Increase validator gauge weight control by 5% every two months to 50% total (currently 10%).
This will attract investors, i.e. buy pressure, value accrual and attention to $mnde.
No/slow gauge weight increases is anti-competitive, a detriment to growth and an existential threat to the protocol.
Currently validator gauges control 10% of the mSOL supply. This was a great first step, but now is the time to increase it. We must increase the gauge weight by 5% immediately (15% total) with a scheduled plan ( a 5% increase every 2 months) up to 50%. So in 14 months validator gauges would control 50%.
Validator gauges are our best asset, a unique tool that differentiates us between current and (inevitably) future competitors. It helps us fight for total market share and relative market share.
Lido (our main competitor) has better LM rewards and infinite money. We are loosing the liquidity mining (LM) battle as new and old entrants will inevitably choose to stake with Lido over us due to better APYā¦as we are diluting the token. And the Lido narrative will continue to strengthen, especially after the successful ETH merge. We need to fight for the name recognition Lido has.
Marinade has validator gauges and Lido does not. We should use that advantage while it lasts.
Furthermore, low gauge weights means less investors. It is simply less not viable for investors to invest with the current trajectory of gauge weights. Investors need a predictable and viable ROI, we do not currently have that ā $mnde is too volatile (moving 50% in a week sometimes), in a bear market, a popular competitor (Lido), has an overwhelmingly high total token supply, high emissions and too little demand. Increasing gauge weights is a tangible step towards solving part of this issue, of making $mnde a viable investment.
The main fear Iāve heard regarding my proposal is that ā āan increase in gauge weights poses a threat to decentralization on Solanaā. Fear of this should also not hold us back, especially when it is a danger to the protocol. Gauge increases are something we have to do and I firmly believe the community can provide a solution if decentralization problems arose.
Lastly, I wanted to note that it is highly recommended that we decrease the total token supply and a decrease emissions along with this current proposal.
I talked to the team about this. They want the slow and steady approach as you canāt really take it back easily once you move it forward. That said 10% is working well so I would support moving it to 15% with potentially more later.
The lack of action on this has put a huge damper on investment and token price (bad token price means bad LM rewards, which means Lido is more attractive ā less mSOL adoption). Do we want increased web3 participation? A validator gauge increase does that ā web3 investors and validators then commit to Marinade because it is financially advantageous. Then they gave skin the game who are incentivized to promote mSOL adoption.
We will endanger the protocol if we continue to move this slow.
Marinade does not exist in a vacuum. This is a startup. We should use our advantage while it lasts. Other competitors will come.
Now is not the time to be patient and give room for competitors to enter.
Seeing some chatter from Solana validators lately that itās a tough business right now. I want Marinade to do everything they can to support independent validators, and raising 10% gauges allocation is a good place to start. They seem to be working as intended so far. The question is how and how much to raise it. Iām not the most educated person there.
With regards to moving slow or fast, itād be good to create some sort of formula or milestones in MNDE validator gauge proposal so that once X MNDE is used in gauges, it increases the gauges percentage Y, as long as APY or other performance indicators are maintained. I donāt want to have to vote for every 5% increase in percentages.
Is there a way to measure Marinadeās influence on Solanaās Nakamoto coefficient (NC)? For example, if we removed all of Marinadeās delegated SOL from the equation, how much would the current NC be reduced by?
As per my proposal above, the 5% increase in gauge weights would increase automatically, after the vote is passed. Iām happy, I certainly hope the gauge weights are working as intended, but I want them to work really well. Furthermore, if it is working well, why not do it even more. Itās not like Marinade is the undisputed leader of the liquid staking solutions. Iām afraid we are getting complacent, risk averse and not acting quick enough ā when we havnāt even won the āwarā yet.
Thatās a great a question, I think one of the team members talked about this. Nonetheless, Iām confident if we reduced mSOL from the equation it would hurt the NC (I canāt tell you the magnitude, which is what really matters). However, if Marinade looses to Lido than the NC may get even worse.
Sadly, I feel we are implicitly framing this proposal as either A) increase gauge weights or B) keep the the protocol decentralized. This is simply not true, itās a false dichotomy and itās really hurting us. Both can exist.
@7Layer had a good suggestion on twitter. Something to the effect of, ā have an inverse weight mechanism, where the bigger someoneās allocation gets, the less each vote increases thier gauge allocationā.
To reiterate, gauge weight increases are NOT mutually exclusive with decentralization. Additionally, we are not even addressing the question of ā what is an acceptable amount of decentralization? Iām afraid weāre pursuing some ill-defined esoteric goal to the detriment of the value of $mnde and success of Marinade. We need to be aggressive, not timid in pursuing market share.
Yeah Iām not trying to frame this as binary. Basically what I was trying to get at is that, if increasing the % of stake controlled by validator gauges does not reduce Solanaās NC, seems like thereās little downside to increasing it.
However, once increased it will be difficult to decrease, even if decreasing would lead to a higher NC (validators with MNDE would have to vote to decrease the SOL they can direct to themselves). So increasing too much too quickly also seems a bit risky.
Ideally, the % is auto-adjusted such that itās the maximum amount that makes the NC the highest number possible. This way, it would automatically increase/decrease the % to maximize the NC while simultaneously increasing the value of MNDE (at least the part that comes from being able to vote on validator gauges) as much as is allowed. And we wouldnāt need to rely on the goodwill of validators with MNDE.
Yeah, I think gauge weights/votes should be weighted in a similar way to the normal delegation mechanisms. Sucky validators shouldnt be able to just overcome bad performance by just throwing $$ at themselves.
I also think that the gauge mechanism should be designed toward supporting validators to get to the breakeven point, and weighting should be based around keeping a validator near that equilibrium. If validators can set a high commission and just buy enough mnde to become immediately profitable youāre going to start having sybil issues. If they become profitable that also means they can continue to put profit toward mnde and their own gauge weighting. Ultimately higher commissions arenāt good for mSol apy eitherā¦
I would weight gauges based on factors such as commission, credits, existing stake, etc. If a 100k sol staked validator has 100k MNDE worth of gauges for example, at 6% commission maybe that validator only takes 20k sol worth of gauges, but if it drops its commission to 2% the weight of that 100k MNDE gauge increases so that the validator receives more gauge-related sol delegation. Technically the breakeven point of that validator increases and the weighting of the gauge helps shift the equilibrium toward the higher breakeven point. If that validator grows in third party stake over time and is closer to breakeven at that commission level or exceeds it, then the weighting per mnde in the gauge should become lower. Anyway, those are just some thoughtsā¦ maybe Iāll try and clean up this post tomorrowā¦ Anyway, Iām not sure how aggressively to favor lower commission validators (disclaimer is that we run a 0% commission validator), but I think 6% commission having the same score as 0% doesnāt make much sense (6% is generally too high for the large majority of validators to actually become independent through attracting third party stake, so you end up having a weird validator welfare system like the current Solana foundation delegation program). I donāt think the 0% commission competition is that healthy either though.
While I think that +5% every two months is a really aggressive pace and probably a bit too much, I would also support a move to 15% in the near future.
I do agree with @Chief_Standing_Wolf that the validator gauges are one of Marinadeās best assets and a key differentiation factor, but Iām with @dobby about +5% every two months coming across as a lot, and Iād be hesitant to support that without further study on the impact to help answer the question that @Durden has asked.
While we are at itā¦
This is an interesting idea. Weāve had a few passing conversations on the Discord about if voting on the gauges should be linear, as it is now, or if it should be on some sort of curve Ć” la quadratic voting. I donāt think the topic of weighing them based on the āMarinade scoreā had come up before, though.
Would support validator gauge weight increase but think it would be best if ābribeā mechanics were built first so that it can have the best impact.
I think that @Chief_Standing_Wolf is on to something. Increasing the % the gauges control in the pool does have an immediate impact on MNDEās utility and possibly general appreciation, which to me is connected to the MNDE impact on the validator gauges.
50% feels quite aggressive though and would possibly make Marinade step away from the original mission and ethos of decentralizing and securing Solana, in a permissionless fashion. Entertaining that idea makes me feel more comfy if a majority of the stake in the pool is controlled by the stake bot (permissionless delegation strat).
However, I would love to see how the validator gauges was used with an additional 5% allocated from the total stake, ie.15%.
I would be up for a one-time +10%. Instead of doing a really small step and waiting, it doubles the ceiling and allows for the āgameā to progress faster instead of trying to optimize.
I would not suggest committing to neither a threshold- nor time-based increases now. The behavior at a certain percentage does not guarantee that it will progress in the same way. The delegation strategy driving the stake is a critical asset (stake is attracted to that plus liquidity unlock in a form of mSOL) and should be treated with care.
Move like that increases the risk of the delegation going awry, so it should be connected with a more locked MNDE participating in the strategy. The fair expectation would be for participation to increase proportionally (2x). Currently, there are 29M MNDE participating in validator gauges, so 60M would feel good. The next steps can be considered after.
I would not do quadratic voting or any voting change now (for validator gauges, liquidity might be a different case), but an increase to 20% should provide input if such adjustments are needed.
All these points together, I would still vote on this increase.
As an MNDE holder and a Marinade gauge staked validator, I fully support raising validator gaugesā control. It will also indirectly pump MNDE (since controlled SOL per MNDE is pumped ā more power per MNDE), which leads to increased APY for pools that has MNDE emissions, which could help with TVL.
However, I feel like a one-time +10% may be too drastic, I feel like we should increase in increments so gauge voters have time to adjust their voting strategy for maximum effectiveness. Also increasing gauge control may have some unintended consequences that will only reveal themselves after the increase, therefore I would to propose that we still raise the control, but slowly, and have a set of rules in place that could halt the increase.
What about increasing by 1% per week to start with?
Thereās an old Sid Meier mechanism design maxim where he said that if you wanted to see if a setting was doing something, you had to either double it or cut it in half.
We have already gotten some feedback from validators that it can be unpredictable how much SOL will a certain amount of MNDE on the gauges get them. I expect that a gradual 1% increase would make the change imperceptible, and would thus lead to no real increased interest.
If there is a general uncertainty about a one-time jump to 20%, then a middle path could be:
One time jump to 15%;
Empowering the team to increase it another 5% (letās say) 4 weeks later without an onchain proposal;
If after seeing the effects the DAO feels that another bump would cause a problem, then anyone can introduce a proposal before that to stop the second bump.
Why donāt we vote on 20% and then empower the team to drop it to 15% if unforeseen issues come up with regards to performance or APY or decentralization impact.
The main reason I could see is that, from purely a psychological standpoint, going from 20%->15% will feel like taking something away from validators, whereas 15%->20% will be giving them something extra.
I expect people will be more hesitant to the potential negative implications of ātaking something awayā, and thus more hesitant to pull the trigger than they would to suggest āletās just say at 15%ā.