The big problem is not the validators. A large part will not be bothered that much, since the DYDX will be staked with an X amount of validators. So they will not have so much of a negative effect in the end.
Suppose that the 20 million will be equally divided over all validators. Their % VP will stay the same. The commission will be exactly equal due to this.
The normal delegators hurt.
What I mean here, is that validators obviously represent their delegators right? So it’s up to each validator to decide whether they think the costs outweigh the benefits or vice versa for their delegators.
They should…
But history has already shown otherwise sadly.
Personally, I really support this suggestion, it’s really useful
I agree with this, the wider implications have probably not been thought through, but just passed by because at first glance it sounds like a good idea
But we should protect all the delegators at large, maybe we can come to a compromise where everyone can be happy?
Here is a suggestion then
What if Stride gets 15m and XPRT gets 5m
As Stride is the dominant LST already it dose make sense to concentrate liquidity around this one,
But then its also quite nice to have an additional one for DeFi and diversification reasons, stkDYDX
And we protect the delegators at large by not seriously reducing their yield outside of natural market forces, by capping their losses to no more than roughly -20% of their current yield
And also keeping competition alive is ultimately good for the end users
This sounds fair then? agreed or not?
It sounds much better than just delegation to Stride.
Also I think Stride’s fee must be lower than 7.5%
It is great to see such an effort to strong the dYdX Chain.
My slight concern is the possibility of validators taking advantage of community staking to maliciously, but legitimately extract profits.
If I were a validator named as the cause of centralization, I would buy more tokens every time community staking is passed to encourage centralization.
This is because it will allow more funds to be staked from the community, which will push to increased capital gains possibly.
In other words, this proposal may improve staking rate, but it may result in unlimited expenditures from community treasury.
Currently, dYdX Chain is backed by enough great and reliable partners to make that less of a concern, but in a bear market, who knows what will happen.
Therefore, I believe that there should be a clear spending cap for such expenditures.
I basically agree with both proposals.
But I like the persistence proposal because the staking percentage scenario is clearer.
These proposals make the dydx network more decentralized and secure
This plan of DYDX can promote DYDX to develop in a more powerful direction. There are three main aspects that need to be considered in Restaking, namely decentralization, security and profitability. First of all, in order to improve the degree of decentralization, DYDX introduced two restaking projects: persistence and stride. However, the prerequisite for achieving this goal is that there will not be a big gap between the DYDX obtained by the two. Secondly, both Stride and Persistence are already safe and stable. After running for several years, the security has been verified; finally, in terms of revenue, both companies have brought stable benefits to users.
Thanks for this very thorough response!
As I’ve mentioned, I’m supportive of using multiple liquid staking providers for this initiative. So long as it can be done securely. However, I still think Persistence’ economic security is much too low for the 10M DYDX deposit proposed here.
I love that Persistence is planning on diversifying its security. However, I don’t think any of these other security sources are currently live. So until they are live, I think we should just focus on Persistence’ current economic security today.
Persistence has about $60M of economic security, and a TVL of roughly $15. A 10M DYDX deposit would increase TVL by roughly 3x, pushing it very close to the level of economic security. Then, if the price of XPRT declined and the price of DYDX increased, TVL could easily greatly exceed economic security.
For an attack to occur, an attacker wouldn’t have to acquire 67% of staked XPRT by buying it on the market. Existing validators and XPRT holders could conspire to attack the chain, or an attacker might buy validator keys, or some XPRT might also be bought from the market. In reality, it would probably be a combination of these three things.
This is a serious issue. In my view, you can’t just say “it’s improbable,” or “DYDX is staked anyway, so attackers would have a hard time getting it.” With this kind of thing, you shouldn’t create preserve incentives and then say “let’s hope for the best.”
The point is, by increasing Persistence TVL by 3x with a single deposit and pushing TVL very close to the level of economic security, it creates preserve incentives. In my view, it’s too big of a risk.
In my opinion, Stride and its investors will acquire excessively substantial control over the protocol, at least in the short term, which makes it absolutely essential to have a program from pStake that would balance the governance.
Voting results so far:
| Name | Stake,dydx(M) | Vote |
|---|---|---|
| Imperator | 5.33 | Yes |
| Polkachu | 2.44 | Yes |
| Kingnodes | 0.816 | Yes |
| PRO Delegators | 0.633 | Yes |
| Crosnest | 2.086 | Not Voted |
| Strangelove | 0.367 | Not Voted |
| Cryptocrew x Defi Dojo | 0.772 | Abstain |
| Enigma | 1.83 | Yes |
| ECO Stake | 0.967 | Yes |
| Smart Stake | 0.963 | Yes |
| Lavender.Five nodes | 0.61 | Yes |
| Kiln | 4.97 | Yes |
| Meria | 0.433 | Yes |
| Cosmostation | 2.88 | Yes |
Stride’s Investors: Imperator, Cosmostation, ChorusOne
Stride’s Investors in MEV committee(can recommend validator slashing): Reverie, Michael Neuder
Stride validators are responsible for 66.3% of Yes Votes
Stride investors are responsible for 24.88% of Yes Votes
After potential 20M addition Stride validators and Stride’s investors will control 48% of voting power outside Top2 (Which are VC’s validators)
If currently even Stride investors do not abstain from voting despite conflicts of interest, I see no change in the future. How will the community be able to influence a centralized set of validators or cancel the program?
With the most substantial spending of community treasury we must not create a system so vulnerable, that misses any checks and balances.
The same can be said about Stride tbh. Whereas the risk on the Hub is also big, because compromising security once means you effect the Hub, Stride AND Neutron in 1 go. So 3 for the price of 1. And when ICS grows, it only becomes bigger. So ICS does not necessarily mean that the mentioned risks are non-existing.
Spoiler; they won’t. Thanks for bringing the numbers ^^
*GPT summary of community feedback here so far:
The community largely supports the idea of decentralization, as seen through the lens of diversifying liquid staking providers. This approach mitigates risks associated with centralizing too much power with a single entity, a concern raised by several members including @SuperEra, @CosmonautStakes, and @rspa. The notion that supporting both @Stride and @pSTAKE enhances network security and decentralization is well-received, emphasizing the community’s priority for a secure and decentralized ecosystem.
@John_Galt 's concern regarding economic security, specifically the difference in economic backing between @Stride (supported by the Cosmos Hub’s interchain security) and Persistence (pSTAKE’s backing entity), sparks a significant debate. He argues that Stride’s economic security, backed by a larger value of staked assets, provides a more secure option for the dYdX community. This viewpoint receives pushback from others who argue for a more nuanced understanding of economic security, noting that factors such as community commitment and upcoming security measures (like Persistence’s partnership with Babylon) also play crucial roles.
The community responses underline the importance of competition and choice within the liquid staking space. Members like @0xajs and @AutoStake suggest a bidding process or a split allocation that respects both Stride’s existing contributions and pSTAKE’s potential to diversify the ecosystem. This sentiment reflects a desire for a balanced approach that neither monopolizes the liquid staking space nor dismisses emerging contenders.
A significant portion of the discussion revolves around governance and the ability of the community to influence decisions, especially in light of the voting power dynamics highlighted by @RealVovochka and @LeonoorsCryptoman. Concerns about a centralized set of validators exerting undue influence on the network’s direction and the potential for conflicts of interest underscore the community’s call for transparent and equitable governance practices.