Cheers for sharing your views. While I understand the concerns expressed re: abuse of power, I think that #1 is a bit too harsh a criterion in practice.

There are validators out there that are putting time and effort into running their nodes at home and are perfectly entitled to ask for 20% commission from their (often limited number of) nominators. The fact that they consistently get (s)elected by phragmen is evidence that they aren't doing anything harmful to the network in principle. Why go after them?

If the issue is the amount of KSM held by validators that could be used to "swing" votes (something I don't see happening easily, thanks to the current governance mechanisms), then using the amount charged in commission by validators is irrelevant to the discussion.

Since you don't really want to go after any account just because they hold X amount of KSM that you consider "very large and very centralised", you would want to have an entity that reviews proposals before they reach voting status, which is exactly what the Council is doing already.

All in all, I'm not really worried about Cexchanges overtaking governance on Kusama in one form or another. Please feel free to let me know how I might be mistaken. :)

Perhaps I need to add some more context.

Centralized staking services like binance or kraken are in control of the private keys of the accounts that they have custodianship for.

As it stands, they could use that to vote against increasing the Validator Set count or to support more centralization.

What is needed is a way to reduce custodians ability to vote on behalf of their customers. Having a voting power curve relative to commission % further encourages validators to keep their rates lower.

Validators who are charging 100 % and active in Validator sets are either one of a few private fortunes or custodianships.

Cheers for the explanation! :)

One thing I wonder is: what is the point of reducing their voting power by 50% when the custodians can leverage lock periods to increase their voting power anyway? Wouldn't it be more effective to disable the voluntary locking and/or the** democracy bonding** functionality of the accounts that are under the control of custodians from the get-go?

This would probably require updating the system so that it can tell the difference between private keys held by an individual and private keys aggregated by custodians. I'm not even sure if that is possible under the current set-up for address generation. So, further digging is definitely needed here. >__<

The thought was that there is likely no technical method to determine if a validator is a custodianship. So scaling it would be a way deter or lessen impact with a gradient less impactful to larger private holders.

Your suggestion of a democracy bonding control is a much better enforcement mechanism. The challenge is how to determine when it should be on or off.

Are funds able to be bonded economically and for governance simultaneously? If not, then that is part of a solution as it is unlikely that a custodian would have funds not producing yield in standby ready to use for governance voting.

Assuming that is not the current state, and agreeing that democracy bonding is the appropriate method for control, that leaves the remaining issue of identifying custodianships.

I think the only way to do it could be any or all of the following:

1. Algorithmically extrapolate account structure of validators and nominators. Determine common account ingress patterns. Establish criteria for what appears to be custodial. Require any validators meeting this criteria to have identity registered.

2. Mandate that all validators in an active set operate with an on chain identity.

3. Require that nominators select more than 1 validator identity

4. Custodian Validator stashes with democracy bonds are omitted from active set (along with all Validators operating under the same identity).