?

Kind of makes sense I guess

I don’t think it’s a bad idea to have a discussion around that to be honest.

Like having some sort of cap (5% or so). Having it like that would allow for some validators to up the commissions slowly but not too slowly in case of having to cover costs and would also protect delegators from having a massive cut in their APY in the space of 24 hours.

Having 5% commission should be discussed there are some good validators below 5% but it should also be discussed is this some kind of manipulation to aquire more voting power or are they a genuine validator who supports the network.

As Damien mentioned parameter --commission-max-change-rate="0.01" should somehow be hard locked in so similar thing doesn’t happen again.

I agree with this.
i think the minimum commission should be 3%.
As a simple delegator, i see these 5% a little too much.
And what about the maximum commission rate, since it s a bigger threat for the sustainability of the tokenomics ? I think we should set it also. Probably around 20-25%.

4.69420808% is funny. I like 3.5%, 3.69%, 4%, or 4.69% to begin with. Also cool idea with the 1%/24 hrs change

I think that we need to keep the Cosmos market as free and open as possible, and by introducing mandatory minimum commission rates for validators, you are taking away that freedom. Adding a minimum commission benefits only the existing validators, as they can just go along with the terms and collect fees from all users. It harms the delegators, and ultimately the project, however. You are taking away free and open choices from people and making it more difficult to enter the validator set for new validators who could contribute to the health and security of the chain. You can’t let one bad apple ruin the entire batch. As an alternative, I suggest having block explorers and wallets point out that a validator has an unusually high maximum commission rate and high daily increase maximum combination and let the user decide who they want to stake with. New validators have very few ways to gain delegations within the active set, and lowering their commissions is one way for them to gain delegations while simultaneously allowing for higher rewards for their delegators. Overall, a bad idea that stifles an open and free market, and reduces competition amongst the validator set,…

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We are absolutely in favor of 5% minimum commission. Not all 0% commission validators are crooks, but 0% is the bait crooks use to lure people in. We’ve seen this 0% to 100% commission scheme on other chains.

Ask yourself, “Why would a stranger on the internet offer me something for nothing?”

And good luck getting your questions answered from a 0% commission validator. They have virtually no incentive to care about you.

Additionally, 0% commission nodes get huge quickly and cause centralization of voting power.

Plus, it costs time and money to run validator nodes, especially as consumer chains are onboarded and more infrastructure is required. Small validators are essential for network health and security. Placing a minimum commission network wide will level the playing field.

Delegators, take pride in paying a little commission and supporting your validator. It allows them to run the best equipment to reliably sign blocks and earn rewards for you.

The average validator commission across all blockchains is 10%. Solana validators charge 20%, as do many Polkadot validators.

We’d fully support 5% minimum.

“Why would a stranger on the internet offer me something for nothing?”

As an operator that runs 0% commission validators, the answer is pretty simple:

To gain delegations by offering higher rewards than other validators are offering.

Stakers keep 100% of their rewards and I gain voting power.

You see, we’re not really offering them something for nothing, it’s a fair trade. We’re not entitled to their rewards, we’re asking nicely for them.

As I move up in the voting power, I generally increase my commission to earn a meager amount of rewards while still competing with the other validators and still hopefully retain existing delegations.

I’m sure that all of the established validators would love to stifle their competition and make it easier for themselves to earn rewards. The cost is on the people using the chain, since you’re taking away rewards from them and building barriers to entry for new validators that could possibly compete with you.

Bad idea for the chain and its users, great idea for established validators.

Hi everyone here hope you guys have a wonderful Sunday weekend. The proposal of minimum commission trade should be 5% would be normal for there team proposals. Not to bad to approve here Commission.

Can we list the benefits to the users for the validators setting a 5% minimum commission?

1. They lose a minimum of 5% of their staking rewards to the validators.
2. Validators can still increase their commission to 100%, regardless of their minimum commission.
3. New validators have no way to offer a lower commission rate to gain an advantage over existing legacy validators, stifling competition and growth.

If you’re going to remove an existing free and open market, it seems that it would make more sense to set a maximum commission rate of 20% rather than a minimum commission rate of 5%. Otherwise you’re solely doing this to benefit the existing validator set and not to protect the users.

If the true goal is to reduce more incidents like the Sunflower validator, then the solution is to set a cap on the maximum commission to 10%. Setting a minimum commission does not solve the problem.

Just like any startup business, it is important for new validators to have the ability to set a lower minimum commission than what others are offering to attract more delegations. Removing this ability will just ensure that the current validators continue to dominate.

What good reason will anyone have to delegate to a new validator if they offer the same commission as the well established validators ? This proposal goes against the free market principles.

Why not force a max commission rather than minimum commission? Cap it at 20% or 15%. Many who stake want the 0% commission. At Secret many go with Melea for that reason and regardless how one feels delegators should be able to make this choice themselves.

It produces a level playing field for all validators. Then it comes down to how well validators run their businesses to compete with each other. That’s best for the network and best for the delegators.

jasonsopko:

As I move up in the voting power, I generally increase my commission

“As I move up in the voting power, I generally increase my commission” AKA: Bait and switch.

And the second your delegators feel deceived they will jump ship to the next 0% validator who will pull the same b.s.

If delegators are conditioned to understand and value the service they’re receiving, all networks will be better off.

We stand by our position: 0% validators shouldn’t be allowed on any blockchain networks.

Additionally, we’d advocate for a tax levied on larger validators that went into the community pool. That would incentivize delegators to avoid the largest nodes, therefore helping the network to decentralize.

How is it “bait and switch” when the variables by which I’m governed are clearly viewable for all to see? When you choose a validator to delegate to, pay attention to their variables, as they are allowed to increase to a max commission and max daily rate in plain view. It’s not deceptive at all.

As I increase my commission rate, I will likely continue to lose delegations to other lower commission validators.

I like a free and open market. That’s the true level playing field for all validators.

I think setting to 5 is a good start because business have to make money all for it.

To explain, the race to zero is not a race we want. If you are trying to win delegations by lowering your fees, you can’t sustain a business that way. For some odd reason in the space people don’t want service providers making money or running at a loss. Eventually they have to make up for the loss, which is why Sunflower as well as many others have done this. It’s not sustainable, I’m pro enterprise and winning on service not a lower fee.

jasonsopko: • They lose a minimum of 5% of their staking rewards to the validators. • Validators can still increase their commission to 100%, regardless of their minimum commission. • New validators have no way to offer a lower commission rate to gain an advantage over existing legacy validators, stifling competition and growth. • They lose a minimum of 5% of their staking rewards to the validators. • Validators can still increase their commission to 100%, regardless of their minimum commission. • New validators have no way to offer a lower commission rate to gain an advantage over existing legacy validators, stifling competition and growth. To claim you care about your delegators losing 5% of their rewards is disingenuous at best. It’s about you gaining voting power using a cancerous strategy. 0% commission is the bait dishonest node operators use across all networks. Delegators don’t lose rewards through commission, they pay for a service. Being up front with delegators by educating them creates loyalty. They take pride in knowing we’ll respond promptly to emails and produce educational content they value. Giving them 0% as a promotion they don’t know is…

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To claim you care about your delegators losing 5% of their rewards is disingenuous at best.

I care about validators fleecing the users for a minimum of 5% without their consent. Open and free market, let the users decide instead of forcing them to pay you. If you’re a good validator, people will stake with you, independent of your commission. Trying to force other validators to charge the same commission as you is unethical and unwanted. Some validators will gladly run at a lower commission, and some delegators will choose to stake with them.

I understand why some validators want to force a maximum commission on the users. They don’t want competition and have an entitlement mentality that they should be rewarded independent of their contributions. Everyone gets paid, classic politicians voting themselves a pay raise.

If you feel charging commission is fleecing delegators, then you don’t even value the service you provide. There are many validators that charge 10%, so a 5% floor isn’t forcing others to charge the same. They charge 10% because they have 24/7 teams and tech support, and infrastructure redundancies. They have overhead and charge for their reliability. It’s a business.

Totally agree. That’s why we need to allow for 0% commission so that smaller validators like myself can compete with the large ones. Let the free and open market decide. They can pay a higher commission for 24/7 teams and tech support, infrastructure redundancies, etc. or they can go with a lower commission validator who runs things out of his barn by himself.

Risk vs reward, let the delegators decide in an open and free market.

Furthermore, if you want the chain to grow and become further decentralized and more secure, you should allow for as many options as possible for new validators to get established. Putting restrictions that hinder growth is a bad thing.

We are a small team too, 2 people. 2 lifelong friends, one from tech and one from traditional finance. I fully appreciate your position, but disagree. We run infra for four chains, 2 in Cosmos, one in Polkadot and Polygon. 0% validators are problematic in all of them, causing centralization of voting power and opening the door for scammers who run nodes. 0% validators accumulate stake quickly from fickle yield chasers and then dominate voting power without having worked for it. Those who work for it, care. They contribute, they vote, they educate. They show up. A 5% floor puts the large 0% validators in a position where they have to actually go to work for their delegators, like we do. They have to show up and when they don’t, they’ll be exposed and lose delegators, which is what they deserve. You yourself said that when you become large enough you’ll start charging commission. So, if you’re not advertising 0% as a promotion you are deceiving your delegators. What’s the name of your validator? No more gimmicks to quickly accumulate stake to then dominate voting power, which is bad for the network. Fickle yield chasers will then simply choose between 5% validators and…

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A global minimum commission will allow even those newest validators to earn some form of income and allow them to reinvest into their infra.

For me security and the Sustainability of validators needs to be the high priority for the Hub.

With the onboarding of all these consumer chains, the infrastructural need and demands are growing and even those who charge like 10% can at times not even break even (depending where you are in the set).

How can a validator that has 0% commission run highly secure infrastructure without incurring a heavy heavy loss? And how is that model sustainable?

The hub is going to secure multiple high worth networks so the network needs to be secured by the highesr quality of infrastructure.

I also don’t think that having a global commission will hurt the competitiveness that much, but will help with the secureness and longer term Sustainability.

(My own personal opinion)

I understand your position, I just wholeheartedly disagree with it.

I’m old. In my lifetime I’ve taken the time to educate myself on philosophical matters such as free trade, and I love that the Cosmos ecosystem reflects many elements of true free trade as well as free speech and “We the People” governance.

I don’t want to change that. I don’t want government interference in our free trade in the form of taxing end users via a forced minimum validator commission mechanism.

I suppose it comes down to your own personal opinion on the matter of “Protection or Free Trade” (Henry George is one of my favorite authors).

I obviously support the “free trade” stance, and some such as yourself support the “protectionism” stance.

Thank you for weighing in, I think it’s vitally important to have feedback from smaller validators.
Not every validator will be setting their commission at 5% so there will still be space forsmaller vals to be competitive. The other goal here is to try and ease concentrated VP, Plenty of bigger validators also have 0% or low commissions so goes against your theory that it only helps small validators. IMO the concept of a free market becomes somewhat illusory when voting power becomes concentrated. I am actually in favour of a dynamic min fee.

What about enforcing a sliding scale for validator commission, where it is increased or decreased based off of your current voting power? This actually addresses a different problem with chain health, where the top voting power is held by too few validators, a common problem on Cosmos chains. After some back and forth with the validator set, I wrote a proposal for the Decentr chain that was of course vetoed by the top voting power, because they didn’t want to go along with it and enjoyed their stranglehold on the chain. Here is the proposal (It’s governance proposal 8 on the Decentr chain, won’t let me link it): Title | Validator Commission Guidelines | Description | Summary: | This is a signaling proposal to gauge community sentiment on setting guidelines for validators to follow regarding commission rates. | | Validators are responsible for providing a stable and functional chain and are expected to work together towards decentralizing the stake and consensus as much as possible. Currently, three validators control 33% of the total delegated stake. If all three validators are down simultaneously, the chain will halt until one returns…

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Thank you for raising the topic, I think small and big validators should partake in the discussion. As mentioned earlier, the expansion of Interchain security requires additional resources, so implementing a min fee could serve as a form of insurance for validators to cover the increasing infrastructure costs. While the space for a fee competition still remains, stakers probably would pay more attention to the quality of provided services which is eventually beneficial for the Hub.

To hardcode the fee change by 1% per day appears to be a less controversial suggestion and IMO it should be accepted no matter the min fee setting.

I do not think setting up a minimal commission for a validator is a good idea, mostly with the same reasoning as @jasonsopko mentioned above. Firstly, there are some nice validators who are resorting to 0% commission, or some small commission like 0.25% (especially at the bottom of the active set) to attract new delegators, and that’s completely fine, in my opinion. Second, it limits the % of the commission a validator can set, and also limits the % a delegator can get for their staking. Third, we are all discussing it regarding to what Sunflower did, but how many cases we had of similar things compared to 0% validators who actually did their jobs nice and did not abuse it? I do not think raising the minimal commission would actually solve the problem, nothing stops a validator with 5% commission to raise their commission to 99.35% overnight, given they have big enough max-commission-change-rate. This all seems like an unnecessary and harmful limitation which doesn’t solve the main issue at all and gives nothing but a guarantee that a validator would actually profit from being a validator (which IMO should not be a guarantee, but a choice a validator is making by…

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would love to explore dynamic min commission.

Minimum commission makes sense. It has worked quite perfectly in every chain that has added it.

Though no-one is really forced to keep very low fees anymore, if the contribute enough to get ICF and Stride delegations.

For me, there are far better options than forcing a minimum commission. Like mentioned here only allowing a commission increase about a certain amount in specific time. Raising minimum is bad for all delegators and does not add any kind of protection.

big validator = small commission
small validator = big commission

limit high
limit low

dynamic rate between those limits

I completely disagree with this proposal. increasing the commission does not prevent any validator from doing the same thing again. moreover, it penalizes all stakers who spent time looking for a trustworthy validator with a low commission. my suggestion is therefore to solve the real problem and introduce a kind of validator score that helps newcomers to recognize trustworthy validators.

0% commission validators are bait and switch and shouldnt be allowed. There are legitimate ways to increase delegations.

Two problems right now:

1. No minimum commissions.
2. No max_daily_rate_change set network wide.

For commission, my argument against having no minim is that having 0 commission is unsustainable and there is no reason for a validator to be running on 0% besides marketing to get delegations and then raise it. There are other avenues to get delegations that have to be explored and manipulating commissions shouldn’t be part of it. 3%-5% sounds a reasonable amount. To the ones saying that 100% of the staking rewards should go to stakers, that makes no sense unless they are running their own infrastructure and footing that bill.

Don’t think anyone would oppose the max_daily_rate_change and setting it to 5%, big enough to change commission fast but it would take 20 days to go from 0 to 100% commission.

I love this idea. To add: • Validators with high VP should have a low maximum commission of 30% • Validators with high VP should have a high minimum commission of 7.5% • Validators with low VP should have a higher maximum voting power like 51% • Validators with low VP should have a low minimum commission like 3% • All validators have a `commission-maximum-change-rate = 0.1` per 24 hours • it would take 37 days to get to 100% Day | Commission | 0 | 3% | 1 | 3.300% | 2 | 3.630% | 3 | 3.993% | 4 | 4.392% | 5 | 4.832% | 6 | 5.315% | 7 | 5.846% | 8 | 6.431% | 9 | 7.074% | 10 | 7.781% | 11 | 8.559% | 12 | 9.415% | 13 | 10.357% | 14 | 11.392% | 15 | 12.532% | 16 | 13.785% | 17 | 15.163% | 18 | 16.680% | 19 | 18.348% | 20 | 20.182% | 21 | 22.201% | 22 | 24.421% | 23 | 26.863% | 24 | 29.549% | 25 | 32.504% | 26 | 35.755% | 27 | 39.330% | 28 | 43.263% | 29 | 47.589% | 30 | 52.348% | 31 | 57.583% | 32 | 63.341% | 33 | 69.675% |…

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Yes, this is precisely the reason that I have a problem with forcing a minimum commission rate. There are some of us who make contributions to the network by footing our own infrastructure bills and paying the costs while offering a 0% commission. I am willing to pay for the initial infrastructure costs by myself, at the risk of not making any money in the long run. My hope is that my delegators will stay with me when I do increase my commission rates eventually. When a validator increases his commission, he runs the risk of losing existing delegations. This is the mechanism that keeps validators hovering around 5%. Increase it more, and they’ll likely jump ship to another 5% validator. My goal is to run validators on chains at the lowest fee possible. My delegators keep 100% of their rewards. I will eventually increase my fees as time goes on and the project becomes more mature, stable and (hopefully) profitable. My hope is that some of my delegators stay with me, so long as my new commission is reasonable. I’ve done this successfully on several chains, starting at 0% commission and eventually ending up at 1.99% to 5% commission after gaining a reasonable amount of…

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What would stop another honeypot from starting at 4.69420808% then when they had enough delegators [quote=“jacobgadikian, post:1, topic:11042”]
jam it up to 100%.
[/quote]
Why would a minimum commission fix this? It seems to me all you would be doing is setting another floor. And it seems that this change would only help certain validators.

This is why we add a constant change rate to commission per period so it rate limits the transition.

Suggested vs minimum is a BIG diffference. Consumers could accuse the #COSMOS collective of price-fixing practices. Thread carefully here with required fees, especially if there is not a legitimate basis for the levels.

Supporting the idea to set minimum com% and 24-hour change allowance,

I think we should keep some parameters out of the reach of the governance and specifically when we have a representative governance model. A validator should be allowed to keep the commission at whatever value they want it to be.
if we have any parameter on chain then it doesn’t mean we have to enforce governance on it.

Very good discussions here, as we can see the reasons for validators charging for certain commissions.

How do you reach all of your delegators to let them know once you plan to raise your commission?

Depends on the chain, but usually on their Discord or Telegram server.

In general, I support the idea of having a low minimum commission, around 2%. I believe validators should not be viewed as competing startups but rather as entities whose main purpose is to secure the network and guide the chain in a direction that benefits our delegators. In my opinion, the commission rate of a validator is given too much importance. Instead, we should strive to foster a culture that values contribution, security, and reliability over gaining a mere one percent increase in APY. I think a low minimum commission encourages these values and is more favorable for long-term delegators compared to a 0% commission.

Nevertheless, setting a minimal commission won’t solve the stated problem entirely. Hence, I would like to see the introduction of a “max_daily_rate_change” mechanism, which can be modified through governance.

In fact, I believe both of these aspects should be voted on independently and proposed separately.

As voting for a minimum commission poses a conflict of interest for every validator, I will vote abstain if it goes on-chain.

We support this idea of setting minimum commission. let’s just set it at 5% as proposed. after that we can decide again to decrease or increase the minimum commission rate. As I believe we might need to decrease this in the bull run.

I request that this remain about chain, and specifically ICS, sustainability instead of about the sunflower attack.

I have also requested (and have heard) that the language of proposal will be cleaned up to be simple/concise so we don’t lose the plot.

I like that you are going to abstain from this proposal and maybe other validatorss can do so.
But IMO we should keep most of the variables out of the scope of governance.

This is not related to this proposal but @jacobgadikian what do you think about this scenario. I saw that you were talking about removing abstain and NWV from certain props. And then their are proposal like 812 where we should burn the asset or it might lead to a lot of spam.

Good evening Cosmos hub community, this discussion has moved here:

[PROPOSAL #826][PASSED] Minimum Commission Proposal Hub Proposals

Minimum Commission Proposal EDIT 29/09 - Has been put up for voting - Mintscan EDIT 27/09 - Updated the status to Last Call as the proposal will soon go live. Any final feedback will be appreciated. Authors: Simply Staking This is a continuation of the Forum Discussion to Set a minimum commission of 5% Background of the Issue This is not the first time the universal minimum commission for validators debate has been brought up. In a previous proposal with a similar context, the overwhelming m…

Since everyone is voting yes, I support this Proposals that on team. Because one tree can never stay in Forest. And start ruling only so it’s have been on Process right now.