Hey! Thanks for the detailed write up! Really appreciate it. I’m not the biggest fan of the current delegation strategy and welcome changes to it. I think the ideas behind this are more ideal, however I have some questions and points of feedback.
- “yield”: Can you go a little more into detail on how you planning on calculating this? For something as literal as “yield” is, I think in Solana staking, this can actually be quite subjective. For example, it seems like MEV is included. Is that going to be an average over multiple epochs since it can be quite variable? “Yield” can mean a lot of different things these days and I think it’s incredibly important to define it. Validators can consider “yield” a combination of different things, including single-validator LSTs, and it needs a very concrete definition IMO. I would not advise to get into the games of yield calculation of single-validator LSTs and I don’t think you were planning to, but just calling that out as well. It’d be good to see a formula for this when you get around to it.
- Bidding: Can you go into more detail on how you planned to do this? As a validator, how would I actually go about bidding? Would this process be on chain?
- Gamification: If MEV is included, i’m slightly worried about the potential to “wash trade.” That could be an overuse of the word but there’s a potential to inflate your MEV rewards to make a validator’s APY higher to gain more stake from Marinade. I’m not an expert on the Jito stack, but a validator could in theory send a large tip to inflate their APY when they are the leader and “wash it” to get a higher
realized_yield. - Superminority: Would validators in the superminority be eligible?
What I like about the ideas about this DS vs the current one is it encourages more competition, which I think is a good thing. But I can’t help but feel it’s a bit overly complicated. Reasons:
- The change would require validators to pay constant attention to their bids. “Yield” is not constant and it’s something that would need to be monitored by validators frequently.
- Calculating validator profitability is not an easy thing to do, especially with Marinade. Firstly, you have to calculate costs in fiat (server costs) and voting costs (SOL). Secondly, a validator’s cost would not be fixed either. A validator might have to move to remain eligible because of stake concentration and their costs could change drastically. Again, this would need to be monitored pretty frequently by validators.
- The changes seem to be in the spirit of increasing return to stakers which I also think is a good thing. But I can’t help but think the same thing can be accomplished in a far simpler model. The DS could just stake to the highest yielding validators with some criteria in there to limit the possibility of commission rugs or downtime as much as possible. PSR already does a good job of limiting the impact of a downtime event to stakers. I’m not sure why the proposed DS would do a better job of generating a higher return than staking to the highest yielding validators with some criteria in there that a validator has to have been running for ~X epochs (a good value of X might be 50 as an example).
This strategy guarantees that as long as you are in the delegation set, you will be profitable.
Is this really true? There are probably strategies here where a validator could bid an amount to NOT be profitable on the Marinade stake, but still be profitable overall. This could present interesting sybil attacks and also squeeze out smaller validators.