The goal of this proposal is to avoid race to the bottom dynamics. Additionally, profit margin is the main source of revenue for node operators - imposing a minimum profit margin improves the prospect of operating Nym nodes, supports the operator community for their crucial work and creates a more pronounced systemic advantage to favor those who invest work and time into operating infra over those who passively stake by delegating.
Important: If this proposal is accepted, the minimum profit margin will be implemented on-chain, and apply to all Nym nodes.
Closed: 2024-05-16T00:00:00Z→2024-05-23T00:00:00Z, or until decided
Min. quorum: 50% (of node operators who registered on the forum before voting ends)
Type: Single majority
If this proposal is accepted, the community will proceed to vote on the value of the network-wide minimum profit margin. This will happen in 2 steps:
The Squad Wealth Fund consists of delegator rewards, therefore imposing a minimum profit margin will directly affect its revenues. As the stewards of the The Squad Wealth Fund, Nymja and Shinobi vote on the highest value of the min PM can be.
Next, the operator community will vote on the value of the minimum profit margin (between 10% and the maximum value decided during the previous vote).
You can change your vote any time, until the topic is closed. Once voting closes you will not be able to change your vote. Please also share your thought process, concerns, questions and ideas below - let’s discuss the proposal and make decision together!
Should a minimum profit margin implemented on the contract level?
Yes
No
0voters
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Love voting. Voted for YES simply because at the moment node running can barely cover the costs of running a node in “good” jurisdiction. By good I mean a country with competitive prices and good Internet. Since NYM is targeting exotic locations, running a node there will have to be borne entirely by the node operators. In those exotic jurisdiction costs are usually (but not always!) higher, so it would be great to incentivize those operators.
On the other hand, I do wonder whether this may create a competitive advantage for some node runners. For example, running a node in Germany is cheaper and it will have a better uptime = more tokens. But I guess this is a different topic to discuss.
We have one concern.
How is it possible to modify this on chain for all the mixnodes since these parameters are controlled by the private key of the wallet managing the node ?
I think it will be a good thing for a minimum PM, that would help healthy competition, right now competing againt whales or popular operators makes things difficult for small operators. Competing with your 3 - 5% one can barely afford good hardware with current market condition especaily with the new hardware requirements
Indeed, they’ll be impacted. I think that is in part the reason of this voting, make adjustments, based on real life data, about how the tokenomics will work. I think that having a fair game, allowing atracting of new operators, will make a stronger and more resilient network against a powerfull atacker with lot of resources. One “easy” attack vector is to increase the fee for VPS providers to the point no started node operator may be able to purchase one without some saved tokens to endure while its node acquire recognition
I also want to discuss in this thread what are the objective adventages and disadventages of setting a minimum profit margin. It is my understanding that the nodes rewards are split to node operators and delegators (stakers), for example if reward is of 10 nym and a profit margin is of 10 %, is 1 Nym for the node operator and 9 Nym for the stakers (split proportionally by their contribution). If I’m right, what are the disadventages and adventages for the nym economy, users, node operators in the future?
Yes, operators are an important link to Nym’s infrastructure and decentralization. The democratic participation of the operators is necessary, Nym will be better and better every day.
I think the key here is how the node’s profit is split. If too much goes to the operators, people may feel they should stake less. If too much goes to stakers - operators may be less incentivized to run the infrastructure, look after it, update, etc.
i’m voting yes because even if im not selling any nym, there are node operators that might be struggling due to market conditions/sentiment and covering their costs mean a stronger mixnet.
Good point, Mr Smith. If the minimum PM is set very high, then we would risk hurting the value proposition of delegating. However, with the current APY which is ~15%, even a 50% min PM would put Nym in line with other cosmos projects in terms of staking rewards offered (7.5% is still decent). So this is not a big concern, however min PM will directly impact revenues to the Squad Wealth Fund. This is why, if the proposal passes, Nymja and Shinobi will decide how much to favor operators at the expense of the Fund. As many Shinobis and Nymjas are also node operators, I am not worried about any extreme outcome - whatever happens, it will be great for the community overall.
Hey all, thanks for sharing your thoughts about the proposal.
Edit: Nym Team is NOT voting, that was left in the proposal by accident - I’ve made an edit accordingly. In general, for the time being we are going to use a common governance setup where Nym Team only submits proposals, and the community votes.
For what it’s worth I would be happy to see this proposal pass. It would be beneficial to the node operator community and to the Nym network as well to have a minimum profit margin. Thanks for the idea @wunderbaer!
Thank you very much for picking up my proposal! I think it’s crucial to adjust this value to maintain a healthy ecosystem for node operators. Looking forward to the results and the (hopefully) upcoming decision on the values for the minimum margin.
The impact of an increated minimum margin will hardly affect delegator’s rewards anyways. The difference from e.g. 2% to 5% is marginal. I wouldn’t worry too much about it here. I think the key is to keep the value “flexible” to some extended. So for example when the price of NYM increases drastically we should also consider lowering the % again at some point…
I vote yes. It seems to me a measure that supports fair competition and smaller nodes. This is essential to keep the network as decentralized, strong and healthy as possible.
Closed: 2024-05-16T00:00:00Z→2024-05-23T00:00:00Z, or until decided
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