This is the part that is key. It would be unfair for this upgrade to take fees away from the over 100 stakers that are currently securing the network. So it makes sense to change the economic model so they continue to earn by staking POL and running nodes.
More validators, more decentralization and increased security guarantees, while also increasing throughput. Let’s do it because those are all great things. In my opinion, VEBloP should not launch until this economic model is ready.
Lowering the cost to run a validator may make POL more appealing to LST network operators like Lido and Rocketpool as well. Supporting a more significant liquid staking ecosystem around POL should be part of this roll out too IMO. (as I’ve suggested here).
One thing i would flag for this: the reward is weighing the amount of POL staked equally with uptime. This creates a large incentive to centralize validators as bigger validators will earn more rewards even if their uptime is not as high, despite creating similar amount of security.
For example, consider if there is a 1,000 POL reward between 2 validators
| Role | Stake (POL) | Performance | Reward (POL) | Calculation |
|---|---|---|---|---|
| Validator 1 | 2M | 50% | 500 POL | [(2M * 0.5 / 5.8M_PWS) * (1000*0.8)] (Validator Perf-Weighted Share) |
| Validator 2 | 1M | 100% | 500 POL | [(1M * 1.0 / 5.8M_PWS) * (1000*0.8)] (Validator Perf-Weighted Share) |
Should these 2 validators get the same reward when one was down half the time, but had twice as much stake?
Maybe you earn 100% of the reward if your uptime is above 99% (I believe the average for current validators is over 99.8%)? I would put more weight on uptime in the calculation, and spending the time to simulate what would be the rewards for current validators based on current POL staked would be worth pursuing too.