Staking Phase 4 - MIP-8

[mihaieremia]

Quoting this part:

Furthermore, in the current implementation it means those staking providers cannot accept more stake/delegation/reDelegateRewards

It feels like this part of SP4 will become like a gate keeper killing any chance in the future for the current delegators or even the owner of the SP to stake/reDelegateRewards in their own provider.

I think this is not an urgent requirement and has 0 value in the discussion considering the plan to limit the power to add new nodes.

Every user should be free to use whatever provider they want even if the provider APY is very low or very high…

Another part that I could not understand is how did the team come out with the requirement of max 50 nodes ? Is there a logic behind it that I don’t get it, why 50 and not 100 or 76 ?

My proposal here would be a max 2% of the total eligible nodes in our current setup set at 3200 nodes, applying 2% of this will come with a max node amount of 64 nodes. In the future when we will need to add more nodes because of the 2% value then all the providers will be able to add more nodes due to the increase of the network capacity. Please elaborate on the 50 nodes cap and maybe I get the team view better after cc: @Adrian might help

On a more personal note a feedback coming from a “larger” provider:

People should keep in mind “killing” big providers will also kill the power of those providers to reinvest their cut fees in building tools for the ecosystem, considering that for the past years we had 0 VCs/grants helping builders.

Things get better now, but we tend to forget the past and where the money were coming from, for sure not more than 3-4 providers did such things with their rewards but some did and brought a lot of value to the ecosystem in times where nothing was moving…

Not sure how many community people knows the following but will drop it here might make you think twice before “killing” the expansion of big providers…

For the past 2 years almost all the cut fees rewards generated by Trust Staking were spent in the favor of the ecosystem building XOXNO, sponsoring both xDays, sponsoring different events in Europe and Romania as BrandMinds 2022, NFT Bucharest, NFT Valencia, later one we acquired another provider that was closing up, it will help us generate more income for the platform. Rewards that we could just keep for ourself as others but we decided to reinvest, we might never recover them considering the limits added plus the inflation going down every year

[drmelone]

@mihaieremia

for sure not more than 3-4 providers did such things with their rewards but some did and brought a lot of value to the ecosystem in times where nothing was moving…

Yes. Absolutely.

We should work on solving solvency for the projects that depend on this in another way.
These projects deserve to be funded (e.g. XOXNO).

Other providers that have just been straight dumping EGLD rewards… no mercy for them haha.

@robert please tell us if major moves in this area are to be expected

[robert]

TopUp rewards are done using a curve and the best rewards you get if you are closer to the average topup of the validator nodes. Anything on top of it, receives less rewards, described with a linear function.

30 Nodes with 1500 topUp each earn more than 20 nodes with 10000 topUp each.

So everyone going for the average is the best for themselves and for the network as well.

[robert]

First, 50 nodes come as a compromise as validators said 32 is too small. 32 being the first number as 1% of 3200. When the demand increases, new shards will be launched, new validators will be added, so the 1%/2% will mean more nodes. So everyone have to grow the pie. We need to create a sort of vote in which these limits are chosen. Still open for feedback, always open to new ideas which grow the ecosystem.

I wrote about the limits of stake/delegation/reDelegateRewards, just to explain the details of the current code. Even though I implemented it, it is not an ideal solution. Organic growth, organic decentralization should be pursued and this is more about education, discussions then adding limits. I do like open markets, without barriers of entry and without barriers to grow. But somehow each person has to understand that it is better to decentralise than to grow ones pie, or it is better to grow the whole pie (meaning - investing in new dApps, creating new applications should be chosen instead of adding new nodes, after a “soft limit” is reached).

We do not want to kill big providers, that would be a stupid thing to do, we only want to increase decentralization as it is a must.

Actually, we are working on new proposals of how to reward those who build, from small builders, to staking providers and more. Idealistically speaking, every staking provider should do similarly to what TrustStaking/XOXNO does, participating in all kinds of blockchain events, joining staking panels, joining economics discussions everywhere, being active in communities and also building products. Thus creating and adding value.

So if you have ideas how to encourage these reinvestments, let’s have some chats.

[annia]

Hello! Many thanks for sharing this information!
Could you kindly provide clarification on a few aspects of Staking V4?

• In scenarios where SP has too low a top-up, is it necessary to deactivate certain nodes to achieve an average top-up? If so, would this result in non-rewarded rewards for these nodes?

• Could you provide further insights into the transition system from 800 validators to shards of 80?

Regarding this example when we select only 2 nodes instead of 3. Could you offer more details about how the selection process for existing nodes will occur and how the average top-up calculation will be determined?

@schimih

Example: Consider a scenario with a top-up (average) threshold of 1216 EGLD and two validators. The first validator has a single auction node with a top-up of 1222, exceeding the threshold and hence qualifying. The second participant owns three nodes in total—two in the auction and one active—with a collective top-up of 2555 EGLD. When considering all three nodes together, the average top-up per node is 851 EGLD, disqualifying them due to falling below the threshold. However, if we select only two of these nodes (one from the auction and the active one), the average top-up per node rises to 1277 EGLD, making both nodes eligible. In this example, first validator qualifies with one node and the second validator with two nodes.

Your detailed explanation would be highly valuable!

[annia]

Hi @robert ,
Could you please help with these questions? Thanks a lot!

[Adrian]

In scenarios where SP has too low a top-up, is it necessary to deactivate certain nodes to achieve an average top-up? If so, would this result in non-rewarded rewards for these nodes?

Only after a node is shuffled out and reaches the auction list.
Assuming it’s topup would not qualify it to be in the top 320 nodes selectable by the auction, and it cannot increase to such a level by the next start of epoch, then it would be good to deactivate it as the associated stake would then be distributed to the active nodes as topup and earn rewards.

Could you provide further insights into the transition system from 800 validators to shards of 80?

There is no such transition, it would be bad for the security of the network. The shards are still having 800 nodes, with the difference that while before staking phase 4 there were 400 eligible and 400 waiting, now there are 400 eligible, 320 waiting and 80 in the auction list selectable through the auction process at the new epoch, for each shard.

Regarding this example when we select only 2 nodes instead of 3. Could you offer more details about how the selection process for existing nodes will occur and how the average top-up calculation will be determined?

It basically means that the auction will try to consider several scenarios to select the best one for the staked nodes that are in the auction list.
Lets do an example, staking provider has k nodes, with x out of k in the auction list, and the rest (k-x) either eligible or in the waiting list (scheduled to be eligible)
The auction will basically do the following steps:

1. consider all nodes with their associated topup and evaluate how many (of the x nodes) qualify in the top 320 selectable, if so all nodes have enough topup and qualify to be selected.
2. If the nodes do not qualify in the top 320 nodes, it will try to distribute the associated topup to k-1 nodes and evaluate this scenario. Having the entire topup from k nodes distributed to k-1 nodes, will mean that out of x nodes in the auction it will consider only x-1 nodes in auction but with increased topup each, coming from the redistribution. If this will make the x-1 nodes qualify this is good so those x-1 will be selectable, and 1 still remain in the auction list. If it will not be enough to qualify the nodes it will repeat the step2 but this time considering k-2 nodes (so x-2 in auction list) and re-evaluate. One thing to note here, is that even though this will try to optimize the number of nodes entering the network through auction for each staking provider, there could be some things done by the staking provider to make this even better:
   a) if the staking provider sees that only y out x nodes in the auction list will qualify (y<x) he could unstake/unregister one of the keys in the auction. This will enable not only the topup for the unstaked node to be re-distributed to the other nodes, but also the base stake (2500 egld) which will improve the topup more for the remaining nodes.

[Adrian]

@mihaieremia

Furthermore, in the current implementation it means those staking providers cannot accept more stake/delegation/reDelegateRewards

It feels like this part of SP4 will become like a gate keeper killing any chance in the future for the current delegators or even the owner of the SP to stake/reDelegateRewards in their own provider.

I think this is not an urgent requirement and has 0 value in the discussion considering the plan to limit the power to add new nodes.

I have been against this part since the beginning for the same reasons, and the current proposal does not include limiting the stake, only the nodes. It is there as an option, it could be configured with a limit, but the current proposal does not include a limit.

[annia]

Hello, thanks for the answers! Could you clarify if, in the event of node deactivation, the stake and delegators associated with that node are transferred to another node? Additionally, will users of the deactivated node receive any rewards?

[Adrian]

Could you clarify if, in the event of node deactivation, the stake and delegators associated with that node are transferred to another node

Delegators are never associated with specific nodes, but with the staking provider, so no matter what keys are registered(staked) or deregistered/deactivated (unstaked) all users/delegators will get rewards, as long as there is at least one active node for the staking provider.

Also the stake for the unstaked node will be added to the topup for the rest of the staked nodes, this is why I mentioned that it will improve the chances for other nodes to be selected from the auction list, as those will have higher topup.

[davyegld]

On this, since there are surely lot of providers contributing but most doing nothing.

Wouldn’t it be better to heavily limit their revenue and so keeping the limits, maybe even lower to 1%. But having part of the fees redirected to a DAO system allocating those rewards to builders on the chain?

This way we’d be sure more funds are used for the growth of the chain, and less sold on the market. MultiversX validators compared to other chains are hugely in profit thanks to the high rewards and low expenses (see Solana validators for example).

[robert]

It will be harder to market the yield generated by staking/delegation.

We want every actor on the network to build more, some Staking providers do insanely lot. But it is hardly quantifiable on-chain. Also, some help in direct others in less than obvious ways.