PIP Name: PIP-24: Paloma Mainnet Validators Minimum Commission
Status: Proposed
Author(s): @LARRY
Type: Signalling Vote
Discussions-to: PIP-24: Paloma Mainnet Validators Minimum Commission
Created: 04/18/2023
Simple Summary
As part of the Paloma upgrade to Cosmos-SDK v0.47.1, minimum commissions will be required of the Paloma nest. Given the upgrade will default to a minimum commission, we ask the Paloma community to send a signalling vote for setting a minimum validating commission of 5%. This minimum commission will force all current and new validators to this amount.
Abstract
The Cosmos protocol commission is used as a method to attract delegators to stake their tokens. This incentive, unchecked, may cause rogue validators to offer 0% commissions as a way to acquire stake and control network governance.
As part of the Paloma upgrade to Cosmos-SDK v0.47.1, minimum commissions will be required of the Paloma nest. Given the upgrade will default to a minimum commission, we ask the Paloma community to send a signalling vote for setting a minimum validating commission of 5%. This minimum commission will force all current and new validators to this amount.
Motivation
Having a 5% minimum commission assumes that delegators will spend more energy and attention evaluating validators instead of seeking the lowest cost validator to delegate. Although not yet proven, the hypothesis for this change is that a minimum commission will support delegation decentralization and a more decentralized network. Validators will compete more for delegators for stake given that they are guaranteed a network minimum reward for their efforts.
Additionally, it is necessary to provide proper incentives to validators for their work running and securing Paloma Chain.
If the signal vote passes, Paloma Chain will soon be updated so that:
Existing validator nodes with commission rates set to less than 5% will have their commission automatically updated to 5%. New validator nodes will have a floor commission rate of 5%
Specification Overview
This is signal vote from the validator community to approve increasing the minimum validating commission to 5%.
Technical Specification
How to Vote on the Proposal
palomad tx gov vote 6 yes \
--chain-id=messenger \
--from <Your Paloma Address> \
--fees 400ugrain \
-b block
-y
If the proposal passes, the Paloma team will increase validating commission to 5% across all Paloma Chain mainnet validators.
Rationale
Implement validator approval for minimum commission that will be required in Cosmos SDK v0.47.1 upgrade from v0.45.13.