Dear community,
With the upcoming rollout of runtime 9160 we should explore the option of an extrinsic to set a network wide minimum commission. This discussion relates to metrics associated with the KUSAMA chain. After the on chain parameter is declared any persons using the staking.validate() extrinsic to change their commission would have to abide by the new threshold. All existing commission values would remain the same.
I implore those who are contributing to this post to do so in a meaningful and calculated manner. The goal is to ensure that validators are compensated fairly and that they may continue to operate their nodes in a sustainable manner. It is not an avenue for undue enrichment.
Some of the apparent stakeholders are:
Parties who self-nominate like many of the exchanges should not be affected by this change.
This thread is opened for us to discuss in an empirical manner what is a reasonable value for this threshold and to appreciate the views of all entities it affects. A high commission can deter retail nominators from staking and it can encourage commercial nominators to host their own validators.
I would like to encourage discussions in a structured and meaningful manner. The proposed commission should consider items like:
The following should be used in calculations.
Ideal return per month [IR] = ( [Rental Cost] + [Operator Hourly Rate] * 1 (hr) * 30 (days) ) * (1 + ( [Percentage Profit]) / 100);
IR = (80 + 20 * 1 * 30) * (1+(15/100))
IR = (80+600) * 1.15
IR = $680/mth or 2.656 KSM
Commission required [CR] to earn 2.656 KSM over 30 days =>
0.6 * [CR] * 4 (eras) * 30 (days) = 3.054
[CR] = 2.656 / (0.6 * 4 * 30)
[CR] = 0.03689 or 3.7%
CALCULATION AMENDED TO REMOVE 15% PROFIT
Allowing for 20% for fluctuations in token price and era points a commission of 4.8% is calculated. There aren't any validators in the active set with a commission of 4.8%, however those that have 5% offer a return of 17.77% on a total-stake of 4,798.2177 KSM. The total stake in question is nPoS normalized and should represent the 'general stake'.
I do confess that larger operators would enjoy better returns due to economies of scale but I present the above for general consideration. I also note that while the token price is set at $256.00 the present price is $170.00.
I also understand that it is technically possible to submit a proposal to forcefully adjust the commission of validators. While this sounds a bit excessive it might be an good accompaniment to ensure an even playing field.
Regards,
Will | Paradox