Idea to balance stakeholders and increase the number of elected validators

#1

This may end up being a duplicate because I was trying to type it on my phone but accidentally submitted it before finishing my thought :

So my idea is this. A small 1/2% to 1% fee spread across validators that creates an enhanced stake pool. Users can choose to stake to a locked staking period pool if they need less liquidity than normal staking and want enhanced returns. A user could choose (for example) a 1 month, 3 month, 6 month, or 1 year term, and the rewards paid out from the pool would be reflective of their long term commitment to the stability of the network (I was thinking 10%, 20%, 30%, 40%). Users staked in the long term staking pool could effectively be used as validator rebalancers where they’re spread among all participating validators in such a way that they’re always roughly equal, and a small percent of the stake (lets say 5%) could be committed to helping get new validators elected.

Basically stakers would get the rewards from the servers they’re staked to, but also get the bonus from the long term stake because they’re locked out of their liquidity unlike normal stakers that only have the few day waiting period.

I’d think certain minimum parameters would need to be established to be a participating validator such as maximum fees and so forth to ensure that people participating are getting adequate rewards for doing so, but also validators that participate could get some kind of a badge indicating they’re part of (what i’m calling) the Harmony Secure Staking Initiative.

It’s not a fully fleshed out idea at the moment admittedly, but it seems there are many concerns about getting new validators elected and spreading the load of stakers across more validators to maximize network security. It seems this (or a variation of it) may be a way to go about doing that.

#2

Kind of a cool idea. My one question, is where would the increased rewards come from? Would you propose to increase inflation to pay for this?

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#3

My though was that participating servers would have a small fee pass through that pays the added interest. It would be nice if you could spread a small like .25% mandatory fee across all servers or something like that but I know making it mandatory would cause a lot of people to balk. It would have have to be a slightly larger fee from a smaller subset of participating servers.

#4

This is a great idea. Coming from a finance background what you are proposing is similar to the creation of a yield curve for staking. This is an effective way to manage capital for countries (currencies) and corporations. You will pay more for long term capital to account for iliquidity and inflation, on the other hand you have the capital at your disposal for a longer term and can undertake projects with more certainty given your longer term funding. The challenge for something like this in Crypto world is to adjust to the higher yields and pace of projects, development and need for stable staking base.

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#5

I would also add that if you were to create a staking “yield curve” like that it makes sense to, at the same time, create a place where stakers could get out of their longer term stakes at a secondary market. The reason for that is that in a truly decentralized environment you want to have the market decide on the yield, not a centralized player.
On other words, there would need to have a decision on sizes of pools of staking for each term (ie 1,3,6,9,12 months), then an initial auction process where stakers would offer an amount of tokens for the slot of their interest at a yield they are satisfied. After that competitive auction goes through those tokens are tied up for the term commited, the only way to negotiate let’s say a 12 month stake to unstaked tokens would be through the secondary market.
Every month following the initial there will be a new auction of primary stakes in order to maintain the “yield curve” working.

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#6

That’s interesting stuff. I frankly don’t know much about yield curves or anything. It just sounded like a potentially workable idea in my head :joy:

I’m happy to hear it has some kind of grounding in reality at least. Thanks for adding your knowledge to the mix!

#7

Definitely an interesting idea!

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#8

I want Harmony to make validators easier obtainable. To be elected you need 5 million. Bring it down something more affordable (like 10k USD worth), that is much easier to obtain then 5 million tokens that is roughly about 500k USD. Start burning tokens to increase the price of Harmony. A lot of people are staking to produce a good quality income.