XX Validator incentives for Team-backed validators distort competition ¶
As explained in previous blog post and highlighted in other posts related to XX validator economics, independent validator nodes can’t compete against TM-backed validators on equal footing.
Things used to be bad for independent validators due to the generous team multiplier, but it got worse after each of the two rounds of economic “fixes”.
Today it simply makes no economic sense to run an independent validator node.
Team Multiplier-backed validators-rentiers have make the network work in service of validators, instead of the other way around.
Today only whales can run independent validator nodes. (Although they shouldn’t, because it makes no economic sense.)
Taking XXV2 down ¶
I just unbound almost all validator’s coins from XXV-2’s wallet (down to 1K plus change, from 35K in era 145) and lowered its commission to 2%.
The second thing I did was to nominate a bunch of TM backed nodes from my main wallet. Which leaves XXV2 pratically defunded without significant backers.
If a whale nominates XXV2 today, I’ll let it run. If it doesn’t make it to era 146, I’ll shut it down. One thing less to worry about.
XXV3 remains (for time being) ¶
Old XXV (now XXV3) remains online as it’s TM-backed, but I may terminate it as well.
With XXV2 going offline, I’m going to make more money nominating while doing up to 50% less work.
If I stopped running XXV3 I’d make 2K xx less per month, but that is just 4 days of earnings from nominating other nodes and I wouldn’t have to do any node maintenance. So this remains a possibility once the coins are unlocked.
Other action items ¶
Until situation improves I’m not going to write anything here, or participate in the community.
Obviously I’m also not going to try to stand up new nodes.
What can be done ¶
It’s easy to fix the problem:
- The XX Team should share rewards for its TM stake because there should be no interest-free loans for anyone. Validators from Canary/Beta/Proto network got their rewards - a bunch of free coins - and inexplicably still continue to receive Team Multiplier and that loan is interest-free. It’s like they modelled TM after the Fed & Wall Street banks
- Earnings made from Team Multiplier coins should be burned
That would create equal conditions for all validators, with and without a Team Multiplier, and introduce some competition.
It may also help eliminate some of the poor performing nodes that constantly get relected because of the TM subsidy.