Proposal: Validator Slots Increase

Why not add a feature to proportionally lower the validator fees depending on delegators stake amounts? But constraint the ability to change them.
So that all validators have same fees and delegators choose nodes by uptime and rewards.

Adding my 2 cents here @nickw …

Don’t just increase slots, couple it with limiting slots-per-validator
I think we should increase the slots only if it’s coupled with limiting the number of slots-per-validator. The current 106 slot limit per Validator is really very high, something around 48 slots might make better sense. Once validators hit that ceiling, it’s much harder for the validator to convince / communicate to delegators to move to another one of their Validators (losing 1 epoch’s worth of rewards is a friction)

Hypothesis

This will still encourage newcomers while introducing a hard ceiling on highly staked validators, discouraging centralization / concentration of delegations with any validator

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Side effects of extendings slots and limiting slots-per-validator
On the flip side, the Validator’s profitability will be in jeopardy – Harmony $ONE prices are still depressed – as a result would not incentivize Validators to add redundancies in their infrastructure – giving up on dual nodes and losing out on signing blocks on time.

Hypothesis

Validators will begin cutting costs by running less redundant services which could risk lowering the security profile of the chain

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What would Validators do when they hit the limit?
When the total-slots increase alongside reduced slots-per-validator limits are imposed, the next lever that Validators can use to remain sustainable is by increasing commission rates. This may be a good thing. Validators should avoid advertising about racing to the bottom with commissions. Look at what the airlines did in the 1990s by competing on price when low cost airlines came in, they started making really slim margins (but yes they became more innovative) and it remained low until today, benefiting consumers, but when a worldwide pandemic hits, they don’t have much cushion to play with, and many airlines will not make it. We don’t want this to happen to Validators reducing commissions and have everyone exit when the next crypto winter hits.

Hypothesis

Validators will increase to commission rates to 8% - 15% as seen in other chains. Mature Validators will increase commissions advertising on their experience and resiliency, while newcomers will compete initially on a lower rate to gain momentum before they realize the economics and start increasing commissions as well. This keeps the community vibrant and not “closed” to just the top guys.

Open to feedback

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Glad to see Animoca brands as a new validator, time for them to move their Sandbox token to HRC-20 on Harmony?

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Is there a straight-forward answer on whether doubling the amount of slots will reduce the APR by half? Because that seems to be the case. If so, that means by the time we reach 1000 external nodes, the APR will be extremely low, perhaps even as low at ~4% which just prices us out of the PoS market entirely. Competitors offer much higher returns with more decentralization.

Can someone clarify? Because on paper, that doesn’t look so good.