Simply VC Validator: Evolving to be more delegator friendly
TL;DR
- Our original validator has been renamed to Simply VC Genesis and will be switched off at the end of cosmoshub-2.
- We have set up a new validator, called Simply VC, with a new and improved commission structure:
- 1.85M of our self-delegated ATOM have been redelegated as part of our changeover.
- We discuss the ability for validators to reduce their max parameters.
Background
Validators on the Cosmos Hub are initialised using a create-validator command that specifies various descriptive and operational parameters including the following commission related parameters:
- Commission rate: The commission rate on block rewards and fees charged to delegators.
- Maximum commission: The maximum commission rate which this validator can charge. This parameter cannot be changed after create-validator is processed.
- Commission max change rate: The maximum daily increase of the validator commission. This parameter cannot be changed after create-validator is processed.
The first parameter can be updated at any time while the other two cannot.
When we set up our validator for the Cosmos mainnet launch we wanted to take the broadest approach possible to allow us to adjust our commission according to market demands and validators’ commission trends, specifically:
- Commission rate: 20%
- Maximum commission: 100%
- Maximum daily commission change rate: 100%
Lessons learnt
Over time we understood that delegators were not comfortable paying such fees and we opted to reduce our commission significantly. However, the protocol did not allow us to reduce the max parameters in the same way.
It became clear that the high thresholds that we had set around commission changes gave us too much power to play around with our commissions to the detriment of all our delegators’ rewards. In fact, we technically allowed ourselves to change our commission rate to 100% nearly instantly at will, even though it would not be in our long-term interest.
Actions taken
We understood that the above situation required delegators to trust that we were going to be diligent and do the right thing. As strong believers in the development of trust-less systems, we should have known better. So, we have now taken the following steps to rectify the situation:
- We have renamed our genesis validator to Simply VC Genesis with the plan to leave it running until the end of the current cosmoshub-2 chain
- Set up a new Simply VC validator running in parallel with the following parameters:
- Commission rate: 7%
- Maximum commission: 30%
- Maximum daily commission change rate: 1%
3. Redelegated 90%+ of our ATOM holding to the new validator
We also thought that any delegators to our genesis validator should be rewarded for their inconvenience, especially considering the trust they had placed in us. Therefore, we decided to send 1 ATOM to each of our 3rd party delegators with a tx MEMO informing them on the situation and to send a further 4 ATOM following their redelegation to our new validator as compensation.
With this configuration, delegators can be assured that our commission will never rise significantly and instantly. In fact, it would now take us 23 days, more than an unbonding period, to raise our commission from the current 7% to the max 30%.
Some parting thoughts
The max commission and daily change parameters are there to protect delegators from drastic changes in commission from their validator. Such parameters cannot be changed once a validator is created, as it would be counterproductive to have a validator promise its delegators with one max commission figure then give it the ability to increase it at will.
However, if a validator would like to decrease it, to the full benefit and peace of mind of its delegators, there is currently no way of doing so. We believe that validators should be given the ability to decrease the maximum commission rate and maximum daily change rate, as these can only have positive consequences to the respective validator’s delegators.
If such a system would be in place, we would have been able to run the usual edit-validator command and simply lower the maximum commission parameters, just as if we were editing the validator details.
Simply VC will be working on gathering the community’s opinion on such a matter and subsequently issue a proposal to make such amendments.
Relevant Resources
Find out more about Simply VC at our new website: https://simply-vc.com.mt
Check out our validators on these explorers:
- Simply VC
https://cosmos.bigdipper.live/validator/cosmosvaloper124maqmcqv8tquy764ktz7cu0gxnzfw54n3vww8
https://www.mintscan.io/validators/cosmosvaloper124maqmcqv8tquy764ktz7cu0gxnzfw54n3vww8
- Simply VC Genesis
https://cosmos.bigdipper.live/validator/cosmosvaloper1vjqault583hwktfj63k2hh7r02sj2a66fmvzqz
https://www.mintscan.io/validators/cosmosvaloper1vjqault583hwktfj63k2hh7r02sj2a66fmvzqz
