Hey all! Wanted to get your thoughts on something…
It’s become an increasing worry to me that the staking rate is uniform across amount staked. Let’s call it on average 15% (7.5 staking, 7.5 real).
Typically due to the vast interdependencies in the economy/physical systems in general, a system’s growth displays more asymptotically towards to top, with it being harder to accrue money/energy the bigger the system gets.
But in our system the bigger entities get the same % in rewards and therefore display the same rate of growth as smaller entities. With money being a proxy for energy, this means energy is being taken from somewhere else in the system, or that the system is just unsustainable entirely.
To keep it more concrete: there’s no available options for those at the highest rungs of wealth to passively make 8% real a year, and I think there’s a physical (albeit not well modeled) reason for that. Even in this low growth period, the highest stakers are making 10-20 million a year passively. This problem is only going to get worse as polkadot grows.
Would love to hear thoughts on this & if agreed upon would like to discuss potential solutions. Thank you.
I don’t get your points and I don’t agree to some of your statements. Besides, it is not currently technical feasible to prevent whales to divide funds into many accounts to make it appear to be small token holders to the protocol.
One day we may have a working proof of personhood system and could implement something like the staking reward will be 20% for up to 10k DOT and reduced to 10% beyond that. But that just means someone will develop a smart contracts to allow whales to lend DOTs to people don’t have 10k DOT and enjoy the (20% - fee) staking rewards. Yeah it helps a bit but how about just implement UBI instead.
If you “taxed” whales (or made staking rewards curved for size), they’d just split up their bags into multiple accounts. Without verifiable, consensus identity, I don’t know how you’d do what you’re trying to do (and that’s setting aside the bigger question of whether it’s desirable).
I agree with what you’re saying about the difficulty in finding a solution for this. At this stage I was really more interested in discussing the merits of the idea, specifically around the uniform passive growth rate of small and large entities and what that does to a system’s development. I’ll rescind a bit and say that entities of varying sizes can grow at the same rate, but certainly not for the same amount of energy expended, which is what’s happening here.
What is it you don’t agree with?
IRL it is the billionaires whom have access to all sorts of investment vehicles, which have requirements to only allow people with good risk tolerances to join. And they are also able to afford to services to reduce tax and hedge risks. If you only have $1000 in bank, it is unlikely to get you the same APY compare to someone else with $10M.
Now everyone has access to staking and gain basically the same APY regardless of the principal amount. I will say that’s already an improvement. Can we improve it further? Maybe, for example, with UBI. But I don’t think adjust staking rate is the right solution.