P2P Validator: New Fee Update for Polkadot Network [2024]

<p>At&nbsp;<a href="http://p2p.org/?ref=p2p.org">P2P.org</a>, we take blockchain security seriously.</p><h2 id="executive-summary"><strong>Executive Summary:</strong></h2><p>Blockchain security is a top priority for validators, especially with the expansion of Polkadot's active validator set. Validators are vital in securing the network by participating in block production and finalization processes. However, <strong>some validators bypass GRANDPA participation to reduce operational costs, jeopardizing network stability and security</strong>.</p><p>Active block production and finalization participation are crucial for maintaining Polkadot and Kusama's network integrity. <strong>Validators who avoid GRANDPA undermine network performance, potentially leading to slower finalization and reduced reliability. To mitigate these risks, token holders should carefully evaluate validators based on their commitment to security, uptime, risk management, and compliance with industry standards.</strong></p><p><a href="http://p2p.org/?ref=p2p.org">P2P.org</a>&nbsp;offers tools like the Relay Participation Rate dashboard to monitor validator engagement, helping stakeholders make informed decisions. By delegating stakes to validators prioritizing network health and security, token holders can contribute to a more resilient and trustworthy blockchain ecosystem.</p><h2 id="understanding-blockchain-security">Understanding Blockchain Security</h2><p>With the recent referendum aiming to expand the active validator set to 400, the focus has intensified on the critical role validators play in securing the Polkadot network—especially through their participation in finalizing blocks. Validator engagement in the consensus process is essential for maintaining the integrity of the ecosystem, and upholding high operational standards has never been more crucial.</p><p>In Polkadot, block production begins with the Blind Assignment for Blockchain Extension (BABE) protocol. BABE randomly assigns validators to produce blocks in slots approximately every six seconds. Validators participate in this random lottery for each slot, producing a block if selected. Notably, a backup validator is also assigned in case the primary validator fails to produce a block.</p><p>Once a block is created, it needs to be finalized by other network participants—precisely, the validators—through the GRANDPA (GHOST-based Recursive ANcestor Deriving Prefix Agreement) finality gadget. GRANDPA operates in parallel with block production as an independent process. Validators engage in consecutive rounds of voting to finalize blocks, and once two-thirds of the validators have voted in favor, the block is considered final.</p><p>While validators cannot influence the BABE step due to its randomness, they are incentivized to participate in block production because they receive rewards for creating blocks. However, the same incentive structure does not apply to GRANDPA participation.&nbsp;<strong>This lack of direct monetary reward can tempt some validators to disable their participation in GRANDPA by running their nodes with the&nbsp;<code>--no-grandpa</code>&nbsp;flag</strong>, potentially reducing operational costs at the expense of network security.</p><h2 id="why-validator-participation-in-grandpa-matters">Why Validator Participation in GRANDPA Matters</h2><p>Skipping finalization might lower operational expenses—such as bandwidth consumption and node maintenance—but it introduces significant risks to the network. Without robust participation in GRANDPA, the network may experience delays in finalizing blocks, adversely affecting performance and reliability. The ecosystem's security is intrinsically linked to the consistency and reliability of validators in the finalization process.</p><p>Moreover, validators who avoid participating in GRANDPA place additional burdens on those who maintain high operational standards. These standards are often achieved through rigorous internal monitoring, adherence to compliance frameworks, and dedicated infrastructure management. Validators committed to these practices ensure consistent uptime and mitigate risks such as slashing, thereby contributing to a more secure and resilient network.</p><h2 id="the-current-state-of-participation">The Current State of Participation</h2><p>Our public dashboard,&nbsp;<a href="https://grafana.polkamon.p2p.world/d/XX_I3QQSk/relay-participation-rate?orgId=1&var-chain=polkadot&var-account=All&var-percent=30&ref=p2p.org">Relay Participation Rate</a>&nbsp;(accessible via Telegram authentication), offers an overview of validator participation in the finalization process across Polkadot and Kusama. This tool is part of our&nbsp;<a href="https://maas.p2p.org/?ref=p2p.org">Monitoring as a Service</a> (MaaS) project, designed to provide validator operators in Substrate-based networks with transparency and monitoring capabilities. To access the dashboard, login with your Telegram account, navigate to the "General" section in the upper left-hand corner, and select "Relay Participation Rate."</p><p>The dashboard features three types of charts:</p><ol><li><strong>Prevotes Ratio</strong>: Indicates participation in the first part of the consensus process.</li><li><strong>Precommits Ratio</strong>: This ratio relates to GRANDPA (chain finality) and represents how often a validator participates in finality, the second part of the consensus.</li><li><strong>Missing Backing Votes Ratio</strong>: Shows the percentage of skipped candidate backing actions (Proof of Validity) for parachains—the most profitable aspect of a validator's activity.</li></ol><p>The top table provides a current snapshot of validators and their participation ratios in the consensus process. While the Polkadot network currently shows no validators with 0% precommits (finality stage), several validators exhibit low engagement. This could signal infrastructure issues or deliberate decisions to minimize costs at the expense of network security.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/09/Screenshot-202024-09-11-20at-2016.12.33.png" class="kg-image" alt loading="lazy" width="1844" height="532" srcset="https://p2p.org/economy/content/images/size/w600/2024/09/Screenshot-202024-09-11-20at-2016.12.33.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/09/Screenshot-202024-09-11-20at-2016.12.33.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/09/Screenshot-202024-09-11-20at-2016.12.33.png 1600w, https://p2p.org/economy/content/images/2024/09/Screenshot-202024-09-11-20at-2016.12.33.png 1844w" sizes="(min-width: 720px) 720px"></figure><p>On Kusama, the situation is more concerning. As of September 11, 20 validators displayed 0% participation in both prevotes and precommits, raising questions about their reliability and commitment to network security. Such inconsistent participation—whether due to inadequate infrastructure or intentional non-participation—can undermine the overall stability of the ecosystem.</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/09/Screenshot-202024-09-11-20at-2016.34.40.png" class="kg-image" alt loading="lazy" width="2000" height="316" srcset="https://p2p.org/economy/content/images/size/w600/2024/09/Screenshot-202024-09-11-20at-2016.34.40.png 600w, https://p2p.org/economy/content/images/size/w1000/2024/09/Screenshot-202024-09-11-20at-2016.34.40.png 1000w, https://p2p.org/economy/content/images/size/w1600/2024/09/Screenshot-202024-09-11-20at-2016.34.40.png 1600w, https://p2p.org/economy/content/images/2024/09/Screenshot-202024-09-11-20at-2016.34.40.png 2000w" sizes="(min-width: 720px) 720px"></figure><h2 id="the-risks-of-non-participation">The Risks of Non-Participation</h2><p>A decline in validator participation poses a risk of slower finalization times, which can have cascading effects on both the Polkadot and Kusama ecosystems. Maintaining at least two-thirds participation is essential for the network's smooth functioning. If a significant number of validators continue to prioritize cost-cutting over participation in finalization, the network's reputation and its ability to attract further development may be jeopardized.</p><p>It's important to note that GRANDPA's non-participation is neither financially rewarding nor subject to slashing penalties. This lack of immediate consequences provides little motivation for validators to engage in the finalization process, highlighting the need for token holders to be vigilant in their choice of validators.</p><h2 id="how-to-choose-reliable-validators">How to Choose Reliable Validators</h2><p>Given these potential risks, it's imperative for token holders to thoroughly evaluate validators before delegating their stakes. Key factors to consider include:</p><ul><li><strong>Commitment to Network Security</strong>: Does the validator consistently participate in both block production and finalization processes?</li><li><strong>Uptime Track Record</strong>: Does the validator maintain high availability, ensuring the network remains robust and responsive?</li><li><strong>Risk Mitigation Measures</strong>: Does the validator implement safeguards against slashing and other operational risks?</li><li><strong>Compliance with Industry Standards</strong>: Has the validator undergone third-party audits, such as SOC 2, to verify their adherence to security and operational protocols?</li><li><strong>Infrastructure Quality</strong>: Does the validator invest in reliable, secure infrastructure to support their operations?</li></ul><p>Delegating to validators prioritizing network health through consistent participation and reliability strengthens the Polkadot and Kusama ecosystems. Validators that uphold high-performance standards and implement comprehensive security measures—such as internal compliance audits, uptime guarantees, and slashing protection—offer a more robust and secure environment for stakers.</p><p><strong>By choosing validators committed to the network's long-term health and security, token holders can contribute to a more resilient and trustworthy blockchain ecosystem.</strong></p><p>Do not hesitate to ask questions in our&nbsp;<a href="https://t.me/P2Pstaking?ref=p2p.org">Telegram</a>&nbsp;chat or contact Alex via&nbsp;<a href="mailto:[email protected]">[email protected]</a>. We are always open to communication.</p><hr><p><strong>Web:</strong>&nbsp;<a href="https://p2p.org/?ref=p2p.org">https://p2p.org</a></p><p><strong>Stake DOT with us:</strong>&nbsp;<a href="https://p2p.org/networks/polkadot?ref=p2p.org">https://p2p.org/networks/polkadot</a></p><p><strong>Twitter:</strong>&nbsp;<a href="https://twitter.com/p2pvalidator?ref=p2p.org">@p2pvalidator</a></p><p><strong>Telegram:</strong>&nbsp;<a href="https://t.me/P2Pstaking?ref=p2p.org">https://t.me/P2Pstaking</a></p>

<p><strong>Welcome to our bi-weekly market recap at P2P.org, where we delve into the most impactful shifts happening in the crypto space.</strong> This edition explores the ever-evolving staking landscape, the Ethereum ecosystem, and Bitcoin’s latest staking developments.&nbsp;</p><p>Let’s dive into the highlights!</p><h3 id="ethereum-steady-validator-growth-amid-market-uncertainty"><strong>Ethereum: Steady Validator Growth Amid Market Uncertainty</strong></h3><p>Ethereum is holding steady! Over the past month, we saw a 1.49% growth in the total number of validators and staked amounts (source: <a href="http://beaconcha.in/?ref=p2p.org"><u>Beaconchain</u></a>). While this growth is consistent with previous months, it’s clear that price volatility and reduced validator rewards have slowed down the pace compared to earlier in the year. But hey, steady growth is still growth!</p><p>This isn’t surprising, considering the broader market’s recent behavior. In the last 14 days, <strong>the total market cap dropped from $2.3T to $2.03T</strong> (source: <a href="https://www.coingecko.com/?ref=p2p.org"><u>CoinGecko</u></a>). A dip like this often spooks the market, with concerns of a potential recession and uncertainty around the upcoming US elections driving institutional caution. High-risk assets like crypto felt the impact as investors hit the sell button.</p><p>Check out the chart below for a visual of Ethereum validator trends over time:</p><figure class="kg-card kg-image-card"><img src="https://p2p.org/economy/content/images/2024/09/6536.jpg" class="kg-image" alt loading="lazy" width="2000" height="908" srcset="https://p2p.org/economy/content/images/size/w600/2024/09/6536.jpg 600w, https://p2p.org/economy/content/images/size/w1000/2024/09/6536.jpg 1000w, https://p2p.org/economy/content/images/size/w1600/2024/09/6536.jpg 1600w, https://p2p.org/economy/content/images/2024/09/6536.jpg 2000w" sizes="(min-width: 720px) 720px"></figure><h3 id="eigenlayer-and-restaking-airdrops-and-big-collaborations"><br><strong>EigenLayer and Restaking: Airdrops and Big Collaborations</strong></h3><p>Despite the shaky market, the <strong>past few weeks have been exciting for the</strong> <strong>Ethereum staking ecosystem</strong>. The main focus? Restaking. <strong>EigenLayer (EL)</strong> has announced a fresh round of $EIGEN airdrops to the community, distributing 86 million tokens, representing 5% of the total 1.67 billion $EIGEN supply. Even social media users can qualify for the airdrop—a move that shows EL’s commitment to rewarding the community that’s helping bolster its brand.</p><p>Original Eigen Foundation tweet: <a href="https://x.com/eigenfoundation/status/1831375846097219707?ref=p2p.org">https://x.com/eigenfoundation/status/1831375846097219707</a></p><p>In other big news, EigenLayer is partnering with <strong>Ethena and EtherFi</strong>, bringing the stablecoin <strong>USDe</strong> into the picture as a new restaking collateral asset. The <strong>adoption of ERC-20 tokens as collateral</strong> under the Symbiotic restaking protocol is a key differentiator, opening up the possibility for a much broader range of assets to be supported in the future. This move highlights Symbiotic’s innovative approach and maybe a strategic response to its growing competition. EigenLayer's recent partnership with EtherFi could be seen as a defensive move against Symbiotic, which is already positioning itself ahead with the ability to use ERC-20 tokens as staking collateral—something that EigenLayer currently does not offer.</p><h3 id="bitcoin-staking-babylon%E2%80%99s-success-and-fierce-competition"><strong>Bitcoin Staking: Babylon’s Success and Fierce Competition</strong></h3><p>Things are heating up on the <strong>Bitcoin staking</strong> front<strong>,</strong> too. Babylon’s first-ever staking launch at the end of August was a huge success—<strong>1,000 BTC</strong> was deposited in just four hours! With multiple large reserve tokens (LRTs) attracting a ton of BTC for the next round of staking, this momentum doesn’t seem to be slowing down.</p><p>However, competition in the Bitcoin space is fierce, with protocols vying for attention and deposits. <strong>Lombard</strong> recently announced the ability to re-stake LBTC with <strong>Ether.fi</strong>, strengthening its position as a leading LRT in the Bitcoin ecosystem.</p><h3 id="closing-thoughts-the-road-ahead-for-crypto"><strong>Closing Thoughts: The Road Ahead for Crypto</strong></h3><p>August and September are historically bumpy months for crypto and the stock market, and this year has been no exception. Price discovery is a natural process, and while volatility can feel unsettling, it also presents opportunities for growth in the long run. With exciting developments like <strong>EigenLayer’s restaking advancements</strong> and <strong>Bitcoin staking’s rapid expansion</strong>, we’re optimistic about what’s to come.</p><p>Stay tuned for our following market recap, where we’ll continue exploring the trends shaping the future of crypto!<br></p><h2 id="about-p2p-validator"><strong>About P2P Validator</strong></h2><p><a href="https://p2p.org/?ref=p2p.org">P2P Validator</a>&nbsp;is a world-leading non-custodial staking provider, with $7B from over 10,000 delegators/nominators across different high-class networks. Developing the SaaB (Staking-as-a-business) model, we help networks, exchanges, custodians, and institutions build their staking products and create new revenue streams.</p><hr><p>Do not hesitate to ask questions in our&nbsp;<a href="https://t.me/P2Pstaking?ref=p2p.org">Telegram</a>&nbsp;chat or contact Alessandro via <a href="mailto:[email protected]" rel="noreferrer">[email protected]</a>. We are always open to communication.</p><hr><p><strong>Web:</strong>&nbsp;<a href="https://p2p.org/?ref=p2p.org">https://p2p.org</a></p><p><strong>Read about SaaB:</strong>&nbsp;<a href="https://x.com/P2Pvalidator/status/1778388967940902972?ref=p2p.org">https://x.com/P2Pvalidator/status/1778388967940902972</a></p><p><strong>Twitter:</strong>&nbsp;<a href="https://twitter.com/p2pvalidator?ref=p2p.org">@p2pvalidator</a></p><p><strong>Telegram:</strong>&nbsp;<a href="https://t.me/P2Pstaking?ref=p2p.org">https://t.me/P2Pstaking</a></p><p></p><p><br></p>