Dear community,

With the upcoming rollout of runtime 9160 we should explore the option of an extrinsic to set a network wide minimum commission.  This discussion relates to metrics associated with the KUSAMA chain.  After the on chain parameter is declared any persons using the staking.validate() extrinsic to change their commission would have to abide by the new threshold.  All existing commission values would remain the same.

I implore those who are contributing to this post to do so in a meaningful and calculated manner.  The goal is to ensure that validators are compensated fairly and that they may continue to operate their nodes in a sustainable manner.  It is not an avenue for undue enrichment.

### Stakeholders
Some of the apparent stakeholders are:

1. Independent Validators
2. Commercial Validators
3. Retail Nominators (everyday person)
4. Commercial Nominators who don't operate their own validator (Karura, ParallelFi etc.)

Parties who self-nominate like many of the exchanges should not be affected by this change.

This thread is opened for us to discuss in an empirical manner what is a reasonable value for this threshold and to appreciate the views of all entities it affects.  A high commission can deter retail nominators from staking and it can encourage commercial nominators to host their own validators. 

### Considerations

I would like to encourage discussions in a structured and meaningful manner.  The proposed commission should consider items like:

1. Rental cost for an appropriately spec'd validator host-machine
2. Compensation for the hours exerted by the validator operator
3. Fair and reasonable profit
4. Fluctuations in era points during a monthly period
5. Fluctuations in token price during a monthly period


### Constants

The following should be used in calculations.

- [Kusama Price](https://kusama.subscan.io/tools/charts?type=price) - USD$256 / 1 KSM
- Total Kusama earned per era = 0.6 KSM
- 30 days per month

### Sample Calculation

Ideal return per month [IR] = ( [Rental Cost] + [Operator Hourly Rate] * 1 (hr) * 30 (days) ) * (1 + ( [Percentage Profit]) / 100);

IR = (80 + 20 * 1 * 30) * (1+(15/100))

IR = (80+600) ~~* 1.15~~

IR = $680/mth or 2.656 KSM

Commission required [CR] to earn 2.656 KSM over 30 days =>

0.6 * [CR]  * 4 (eras) * 30 (days) = 3.054

[CR] = 2.656 / (0.6 * 4 * 30)

[CR] = 0.03689 or 3.7%

**CALCULATION AMENDED TO REMOVE 15% PROFIT**

Allowing for 20% for fluctuations in token price and era points a commission of 4.8% is calculated.  There aren't any validators in the active set with a commission of 4.8%, however those that have 5% offer a return of 17.77% on a total-stake of 4,798.2177 KSM.  The total stake in question is nPoS normalized and should represent the 'general stake'.

I do confess that larger operators would enjoy better returns due to economies of scale but I present the above for general consideration.  I also note that while the token price is set at $256.00 the present price is $170.00.  

I also understand that it is technically possible to submit a proposal to forcefully adjust the commission of validators.  While this sounds a bit excessive it might be an good accompaniment to ensure an even playing field.

Regards,
Will | Paradox



- They are discussing setting a minimum commission for validators on the Kusama chain.
- They want to make sure validators are compensated fairly and can continue operating.
- They are considering factors like rental costs, operator compensation, and profit.
- They provide a sample calculation to determine the commission needed to earn a certain amount.
- They suggest a commission of 4.8% based on fluctuations in token price and era points.

#1306 On-chain Minimum Commission - Discussions before launch