Staking Phase 4 - MIP-8

I have a question that was not addressed in the proposal for Staking Phase 4.

@schimih @robert

Will the Foundation still remove all the remaining Foundation Nodes until Staking Phase 4 starts as it was once promised?

For me, this is one of the major selling points of Staking phase 4, besides the auction model.
In fact, for me this is the biggest selling point as it is the biggest booster in decentralization.

If this is no longer planned, which would kind of break a promise, I will rethink my choice for the upcoming governance vote on Staking Phase 4 / mainnet 1.7.

I almost agree with all points that skeak4all spoke.
BUT a larger SP doesn’t mean a larger APR per node, it means a larger space to grow and handle with top-up low limit.
BUT the top 20 SP cannot take 100% of the rewards, all of the 3200nodes will remain rewarded.

As you explained, The first point is that the big SPs will be favored in staking phase 4. They will more easily add nodes and maintain their APR and their top-up.

Could we envisage a deterrence increasing from the 2nd node to the xth staked by an SP ?

That could be a great incentive to decentralization and encourage bigs SPs to unstake some nodes.

The second point is the minimum amount of EGLD to become a SP. Let’s say 4000EGLD to be promoted from the auction list in phase 4. You can become a SP and put a node on the waiting list for 2500EGLD on phase 3.5

Could we allow SP with 1 node to be promoted from the auction list without the minimal top up requirement for a minimal period of time, let’s say 30 epochs ?

That could be a great support for very small SPs, allow them to increase their top up by users incoming during that period of time.

Long live MultiversX!

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actually not a bad idea, not sure if 30 epochs will suffice though
I would like to see a reworked version of your idea.
I like the idea, but I dont think it’s ready like this to be used in the proposal, need to adapt it somehow… hmm

@stew If we implement that schedule of slowly increasing the minimum required staked value per node we will essentially end up in the same situation, forcing small validators to either close their business or bring more EGLD to survive. The bad thing, in my opinion, is that the market won’t decide the correct price of a node but rather a limit that we will impose.
Since we are a staked-based system, do you find the current situation to be fair? One node with only 2500 EGLD and 0 top-up keeps the seat taken and because of this, no other entity can join even if that entity is willing to stake a lot more for the node. Start the auction only for companies having more than 50 nodes. Why? To protect the same small validators with the minimum staked and 0 top-up?

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Isn’t it right now: 400 active nodes, 400 in “waiting list” - so 800 per shard basically?

Right now it is 800 maximum per shard, 400 eligible, 400 waiting, but with staking phase 4 the waiting list decreases to 320 per shard, in order to keep the same waiting time after shuffling out for the qualifying nodes (selected in auction depending on topup), but each shard also enables the selection of 80 more nodes from the auction list in every epoch. So it is basically be the same as having 800, just wanted to point out the differences.

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So the auction will be for all nodes waiting and we’ll not have a differentiation between nodes in queue and waiting.

Indeed all the waiting nodes go through auction first, in batches, so 320 nodes per epoch enter the 4 shards waiting lists (80 per shard), but once they entered the waiting lists, they will remain just like now in the waiting list and then reach the eligible lists, validate blocks and vote in consensus while eligible, then when they are shuffled out will go again through the auction.

there is no difference between nodes in auction where the owner is a staking providers contract or the owner is a wallet (direct staked) as I mentioned before.

So for example we’ll have 400 nodes validating per shard, and others that can enter. So we’ll remove the 3200 nodes limit?

Others can enter yes based on topup, so the system is more opened in this sense, and in the auction list can be as many nodes, the only limitation is the egld supply. Technically the limit is still 3200 nodes, just that there can be 320 nodes replaced by others with higher topup upon shuffling out in each epoch.

Will the Foundation still remove all the remaining Foundation Nodes until Staking Phase 4 starts as it was once promised?

from what I remember it was discussed that after staking phase 4 the foundation will gradually remove the foundation nodes, I don’t remember any promise that this will be done before staking phase 4 happens.

There will be no more queue. The number of eligible nodes to actually validate and create blocks will not change. What is changing is the selection from the unlimited auction list to the waiting list. Once a node gets into the waiting list, it is 100% it will become eligible as well after a few epochs. From eligible you are shuffle out after a few day to the auction list. And this goes on forever.

Thanks for the feedback @steak4all

Staking Phase 4 will drive towards an open market and more decentralization. With the current setup it is always a problem of growing nodes, as nodes stay in the additional queue almost forever, until someone leave (that someone in general are nodes from the MultiversX foundation).

SP4 will introduce the limit of 50 nodes per staking provider. Thus anyone over it cannot add more nodes. Furthermore, in the current implementation it means those staking providers cannot accept more stake/delegation/reDelegateRewards. This will lead on users to move their newly acquired stake to new/lower cap staking providers, which is actually the good scenario for a healthy ecosystem.

Going further, if you have a lot of nodes, keeping a high topUp per Node is quite hard. Smaller entities can keep those better. Also, open market will make staking providers to come up with new ideas for their communities: maybe some nice art and NFTs, or small events, free education, etc.

The auction is happening only on the auction list to select the next nodes towards the waiting list, this happens at every epoch change. Your node is selected if it is in the top 320 nodes per topUp from the auction list, the other 2880 nodes were already selected and are working as eligible/waiting. The scenario you explained would only happen if the top 20 operators (without the 50 nodes per stake limit explained above) would acquire higher topup for all their 3200 nodes, which is quite an impossible feat.

Responding to the points:

  1. There is no monopoly over staking rewards, as rewards will remain the same, it would be monopoly only if those providers grow to have all the 3200 nodes. The providers will take the necessary steps in order to drive the ecosystem to more decentralization, starting with the MultiversX Community Delegation, who will show the way by reducing the number of nodes.

  2. Small providers will be helped by aforementioned changes, as the delegations from providers like MultiversX community delegation will go towards them.

  3. Network security is ensure by opening up the market to new entries and for all existing small entries to freely grow.

Replying to @dam007 as well

Current small staking providers still have a few months (SP4 is planned for early March if all testing, discussions, governance go well) in order to gather the necessary topUp, this is more >30 epochs. Also, as we are speaking about SP4 since at least 1 year, the time to accumulate more stake was possible.

After SP4, new staking providers can attract more delegations by creating interesting incentives for their communities, or joining a liquid staking protocol, or building their own versions for it. Farm/DeFi rewards can be put out in order to incentivise user to join a staking provider for a time being, in order to increase the APR.

But with a limitations described in previous post, no new delegations for bigger entities, all what is comming from claimRewards and new bought eGLD will go to smaller entities. If we check the code of liquid staking from Hatom, they have a priority system which selects the staking providers in such a way that all SPs from their ecosystem to grow. (smaller ones to grow faster).

As the number of new providers will grow / as the number of smaller staking providers is growing, the number of nodes from the MultiversX Community Delegation will decrease. The decrease will happen faster if we have more and more professional services as staking providers.

I understand your point of view for the small staking providers already in the network. But after SP4 it will need a lot more work for a new SP to enter the validation. I’m not a fan of that proposal.

For the bigger entities, the limitation of 50 nodes is good for decentralization and as you said the new bought EGLD and the claimRewards will go to the smaller ones. But those have already more than 50nodes will probably not leave what they have, you should think about an incentive to help them to unstake the 50+ nodes from the network little by little. Which you don’t in the current proposal.

Staking Phase 4.0 represents a significant leap forward for the MultiversX Network, and there are two critical points from the article that deserve special attention:

  1. Fairness in Reward Distribution: In simple words, the current network state is that validator nodes that have secured a slot since genesis are earning APRs up to 10% where newer delegators that are joining the network are able to earn 6-8% APRs. The introduction of the Soft Auction Mechanism is a game-changer for the network. It’s commendable how this mechanism aims to dynamically select nodes from the auction list based on top-up values, ensuring that all validators, big and small, have a fair shot at participating in the network. By allowing validators to bid for positions and adjusting the top-up threshold, the network not only promotes fairness but also encourages diverse participation, ultimately contributing to a more decentralized and balanced ecosystem. This mechanism aligns with the core principles of blockchain technology and promotes inclusivity in network security and consensus.

  2. Increased Decentralization: the proposed measures to limit provider dominance are a significant step in the right direction. By setting a cap on the number of nodes a staking provider can have, the network takes a proactive stance in preventing excessive concentration of power. This not only ensures a level playing field for smaller providers but also safeguards the network against potential malicious activities. The emphasis on maintaining a healthy, decentralized ecosystem reflects a commitment to the long-term security and stability of the network.

By having both models in place from above, the protocol has a minimal framework in place where further foundation nodes could be removed in favor for a fair distribution model for both small validators and new delegators, averaging the opportunities in a fair and more robust model.

On top of the protocol implementation, a more in-depth execution plan should follow on all products that offer staking services provide delegation services, which should favor the delegation for the users supporting both decentralization and fairness distribution model, considering the Nakamoto Coefficient.

As a final note, any staking provider duties should be on top of the model, which should be active looking to provide value to the protocol, resulting in mode educated delegators willing to support their activities. This has been the default model on most of PoS Network where SP services that started small have turned out into industry leaders and driving innovation.

I believe that if we manage to create a community aware of activities offered by staking providers, more smart delegations will follow that path surely, especially for the smaller ones that are willing to put in the hard work. The right way of seeing this is “I build, therefore I exist”.


What You guys from MVX don’t understand is that the users , as delegators will leave the ecosystem once the APR will go down, which will be after staking V4, even you sustain decentralization, we all see that is not like this, Is some greed feed of the big players. What can i say: big congrats.
Meanwhile other ecosystem , was building a phone, which paraphs in the future it will be used as small validator, gave the blockchain a utility and regain the thrust of the users. Yes i am talking about solana.
With staking V4 you will collapse APR, i hope you will realize this as is not too late.
Now we see what whales do with prices of EGLD, give them more power, and you will do the same mistake as LKMEX.
Just my 2 cents.
PS: once the APR will be under 6 % , personally i will sell all my Egld and look for another ecosystem with more competitive APR

Are you aware of what sustainability means?
Other blockchains and ecosystem may offer a higher APR.
But that ultimately comes with extremely high inflation as well.
EGLD tokenomics, which are designed to be eventually fully replaced by transaction fees of the chain have nothing to do with staking phase 4.

Even without staking phase 4, the APR will eventually drop below 6%.
It’s also possible it will go above 6% again, once the chain starts taking off, but where and how is this connected to staking phase 4?
May the APR go down after staking phase 4 starts? Maybe so, yes.

Lower inflation (talking about EGLD tokenomics here) also means less new EGLD being generated that could hit the market and create sell pressure (= higher price).

Okay so you just indirectly admitted you are not here for the ecosystem or for the tech.
Are you even a validator?
This sentence implies (and you know it) you are only here for the money.
If EGLD APR falls, I will sell and leave. This is what you wrote. No other way to put it.

So you would have sold and left either way next year, when we will have entered the next year of the EGLD tokenomics, is that correct?
I assume it is, because APR will go down.
So this proofs your comment really is about the money only and not about staking phase 4.

Again, how in the world is this related to Staking Phase 4? Please explain yourself.
This is entirely out of context.
Besides, I hope you have seen that their phone was an entire flop with no sales whatsoever and even phone-youtubers like MKBHD picked it up and called it a very bad phone, for a way too high price and no reason to exist.
So how is this even worth a mention when it is not even remotely remarkable.
You are aware MultiversX has a partnership with Samsung? I hope so.

Finally, please think about what you just wrote.
“the phone may be used as a validator”.
This kind of proofs you have no clue about technology and I am starting to suspect you really are not a validator at all.
Do you even know the Solana Validator Hardware Requirements?
They require 64 CPU cores, 250gb+ memory, multiple terabytes of SSD storage, a high end graphics card and a 10gbit/s network connection.

How should a phone run the Solana network.
Please elaborate.

“gave the blockchain utility”
How? All you can do in the phone, you already could do with any average phone and any Solana wallet. There is no new utility given to the blockchain.

“regain trust of the users”
How does launching a totally overpriced and bad phone (hardware, software, update support) that everyone agreed on was a fail, regain trust of the users?

How can you make such a general statement without providing proof or even remotely any good arguments? The EGLD tokenomics went on and on, and APR decreased as planned, yet the total % EGLD staked kept going up and up over the years.

Other blockchains with WAY less APR than MultiversX, like Cardano, still exist, are in the top 10 or somewhere around that ballpark and people gladly stake their ADA. Why? Because they don’t do it necessarily for the “significant” APR but because they like

Cardano, they like the tech, they hope/know ADA will increase in price.
ADA is the living proof that people will stake even if APR is lower.
Cardano has 65% of circulating supply staked. We have 66%.
How can you say that people will leave if APR drops, when clearly for other ecosystems it is not the case?

Need I remind you again, less APR (tokenomics related) also means less sell pressure and higher price?

Heck, look at Ethereum with 3-4% APR at best.
And yet their stake keeps going up.
And don’t say “but they have little ETH staked” - their Staking ecosystem is extremely young and staking may also not be very profitable there due to high transaction fees, unlike on MultiversX where transactions are almost free.

How, what, in what sense, where and why would MultiversX repeat LKMEX issues with staking phase 4 or the APR going down as planned? How can you even put a comparison here? What is your point? You have failed to even name a single “mistake” they could repeat “as with LKMEX”.

Your entire comment does not include proof, any arguments or is even related to Staking Phase 4.


Quite a lot to take in so some straight to the point questions while I wrap my head around this.

  1. Will the change cause the reward APYs to drop or lead to scrambles by delegators unstaking in order to move to alternative SPs searching for best yield? (not related to annual inflation drops)

  2. Will this kill off all the small validators with just 1 node currently staking 2500 egld or slightly more?

  3. For smaller SPs, does the top up measurement mean it will lead to fewer nodes to make the average better and so actually discourage deploying more nodes? For example if one has 5,000 egld, it would be better to only have one node rather than two to hope for selection.

  4. What happens to all the hundreds of nodes over the 50 node cap which are run by the large SP’s and how does that affect the current delegated egld, plus reward distribution to both themselves and delegators?

  5. With the introduction of multikey, this presumably allows SPs to run far lower number of virtual machines and so reducing their hosting costs significantly. Should we expect Service fees to lower in light of this?

  6. With the Auction mechanism driving the selection of nodes to the active queue, will there be a way of knowing how much top up is required to improve selection chances?

  7. Will the changes possibly require delegators to distibute staked egld across multiple SPs rather than say one they trust, in order to maintain the current APR they receive?

I think, for some validators it will, but not for all. Many already have high Topups and the APRs for them will not change

Yes, unless they stake more or open up their node for delegation from everyone

They will simply need more EGLD topup to have 2 nodes in the active state.
Or, well, to be fair, as it looks like right now they will need more EGLD topup.
The entire staking phase 4 is about creating an open market that will dynamically decide how much topup is needed.

They cannot become active, cannot participate in consensus anymore if this proposal passes as is.

An estimation is posted in the proposal, but the actual required topup will be dynamic and the open market will decide how much is needed

I think, with staking phase 4 all providers will have similar APRs.
If you want to not struggle with distributing your EGLD among multiple providers, consider using liquid staking that does it for you (in this case Hatom or JewelSwap).

I couldn’t answer one of your question because I have too little confidence in answering it correctly.
I hope this helps.

Currently the more top-up the more rewards.

Maybe the solution would be to remove rewards going to top-ups and being distributed only to base stake.

This way:

  • Validators need to keep their top-ups in line with the average to be eligible
  • if they go down the average they earn nothing so they’d better keep more top-ups
  • Bigger staking agencies would still be limited by the 50 nodes limit (I’d lower it to 1%/32 nodes progressively)

This way a small node operator could run a node without being less attractive than bigger staking agencies with more top-ups.

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On number 3, I think in that case this can needs to happen:

  1. Give some buffer time
  2. Open a staking agency
  3. Receive higher rewards than others cause of lower top-ups.

But in order for this to happen, we need to delete imo rewards for top-ups.

If there are 100 EGLD to be distributed towards 100 nodes, the ones with more egld staked would get less rewards/per egld.

This way you encourage users to stake with these smaller agencies.

Ok so we can have way more nodes with this system.

And only the nodes with more top-ups would keep staying in.

Will we remove the top-up rewards? Otherwise I’m worried users would stake with the highest APRs that are the ones with more top-ups, so probably bigger agencies.

More difficult for small staking providers to have lot of top-ups. If we remove the top-up rewards, users will stake with the ones with less top-ups and so helping smaller SP.

Good idea to remove topup apr (and redirect to base apr).

I like it.

Great idea.

Implement it pls sers