KYVE Validator Delegation Program Update

PROPOSER: The KYVE Foundation ([email protected])

Proposal Summary

Since the launch of the protocol layer, the KYVE Validator Delegation Program (rewarding the top Incentivized Testnet participants, KVDP) is the layer’s largest source of delegation.

We have become aware that certain validators within this program are taking advantage of the situation and setting their commission rate to 100% to get the most economic benefit. In doing so, those who delegate to them do not receive a part of the rewards, discouraging delegation.

In order to give new protocol validators a fair chance, increase network competition, and further support delegation, we propose limiting the commission rate to 50% for those within the KYVE Validator Delegation Program. These validators would have 96 hours (4 days) to comply with the new limit, along with a second chance option for those who missed the implementation of this new rule.

Proposal Details

Objectives: Lowering the commission rate is a way for validators to attract more delegation by incentivizing delegators. The main objectives of this proposal are to encourage best practices on the protocol layer for those with the advantage of receiving delegation from the KVDP, as well as further motivate delegation on the protocol layer, in turn, further decentralizing and securing KYVE.

Terms & Timeline: To enforce this new rule, we propose a delay of 96 hours (4 days) after the proposal has passed for the validators within the program to initiate the lowering of their commission rate. If a validator does not comply with initiating the lowering of commission within this set timeline, they will lose their delegation from the program. Once their delegation is lost, they will have one chance to lower their commission rate to be re-delegated to.

However, if after the 4 days from the proposal passing, a validator receives delegation and sets their commission rate above 50%, they will immediately lose their delegation as they have not complied with this set limitation.

Impact Assessment:

• Technical Impact: The protocol validators within the program would need to update their commission rate.
• Economic Impact: This would positively impact KYVE’s overall protocol layer economics and security, which rely heavily on delegation. It would also help achieve a stake ratio balance between the two layers.
• Social Impact: This would encourage further delegation to protocol validators, overall enhancing KYVE’s decentralization and network security. It would also give the other validators who are already following best practices more opportunity to receive delegation from our users.

*Please note that this proposal is addressing 100% commission on the delegation from the KYVE Validator Delegation Program, not personal funds.

**The Foundation’s block rewards earned from the program’s delegations are used to refund the pool(s) in order to continue feeding into network participation, as well as possible community activities.

Voting Options

Voting YES

• A YES vote on this proposal indicates that a commission rate limit of 50% SHOULD be enacted for protocol validators in the KYVE Validator Delegation Program, with 96 hours (4 days) to lower their rate from the proposal passing.

Voting NO

• A NO vote on this proposal indicates that a commission rate limit of 50% SHOULD NOT be enacted for protocol validators in the KYVE Validator Delegation Program.

Voting NO WITH VETO

• A NO WITH VETO vote on this proposal indicates that a commission rate limit of 50% SHOULD NOT be enacted for protocol validators in the KYVE Validator Delegation Program; and that the proposal depositors should be penalized.

Voting ABSTAIN

• An ABSTAIN vote on this proposal indicates that you decline to give a specific opinion on this proposal while maintaining active governance participation.

Conclusion

Overall, our aim is to provide a fully decentralized, secure platform for our network participants and technology to thrive. By encouraging best practices on the protocol decided on by our governance, we hope to reach these goals. Please note that this proposal follows a template that will later be finalized through a governance discussion around processes.