Short description: This proposal seeks to adjust validator minimum commission rate from 3% to 10%
Project Category / Type: Infrastructure
Discussion date: 23.11.2022. https://kusama.polkassembly.io/post/1993
Onchain publish date: 26.01.2023.
Governance referenda origin call: staking_admin
Context
This proposal seeks to adjust the validator minimum commission rate and keeps all other staking configurations unchanged. In the current market (last several months) validator income from the minimum commission can cover less than 50% of the server rent costs. In order to maintain a sustainable environment and prevent the network degradation I am passing this proposal to onchain voting.
Problem
There were several topics regarding to the validator infrastructure expenses and operational costs that can be found here:
https://kusama.polkassembly.io/post/1980
https://kusama.polkassembly.io/post/1306
A fully active validator operating at 3% commission can stand to earn:
(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month.
With KSM priced at 34$ this equates to ~97.92 USD/month.
Proposal
The proposed increase of minimum commission to 10% is trying to create a better and more sustainable network environment. With the numbers given above it is clear this is a small step towards this goal. Beside the commission, we would need KSM price to double and reach 50$ in order to earn ~480 USD/month which is still within the boundaries of operational costs.
With this proposal we are not influencing KSM inflation rate. We are asking the nominators to steer 1.36% of their staking APY towards the network, current returns are 18.88% and we anticipate it to be 17.52% all other factors being equal. We need to have a strong, reliable, secure and redundant blockchain network in order to process and secure multi million $ assets on it.
Objectives
Validator earnings and effects on staking rewards
A fully active validator operating at 3% commission can stand to earn
(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month. :
with KSM priced at 25$ this equates to ~ 72.00 USD/month.
with KSM priced at 34$ this equates to ~ 97.92 USD/month.
with KSM priced at 50$ this equates to ~ 144.00 USD/month.
A fully active validator operating at 10% commission can stand to earn
(800/1000)* 4 * 30 * 0.1 = 9.60 KSM/ month.
with KSM priced at 25$ this equates to ~ 240.00 USD/month.
with KSM priced at 34$ this equates to ~ 326.40 USD/month.
with KSM priced at 50$ this equates to ~ 480.00 USD/month.
Known constraints
A significant change of KSM price can have a positive or a negative impact to the changes proposed. This proposal is not trying to set permanent staking parameters i.e. In a scenario where KSM hits $100 anyone can start a new proposal to decrease the commission rate.
Short description: This proposal seeks to adjust validator minimum commission rate from 3% to 10%
Project Category / Type: Infrastructure
Discussion date: 23.11.2022. https://kusama.polkassembly.io/post/1993
Onchain publish date: 26.01.2023.
Governance referenda origin call: staking_admin
Context
This proposal seeks to adjust the validator minimum commission rate and keeps all other staking configurations unchanged. In the current market (last several months) validator income from the minimum commission can cover less than 50% of the server rent costs. In order to maintain a sustainable environment and prevent the network degradation I am passing this proposal to onchain voting.
Problem
There were several topics regarding to the validator infrastructure expenses and operational costs that can be found here:
https://kusama.polkassembly.io/post/1980
https://kusama.polkassembly.io/post/1306
A fully active validator operating at 3% commission can stand to earn:
(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month.
With KSM priced at 34$ this equates to ~97.92 USD/month.
Proposal
The proposed increase of minimum commission to 10% is trying to create a better and more sustainable network environment. With the numbers given above it is clear this is a small step towards this goal. Beside the commission, we would need KSM price to double and reach 50$ in order to earn ~480 USD/month which is still within the boundaries of operational costs.
With this proposal we are not influencing KSM inflation rate. We are asking the nominators to steer 1.36% of their staking APY towards the network, current returns are 18.88% and we anticipate it to be 17.52% all other factors being equal. We need to have a strong, reliable, secure and redundant blockchain network in order to process and secure multi million $ assets on it.
Objectives
Validator earnings and effects on staking rewards
A fully active validator operating at 3% commission can stand to earn
(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month. :
with KSM priced at 25$ this equates to ~ 72.00 USD/month.
with KSM priced at 34$ this equates to ~ 97.92 USD/month.
with KSM priced at 50$ this equates to ~ 144.00 USD/month.
A fully active validator operating at 10% commission can stand to earn
(800/1000)* 4 * 30 * 0.1 = 9.60 KSM/ month.
with KSM priced at 25$ this equates to ~ 240.00 USD/month.
with KSM priced at 34$ this equates to ~ 326.40 USD/month.
with KSM priced at 50$ this equates to ~ 480.00 USD/month.
Known constraints
A significant change of KSM price can have a positive or a negative impact to the changes proposed. This proposal is not trying to set permanent staking parameters i.e. In a scenario where KSM hits $100 anyone can start a new proposal to decrease the commission rate.
Threshold
Threshold