[PROPOSAL ###] [DRAFT] Add Elys Network Consumer Chain

Elys Network Consumer Chain Proposal This is a proposal to launch Elys Network as an opt-in consumer chain. Opt-in consumer chains are intended to be launched permissionlessly, but in this version of ICS, a permissionless launch is not yet possible for technical reasons involving the chain_id. If you are interested, read more here . This proposal is NOT intended to judge whether the chain is worthwhile to use or validate. Since it is an opt-in consumer chain, no validator is obligated to run it, and any validator can opt in or out its validator set at any time. Validators who do not feel that the chain is worthwhile are encouraged simply not to run it. • Vote YES if you believe that this consumer chain is being started by Elys Network’s real development team, is not squatting on a chain_id commonly recognized as belonging to another chain, and is not launching a large number of consumer chain proposals to spam governance. • Voting NO has no purpose. Voters who feel that this chain is impersonating another chain or that this proposal is part of a spam attack should vote NO WITH VETO • Vote NO WITH VETO if this consumer chain is impersonating another chain, is “squatting”…

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What a first post!

I look forward to seeing how the validator community receives Elys Network as a consumer chain. Working alongside the team has been great, and I can absolutely vouch for your team’s professionalism.

Hesham:

• 30% airdrop increase for validators and their stakers who opt in for 1 year
• 25% of staking rewards to Cosmos Hub opt-in validators and their stakers. For the first year, that equates to 2 million ELYS

Praying my validators choose to opt-in.

Is there more info somewhere for validators who do want to opt-in? A discord they should join, a Github to watch for the binary, etc etc?

What if there are more than 45 validators who choose to opt in?

Polkachu:

What if there are more than 45 validators who choose to opt in?

only top 45 validators who opt-in will be in the active set

I assume the Vote Power Cap of 15% will prevent larger Hub validators from running Elys, if they are more smaller validators?

An extreme example would be in the bottom 44 of the Hub vals run Elys, and then SG1 decides to run it toom SG-1 will end up with having more than 15% of the VP on Elys, and that would disqualify them? [SG-1 is just an example]

Or is the 15% cap = “15% VP on the Hub”?

We will be happy to support the chain and cast a YES. But we would definitely invite you to consider using the VotePowerCap at a much lower setting than the proposed 15% which will basically have absolutely no effect, as presented in the chart below:

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Note that the presented situation corresponds to the most favorable condition in which all the top validators (excluding exchanges) would decide to opt-in.

A more effective approach would be to set the cap somewhere around 3-4%. These are the relative effect it would have on the distribution:

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More information about the VotePowerCap here: ICS 2.0 Economics : Partial Set Security (PSS) Financial Model

Thanks for reading, and on behalf of the PRO Delegator’s validator, we welcome you to the Atom Economic Zone!
Govmos

Finally!

Regarding the 15% power cap part: I gather that it refers to the VP on Elys and not on Cosmos (as it wouldn’t concern anyone if so, as pointed out above).

Thank you for more information

Elys team is very impressive every time I hear them. Looking forward to this.

About Elys incentives: how would you manage inactive validators? I’m asking because, if for example 90 validators will opt in, only 45 will be active, and if inactive validator delegators would not get the airdrop boost (for example) the drawback is to increase the centralization over the validators with more VP that’s active on Elys

Hesham:

Vote YES if you believe that this consumer chain is being started by Elys Network’s real development team, is not squatting on a chain_id commonly recognized as belonging to another chain, and is not launching a large number of consumer chain proposals to spam governance.

Yes. Let’s do this thing.

Curious what happens if validators opt-in, do all the work to support the chain, and then are outside of the 45? We would like to support, but the lack of guaranteed resources and potential of time spent for nothing is a definite hurdle. Time is super valuable for us right now supporting many networks as a small team.

I support the 15% power cap (although I could be persuaded otherwise).

The reason is that the power cap is intended as a safeguard against a validator having way too much power, not to accomplish political goals of equalizing the validator set. I’m not necessarily opposed to that but I think it’s best to start slow with less drastic settings at first. It can be moved down to 10% or lower have a more pronounced effect in the future.

jtremback: support the 15% power cap (although I could be persuaded otherwise). Alright, let us try to convince you otherwise with rational arguments! Using the VP tax at an effective level, which we define as the minimum level that puts it into effect with the select set of validators, we demonstrated that it affects the revenue distribution scheme. As the model’s calculations describe (you can crunch the model yourself if you want to verify), the capped vote power of certain validators is redistributed to the remaining validators. The effective algorithm then iterates through the active set and consequently redistributes all excess cap amounts. The result is that it not only reduces the excess vote power of the affected operators above the cap but also raises the amount of VP that is inherited by the lower-ranked validators in the set. Therefore, the statement “the power cap is intended as a safeguard against a validator having way too much power” is incomplete, assuming that we demonstrated it has more profound effects than this one alone. The further the reduction, the more sensitive the effect. That’s what you see with the dashed red line on our VP charts shared…

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Looking forward to Elys as a consumer chain. Its a Yes for me

According to the @Govmos ICS 2.0 Economics : Partial Set Security (PSS) Financial Model:

I’ve 2 questions :

1. What are the estimated monthly revenues you aim to achieve?

2. Why have you set a limit of 45 validators? Could you explain the reasoning behind this specific number?

Additionally, have you considered using the “Validators/Chain Revenue Ratio” to determine an optimal number of validators and adjust accordingly?

simple question really. what are the projected returns for a validator? Here is my reasoning:

• So far ics has been a huge cost
• We are a bare metal val (not dc) with a complex setup - it needs to eat
• We also provide endpoints, which increases the costs of the setups

All of these + some other points not mentioned here, lead to high costs and so far ics only covers costs indirectly (i.e stride lsm). What is the plan here?

Govmos : great discussion with jtremback regarding power cap. We discussed this for quite some time, and we could look at reducing it to between 5 and 10% but we want to make sure we get input from more of the community on this. Since this is a governance parameter, it can be adjusted at any time via on-chain governance but we do want to make sure we launch with a number that the community is comfortable with. manueldb, Brendan-Whispernode, JulienViolet: We set the validator max number at 45, which seems like a low number, but is actually probably higher than we need at the start to accomodate demand from the community. With Partial Set Security, the idea is that chains can “right size” their economic security needs to the valuation of their chain. In this instance, we estimate that 45 validators is sufficient to represent the ATOM economic security for our initial valuation that we can then evaluate as we grow. As our TVL and valuation grow, we would indeed require more economic security, and can use governance to increase the validator set as needed to reflect that. To your point JulienViolet, the revenue of the chain would drive our valuation and impact this number going…

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You don’t have to opt in to validate any opt-in consumer chain if you don’t want. If the rewards Elys is offering aren’t worth the infrastructure costs, then don’t run it

Thanks Jehan. I dont see a calculation question as an assumption that i dont want to opt in. Im “dyor-ing”. i think thats what questions are for. to help understand whether we want to opt in or out =)

@Hesham thanks for the detailed response with me in mind

Support Elys Network as an ICS chain!

Hey Hesham!

If 15% VotePowerCap has zero effect and a lower % would help decentralization I don’t see any reasons to not do it now and wait. I’m supportive of your idea to find a middle ground around 5% to 10%

It will be interesting to see how the delegators react toward opt-in validators.

It is a yes from us but, how sure are we about 45 validator cap?

If the airdrop only goes to the top 45 opting-in validators, this encourages ATOM delegators to stake with validators with the most voting power, further centralising the Cosmos active set

with a votepowercap of around 5% this would encourage the delegators to bet on the validators with the least voting power among the 45.

Yes, that’s the very probable simulation, and if this happens Chains need to find a solution for the sake of a healthy ecosystem.

Only the top 2 Cosmos hub validators have 5% voting power, one of which is a CEX, so it makes virtually no difference.

It could be that I’m interpreting the VP parameter incorrectly - if it’s about Elys then disregard.

In any case, it would be fair to distribute the extra airdrop to delegators of opting-in validators regardless of if they are chosen to validate or not, since being chosen is out of our control.

Isn’t the power cap 15%?

Thank you @Hesham for your message. It was very insightful.

I have one more question about validator fees: Will the protocol allow validators to choose their own percentage, or will it impose a fixed rate or a recommended range?

Just a suggestion, you can use the “@” mention to reply to any specific user in the discussion. This will alert the person you’re addressing.

@JulienViolet Every validator can choose their own commission level for each consumer chain. This input in the model is just an assumption.

@serejandmyself No worries! Just making sure

We will definitely vote yes on this proposal, the parameters will have to change as a response to how this first PSS chain is going to work out and we are 100% okay with that.

We are not a 100% sure yet on wether we will opt-in but it looks likely at this point in time due to the commitment native governance tokens alongside a sizeable revenue cut by the protocol. If we need to charge more commission to make running the consumer chain viable we will but hope to direct as much to our ATOM stakers increasing our validator specific APR.

@jtremback do you know if Explorers and interfaces like mintscan/Keplr will be able to easily integrate the validator APR differences caused by validators opting in to these ICS chains?

Best,
Ertemann
Lavender.Five Nodes

Ertemann:

do you know if Explorers and interfaces like mintscan/Keplr will be able to easily integrate the validator APR differences caused by validators opting in to these ICS chains?

We hope they will. We provided the base calculations within our model. Integration from the explorers within their product suite is the best place to offer more granular details on actual revenue distribution. They vary based on each chain’s revenue share mechanism, the effects of the votepowercap (if any) and also from each individual validator fee. There was simply no way we could include such complexity in the model, hence the reason why we opted for a “generic” validators fee to perform our statistical analysis.

What about the Airdrop thing? Will the airdrop boost works also for inactive validators? I’m asking because if a validator can’t manage to be in the active set some delegators from the hub could redelegate away from him.
The result of this could be that delegators will redelegate away from the inactive validators and delegate only to those 45 active validator in Elys.

If Airdrop boost will be distributed also to inactive valdiators (on Elys) maybe a validator could evaluate to opt-in even if it will be inactive, in order to not risk to lose delegations on the hub (they could lose them also for not having Elys revenue rewards VS the 45 active validators, but at least not from airdrop)

JulienViolet:

I have one more question about validator fees: Will the protocol allow validators to choose their own percentage, or will it impose a fixed rate or a recommended range?

The model only provides a guideline for an estimated average validator %fee. Each validator will set this parameter independently and can unilaterally adjust it over time. We simply couldn’t get down to that level of granularity with a global model like this one, hence why we opted for this generalized variable.

Hello all,

Based on community feedback, we have revised the max power cap down to 10%. This may be a good starting point as an upper limit, which as mentioned before may never kick in given our active set of up to 45 validators.

We will be meeting with Keplr soon and will bring up the validator APRs in that discussion.

We are now targeting a mid September launch, which means we can expect the governance proposal to be raised in mid August, so we have abotu 2-3 more weeks left to collect input in this discussion, please continue to provide us your recommendations. Thank you

Hesham

All eligible ATOM stakers based on the snapshots that will be announced, will be able to claim the airdrop (subject to various criteria such as geographic restrictions and anti-sybil). The opt-in validators will receive an additional airdrop boost but if use the snapshot for the bonus airdrop, people who redelegate afterwards wont be eligible for that.

I have a question about anti-sybil, have you considered measures to allow justified exceptions?

Ex. validator sends the rewards to the wallet assigned as validator bond for liquid staking

do you mean all opted-in also if inactive?