TerenceTerence2021年9月15日 上午3:28

How to delegate your DSM? My two cents.

How to delegate your DSM? My two cents.

Desmos Proposal 1 is very likely to pass. This means the inflation will be enabled and DSM hodlers will start to generate staking income if they staked their DSM. So which validators should you delegate to? As not all DSM hodlers are familiar with staking, I would like to give you my point of view. Please note that this is just my personal opinion that some other experts may not necessarily agree with. Please do your own research.

What are Desmos and DSM?

Desmos is a decentralized computer network. The purpose of Desmos is to serve as the backbone for many other social networking and digital advertising applications. When there are data created by these applications (eg, a “post”, a “like” or even a 😂) , they will be recorded on Desmos. We need some people to operate and secure Desmos.

DSM represents the ownership of Desmos. Because of this interest, we believe that DSM owners should want Desmos to become successful. They are the most suitable people to operate and secure Desmos as they should be the one who care about Desmos the most.

Why does staking reward exist?

Ownership of DSM alone is not enough to motivate them to work because some of them may just want to trade DSM as a short-term speculator. We need an extra incentive to motivate them to become long-term participants. So there is a thing called staking reward. By staking the DSM, DSM owners are participating in the operation of Desmos. In exchange for this participation, they will get new DSM as staking reward.

Where do these new DSM come from? Inflation. The total supply of DSM is 100M at the start (aka “at genesis”). New DSM will be created according to the inflation rate (which can be varied according to the protocol design). As a simplified example, if the inflation is 10% per annum, there will be roughly 10M DSM created in one year. This 10M DSM will be distributed to the DSM owners who have staked their DSM.

This mechanism means the DSM owners who have not staked their DSM will have their interests diluted by the inflation. Assume you have 15M DSM at genesis (which means you own 15% of Desmos at that time) but you have not staked any of these DSM. After one year, the supply of DSM has increased to 110M due to 10% inflation per annum. You will not get any of this newly created DSM. Although you still have 15M DSM, your percentage ownership has dropped from 15% to 13.6%.

Why does Desmos need (a group of) validators?

Owning DSM does not mean you know how to operate and secure Desmos. That is why we need some people called validators. They are tech professionals who provide network security to Desmos.

So, Desmos is operated and secured by a group of validators. Why a group? It’s because we don’t want to see one single operator or a few operators become capable of dominating the network. This does not mean they must have bad intentions. We just want to avoid this risk. We believe this centralization of power will harm the network and its users sooner or later. This is proven by human history.

So we need to attract a group of professional validators to secure Desmos. As of this writing, there are 77 active Desmos validators (you can refer to Desmos Big Dipper).

What is the relationship between DSM owners and Desmos validators?

By providing the service of operating and securing Desmos, validators earn DSM as income.

Where do these DSM come from? From the DSM owners that these validators are providing service to, and this probably means you. Now, you have DSM but will not work as a validator while there are Desmos validators who are able to provide validating services in exchange for DSM as service fee. By “delegating” your DSM to the validators you choose, validators will do their work and help you to earn the staking income. You pay a percentage of this staking income to these validators as a commission. Desmos validators have autonomy to decide their commission rates.

Is there any downside of staking your DSM?

Token economics, or tokenomics, is about game theory. We use a set of carrot-and-stick mechanisms to incentivize good behaviours and penalize bad behaviours. When you (via validators) provide operation and security for Desmos, you will earn reward. When you (via validators) do something wrong (intentionally or unintentionally), you may be punished. One of the punishments is a small portion of your DSM staked with a validator will get slashed permanently if that validator has been offline from the network for a certain period of time.

So, how to delegate your DSM?

I will not tell you which validators you should delegate to. Instead, I will tell you what I will generally consider as a DSM owner who wants to make Desmos successful.

1) Contribution: validators who contribute actively to Desmos. For example, they create content to promote Desmos, they share the contents of Desmos with their audiences, they are active in the validators community to help other fellows, they find and solve bugs, they improve the code of Desmos, they build on Desmos, etc.

2) Network security: validators who run reliable network infrastructure

3) Skin in the game: the validators themselves also have interest in Desmos

4) Decentralization: I also want to see a more decentralized distribution of voting power so that the failure of one or a small group of validators will not affect the network. There is endless debate how decentralized a network should be and I do not have an absolute answer. But I will consider two factors:

  • 80-20 rule. If 20% of validators are having 80% of voting power, I think this is not healthy
  • How many validators (and who) have 34% voting power: in a BFT network like Desmos, 34% of voting power is enough to censor the network which will put the network at risk.

5) Pricing? Pricing is not my first consideration. So long as their commissions do not deviate too much to the market average, I am happy to give hardworking validators the commission they deserve.This is how tokenomics works. If we always only consider pricing, we will end up with an underperforming validator community who do not invest their money and time in their infrastructures, knowledge and manpower to secure and govern Desmos. This will ultimately harm Desmos.

If I am not familiar with the validator community, at least I will delegate to a group of validators instead of one, and rely on the wisdom of the community. If everyone will consider these factors and try our best to do our part, the overall delegations should be able to reflect the credentials of contributing validators while keeping the network fairly decentralized.

Conclusion

Desmos validators have different levels of experiences and different backgrounds. As a DSM owner, you need to give chances and provide resources for your validators to grow. When I look back, Forbole knew nothing when we first joined the community of Cosmos in late 2017. In less than 4 years, Forbole has grown from 2 co-founders to a team of 25 people. We have become a renown validator on nearly 30 blockchains securing more than $1 billion worth of digital assets. We are the developers of Big Dipper, Forbole X and Desmos. We have launched Forbole Ventures, our private investment arm to support other projects to thrive. You will never know how far a validator can go. I invite you to join us to build a strong Desmos validators community as we believe it is critical to the success of Desmos.

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How to delegate your DSM? My two cents.

TerenceTerence2021年9月15日 上午3:28
How to delegate your DSM? My two cents.

Desmos Proposal 1 is very likely to pass. This means the inflation will be enabled and DSM hodlers will start to generate staking income if they staked their DSM. So which validators should you delegate to? As not all DSM hodlers are familiar with staking, I would like to give you my point of view. Please note that this is just my personal opinion that some other experts may not necessarily agree with. Please do your own research.

What are Desmos and DSM?

Desmos is a decentralized computer network. The purpose of Desmos is to serve as the backbone for many other social networking and digital advertising applications. When there are data created by these applications (eg, a “post”, a “like” or even a 😂) , they will be recorded on Desmos. We need some people to operate and secure Desmos.

DSM represents the ownership of Desmos. Because of this interest, we believe that DSM owners should want Desmos to become successful. They are the most suitable people to operate and secure Desmos as they should be the one who care about Desmos the most.

Why does staking reward exist?

Ownership of DSM alone is not enough to motivate them to work because some of them may just want to trade DSM as a short-term speculator. We need an extra incentive to motivate them to become long-term participants. So there is a thing called staking reward. By staking the DSM, DSM owners are participating in the operation of Desmos. In exchange for this participation, they will get new DSM as staking reward.

Where do these new DSM come from? Inflation. The total supply of DSM is 100M at the start (aka “at genesis”). New DSM will be created according to the inflation rate (which can be varied according to the protocol design). As a simplified example, if the inflation is 10% per annum, there will be roughly 10M DSM created in one year. This 10M DSM will be distributed to the DSM owners who have staked their DSM.

This mechanism means the DSM owners who have not staked their DSM will have their interests diluted by the inflation. Assume you have 15M DSM at genesis (which means you own 15% of Desmos at that time) but you have not staked any of these DSM. After one year, the supply of DSM has increased to 110M due to 10% inflation per annum. You will not get any of this newly created DSM. Although you still have 15M DSM, your percentage ownership has dropped from 15% to 13.6%.

Why does Desmos need (a group of) validators?

Owning DSM does not mean you know how to operate and secure Desmos. That is why we need some people called validators. They are tech professionals who provide network security to Desmos.

So, Desmos is operated and secured by a group of validators. Why a group? It’s because we don’t want to see one single operator or a few operators become capable of dominating the network. This does not mean they must have bad intentions. We just want to avoid this risk. We believe this centralization of power will harm the network and its users sooner or later. This is proven by human history.

So we need to attract a group of professional validators to secure Desmos. As of this writing, there are 77 active Desmos validators (you can refer to Desmos Big Dipper).

What is the relationship between DSM owners and Desmos validators?

By providing the service of operating and securing Desmos, validators earn DSM as income.

Where do these DSM come from? From the DSM owners that these validators are providing service to, and this probably means you. Now, you have DSM but will not work as a validator while there are Desmos validators who are able to provide validating services in exchange for DSM as service fee. By “delegating” your DSM to the validators you choose, validators will do their work and help you to earn the staking income. You pay a percentage of this staking income to these validators as a commission. Desmos validators have autonomy to decide their commission rates.

Is there any downside of staking your DSM?

Token economics, or tokenomics, is about game theory. We use a set of carrot-and-stick mechanisms to incentivize good behaviours and penalize bad behaviours. When you (via validators) provide operation and security for Desmos, you will earn reward. When you (via validators) do something wrong (intentionally or unintentionally), you may be punished. One of the punishments is a small portion of your DSM staked with a validator will get slashed permanently if that validator has been offline from the network for a certain period of time.

So, how to delegate your DSM?

I will not tell you which validators you should delegate to. Instead, I will tell you what I will generally consider as a DSM owner who wants to make Desmos successful.

1) Contribution: validators who contribute actively to Desmos. For example, they create content to promote Desmos, they share the contents of Desmos with their audiences, they are active in the validators community to help other fellows, they find and solve bugs, they improve the code of Desmos, they build on Desmos, etc.

2) Network security: validators who run reliable network infrastructure

3) Skin in the game: the validators themselves also have interest in Desmos

4) Decentralization: I also want to see a more decentralized distribution of voting power so that the failure of one or a small group of validators will not affect the network. There is endless debate how decentralized a network should be and I do not have an absolute answer. But I will consider two factors:

  • 80-20 rule. If 20% of validators are having 80% of voting power, I think this is not healthy
  • How many validators (and who) have 34% voting power: in a BFT network like Desmos, 34% of voting power is enough to censor the network which will put the network at risk.

5) Pricing? Pricing is not my first consideration. So long as their commissions do not deviate too much to the market average, I am happy to give hardworking validators the commission they deserve.This is how tokenomics works. If we always only consider pricing, we will end up with an underperforming validator community who do not invest their money and time in their infrastructures, knowledge and manpower to secure and govern Desmos. This will ultimately harm Desmos.

If I am not familiar with the validator community, at least I will delegate to a group of validators instead of one, and rely on the wisdom of the community. If everyone will consider these factors and try our best to do our part, the overall delegations should be able to reflect the credentials of contributing validators while keeping the network fairly decentralized.

Conclusion

Desmos validators have different levels of experiences and different backgrounds. As a DSM owner, you need to give chances and provide resources for your validators to grow. When I look back, Forbole knew nothing when we first joined the community of Cosmos in late 2017. In less than 4 years, Forbole has grown from 2 co-founders to a team of 25 people. We have become a renown validator on nearly 30 blockchains securing more than $1 billion worth of digital assets. We are the developers of Big Dipper, Forbole X and Desmos. We have launched Forbole Ventures, our private investment arm to support other projects to thrive. You will never know how far a validator can go. I invite you to join us to build a strong Desmos validators community as we believe it is critical to the success of Desmos.

標籤