Prop 128: Support Decentralization and Security on the Kava Network

Support Decentralization and Security on the Kava Network

Critical Decentralization Issue:
Decentralization is a key aspect of blockchain technology and is essential for ensuring the security and reliability of the network. However, as the Kava network continues to grow, we are witnessing a concentration of power in the hands of a few large validators.
Currently, the top 4 validators control more than 44% of the voting power meaning that any proposal can pass or fail with just their support. In our opinion, this is not a truly decentralized blockchain.
We reached out to Kava community on discord about the immense amount control in the hands of a few. We were informed that the top 4 validators do not vote on any proposal. We really appreciate that from the top 4 validators, but we believe in true decentralization. Trusting someone to be responsible has not worked very well lately.
This is not true DECENTRALIZATION if we just HOPE that the largest validators do not vote to harm the network.

Solution:
Currently, trends suggest that delegators flock to validators offering 0%/unsustainably low commission. This makes it very difficult for validators with a small number of delegators to stay competitive, as validators rely on commissions to cover the expenses of maintaining their nodes.

To address this issue, we propose setting a minimum validator commission rate of 5%. This will create a more level playing field and help to ensure that smaller and newer validators are able to participate in the network, promoting a more diverse and decentralized network.
The top validators continue to accumulate a larger share of Delegations while the bottom 95% of validators are forced to cut costs, reducing the overall security of the network.

Let’s look at a real example of these costs:
The minimum hardware costs for a validator are ~$200 per month, while more advanced and secure configurations (ex; Sentry) can cost anywhere between $600-800/month (including maintenance).
Let’s look at an average validator (Validator at rank #51)
Total Stake = 141,737 Kava
Approximate Staking Reward = 141,737 X 21% = 29,764 Kava
If this validator earns 5% commission = 29,764 x 5% = 1,488 Kava = $1,500 = $125 per month
Stats as of 2/8/2023*

This makes it challenging for validators to maintain the minimum server requirements, let alone add additional security features like a Sentry node architecture.
A more competitive and diverse group of validators will add to the network’s decentralization, increase its’ security, and make it more resistant to malicious actors. As a community, we have a responsibility to take actions that reinforce the security of the Kava network. Setting a minimum commission (similar to those set for other Cosmos IBC networks) is a simple step towards achieving a truly decentralized Kava Network.

Reference: Juno implemented a Minimum Validator Commission feature (originally copied from Stargaze). We can use the same approach. Please see MinCommissionDecorator

Vote Yes – If you want a decentralized and secured Kava Network
Vote Abstain - If you do not wish to express an opinion but would like to contribute to the quorum
Vote No – If you only want to maximize your rewards, at the cost of reduced security and increased centralization
Vote No With Veto – If you are against this proposal and want to penalize the proposer for trying to achieve true decentralization on Kava network