DAP staking changes significantly reduced Polkadot's security -- a wrong premise, and a bet against the industry

[sorpaas]

@dandan

Given that the Web3 Foundation holds a significant amount of DOT and operates a considerable number of validator nodes

Exactly right. See The Nakamoto Coefficient of Polkadot is At Most 25 - #15 by sorpaas

We did later find strong evidence that this is W3F/Parity. It runs completely against the decentralization story. This means that if you are an external team, you probably don’t want to launch on Polkadot because it doesn’t practically provide shared security, but a lot of centralization.

@sorpaas

5. The conflict of interest

Three facts:

1. A single nominating entity backs ~17.5% of the active set. We have recently identified a large validator bloc, and we have strong evidence that this is simply W3F/Parity. The backing – on the order of 135M DOT – is entirely one entity’s.
2. DAP converts that backing from slashable to unslashable. This holds regardless of who operates the nodes: the benefit accrues to the backer.
3. The same affliated entity authored, proposed, and voted in relevant referenda enacting DAP.

Grouped by backing entity rather than by validator identity, Polkadot’s concentration picture also changes: counting backing groups, the top few groups exceed the ⅓ finality threshold at a coefficient on the order of 4.

Re @jonas post, we already see some categorical errors and his argument actually already concedes a significant portion of the original DAP rationale. We do agree that some of his numbers do look more recent / better computed, but those really don’t do much to the logic of our arguments (which is the fact that DAP staking change significantly reduced Polkadot’s security).

We only plan to publish our response slightly later as we want to do some more reviews.