I’ve been digging through the forum posts reviewing all the different suggestions for how to encourage more decentralization of validators. I have an idea that keeps returning to my mind that I haven’t seen addressed anywhere. I’m new to the scene here, tho, so if this has been discussed please let me know where that conversation is so that I can dig in and see what people have already said.
I don’t know how technically complicated it would be, but so far in my research I haven’t come up with any major downsides to this idea. I’m anxious to hear what critiques others may have on the proposal.
Could we dynamically limit the minimum bid to be no less than -15% of the median stake for all validators with multiple keys? I feel like this addresses several issues without adding unnecessary oversight or management:
It alleviates larger validators taking up excessive amounts of keys without going down the retroactive key/delegator cap road (which doesn’t seem to be getting any traction on the posts I’ve seen about it). It doesn’t prevent larger validators from getting multiple keys, but it helps a little bit by keeping them in the median stake range. Small steps forward.
It frees up the lower bounds from the intense competition that it has become. Established validators have no reason to be farming the lower bounds; all it does is prevent new validators from having a chance to get a foothold.
It doesn’t prevent any size validator from being able to stay in the sweet spot for max return on rewards.
It allows larger validators who are willing to contribute more to the community to intentionally drop keys without the risk of other large validators swooping in to pick them up before smaller validators get a chance. It doesn’t completely remove the risk of larger validators sniping these keys, but again, it helps alleviate the problem to a significant degree.
The only downside to this is the complication of the moving target. Median stake is constantly fluctuating, and bids could get pushed below the limit unintentionally. How do we handle that situation? A 1-epoch grace period to adjust your bid? Auto-adjustment? From a technical standpoint, I can see that this isn’t a simple solution to implement. But I keep finding myself wishing there was a way to free up the lower bounds to be the “validator incubator” that I feel it was intended to be, while keeping established validators up in the median stake range where they were always meant to be. This won’t free up a ton of keys, but I think it would free up maybe 5-10 keys, which would be a huge step forward for a lot of smaller validators. Maybe instead of a dynamic limit, it’s a set limit that is agreed upon via governance, and can be changed as the bidding environment changes. Ideas? Thoughts? Concerns? Share with me.