[PROP #867][APPROVED] Cosmos Hub & Neutron: Validator alignment

Note: This proposal is the first of a series of proposals meant to increase alignment between Cosmos Hub, Neutron, Stride, future consumer chains and their respective stakeholders. A document outlining the general vision for these proposals is being drafted. Neutron Forum – 13 Dec 23 [DRAFT PROPOSAL ] Cosmos Hub & Neutron: Validator alignment DAO Governance Main DAO Proposals text-proposal Note: This proposal is the first of a series of proposals meant to increase alignment between Cosmos Hub, Neutron, Stride, future consumer chains and their respective stakeholders. A document outlining the general vision for these proposals is... Reading time: 4 mins 🕑 Likes: 13 ❤ Summary • Allocate 10,000 NTRN from the NTRN Airdrop to each Cosmos Hub validator running Neutron nodes to provide financial support and improve incentive alignment. • Validators opting to not run Neutron nodes after the 31st of December under the ‘soft opt-out’ feature will not be eligible. • Tokens are allocated to Cosmos Hub operators running active nodes on Neutron. Operators whose nodes become inactive on…

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is $NTRN in this case more like $FTT or simply top validators using the CP to make up for the cost of their governance failures? Validators voted to proceed with unprofitable ICS chains and heavily subsidized stride despite lack of demand and a whole host of articulated problems that validators now want to unilaterally vote to force users to pay for. The market has rejected this validator precedent reflected in the price of ATOM. I hope validators decide to listen to the market and stop relying on farming user capital to fund their failures.

Amazing step to support the validator operations. This action is setting a commendable precedent for more ICS chains to come.

One suggestion is to exclude the CEX validators and validators abusing the commission.

How is this “forcing users to pay” for anything? The NTRN in the community pool wouldn’t exist at all if Neutron wasn’t a Cosmos Hub consumer chain.

would this not be preceded or followed by a proposal to make NTRN liquid using ATOM unilaterally taxed 10% by validators, so validators can more easily subsidize their own decision install NTRN as an ICS chain?

Bendy, the AAdao, Zaki, etc are presenting the NTRN in the CP as some huge win for ATOM, but it sounds like you are saying its just NTRN trying to pay for validator’s governance blunder

I was hesitant at first, but this portion of the funds but makes a large impact on the infrastructure providers of the AEZ and makes the onboarding for new consumers much easier to handle.

Would this include CEXs and white labels?

Will each validator be given a vesting account automatically without having to go through an approval process? What will that structure look like?

1 year is a long long time in this space. The return of these funds may be hard to do with turnover. There should be failsafes and procedures for signer rotation if needed. I don’t imagine theres a large portion of the funds remaining, but something to take into account considering the length of time for this responsibility.

I would target this subsidy proposal to the bottom 80% of the validator set. I don’t see why we would be subsidizing big validators who are making money hand over fist from staking. Napkin math tells me that the biggest validators like Coinbase make nearly $100,000 per month in revenues which if validator costs are about $1000 per month per chain, that means they hardly notice the 2 extra chains they support. $99K per month or $98K per month is still pretty high profitability as far as that goes.

I’d limit this subsidy to validators with 2 million or less ATOM in assets under staking (AUS).

Agree with this. If not 20%, we should atleast cap it with top-20, as last 20th validator have more than 3.2m in staking so earning good commissions.

I am also interested to see linear distribution based on voting power to remaining validators (i.e., lower end validators get extra tokens than top validators). So instead of each validator getting 10,000 NTRN equally, may be the validators in the top will get 8,000 NTRN to 10000 NTRN whereas lower end validators get 10,000 NTRN to 12,000 NTRN.

Spaydh:

Allocate 10,000 NTRN from the NTRN Airdrop to each Cosmos Hub validator running Neutron nodes to provide financial support and improve incentive alignment.

Spaydh:

Validator allocations will be vested linearly over one year using dedicated contracts on Neutron.

This is a great idea, with a simple and efficient solution. As others have mentioned, CEX validators and top 20 or so validators could be excluded or receive a lower amount, but in general fully in support of this proposal

CONTEXT: The proposal suggests allocating a portion of the NTRN tokens from the Cosmos Hub community pool to support and incentivize validators running Neutron nodes. This initiative aims to align with the “Do No Harm” and “Cooperation” policies endorsed by both Neutron and the Cosmos Hub community. The proposal addresses the financial support and incentive alignment of validators running Neutron nodes and seeks to enhance collaboration opportunities between the two networks. ANALYSIS: We would like to note that the proposal does not exclude certain validators based on financial metrics, demonstrating consistency with Neutron’s approach to token distribution. The proposal aligns with the principles of equally weighted distribution, similar to Neutron’s token distribution event, showcasing a commitment to fairness and inclusivity. To further enhance efficiency of the allocated capital among validators, there’s a suggestion to explore the inclusion of basic network efficiency factors, such as a base 95%+ uptime and no slashing over the past 6-12 months in the eligibility criteria . This could contribute to fostering the highest possible quality among validators and ensuring…

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Hey everyone,

Although it is clear some of my original proposal draft made it into the above proposal (which is great tbh) I still think it is valuable to post my ideas as I had originally drafted them.

Therefore a secondary proposal in similar style is now available here: [Draft] - Cosmos Hub Neutron Validator cost restitution plan

NTRN is owned by HUB and vals extract value from HUB continously. How is that not aligned? Vals will get it either way over time. Better increase the pie and later share it.

Other thing, NTRN and Hub made a deal and all signed on it. Vals want more value but they signed up and knew there will be delay in pay off? This is just a bad precedent where vals want more instant value before it is created.

Such proposals unlikely to pass because vals are biased to vote and should abstain and I doubt community will be activly voting to extract value. Especially when many validators vote against investor’s interests.

You make a lot of baseless assumptions. Validator costs are a real, monthly expense, can’t be delayed 3 years until TX fees cover them.

Very supportive of this, thanks to @Ertemann for the initial idea.

Please explain. In detail so I can change my mind.

I like to make $ rather than consume, businesses do same, that want to do well.

OK, I actually went and checked small validators above bottom 5%. Do you know what I find? Single individuals or few people at most. These are not professional businesses but hobbies. They do not even advertise they run nodes (some do though). Giving from NTRN is just any random income for them and won’t improve their infra as they are not even looking at validator business. I know many like to be socialists and ‘help’ the little guy because it sounds good/kind, but we are in business.

Give me something to understand why. I can go to all the bottom guys and show what they say on their websites. Very little actual validators becides a person running a node for fun.

Other example, nomic pays 0 (can’t sell and unlcear if pays off) for a long time. Vals still there, because it is an investment. One can look at NTRN validation exactly the same.

Any rational argument is welcome. I am here to learn.

I am an anarcho-communist, please don’t insult me with the “socialist” label. I am going to go slightly off topic here but I think it is relevant to where this conversation is going. In ICS running an additional chain is the same cost as running the Hub. So if the Hub costs $1000 per month per validator, we are talking about 180 validators or $180,000 per month or $2.2 million per year. Obviously the Hub has enough AUM and generates enough activity to justify that. But does ever additional consumer chain? Stride is getting very close to that level of activity if not already there. Neutron clearly isn’t. What happened with Neutron is what happened at Polkadot. The validators made a bet that there is big demand for WASM after all the bitter political battles over WASM on the Hub in 2020 and 2021 as Terra (LUNA) was going gangbusters. Well… since then Solana has emerged as big WASM developer honeypot and Neutron can’t attract the usage. Neutron is not the only chain losing to Solana. The Polkadot parachains lost out too. Bad bet by the validators who are fighting the last (2021) wars. Not going to be the first time such a thing has happened. The question here is one of strategy -…

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By “abusing commission” we hope you mean 0% and above 20%.

Yes, mainly. I see 1%-20% acceptable range.

vixcontango: Obviously the economics of the big validators vs the small validators are dramatically different and that is why I think it makes sense to target the stimulus to the small validators. The small validators is what makes the Cosmos Hub quite decentralized. Our business - as it were - is decentralization. And as such it is important to treat them fairly. In this case “fairly” means don’t stick them with losses while the community pool is rolling in dough. Love that. We don’t view the space like a VC because we rent our servers and it’s cost prohibitive to throw shit at the wall to see what sticks. Huge validators own their infra and run data centers. We’d love to get there someday and think this proposal is a good idea, with a few modifications. We don’t believe the top 20, 0% commission, or CEX validators should receive support from this proposal. Tiered support makes sense with more going to help smaller validators. Prop 848 was a great example of just how much power the largest validators already have. Please use this proposal to spread out voting power. Under those circumstances we would end our soft opt-out and spin up a validator for Neutron. Our…

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You just shared why we are here in a long essay. We are on the same page.

My argument is, we should use CP money to invest because Hub is still underfunded.

Supporting small vals is a losing game. I would support only professional vals that focus on validating and has expertise. Not one man shops. This is not adding much decentralization because person can close it at any point in time for any reason. Institutions last, people not.

Bigger vals are ok to make investments, so they do not need payout now as they can get more later.

We should have a list of vals that are actual businesses with transparent org structure. Then we see what all want to support - random people who do not care of Hub long term, just quick profit without putting much skin the game (creating actual business). Startups fail fast.

So I am just being very rational what makes sense to do with money despite having ideology.

Hey folks, thanks for the thoughtful debates.

I take the points on big vals vs small vals but given that the primary objectives of this proposal are to 1) ensure infrastructure costs are funded and 2) increase alignment between operators and consumer chain, I’m not sure making very opinionated eligibility rules really serves these objectives. They also add significant execution complexity, which imo should be minimized.

I plan to submit the proposal on-chain this week around Wednesday.

Please at least exclude CEX validators

Spaydh:

10,000 NTRN from the NTRN Airdrop to each Cosmos Hub validator running Neutron nodes to provide financial support and improve incentive alignment.

Thanks for reconsidering this. I agree that this is the right approach for alignment of the operators of the system, ATOM stakers (via the Cosmos Hub), and consumer chains. We’re less than 1 year into the Replicated Security experiment and making sure everyone has the right amount of upside is important.

There’s even a scenario where this could replace the commissions validators charge on consumer chains, if it’s technically feasible to do so.

1. Can we discuss an allocation for validators that have actively participated in the original testnets?
2. Are you still intending to go through Neutron governance first or is that just to enable governance rights for the tokens?

Also any feedback on my original draft posted here would be welcome: [Draft] - Cosmos Hub <--> Neutron Validator alignment plan

Edit:

Also seeing as I had intentions to work on this or a similar proposal as well i would be happy to be on the mulitisig and steward the correct execution.

BlocksUnited:

We don’t believe the top 20, 0% commission, or CEX validators should receive support from this proposal. Tiered support makes sense with more going to help smaller validators.

Commons Hub validator would be very dissapointed if something along these lines is not implemented.

If linear distribution is considered too complex, we expect excluding the top 20 at a minimum.

@Spaydh can you please comment on the last questions raised here by me and others?

why is ATOM paying for NTRN’s validator costs?

Success of Neutron is success of the Hub. Making sure validators are properly compensated is big part of having alignment.

That is false. Neutron could fail and ATOM still be successful. Why are ATOM users expected to pay for NTRN validator expenses for free?

You realize they will be paid in NTRN. Sent by Neutron to the hub community pool

So ATOM users should pay for NTRN validator expenses because they are paying in NTRN? NTRN does have its own CP with NTRN as well, doesn’t it?

Validators voting to pay themselves out of community pool sets bad precedent, these funds should not be distributed to validators. it should be used to hold a superior stake in Neutrons governance. what stops more proposals from coming to distribute community funds to validators. There is already a lack of trust in community and this wont help with general public, if neutron is unprofitable to validators maybe these funds should be used to renegotiate.

Just wanted to add, I am a strong believer in validators increasing fees to operate. Due to the competitive nature of the set operators are willinh to run at a loss just to be part of it. This is the going rate due to free market and imo a good thing. If validator is unwilling to run at those margins there will be someone to fill their shoes. If enough validators decide not to run then commission will naturally increase. But we are not seeing that.

Tldr: validators are willing to run at a loss just to be part of the set and this is a good thing.

I hope most of the validators will abstain on this vote and let the delegators decide the outcome. We will abstain with our validtor because its obviously a conflict of interest.

The proposal has been approved. Transactions and smart-contracts to provide the validator incentives are being prepared.

With the Cosmos Community now directly funding validators, eliminating the previous separation between community funds and validator operations, there is a greater need for enhanced transparency. The community deserves a detailed financial statement showing the allocation of Neutron tokens to each Validator, along with their dollar value. This clarity is essential, considering our funds are now crucial in supporting Validator activities. This shift also brings into sharp focus the credibility of our network’s decentralization. The recent proposition’s approval raises significant concerns about conflicts of interest and potentially undermines the integrity of the entire system. It begs the question: Are we facing a scenario where regulatory scrutiny might pierce the veil of our claimed decentralization, uncovering undisclosed agreements and collusion that contravene our blockchain’s foundational principles? To address these concerns, Validators must be prepared for future audits, and we must reevaluate our governance models. The lack of transparency and the emergence of these issues could invite scrutiny from regulatory authorities like the SEC or FTC. The perception of…

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The token holders were always funding valdiators. Thats how it works from the start

Perhaps I am missing some information. Could you elaborate on the direct funding mechanism for validators from the community pool?

My understanding is that validators in the Cosmos network primarily earn in two distinct ways: through transaction fees and staking rewards, both of which constitute a decentralized compensation model.

Validators collect transaction fees for including transactions in the blocks they validate, serving as one of their main revenue streams. Additionally, staking rewards, generated by the network’s inflation, are distributed to validators (and their delegators) for their role in securing the network. These revenue streams are considered “arm’s length” transactions, therefore, reflecting the validators’ independent and separate contributions to network security and efficiency.

Spaydh:

The proposal has been approved. Transactions and smart-contracts to provide the validator incentives are being prepared.

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@Spaydh The Cosmos Hub proposal 867 passed on January 23rd 2024, this is over one month ago, any updates about the implementation of this governance approved proposal?

Did you get any info on the implementation of this?

Hi, yes @Spaydh provided an update in another forum thread:

Strategic guidelines for allocating the Hub's NTRN Neutron

Hi, yes indeed. We’ve faced a number of issues with 4 different multisig UI implementation for cosmos sdk multisigs and signer coordination limitations which delayed the process, but have since then worked with the UI maintainers to get issues addressed, which has allowed signers to proceed. The allocations should be done shortly. We’re also working on monitoring/automation solutions to update the allocations dynamically based on validators joining/leaving the active set to make the operations s…

Hi everyone,

As seen in the response above, there have been a number of technical issues with multiple multisig implementations which have delayed the process.

Nevertheless, I’m happy to share that the allocations are being made right now. Due to the extreme message length required for making 180 different vesting allocations, the execution will have to be broken down in 6 proposals, which all register the same parameters. Each allocation is for 10k NTRN, starting on March 26 this year and ending on March 26 next year.

The first of the 6 proposal is now being reviewed by the committee:

Prop 867: Validator Incentivization | Validator Incentivisation - PART 1/6 ✳️

Please see the following json file containing a message to send 10,000 vested NTRN to each Cosmos Hub Validator. Due to message length, this process will be broken into 6 parts. In each part we will

The other 5 proposals should be up shortly.

vixcontango:

I am an anarcho-communist, please don’t insult me with the “socialist” label.

Oh cosmos hub forum, please never change

Hi @Spaydh the 6 proposals have been approved and the start time of the vesting was indicated as 28th April 2024 but it seems the vesting hasn’t started yet, could you please clarify?

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Proposals don’t execute immediately once they are passed. Once the proposals are executed, the vesting will begin as of the start date indicated in the proposal.

All of the DAO members are doing our independent due diligence in checking 180 addresses before voting or executing so it’s a long process.

1. Which of the Validators who did not opt-out are eligible for it?
2. Which address can claim the drop?
   Thanks!

Thank you for the update, please update us when the vesting starts.

The proposal says “Executed”

Prop 867: Validator Incentivization | Validator Incentivisation - PART 2/6 ✳️...

Please see the following json file containing a message to send 10,000 vested NTRN to each Cosmos Hub Validator. Due to message length, this process will be broken into 6 parts. In each part we will

start_point.time for all validators should be Sun Apr 28 2024 22:00:00 GMT+0000

end_point.time for all validators should be Mon Apr 28 2025 22:00:00 GMT+0000

Hi all, The initial allocations have been made. You can browse the executed proposals on DAODAO and view the vesting contracts here . Here are brief guides to help you navigate the vesting: To check the allocation Simply replace the address in this query with your validator’s To claim vested tokens If your assigned key is an EOA (not great ) or a Ledger: log in to Celatone and click “Execute” on the claim method. Otherwise, you may have to execute the transaction directly: • The contract address is: `neutron1lzw9jmag8kj7py46z83zuvlwx944a3we3h9nwe804lp0qex3qa9qvp82l4` • Since arguments are optional, the message is simply: ``` { "claim": {} } ``` If you are unable to sign anything using your assigned key due to security practices, the committee can clawback the current allocation and re-allocate it to another address controlled by your organization. If that’s your case, please mention it as a reply and we’ll work with the committee to set up a process to securely re-assign the allocation. I also wanted to share operational changes we’re making to make the process smoother/more reliable. Initially, we had thought that vesting the tokens…

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Thanks for the update.

Spaydh:

The initial allocations have been made. You can browse the executed proposals on DAODAO and view the vesting contracts here . Here are brief guides to help you navigate the vesting:

We are happy about the progress. Many months ago we, Cosmic Validator, had an idea of potentially using some of the unclaimed NTRN from the airdrop and sent to the Cosmos Hub community pool as revenue for validators running the Neutron consumer chain with negligable revenues. When we initially did a poll on twitter to ask the Cosmos community about our idea some were surprised about the idea or even against, but the overall majority of the community was supportive. So we are happy that we could contribute to the sustainability of the economics of consumer chains in the Cosmos Hub and hopefully the idea now from EffortCapital about the VP tax will also be implemented soon to further strengthen the economics of consumer chains and validators

we(Crypto Dungeon) have been validating and havent recieved any allocation how can we fix this?

Lee_Berman:

we(Crypto Dungeon) have been validating and havent recieved any allocation how can we fix this?

Not sure what the process is, but inquire with @soi2tudio and @Spaydh

how to check if we received ours? i always thought it was so minimal that i never pay attention to the neutron tokens from ics

Use the “available_amount” query here.

Should be like this:

{
  "available_amount": {
    "address":"neutroaddressfromvalidator123456"
  }
}

thanks for the response and the instructions bro!

and to claim, just send to the contract

{
  "claim": {}
}

if an active validator on cosmos hub that opted out before , but later opts in as at today, will the validator still receive this Ntrn ? and what approx amout will such validator receive monthly ?

Spaydh:

At present market value (>$0.80 NTRN 13.12.23)

Spaydh:

The initial allocations have been made.

The NTRN vesting allocations were calculated with a NTRN price of $0.8 from December 2023. The allocations started to be distributed from 8th May 2024. Since May 2024 the NTRN price has been around $0.3-0.4, which is around half of the $0.8 value used to estimate the allocations. I think the allocations should be adjusted to take this into account? Also, for the next vesting cycle starting in May 2025 it would be better to take an average price of NTRN over the longer term rather than on a specific day?

@Spaydh following up again 6 weeks later, it seems last time you were in the Cosmos hub forum was in June 2024? That’s not serious, you are a consumer chain of the Cosmos hub
cc @lexa @Ertemann @ccclaimens

Stop Asking for money, just accept the Grant that was provided.

It is meant for alignment, you and every other validator shouldn’t be price aware, only ownership aware.

What kind of answer is this? The only one asking for money here is Neutron, with all validators subsidizing the costs to run neutron since the beginning. And it wasn’t a ‘grant’ but rather a lowering of the subsidizing costs for validators for a specific time period which of course needs to be renewed as originally discussed.

It wasn’t meant for ‘alignment’ but to help with consumer chain costs, since this idea of using NTRN from the airdrop given to the Cosmos hub was originally suggested by us. Moreover, you are just another validator, you have 0 authority so why you talk in that tone? I just tagged you because somehow you were part of the multisig, but those NTRN are in the Cosmos Hub so decisions are made by the Cosmos Hub governance, not you. So instead of talking in such a tone, ask Spaydh to check the Cosmos hub forum, since last June I think it is time to check the forum and this thread

Cosmic_Validator: It wasn’t meant for ‘alignment’ You sure? Spaydh: This proposal is the first of a series of proposals meant to increase alignment between Cosmos Hub, Neutron, Stride, future consumer chains and their respective stakeholders. Cosmic_Validator: you have 0 authority so why you talk in that tone? I created this idea and shopped it with Spaydh, alignment was always the only real goal. [Last Call] - Cosmos Hub <--> Neutron Validator alignment plan Proposal Ideas Dear community and validators, This forum post is a request for feedback and Proposal draft seeking to spend NTRN from the Cosmos Hub community pool to incentivize validators of the Cosmos Hub and Neutron chain. **This proposal draft was read by Spaydh from Neutron prior to his post and it seems he based some of the choices in that proposal on this one (namely the amount of NTRN instead of USD denominated and the vesting, so as to focus on alignment). However as we disagree with the Neutron Da… this proposal is not meant to make validators profitable into perpetuity, its an alignment grant for all participating stakeholders. If you want…

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