Overview

Decentralization is an important topic and given the recent proposal it was worth covering the pros and cons of a minimum commission requirement for validators and if it could help decentralize the Cosmos Hub. It appears that there is little to no data or facts backing up that this would improve the network and could hurt decentralization.

This data shown in this report is broken up by validators sorted by voting power.

Average Validator by Commision by Category

First, while it is not the most valuable resource take a look at the average commission by category but this is distorted by validators with 100% or a high commission. When looking at these categories a minimum of 5% commission on average does not appear that it would help decentralization.

Validators Impacted by Proposal

A more accurate portrayal of if this would help decentralization is impact per category on validators. Based on this it appears this could potentially hurt decentralization in some ways as some smaller validators do this to attract delegators as they get going and get their name out in the community.

Things to Consider in this Proposal

• Some could argue this will help shift people away from the highest validators in the top 15, helping potentially improve the Nakamoto Coefficient, but there is no proof this would happen.
• Instead of validators competing often at the 1–10% commissions, they could just compete at the 5–15% commission resulting in the same scenario but being worse off for delgators.
• There is no data that would show for sure that a higher commission would result in more work to the ecosystem or any work to strengthen the network.
• Validators could do airdrops or other methods to compensate delegators anyway, causing the same scenario and potentially making it more time consuming or difficult for smaller validators.
• It is worth considering if the 0% commission and running validators at a loss are good for the network or not.
• This could help startup validators break even or make enough money easier to be sustained.
• Validators may use some of that commission to improve their infrastructure, but once again, that is difficult.

Future Research and Conclusion

Decentralization and network resilience is always worth considering but there is little to no data or facts that back up this improving the network. There are many other potential paths to consider, but in all of this, it comes down to concerns of it backfiring, such as a Sybil attack where the concentrated validators split up into multiple validators taking up open splots and making it worse. These all require more extensive research and data.

If the community wants to decentralize the network and improve resiliency, one of the best things to consider with time is potentially using part of the community pool to create a Decentralization and Resilincy DAO.

This could be a funded group of people dedicated to helping research various areas of improvement from trying to examine geographic concentration issues, cloud reliance issues, and more.

This group could also help educate the community and create gamification to improve decentralization. Some examples may be surveys that validators can fill out that would help individuals understand more about some of the validators.

Another example could be NFT profile Pictures or banners that people can get for delegating to validators out of say the top 20 and maybe different ones for those who are even further decentralized. This creates a fun way to conversationalize and show off your support to the network health.

Other areas besides these and putting out research could be tracking on chain data and informing the community about Sybil concerns, and working with concentrated validators to see if they would consider using some other validators with part of their assets, especially exchanges.

There are a lot of areas to consider, but all of them require more research and community dialogue before jumping to voting on something that could impact the future of the community.

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