# Analysis and Proposals on dYdX Chain and DYDX Tokenomics: Reduce the active set from 60 to 30 validators **URL:** \ **Category:** Proposals\ **Created:** [November 6, 2024, 8:34pm UTC](https://dydx.forum/t/analysis-and-proposals-on-dydx-chain-and-dydx-tokenomics-reduce-the-active-set-from-60-to-30-validators/3138 "2024-11-06T20:34:32Z")\ **Posts on this page:** 1\ **Showing post:** 3
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 7, 2024, 9:08am UTC](https://dydx.forum/t/analysis-and-proposals-on-dydx-chain-and-dydx-tokenomics-reduce-the-active-set-from-60-to-30-validators/3138/3 "2024-11-07T09:08:53Z")
> [@nethermind](#): > > At the current fee level, over 17 active validators are unprofitable after accounting for a fixed infrastructure cost of $1,000 per month at their respective commission rates. Your analysis about profitability and recommendation is based on very wrong costs assumptions, and many already asked you to stop discussing profitability as a reason to eliminate validators given your incorrect assumptions for the analysis: > [@Analysis and Proposals on dYdX Chain and DYDX Tokenomics](https://dydx.forum/t/analysis-and-proposals-on-dydx-chain-and-dydx-tokenomics/3093/79): > > If the geolocation of dYdX validators was very globally decentralized as well as the institutional users of dYdX you could then talk about randomly choosing 30 validators to eliminate, which could be the bottom 30. However, and this is key, the majority of institutional users of dYdX are near the Tokyo area as well as a good number of validators. In this situation to improve performance you CAN’T just randomly pick 30 validators to eliminate like the bottom 30, you must identify which validator… > [@Analysis and Proposals on dYdX Chain and DYDX Tokenomics](https://dydx.forum/t/analysis-and-proposals-on-dydx-chain-and-dydx-tokenomics/3093/83): > > Thank you for your reply. To be clear, I agree with the goal of shifting revenue allocation to liquidity and improving chain performance. It is the most important factor in attracting the platform’s key customers - retail traders, market makers and institutional investors. On the other hand, I also believe it is important to get the message right. Just as validator profit and loss estimates complicate the discussion, Claims and rationales need to be carefully constructed. Why I mentioned t… Not only your assumptions are very incorrect, but you also overlooked the fact that you would actually make latency much worse if the bottom validators are mostly based in Japan while the top ones no. > [@nethermind](#): > > Community feedback indicated strong interest in exploring potential latency and performance improvements from reducing the validator set. You are also overlooking the Optimistic Execution in CometBFT v0.38 with ABCI++ that will be introduced in a few days in the next dYdX upgrade and that it will already improve latency by a lot: > [@\[DRC\] Proposal for dYdX Unlimited (v7.0.0 Protocol Upgrade)](https://dydx.forum/t/drc-proposal-for-dydx-unlimited-v7-0-0-protocol-upgrade/3125/2): > > @dYdX_Ops_subDAO do you have estimations about the latency improvement? This is great news since it would allow dYdX to greatly improve latency while maintaining its current decentralization, and if more validators move the infra to Tokyo the latency could be improved even further @magmar-skip @nethermind > [@nethermind](#): > > This was followed by valuable community input, highlighted below. To summarize: Nethermind suggestion: Based on very incorrect costs assumptions with no supporting research/data/surveys we suggest to remove the bottom 30 validators for profitability concerns Community suggestion: -Nethermind costs assumptions are very incorrect, hence profitability cannot be used as an argument to remove the bottom 30 validators -Nethermind missed the main point and advantage to reduce validators which is latency improvement -Nethermind missed that in the next upgrade latency will already improve by a lot thanks to Optimistic Execution -Nethermind missed that for latency, validators being based in Japan is the most important metric and that to maximize latency improvement we would need to remove the validators not based in Japan -If Nethermind was suggesting to remove validators not based in Japan to improve latency this could make sense, but this was suggested by community members, not Nethermind in their report. However, Nethermind still insists in removing the bottom 30 validators which not only makes no sense given their incorrect costs assumptions to reach that conclusion, but this would actually damage latency since validators based outside Japan is not equal to the bottom 30 validators --- _[View the full topic](https://dydx.forum/t/analysis-and-proposals-on-dydx-chain-and-dydx-tokenomics-reduce-the-active-set-from-60-to-30-validators/3138)._