A little bit of chit-chat
Stargaze Marketplace has grown by 395% since its inception. Specifically, the platform recorded a transaction volume of $4,878,424 in April, a rise from $985,814 in May 2022, marking an annualised growth rate of 206%.
🗳️Voter Power Tax
Blockworks Research has posted a signalling proposal on the Cosmos Hub community forum to continue their work on the so-called Vote Power Tax. According to EffortCapital, the proposal's author, it addresses a set of interrelated economic challenges within the Cosmos Hub, particularly around Interchain Security (ICS) deployment.
This proposal, grounded in economic redistribution among validators, introduces a novel fiscal mechanism designed to enhance validator sustainability as ICS scales. The Vote Power Tax aims to levy a tax based on the relative vote power of validators, redistributing the collected funds as subsidies. This redistribution is anticipated to help validators manage the operational expenses of supporting multiple consumer chains, thereby contributing to a more robust security framework for the Cosmos Hub.
The architecture of the Vote Power Tax is crafted to mitigate the concentration of power and wealth among a few large validators—a recurring issue in decentralised proof-of-stake systems. By adjusting tax rates based on the validators' self-bonded stake and overall vote power, the proposal strives to discourage the centralisation of power. However, this approach also opens potential avenues for strategic behaviour, such as sybiling, where validators might split their stake across multiple entities to reduce their tax burden. Acknowledging these possible exploits, the proposal includes provisions to prevent such manipulation, especially pertinent for large and exchange-operated validators.
The broader implications of the Vote Power Tax extend beyond immediate economic recalibrations; they touch upon the strategic orientation of the Cosmos Hub in the shared security market. As the hub evaluates its role—whether as a proactive venture partner to emerging consumer chains or as a neutral infrastructure provider—it faces pivotal decisions about structuring its economic incentives and security propositions.
🥩 Copy-staking
A proposal set forth by Stride aims to restructure its delegation program on Osmosis, shifting from the existing delegation process to a model known as copy-staking. Historically, Stride's governance has relied on a council of five volunteers, endorsed by Osmosis governance, to select validators for delegations. This council evaluates validators based on various on-chain and off-chain criteria, ultimately distributing delegations among the top-performing validators to enhance chain decentralisation and health.
The new proposal introduces copy-staking, a significant shift toward a more neutral stance in validator selection. Through copy-staking, Stride plans to delegate to all 150 active validators on Osmosis, apportioning stakes based on the existing distribution of delegations within the community minus any current Stride-delegated stakes. This model dynamically reflects the community's delegation preferences, adjusting monthly to align with changes in stake weights. By mimicking the existing stake distribution, copy-staking aims to maintain the power dynamics between stakers and validators, allowing for a transparent reflection of community trust in validators without disproportionately amplifying any single validator's influence through liquid staking.
To implement this transition, governance proposals will be activated on both Stride and Osmosis platforms to secure approval for adopting copy-staking. If ratified, this model will exclude validators with high commission rates, those operated by centralised exchanges, and will cap delegations to any validator to a maximum of 10% of total delegations, among other criteria, to mitigate risks and manage costs.
The community's response to Stride's proposal to transition to a copy-staking model on Osmosis is mixed, with varying perspectives on its impact on governance and validator dynamics. Some appreciate the move towards neutrality in validator selection, but reservations about the 10% cap and exclusion rules exist. Others express concerns that the shift could disadvantage smaller, high-performing validators and maintain existing biases towards validators who can attract large delegations through incentives like airdrops. Another viewpoint defends the proposal, explaining that the cap and exclusions are preventive measures against security risks, aiming to balance the proposal’s intent to reflect market dynamics while safeguarding against potential misuse and ensuring the integrity of the governance process.
Wrap Up
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