HIP-30: Validator Network Optimization and Token Emission Reduction

[Casey]

Summary

This Harmony Improvement Proposal (HIP-30) aims to optimize the Harmony validator network, enhance the network’s overall performance, and align token emission with the long-term sustainability of the ecosystem. The proposed changes include:

HIP30-1: Decreasing the annual token emission to validators from 441 million to 221 million.

HIP30-2: Reducing the number of shards from 4 to 2.

HIP30-3: Decreasing the total number of nodes from 250 to 100.

HIP30-4: Limiting each node to 1 BLS key.

Motivation

The Harmony network is continuously evolving to meet the growing demands of a rapidly developing blockchain ecosystem. As such, it’s vital to implement changes that promote efficiency, security, and long-term sustainability. The proposed updates in HIP-30 aim to achieve these goals while ensuring that validators are rewarded fairly for their contributions.

Specification

Token Emission Reduction

By decreasing the annual token emission from 441 million to 221 million for staking, we aim to create a more sustainable ecosystem with a balanced supply and demand, fostering long-term growth and stability. Additionally, another 220 million tokens will be allocated to ecosystem development, which includes recovery efforts. This reduction in token emission for staking will not negatively affect validator rewards, as the overall rewards per validator will increase due to the decrease in nodes. This approach ensures that validators continue to benefit from the changes while maintaining a healthy ecosystem for Harmony’s long-term success.

Sharding Optimization

Consolidating the network from 4 shards to 2 will streamline network operations, enhance efficiency, and still maintain the possibility of cross-shard communication in the future. This change will result in lower network latency and reduced communication overhead, translating to faster transaction processing and increased throughput.

Node Reduction

Reducing the number of nodes from 1,000 (250 per shard across 4 shards) to 200 (100 nodes per shard in 2 shards) will optimize network performance by decreasing the number of required message exchanges and limiting communication overhead. This change will also lead to faster consensus agreement, improved transaction finality, and increased rewards for each validator due to the decreased total number of nodes. By transitioning from a four-shard structure to two shards with fewer nodes per shard, we aim to create a more efficient and streamlined Harmony network while maintaining the benefits for the validator community.

BLS Key Limit

Implementing a 1 BLS key per node limit will standardize validator operations and promote fairness within the validator community. This change encourages new validators to enter the ecosystem, fosters healthy competition, and rewards efficiency and innovation.

Rationale

The proposed changes outlined in HIP-30 aim to benefit the Harmony ecosystem and validator community by:

1. Enhancing network performance through sharding and node optimization.
2. Ensuring long-term sustainability with a reduced token emission rate.
3. Increasing validator rewards by reducing the number of nodes and redistributing rewards.
4. Encouraging new validators to join the ecosystem and fostering healthy competition.

These changes will significantly impact the Harmony network and its community, and we encourage validators to consider the potential benefits of these optimizations.

Next Steps

We invite the Harmony validator community to review HIP-30 and provide feedback on the proposed changes. Your input is invaluable, and we’re committed to working together to shape the future of Harmony. After thorough discussion and evaluation, the community will have the opportunity to vote on implementing these changes, ensuring a transparent and collaborative decision-making process.

[Casey]

Please vote below on this proposal to help optimize the network.

• Yes
• No

[buttheadus]

Still hopeful for better clarity of how the core team will " help" with the recovery effort. for example
X % to development
X % to recovery efforts and how will it be implemented
From this new proposal

[FortuneValidator]

Regarding the 1bls key per node. Please can you confirm my understanding here:

The limit is per server, not per validator. If for example
I wished to have more than 1 shard 2 bls key, I would need multiple shard 2 servers to facilitate this ?

Do you have any preliminary calculations on what the EMS and bounds would be ? I’m wondering where a validator of any given stake would fall within the new bounds.

[HoundOne_Validator]

It’s a better proposal from. The last one… I’ve a doubt regarding BLS keys.

Will it be: 1 validator = 1 key no matter the one staked with them?
How would the reward system works for all validators? I mean I believe we need to have better tokenomics visibility since this really would be a hardfork

[Casey]

I desire to have a majority, if not all, of the remaining emissions, go straight to recovery. Development funds are critical to improving and keeping Harmony competitive, but I think recovery is a priority.

[Casey]

Your understanding is correct. The 1 BLS key per node limitation refers to the number of BLS keys used on a single server. If a validator wishes to have more than 1 BLS key on a specific shard, they would need to set up multiple servers to facilitate the additional BLS keys.

As for the EMS (Effective Median Stake) and bounds, it’s difficult to provide exact calculations without knowing the specific stake distribution across validators in the new setup. However, the median stake is expected to increase under the proposed changes due to the reduced number of nodes. This may make it more challenging for new validators to join the ecosystem, as they would need to attract a larger amount of stake to be competitive. To encourage and bring new validators into the Harmony ecosystem, the Harmony Foundation plans to redelegate a portion of its stake to those who positively impact the ecosystem. This includes validators who create dApps, develop tools, establish exchanges, or contribute to other use cases that add value to the Harmony network. By supporting new validators with impactful contributions, the Harmony Foundation aims to foster a thriving and diverse validator community dedicated to the protocol’s long-term success.

Validators with a higher stake in the current system would likely find themselves closer to the median stake in the new setup. The position of a validator within the new bounds would largely depend on how the stake is redistributed among the reduced number of nodes and the level of competition among validators. It is important to note that the overall rewards per validator would increase due to the decreased number of nodes, as mentioned in the proposal.

[Casey]

Under the proposed changes, each node would be limited to 1 BLS key, which means that 1 validator would have 1 BLS key per shard regardless of the amount of ONE staked with them. This is aimed at encouraging a more decentralized network and promoting the use of bare-metal infrastructure while discouraging cloud server usage and empowering dedicated operators.

The reward system would still be based on the stake-weighted mechanism, but with the reduction in the number of nodes and shards, the overall rewards per validator are expected to increase. This is due to the decreased competition for rewards among a smaller number of nodes.

With the proposed tokenomics changes, the annual token emission would be split into 221 million ONE for staking rewards and 220 million ONE for ecosystem development (including recovery efforts). This approach creates a more sustainable ecosystem with a balanced supply and demand, fostering long-term growth and stability.

It is important to emphasize that these proposed changes will not be implemented without community involvement and governance voting. The Harmony team is committed to ensuring that validators and stakeholders have a say in decision-making.

As for the hardfork, it would be necessary to implement these significant changes to the protocol, including reducing the number of shards, nodes and the adjustment of tokenomics. However, the Harmony team will work diligently to ensure a smooth process with validator input and vote.

[Casey]

HIP30-1: Decreasing the annual token emission to validators from 441 million to 221 million.

• Yay
• Nay

[Casey]

HIP30-2: Reducing the number of shards from 4 to 2.

• Yay
• Nay

[Casey]

HIP30-3: Decreasing the total number of nodes from 250 to 100.

• Yay
• Nay

[Casey]

HIP30-4: Limiting each node to 1 BLS key.

• Yay
• Nay

[FortuneValidator]

Based off this logic then, with a 6% max key limit per shard this equates to 6 keys per shard per validator.

So 12 keys per validator, albeit 12 servers would be required. I appreciate this is an extreme outcome but there could be just 16/17 validators with 12 keys each ?

On a separate point, is it assumed that we move to external leaders as a part of this HIP ? Apologies if it was mentioned.

[kratos_harmony]

kratos.crazy.one 💙

[FortuneValidator]

Is each sub part of this proposal to be voted and actioned on separately or would be a total all in one package ?

[Casey]

While it is theoretically possible for a single validator to run multiple nodes and BLS keys (up to 12 keys in your example) by operating separate servers, the proposal intends to encourage decentralization and foster the participation of more validators in the network.

We understand the concern that a limited number of validators might attempt to run a significant portion of the nodes, but we believe that the Harmony community and the ongoing efforts to bring in new, motivated validators will help maintain decentralization and a healthy ecosystem.

Regarding external leaders, you are correct in noting that this feature is already being tested and implemented. The HIP-30 proposal does not directly address external leaders, but the progress in this area will complement the proposed changes and further enhance Harmony’s security, efficiency, and decentralization.

[Casey]

If the proposal fails, the sub-votes will help in the counter-proposal.

[direkturcrypto]

yes for ALL.

The Harmony Protocol announced a reduction in token issuance and a new network optimization process. The HIP-30 Validator Network Optimization is a new process designed to increase validator rewards while also reducing the overall inflation rate. This new process will also encourage the development of new validators and increase the security and decentralization of the Harmony network.

Reasons to be positive about this news include:

1. Lower token issuance: By reducing the daily token issuance, the Harmony Protocol is taking steps towards reducing the overall inflation rate of the network. This can help to maintain the value of the ONE token and prevent dilution of existing token holders.

2. Increased validator rewards: The HIP-30 Validator Network Optimization will increase rewards for validators, which should encourage more people to become validators and help to further decentralize the network. This can increase the security of the network and make it more resistant to attacks.

3. Encourages development of new validators: With increased rewards and reduced inflation, the Harmony Protocol is incentivizing the development of new validators. This can increase the number of validators on the network and further decentralize the network.

Overall, these changes show that the Harmony Protocol is committed to improving the network and making it more secure and decentralized. This can be good news for existing token holders and may attract new investors to the network.

[ChefSoySauce]

hopefully this is in addition to the current 120k and not in place of.

[TrickLuhDaKidz]

1. Token issuance is the same

2. Rewards will decrease by 50%

3. I’m not sure this encourages new validators. I mainly see current validators fearful they’ll become unelected.