Economy Cosmos

Why we are against raising the number of validators

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Currently, 6 validators control more than 33% of Cosmos Hub voting power with over 62 000 000 ATOM at stake (>313 000 000 USD). Their monthly revenues are sustainable and in most cases, are high enough to behave in interests of the Cosmos ecosystem even if they are technically able to collude. Their income is also sufficient to maintain reliable infrastructure, provide high level of security and upgrade their facilities. If we will look at validators from 80 to 100 we may notice that they have around 1 252 370 ATOM at stake (6 261 850 USD). Monthly revenues of a single validator in this group, in most cases, do not exceed 1000 USD. Most likely, it is not enough to provide sustainable improvements, cover running costs, pay salaries to the employees and add value to the ecosystem. If we would broaden validators set and add 25 more, their revenues, probably, would be even less. Their ability to provide secure services in the long term is questionable as well as ability to compete and attract new delegators.

Situation with network decentralization will not change vastly, last 20 validators have total voting power less than 0,75%. Taking that into consideration we suggest that additional 25 validators will not add more than 0,5% creating state of the ecosystem where 36% of validators have less than 1,25% of voting power making power distribution even more irrational. This issue should be addressed before raising the threshold to establish fair distribution and define a bottom border of entering the validator's set.

These validators will have higher risk of slashing with lower cost increasing economic viability of such a harmful behavior. For example, the cost of double-sign for Polychain Labs is higher than 3 000 000 USD while the average cost of double-sign for validators from 80-100 is close to 15 000 USD. The cost for validator #100 is less than 10 000 USD. This state of the ecosystem may undermine the overall trust of the Cosmos network affecting decentralization even more as delegators would not even consider to stake out of the top ten experiencing frequent slashing events.


To sum up everything written above, we suggest, that Cosmos Hub is still in the early stage and not mature enough to rise that number as there does not exist strong necessity to do so and outcomes are not clear enough. In our opinion, we should take more time to establish a healthier spirit of competition inside the existing validator's set and see if the smaller validators in the set are able to attract new delegators and provide sustainable services.

We understand that raising the threshold may bring new players in and final intentions are positive, but there may exist an opposite direction that has negative implications in the long run. In that case, our suggestion would be to collect more empirical data and increase the threshold based on the results of the first year as we do not need to rush forward. We already saw double-sign slashing and want to decrease the probability of such events being sure that the majority of validators are reliable and sustainable.

P2P Validator offers high-quality staking facilities and provides up to date information for educational purposes. Stay tuned for updates and new blog posts.

P2P Validator offers high-quality staking facilities and provides up to date information for educational purposes. Stay tuned for updates and new blog posts.

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Konstantin Lomashuk

Entrepreneur, blockchain investor Ethereum, Cosmos, Dfinity, EOS, Tezos, Polkadot. Previously co-founder Satoshi Fund.

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