Community Statement from Professional Dotsama Infrastructure Providers on Kusama Referendum 35

We represent a collective group of individuals and organizations that have been building the core infrastructure of the Polkadot ecosystem for several years. We share the vision of a decentralized future in which multiple providers serve the core requirements of Polkadot, Kusama, parachains, and their respective test networks. While we each approach network design, deployment, and operations differently, we seek to apply a consistently high level of service, security, accountability, and shared economic risk.

We support the decentralization concepts that the Infrastructure Builders Program (the "IBP") seeks to achieve – and hold several of the initially-earmarked award recipients in high regard for their exhaustive efforts building throughout the community. Thus, to not stifle the IBP's innovative concepts nor use our incumbent positions to affect the outcome of community governance, we have refrained from directly expressing our concerns until now. With the IBP referendum approved by governance and its implementation now being turned over to treasury curators, we collectively seek to highlight several important areas for focus and further discussion:

• Open Eligibility
  Establishing clear criteria for community participation in the ongoing elements of the program is essential. All existing and new providers who meet the required milestone criteria should be eligible for participation and we agree it is not acceptable to pay providers twice for the same service. However, those who build necessary infrastructure without treasury reimbursement of their capital costs should not be at a participation disadvantage compared to those receiving large one-time payments.
• Shared Economic Risk
  Through a series of "bonuses," the proposal effectively eliminates much or all of the shared financial risk between the treasury and milestone payment recipients. While we support the notion of a level of economic support for initial bootstraps from small participants, we don't believe it is appropriate for the treasury to provide 100% of required capital expenditure funding support to for-profit enterprises. On the other hand, our organizations have incurred hundreds of thousands (collectively millions) of $USD capital costs in advance. Recoupment of these costs requires successful maintenance of service levels and governance approvals for many years to recover these costs fully, much less to obtain profit. The IBP bonus structure allows participants to receive immediate reimbursement (even substantially more than 100% reimbursement for equipment costs/value by repurposing existing equipment) for these costs, regardless of the equipment's useful life, etc. Notably, the equipment/services that form the basis for the bonus can be redeployed (or even sold) without recourse or reimbursement to the treasury. Therefore, it is critical to create mechanics to protect the treasury from this early capital imbalance risk.
• Protection of the Thousand Validator Program
  Earmarked bounty recipients will be eligible to receive substantial incremental 1KV points. The cumulative effect of these incremental points could prevent other non-IBP-subsidized 1KV validators from becoming members of the active set. The aggregate economic impact of the series of milestone awards and the preclusion of new entrants into the active set could be economically unfair and present a significant risk for decentralization. ALL validators meeting the required criteria should receive the benefits of enhanced 1KV awards, not only those who have received a treasury subsidy under the IBP. Adjusting the 1KV program to mitigate any negative impact on non-IBP participating 1KV validators is simply fair.
• Decentralization
  While technical elements of the IBP implementation are beyond the scope of this open letter, we note that there are several concerning centralization aspects of the IBP: economic centralization (via the subsidies and enhanced 1KV points), technical centralization (e.g., all "decentralized" nodes running thru a single DNS) and validator community centralization (the division into the "haves" and "have nots" of the capital cost subsidy). Each of these should be subject to continuous review and discussion by the community and curators.

We very much want to support the types of initiatives represented by the IBP that can help smaller operators obtain the experience and capital support to begin their journey to provide enterprise-grade infrastructure support for the Polkadot ecosystem. We also believe, however, that it is critically important to:

1. ensure an open system,
2. maintain the highest service delivery and security standards,
3. protect the integrity of the 1KV program, and
4. strike a reasonable balance of risk/reward at each step of the IBP process.

We look forward to continuing the dialogue on these critical topics that impact our ecosystem's base layer infrastructure and the maintenance of a healthy treasury.


– Dwellir | LuckyFriday | OnFinality | RadiumBlock

Dated: February 1, 2023