We are excited to revitalise the Foundation Delegation Initiative to encourage Delegators to support the SubQuery network
Many Node Operators have increased their Commission Rate (CR) to 100% to retain more rewards in an attempt to generate more profits. This is due to the falling price of SQT. However, this is detrimental to the network as it does not attract Delegators.
The goal of this program, is to encourage Node Operators to decrease their Commission Rate, therefore sharing more profits to their Delegators.
How It Works
To encourage delegation within the SubQuery Network, Node Operators are encouraged to reduce their Commission Rate (CR). A lower commission means more rewards will be shared with their Delegators.
Any Node Operators that has a commission rate of <= 70% AND has less than 1M total stake AND has at least 1 project running will qualify to have the Foundation delegate SQT to them to a max of 1M SQT of total stake.
Any Node Operator who has received SQT from this initiative and subsequently increases their CR to above 70% will have their SQT from the Foundation withdrawn.
Note, any CR changes will need to wait 1 full era before it comes into effect.
Criteria
Commission Rate of <= 70% AND
have less than 1M total stake AND
have at least 1 project running
Duration
2 months
Examples
Node Operator A has a commission rate of 100% but then decreases it to 70%. This operator also has 200k SQT self-stake and 100k delegated stake.
Node Operator A qualifies for the Foundation Delegation Initiative where a further 700k SQT will be delegated to Node Operator 1.
Node Operator B has a commission rate of 65%.
As long as this operator has less than 1M total stake and running at least 1 project, this operator will qualify to have their total stake topped up to 1M.
Node Operator C has a commission rate of 50% and decreases to 30%.
As long as this operator has less than 1M total stake and running at least 1 project, this operator will qualify to have their total stake topped up to 1M.
Node Operator D has a commission rate of 50% in current era and increases to 80% in the next era and then in the era after decreases to 50%.
As long as this operator has less than 1M total stake and running at least 1 project, this operator will qualify, but only after the 3rd era.
Operators with 100% commission are mostly RPC operators. What is the point of delegating tokens from the foundation there?
Where will the rewards go? If these rewards go to the foundation and are not sold by the team, then there is some sense in this - to withdraw part of the emission.
Think about this:
let’s take the maximum APY for delegators of 30% (for operators, obviously, more). We need to change the formula for calculating rewards, add a coefficient that takes into account the operator’s commission. If the operator’s commission is 20%, then the rewards are higher and can reach 30% APY. If the commission is 30%, then the maximum APY will be 25%. If the commission > 40%, the maximum APY is 20%. Etc.
This is just an example. This is just an example. In this case, it is more profitable for operators to have a 20% commission => more delegators => more rewards.
Also need a coefficient that takes into account the maximum stake of the operator. Over time, giant operators will appear that will receive too many rewards due to a large stake, although the server is cheaper. In this case, the stake increases => the operator’s APY decreases (but rewards still growing slightly). This will allow at least some control over the emission, will contribute to decentralization.
Let’s imagine a stake of 20 million, and an APY of 200% for operator. In a year, the operator has 60 million tokens - this is too much
thanks for your feedback and apologies for the delay in reply. For point #1, I think what you are saying is to have an inversely proportional relationship, meaning that as CR increases, APY decreases, in order to incentivise a lower CR.
While this does make sense, the question will be what values should be used and who gets to decide what the maximum APY for either Delegators or Operators should be? Wouldn’t it be fairer if the market decides?
For point #2, giant operators are defined as those with large stakes. We want to encourage more to stake in the network and not less, so penalising those with large stakes seems counter productive wouldn’t you think?
Who is an operator? An operator is essentially a delegator, but he simply does more work for the network and spends his money and time. Therefore, he should have more rewards. Let’s say, for example, that delegators have a maximum of 30% per year. 30*3 = 90% for operators. Is 90% a lot? Depends on the token price, whether the rewards cover the cost of the server.
There is a formula for calculating rewards, the formula can be fine-tuned, more parameters can be included.
This means that one of the parameters in the formula should be the token price. Naturally, if someone sends many requests to some operator, and it processes them, then the rewards can be higher. But the rewards are in tokens, so it is necessary to take into account the token price. Without this, we cannot talk about any justice, uncontrolled emission in the future will affect the token price.
Giant operator. Current normal APY of operators is from 100% to 13000%. Now imagine that the operator has 20 million coins in the stake (I mean the operator’s stake, not delegated tokens to the operator) and APY is 200%. It turns out that in a year the operator will have 60 million tokens, well, this smells very bad. Each operator has a point (number of rewards), after which the cost of the server is covered. Then comes the profit.
Therefore, as the operator’s personal stake (these are not delegated tokens) grows, if the stake is huge, the rewards will be too big. To somehow solve this problem, the APY should be reduced to some minimum threshold. The point is that the rewards will still grow slowly, because the stake is larger and larger, but the APY should be reduced depending on the stake. That is, there should be a balance.
What next? You knew where you came to and how the market works. No one is giving away free money here. I know an operator who has almost reached breakeven and will soon be in profit (it all depends on the price). Who will buy your tokens at a price acceptable to you? What do you want? Turn off your indexer and don’t cry. But when you do, will you cry too, because you bought at a high price?
Reduce your expenses, or you will be wasting your time and money most of the time! Mark my words.
Maybe it’s just your strategy to cry to earn more rewards, but my strategy is different.
Agree that an Operator can be considered as a Delegator that does more work and that Operators should have more rewards.
Yes there is a formula for calculating rewards and keen to explore the concept of fine tuning with more parameters.
If we start from the premise of 30% APY for Delegators and for Operators 3x = 90%, are you saying that if the formula for determining the reward is a, then taking token price into account, would we need another parameter y to tweak in order to maintain a target of 90%? eg apy_reward_new = a x t x y
where a = existing reward formula t = token price y = apy_factor
Agree @duchuytb9x that the current high APY doesn’t mean much because of the token price. However, if the APY was say only 90% instead of 800%, + low token price, that would be worse right? It’s basically it is the lesser of the 2 evils.
As you have mentioned in the past, we need to focus on demand and utility or usefulness right? Keen to see if you have any thoughts on these areas
Currently Total Rewards are not increasing, but the price is decreasing => Value is decreasing.
Maybe we should balance them!
For example, set the reward pool to 10K$/1 era.
When the price increases, the rewards will decrease, and vice versa, ensuring the reward is still 10K$/1era
Currently:
ERA 59: 9730000.0015 = 1460$
ERA 60: 13600000.0015 = 2040$
It’s too low to divide by 44 Node Operators! (That’s the sum of Delegator and Node Operator).
6000$ for 1 Month, It’s even
It’s really not enough to cover the cost!
@mister_freeman No crying here. All of us Nodes are here for long term sustainability, if not for that, even me, SubQuery, Liver would have stopped working, and we are the biggest Nodes! We want to discuss to come up with the best solution!
