20%, 30% or 7%? Our commission rate(s) on IRISnet
(中文按此)
Updated on 10 March: After some tests and assessments of the relationship between the performance of the validators and the delegations they can get, we decided to resume our commission rate back to the starting point, which is 20%.
Caution: According to the BPoS design of IRIS Hub, both the stakes of the validator and its delegators may be slashed for the wrong-doings of that validator. Delegating to poorly performing validators may also lower your expected return. If you are IRIS hodlers, you need to do your homework: know the validators before deciding how to delegate your tokens. Don’t trust. Verify.
About our staking service on IRISnet
- Our performance on IRIS Hub can be traced at our profile at Big Dipper.
- Our current commission rate is 7%, and it is subject to change according to the market conditions and our performance. We expect the frequency of changing commission rate will be very high during Betanet as the market is still in price discovery process.
The 20%
Not long ago, there were some discussions amongst validators on commission rates. While I believe in free market, its effectiveness relies heavily on certain assumptions:
- The players (hodlers, delegators and validators) need to have sufficient knowledge about the tokenomics of the chain
- They need to treat this as a business and show a strong sense of risks and rewards relationship
According to some veteran validators with experiences in Tezos, 10% commission rate is in losing territory and hence is not sustainable. Most of the validators opined that 15–20% was a reasonable range. We have chosen 20% according to our assessment of our track record and the market. Even though there were some completely new validators claimed they would charge zero commission rate, we did’t think this was problem to us or other existing validators as we were confident that quality should prevail.
This is the carrot and stick mechanism which drives the people to invest their capitals and time to provide the security of blockchains.
The 30%
In IRISnet validators chat, I have questioned about the decision of IRIS Foundation (“IRISF”) that they would burn their reward from delegation. I really appreciate their intention to develop the community rather than to profit from them. This is a solid stance both in form and in substance.
But this arrangement has side effect. How do IRISF decide their delegations? If they do not care about the reward, how can they care about the commission rate they need to pay for validators? If validators are confident in their own performance and contribution, they should act in order to maximize their profit according to the tokenomic design. This is not greed. This is the principles which make blockchains work.
Contributing validators get the rewards they deserve, then invest more in their team and infrastructure in order to create more contributions.
An over-simplified (and even wrong) math here. For a 4% annual inflation, the monthly inflation is 0.327374% which means there is 6.5M inflationary IRIS created per month. If a validator can keep its voting power (all from delegator) at 5% with commission rate 30%, the validator can earn a monthly commission income of 98,000 IRIS. If we use the price of private sale completed in March 2018 which was $0.05/IRIS, the commission income would worth $4,900. Due to the decent progress IRISnet has shown in the past year, a 100% increase from the private sale price is not unrealistic. Then the commission income would become $9,800. To whales this is a drop of an ocean, but this means a lot to startups like us.
Which is better, burning the rewards or awarding them according to meritocracy?
Betanet is not testnet. Let me repeat. Betanet is not testnet. Betanet is the mainnet. Follow me and say this three times.
Betanet is the mainnet~
Betanet is the mainnet~
Betanet is the mainnet~
This is adversarial. There is incentive. There is penalty. These all all real. IRISnet is the real first BPoS chain. Players should react according to the tokenomic design.
So we changed our commission rate to 30%.
The 7%
Then we experienced an approximately 18.9% undelegation. From the figure, we guessed IRISF has some equilibrium of voting power and commission in mind. Anyway, we have got our question answered: they care about commission rate.
Then we saw a prominent validator has lowered its commission rate to 7.5%. So here we are now.
Welcome to the world of BPoS. This is just the beginning.
Caution: we will change the commission rate frequently during the era of Betanet, maybe a mere hour after publishing this post.
About Forbole
Forbole is a blockchain startup founded in 2017. We are building ForboleChain, the BPoS chain for decentralized social networks powered by Cosmos SDK and Tendermint. We are a contributing community member and validator node operator on Cosmos and IRISnet. We were one of the named winners in the “Never Jailed” category of the Game of Stakes by Cosmos, and we were the only one come from Hong Kong. We were also ranked #1 in the Incentivised Testnet by IRISnet. We are the creator of the award-winning Cosmos block explorer Big Dipper in HackAtom3 by Cosmos.
Please follow us on:
Website：http://forbole.com
GitHub：https://github.com/forbole
Telegram: https://t.me/forbole
