Hi everyone, I’m new here and wanted to share a proposal related to staking. It’s my own idea, but I used AI to improve the text (just in case anyone is wondering).
Introduction (can be skipped):
When I first started reading about the staking, I found the system somewhat unfair, even though I understand the reasoning behind it. I think it’s quite difficult to choose 16 trustworthy validators, especially given how many there are and the lack of clear criteria for what makes a validator truly reliable.
That got me thinking about a way to create a system where both, validators and delegators, can benefit. Validators who are confident in their performance could build more trust and potentially justify charging higher commission. At the same time, delegators would have the peace of mind that they won’t face penalties due to validator mistakes, and can make decisions based on transparency and trust.
Summary
I propose introducing an optional “delegator insurance” mechanism, allowing validators to opt in to provide financial protection for their nominators in case of slashing. This insurance would be enforced and displayed on-chain, allowing nominators to choose “insured” validators who fully absorb slashing risk. In return, these validators could charge higher commission fees to reflect the added responsibility.
Motivation
Under the current system, nominators share the slashing risk with the validators they nominate. While this encourages careful validator selection, it creates a barrier for less-experienced or smaller delegators who lack the tools or time to properly assess validator reliability. Delegator insurance would:
- Reduce the financial risk for nominators.
- Increase accountability and transparency among validators.
- Introduce a competitive “insurance” feature for validators to attract stake.
- Improve the staking experience by offering flexible risk profiles.
Specification
The proposed system would:
- Allow validators to opt into an “insured” status by bonding extra collateral.
- Make the insurance status visible on-chain and in the UI.
- Transfer full slashing liability to the validator’s own bonded or insured funds, exempting insured nominators from losses.
- Permit insured validators to set higher commission fees.
- Require mechanisms for dispute resolution in edge cases (e.g. unclear responsibility for slashing).
Benefits
- Lowers entry barriers for new DOT holders to participate in staking.
- Aligns validator incentives toward stronger operational performance.
- Encourages innovation in validator services and risk management.
- Supports the decentralization of stake across more validator options.
Open Questions
- Collateralization: What should the minimum collateral be to qualify as “insured”?
- Implementation: What runtime or pallet changes are needed to support insurance logic?
- Abuse Prevention: How do we prevent validators from gaming the insurance system?
- Governance Scope: Should this feature be part of core staking logic or an optional module?
Conclusion
This proposal aims to add an optional, market-driven risk protection layer to the staking ecosystem; empowering nominators, incentivizing validator excellence, and reducing risk-related centralization pressure.