[Proposal] Increase Anchor protocol revenue and promote decentralization

TL;DR

By whitelisting all validators to Anchor with 10% commissions or less we can reduce Anchor’s average protocol costs from 8.69% to 6.94% (roughly $6.2M UST savings/year)*

*Protocol savings will dynamically increase with the price of LUNA.

AND

Making the whitelist parameters more inclusive will also Increase the number of Anchor validators from 16 to 123 dramatically increasing decentralization.

Background

Since Anchor’s inception Lido has acted as the gate keeper to allow new validators to support the Anchor Protocol. Lido says in the Anchor documentation:

“The bLuna/stLuna contracts keeps a whitelist of validators, only permitting delegations to those included in the whitelist. This is crucial since all bLuna/stLuna tokens equally share slashing risks, and delegations to low-performing validators could negatively affect all holders.”

When Anchor launched, the Terra validator set was not full (there were under 130 validators) and many validators had issues maintaining up time and completing network upgrades. The state of the Terra network has evolved dramatically as the network has grown and validator competition has increased. Today the Terra validator set is full, and most validators do an outstanding job by most metrics including up time.

Since the Terra network and Anchor have both substantially matured over the last year, we believe having a centralized gate keeper to Anchor validators is no longer optimal for the community or Anchor protocol.

Since the inception of Anchor, Lido has only increased the Anchor validator set once (in July of last year)

The complete list of Anchor validators and their commissions is below:

Name Address Commission
Staking Fund terravaloper123gn6j23lmexu0qx5qhmgxgunmjcqsx8gmsyse 10%
B-Harvest terravaloper15zcjduavxc5mkp8qcqs9eyhwlqwdlrzy6jln3m 5%
DokiaCapital terravaloper1v5hrqlv8dqgzvy0pwzqzg0gxy899rm4kdur03x 5%
Certus One terravaloper1kprce6kc08a6l03gzzh99hfpazfjeczfpzkkau 10%
StakeWith .Us terravaloper1c9ye54e3pzwm3e0zpdlel6pnavrj9qqvq89r3r 10%
P2P. ORG - P2P Validator terravaloper144l7c3uph5a7h62xd8u5et3rqvj3dqtvvka2fu 8%
blockscape terravaloper1542ek7muegmm806akl0lam5vlqlph7spflfcun 10%
syncnode terravaloper1sym8gyehrdsm03vdc44rg9sflg8zeuqwfzavhx 10%
01node terravaloper1khfcg09plqw84jxy5e7fj6ag4s2r9wqsgm7k94 8%
Chorus One terravaloper15urq2dtp9qce4fyc85m6upwm9xul30496sgk37 8%
Smart Stake terravaloper1alpf6snw2d76kkwjv3dp4l7pcl6cn9uyt0tcj9 5%
Stakin terravaloper1nwrksgv2vuadma8ygs8rhwffu2ygk4j24w2mku 10%
DSRV - CHAISCAN .com terravaloper175hhkyxmkp8hf2zrzka7cnn7lk6mudtv4uuu64 10%
everstakeone terravaloper13g7z3qq6f00qww3u4mpcs3xw5jhqwraswraapc 10%
Forbole terravaloper1jkqr2vfg4krfd4zwmsf7elfj07cjuzss30ux8g 10%
Figment terravaloper15cupwhpnxhgylxa8n4ufyvux05xu864jcv0tsw 10%
Average 8.69%

The highest commission of any Anchor validator is 10% and the average commission of Anchor validators is 8.69%. This commission is an expense reducing Anchor protocol revenue.

Proposal for Improvement

  • We believe it is time to expand the Anchor validator set to include all validators with a 10% commission or lower.
  • By using 10% as the commission threshold, we can ensure no existing faithful Anchor validators who have been doing a great job are removed from the Anchor set.
  • There are a total of 123 validators which would qualify by this criterion (an increase of 107 validators – huge win for decentralization)
  • The average commission of the 123 qualifying validators is 6.94% (representing a 1.74% reduction from the current average).
  • In addition to increasing decentralization, this proposal will result in $6.2M UST savings per year for Anchor Protocol. This savings will increase as the price of Luna increases and as Terra protocol revenue increases. (Huge win for $ANC holders)

List of validators which would become whitelisted if passed:

Name Commission
Orion.Money 5%
Staking Fund 10%
B-Harvest 5%
DokiaCapital 5%
Certus One 10%
hashed 10%
NOD Games 0%
Staked 10%
DSRV - CHAISCAN .com 10%
Mosaic 3%
Terran One 3%
DELIGHT 10%
Aardvark 4%
stake.systems 2%
everstakeone 10%
Smart Stake 5%
Bison Trails 10%
Figment 10%
StakeWith .Us 10%
Centauri Alpha 4%
Talis Protocol 1%
BinanceStaking 9%
Luna Station 88 3%
Galactic Lounge :tumbler_glass: :cocktail: :tropical_drink: 0%
Terra Bites 3%
Accomplice Blockchain 0%
BridgeTower 9%
ISS 4%
InfStones 8%
P2P .ORG - P2P Validator 8%
Stakin 10%
Chorus One 8%
Arrington XRP Capital 10%
Blockdaemon 10%
Mr.K(From February 01, 2022, the commission will increase to 5%) 1%
Neptune Finance 5%
Forbole 10%
Allnodes :zap: 0% fee 0%
Rockaway Blockchain Fund 6%
Marte Cloud 5%
syncnode 10%
01node 8%
THORchain.BULL & 0xVentures .org 0%
blockscape 10%
GT Capital 5%
Orbital Command 4%
Galactic Punks Validator 5%
Terra World 5%
CoinBevy 3%
moonshot 5%
MissionControl 5%
lunarcitizens .io 5%
Luna Rewards 10%
Easy 2 Stake 8%
ChainLayer 10%
Staker Space 10%
Top Shelf 10%
Inotel 10%
Uranus 10%
Un Fuego 10%
MCF 8%
Craig 10%
healings 10%
RockX 9%
block42 10%
Interdimensional Cable 10%
8moon 10%
Legend.X 10%
Sarah Kerrigan 10%
Leviathan 10%
TerraDactyl 10%
Nexus Event 10%
StakeSabai 8%
wave 10%
MANTRA DAO 2%
Stakely .io 5%
BTC.Secure 10%
KK Validator == gp airdrop == 10%
kytzu 10%
BlockStake.xyz 10%
AUDIT.one 7%
WeStaking 2%
ATEAM 10%
Autism Staking :jigsaw: 10%
CAPAPULT 5%
Crypto Plant 10%
TERRA-FIRMA 10%
Stake n’ Shake 10%
Heavy Metal Finland 7%
Terra-India 9%
NITAWA 10%
Terran Stakers 10%
0base.vc 10%
AuraStake 10%
BlockNgine :shield: Slash Protected 2%
Cosmic Validator 10%
Chaos Protocol 10%
SolidStake 5%
Synergy Nodes - Glory 5%
MoonDog 10%
OneStar 5%
setten .io 3%
PFC 5%
Nodeasy 10%
GalaxyDigital 5%
:full_moon::fire: Luna Burner :rocket: 0%
Zerg One 3%
Stake5 Labs 5%
Protoss One 3%
DACM 5%
SCB 10X 1%
Pantera Capital 10%
Hypersphere Digital 10%
LunaOrbit 5%
:money_mouth_face: uGaenn :partly_sunny: 1%
FreshLUNA. com Enterprise Validator 9%
:white_check_mark: CryptoCrew Validators #IBCgang 5%
ChainofSecrets 1%
Huobi 10%
Staky .io 8%
SCV 5%
coinhall .org 5%
Bi23 Labs 10%
Average 6.94%

We also hope other Terra protocols which rely on staking such as Stader and Prism will take these statistics into consideration for how they too could improve their product offering and promote decentralization.

9 Likes

We need to also a filter on Uptime > 99% to avoid slashing impacts imho.

8 Likes

We need to also a filter on Uptime > 99% to avoid slashing impacts imho.

Just have to be careful how this is measured.
Current tools use epochs. Which means a validator could have 2/100 blocks after an epoch reset and be tossed out.
A slashing epoch is 10,000 blocks. So, 2/10,000 would be fine.
(IE just make sure this is rolling, not by epoch.)

The slashing paramaters can be found here for anyone interested.

Current param query returns:

{
  "params": {
    "signed_blocks_window": "10000",
    "min_signed_per_window": "0.050000000000000000",
    "downtime_jail_duration": "600s",
    "slash_fraction_double_sign": "0.050000000000000000",
    "slash_fraction_downtime": "0.000100000000000000"
  }
}

This means that a validator is jailed well before a slashing window occurs. The validator would have to be negligent to be slashed. Since the system will automatically jail them first for inactivity. They would then have to unjail themselves via the Command Line Interface, and continue to miss blocks after unjailing.
I don’t know of any validator that has been slashed for downtime on mainnet before. Interested to know if anyone can prove or disprove this with an on chain query.

Double signing results in a harsher, and immediate punishment.

5 Likes

Generally uptime is measured per epoch. Because the metric resets every 10K blocks it would be hard to use as criteria. However, there also isn’t a one for one correlation between uptime and slashing. That is to say just because uptime drops below 100% does not mean the validator will be slashed. So this risk is largely mitigated.

Even existing Anchor validators have had imperfect uptime from time to time, but have overall performed well.

If additional quality metrics are added we would be interested to see how existing Anchor validators have done against those metrics historically. How is the current system quality controlled?

Exciting proposal - as far as my understanding goes, it appears to be a brilliant idea that could increase the decentralisation and resilliance of Anchor.

I wonder if it would have merit to add some more criteria for Validators that are to be included, to incentivise best practice? - like with TDP, maybe the criteria of securing the testnet/running testnet node would be valuable?

I am happy to be corrected on any of these points

2 Likes

We are suggesting making Anchor as inclusive as possible to start to:

  1. Make it easy to manage (is commission > 10% could be programatic once it is set)

  2. Ensure all existing Anchor validators remain in the set.

In the long run you are absolutely right. Any mechanism available to the community to encourage validator quality and contribution should be explored.

2 Likes

I love the idea but is it within our powers? As far as I’m aware Lido is a provider, so should be within their own governance to vote validators in, or am I wrong here?

I say this because if/when LunaX becomes a possibility for collateral (assuming after v2) they would have their own list which is also pretty short right now imo.

1 Like

Supportive of this proposal.

Do you think the same stake distribution algorithm makes sense with the expanded set of validators?

1 Like

bLUNA was launched as a component of Anchor protocol.

LunaX will need to be whitelisted to Anchor through Anchor governance.

To your point, there is now competition. With the monopoly ending we would hope service providers act in the best interest/will of the community and governance proposals instead of selfish interests.

This would dramatically improve Terra network decentralization and Anchor protocol revenue. However, it would also probably be a very hard pill for Lido to swallow.

It is more important for the bLUNA validator set to be more inclusive than it is to force Lido to sacrifice so much revenue.

Unfortunately, the optimal community outcome and reasonable service provider expectations are not aligned. This proposal does not aim to force Lido to make a decision one way or the other on redistribution of existing delegations.

1 Like

Finaly
Anchor validators from 16 to 123 dramatically increasing decentralization
6.2M UST savings/year , yes
Say no more
i 100% in

1 Like

Hey everyone!

From our perspective at Lido, we would like to respond to the proposal and clarify things a bit.

A very important thing to mention is that Anchor governance does not have power over Lido assets. Obviously, while Anchor has power over listing and delisting of assets and is the overwhelmingly largest user of bLuna, we pay attention. That means that the outcome of the vote would be taken into account and appropriately responded to.

The best place to have a discussion about the Lido validator set are Lido community hubs: forum and Discord server.

Still, we hear Anchor community sentiment loud and clear and will accelerate our stake decentralization plans. We are sorry to delay it for so long; it’s not out of malice but just out of the sheer amount of work we had to pour into recent upgrades (stLuna and moving bETH on Wormhole).

With regards to improving the decentralization of our operator set, we have already set in motion plans for an additional, large, onboarding round, as well as stake flattening across the Lido validator set. The deadlines are:

  1. Stake flattening start time is Feb, 14, duration — 2 months. The proposal is on the forum.
  2. Expanding the validators set is going to be started next week. It takes 3 weeks for the open application and evaluation procedure and 1 week for onboarding governance and operational tasks.

Still, the onboarding round can’t be as large as that proposed by this vote. The reason here is that Lido aims to have the best validator set for bLuna and Anchor, and the best validator set can’t consist of all the validators with low fees.

From a governance perspective, we wanted to add that Lido is also using internal alerting to push whitelisted validators to participate in Terra governance. Please note that Lido does not take a position on votes themselves, and validators are expected to perform their own governance assessment and due diligence regarding voting; simply stated, for validators operating within Lido the expectation is that votes must be participated in.

Currently, Lido is also working on the below and a few more things to improve the staking experience on Terra:

  1. Airdrop handling — the way to bring airdrops to the users. Not only the new ones but the historical ones also.
  2. Best liquidity pools on Astroport with no IL or loss of rewards while you provide your liquidity to staking assets.

From all the points above I would say that one of the main improvement points for Lido is increasing transparency and community engagement. Also, if anyone thinks that they could help as here as a Lido on Terra community manager — we’re happy to collaborate!

8 Likes

Thank you for your follow up!

@atebite indeed , for sure

nobody is lurking here