Hi, I am Zanicar. I am the Protocol Engineering Manager at Phi Labs, the team behind the Archway protocol. I would like to propose a reduction of the validator set to benefit the overall ecosystem’s health. Let’s discuss.
A brief look at the numbers
If we look at the current validator set, on an explorer such as NodesGuru, you will notice that only 39 validators represent two thirds of the voting power. Half of that voting power, one third, resides in the hands of only 11 validators. The majority of validators, 70 to be exact, represent less than one percent of the total voting power each. This means the network’s voting power is disproportionately distributed across the validators in an exponential, parabolic curve. But what does this mean?
Consequences and Implications
This means that the vast majority of validators are earning very little in terms of inflationary emissions. This undermines overall network security, as the primary purpose of validators is to secure the network via Proof of Stake protocol. If validator economic viability is undermined, it undermines their ability to provide the required infrastructure and services. It is not surprising to find that of the top twenty validators only two exceed a 5% commission. Conversely, twelve of the bottom twenty validators exceed this commission rate, likely as a result of increased economic pressure and reduced economic viability.
Consequently, larger validator sets require a higher inflation rate as overall network overhead is proportionally greater. This may further impact the network security through more pressure on token price. With a smaller validator set that makes meaningful network contributions, inflation can be lowered to the benefit of the overall network health.
A further implication is psychological. Not all validators can rely on large self-delegation and are completely dependent upon regular token holders to delegate to them. However, typical users do not delegate on a regular basis. They are very likely to select from amongst the largest validators to ensure their delegations remain in the active validator set. Combined with commission fee disparity this further undermines the viability of smaller validators. Comparatively small delegation changes may see them removed from the active validator set.
Practical Considerations
From both a security and economics perspective it would be better to have a smaller set of validators. Consider the following:
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A smaller set is easier to coordinate for technical updates, upgrades and the like, e.g. faster response to zero day vulnerabilities.;
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Greater economic viability for individual validators
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Less slices for a larger piece of overall delegations;
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Greater overall stability within the active validator set;
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Viable to offer smaller commission fees and remain competitive and sustainable;
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Increased validator stability and sustainability leads to better overall network security;
Finally, it provides the opportunity for better decentralization incentives… incentives for the support of smaller validators to progress towards a more linear (ideally horizontal) voting power distribution.
This does however represent some risks in the following areas:
- Potential technical issues resulting from a set reduction (such as around active delegations to validators removed from the set);
- Potential for transaction censorship as there will be less validators contending on block proposals;
- Potential for validator cartels to form which reduces effective decentralization (however, large disparity in voting power distribution also carries the same risk);
Recommendation
I formally recommend a reduction of the active validator set, to 30 validators. We want to work with any active contributors that provide meaningful support to the network. Thus, it is not a recommendation to simply utilize the 30 largest validators in the current set.
Please feel free to provide feedback, comments and suggestions in open civil discussion and/or debate.
We have only the best interest of our network and community at heart.
