Originally posted in Telegram by Dario Tg
In general, I think there is a missing document in the POS scheme (Albatross) and it should address at least the following question:
1.) What are the incentives for small investors running a full node.
Albatross document (ava. at https://arxiv.org/pdf/1903.01589.pdf).
“The issue then becomes that many coin holders will not have the technical knowledge or disposition
to run a full-node, a task that is necessary to produce blocks”
I would argue that the technical entrance barrier for small holders should be as low as possible.
Community initiatives, core team support for this sector and quality instructions prior main net 2.0
launch are just some ways how there can be many small investor validators.
There is also a key role in weighting, which I will more elaborate in point 3.
2.) Pool operators.
It is not know if there will be any software ready for pool operators at the beginning of main net 2.0
In my view it is quite possible that only very few pools will exist that will dominate the nimiq
scene. This would be a decentralization killer. Beside pool software availability at the main net
start, it is crucial that all pools have the same access to potential stakers in the nimiq wallet.
3.) Geographical dispersion as a measure of decentralization.
Even if the first two points are satisfactory met, leading to a high number of validators I think
that the quality of the geographical dispersion is utmost important. It would be a pity that most
of the validators are in the Western World on AWS servers. In this regard we are running into problems
of having a single point of failures (AWS or big Internet junctions in Western world).
My proposition would be that with time additional weighting is added (beside only Deposit) that
favors specific locations (i.e. Africa or South America) and/or networks (i.e. Starlink).
4.) Traders and Speculators.
While locking down the funds for longer time does have impact on day traders and speculators, locking
too much of the circulation supply does the opposite and 100% (from yesterdays theoretical example)
supply lockdown would certainly kill any liquidity and killing any dynamics in opening private
validators (point 1.) as well creating monopolies in pools (point 2).
The whole story started yesterday by examining the sense behind the ability that all the people
can stake all the time, with no or little constrains to funds being locked in stake (meaning
the unstake period is less then 24h and the barrier to lock is only one click away).
While a high percentage number of staked circulating supply is not desirable because it creates
low liquidity and only does adjust the stake for inflation, the opposite can be told as well.
Low staked circulating supply would indicate a low level of decentralization and low protection
from bad actors.
The current proposition of staking rules and amounts is nowhere set, and this is something
that will define the future 2.0 network.
So far I could only find out that the maximum lockdown period will be “until the end of the
epoch” and that there is just minimal amount of funds necessary to get the funds staked
(100 for wallets and 1000 for pools/validators/full nodes).
In my opinion this will lead to the first scenario where everyone will lock all their funds
and having the new minted coins distributed amongst all addresses linearly. Which as an end
effect negates any positive initiatives for may small validotors and many independent pools.
My suggestion is, that the reward system and time lock period is much better adjusted and
thought true, then the current 100/1000 nimiqs and max. 24 hrs. lockdown.