What do you propose
Marinade has for a long time been leading the way with it’s open and transparent validator staking algorithm and delegation strategy. Every epoch’s calculations/predictions can be viewed on Github and many validators actively track these scores and discuss them on the Marinade Discord.
About six months ago the algorithm was updated to use a 5-epoch average, particularly when looking at vote credits score. (Validators must be in the top 250 vote credits over a 5 epoch average to qualify for Marinade delegation).
Since then there have at various times been discussions around raising this to 10 epochs. In this post I am proposing to raise that threshold to a 10 epoch average.
This will help stabilize the algorithm and reduce excessive stake/unstake operations that cause a lot of fluctuation for validators but also result in costs and lost returns to Marinade due to the warmup period stake experiences when it is moved to a new validator.
Pros of this proposal
10 epochs is between 25-30 days. This means validators will not be eligible for Marinade stake until they have been operating on mainnet-beta for at least a month (vs currently 15 days). It also means a single epoch has a reduced impact on the score.
This will result in a more stable delegation distribution across the majority of validators, with existing emergency unstake rules remaining in place, i.e. for delinquency or of a validator drops out of the top 250 over the 10 epoch average. By raising the entry requirement for new validators this also ensures they have proven their stability and operational ability before receiving Marinade stake. Notably with the current 5 epochs there is a good chance that validators won’t have gone through an upgrade and restart cycle in those 5 epochs, while over 10 epochs this important aspect of running a validator is also factored into their score.
Overall the algo will be less sensitive to smaller performance changes (while still adjusting stake amounts each epoch, i.e. it won’t become completely static) and produce an overall more stable delegation strategy.
Cons of this proposal
It raises the barrier to entry for new validators slightly, as they now must operate a month before being eligible for Marinade stake.
It also poses the potential for too little responsiveness in the case of a sudden performance drop by a validator (though this is countered by existing emergency unstake policy of unstaking large-staked validators who drop out of the top 250 and unstaking delinquent validators).
Changing the marinade delegation strategy to consider a 10 epoch average will produce a more stable and profitable delegation strategy that is less susceptible to sudden/brief performance changes and focuses more on long-term performance and reliability. It creates more stability for validators as well as less unnecessary stake movement and associated lost returns for Marinade.
Please share your thoughts