0% fee trap or Why you should avoid overbidding validators

TL;DR
You earn less when delegating to an overbidding low fee validator than you can earn with a validator who uses all his available voting power participating in committee even if its fee higher than 0%.

This is not tech explanation on how EPoS works and benefits delegators. The tech one was done by @rongjian in The Definitive Guide to Harmony Open Staking. But there’s one important thing, I want to point you to when reading the post, that everyONE delegator should clearly understand if he wants to get maximum from his delegation - Do not delegate to an overbidding validator!

How to recognise the overbidding validator?

The Overbidding validator is a validator that has a Bid higher than Effective stake + 15%. In this case everything higher than effective stake doesn’t participate in the committee and as a result doesn’t earn.

Here’s a quote explaining my words in tech manner:

“Each BLS key in the committee has a certain voting power proportional to the share of its effective stake among the whole committee . For example, if the sum of the effective stake of all the keys in the committee is 10k ONE, a BLS key with effective stake of 1000 ONE will have voting power 0.1 (or 10%).”

Delegate wisely :sunglasses:

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Great advice. I would differ on one point though. If the Validator is new, and has only 1 BLS, then they have no choice but to continue growing beyond the upper bound, in order to have enough delegation to safely spin up a second BLS key, and remain elected. When they spin up the second key, their effective bid would be halved, and the Validator would be in a better earning spot. The only alternative (currently) that a new Validator has in this scenario, is to spin up a second key before going above the upper bound… which would most likely mean that they don’t get elected.

This is actually an issue with how tight the current bounds are, and one of the first things that the Validators are handling with decentralized governance. A proposal to fix this has pretty much been hammered out, and should be up for a vote in the very near future!

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what you mean is clear for everyone, but the issue I raised is more about providing transparent information on current earnings and if the validator wants to spin more keys he should explain his strategy on how it’s available for him and approx ETA - then delegator can decide to wait and trust to a validator or choose another one.

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