Our new commission rate on Cosmos Hub
Shameless advertisement:
- Join Forbole’s community
- Follow Forbole’s Twitter
- Indicate your interest in Desmos (be it investor, validator, developer or community builder!)
We started the current #PayWhatYouWant campaign in May. We set our commission rate at nil and encourage our delegators to pay us the commission of the amount they want. The monthly performance is as follows:
May: 523 atoms
Jun: 206 atoms
Jul: 283 atoms
Aug: 133.33 atoms
Sep: 672 atoms
We cannot say this is a good performance. There are a lot of factors that may affect the result. For example, this is not easy for institutional delegators to make donation due to administrative issues. Also, the delegators need to spend extra effort to manually pay the donation. Or, delegators may just have forgotten to donate.
Since the launch of Cosmos Hub, more discussions on this topic have been made. With the signalling Proposal #12 by Sikka, we think this is the right time to review our commission strategy.
Proposal #12
We have voted “no” to the signalling Proposal #12 “Are Validators Charging 0% Commission Harmful to the Success of the Cosmos Hub?”. My partner Kwun Yeung has elaborated further in Cosmos Forum:
Let’s think a bit unconventionally.
At current low (relatively) price of atoms ($2.2 at the time of writing), a validator with 1.24% of voting power and 10% commission will have a monthly income around 1,650 atoms or $3,630. Do you think this is profitable? 1.24% of voting power is enough to make you 20th out of the 100 validators!
Staking is a new concept in cryptos. Cryptos is a new concept in mass market. So staking is a new concept of a new concept.
If you want to be a validator, please be well prepared financially and expect to lose money. We are all in the early stage of an experiment. Most of the tech companies (even including those which have exited) are losing money. It is a long road for the market to find the balanced game theory to sustain the economy of proof-of-stake blockchains. Staking is such a new concept like many other new tech area. So be prepared to lose money at least in the early stage (eg. the next 12 months).
“Then why should we become a validator?” Different people will have different answers. We may also don’t understand why people would mine bitcoin back to the year 2010.
Our new commission rate
Anyway, we believe in #PayWhatYouWant and we like to encourage this concept. But more delegators’ tool need to be ready before we can implement this movement again.
In response to the community’s concern, we decided to resume our normal pricing level which is 9.5%. We will start to raise the commission on 1 Nov 2019 by 1% per day due to the daily maximum setting. Theoretically this will be completed in 10 days but please allow for 1–2 days leeway.
Bonus: our stress test
In case you are interested, I want to share with you a little bit about the stress test analysis we have made for ourselves.
9/90 Distribution
As of the time of 8 Sep 2019, we have a total delegation of 5.1 mil atoms from 384 delegators. 9% of addresses have contributed to 90% of our delegations:
Top 17 delegators made up 80% of our delegation;
The next 17 delegators: 10%;
The next 23 delegators: 5%;
The next 37 delegators: 3%;
The next 30 delegators: 1%;
The remaining 260 delegators: 1%
The top 25% addresses for 98% of our delegations
We took a closer look at the 94 delegators who made up 98% of our delegations. 36 of them delegated only to zero fee (protocol setting) validators, and a majority of them delegated to Sikka, SparkPool and Forbole only. These 36 addresses have delegated 1.32 mil atoms to us (i.e. 26% of our delegation). I assume they will all redelegate from us.
There are another 50 addresses have different level of tendency towards delegating to zero fee validators. They made up 1.35 mil atoms of our delegation. We have assumed they will partially redelegate from us at a percentage from 25% to 50% according to my rough prediction based on their appetite of validators.
Given the above, I estimate our voting power will be lowered from 2.9% to around 1.8% to 2.1%. I hope this will not cause more centralization than before.
What next?
- Publish this post and Tweet
- Inform our community
- Try to inform our delegators directly
