
**Short description:** This proposal seeks to adjust validator minimum commission rate from 3% to 10%

**Project Category / Type:** Infrastructure

**Discussion date:** 23.11.2022.  [https://kusama.polkassembly.io/post/1993](https://kusama.polkassembly.io/post/1993)

**Onchain publish date:** 26.01.2023.

**Governance referenda origin call:** staking_admin

**Context**

This proposal seeks to adjust the validator minimum commission rate and keeps all other staking configurations unchanged. In the current market (last several months) validator income from the minimum commission can cover less than 50% of the server rent costs. In order to maintain a sustainable environment and prevent the network degradation I am passing this proposal to onchain voting.

**Problem**

There were several topics regarding to the validator infrastructure expenses and operational costs that can be found here:

[https://kusama.polkassembly.io/post/1980](https://kusama.polkassembly.io/post/1980)

[https://kusama.polkassembly.io/post/1306](https://kusama.polkassembly.io/post/1306)

A fully active validator operating at 3% commission can stand to earn:

(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month. 
With KSM priced at 34$ this equates to ~97.92 USD/month. 


**Proposal**

The proposed increase of minimum commission to 10% is trying to create a better and more sustainable network environment. With the numbers given above it is clear this is a small step towards this goal. Beside the commission, we would need KSM price to double and reach 50$ in order to earn ~480 USD/month which is still within the boundaries of operational costs.

With this proposal we are not influencing KSM inflation rate. We are asking the nominators to steer 1.36% of their staking APY towards the network, current returns are 18.88% and we anticipate it to be 17.52% all other factors being equal. We need to have a strong, reliable, secure and redundant blockchain network in order to process and secure multi million $ assets on it.


**Objectives**

Validator earnings and effects on staking rewards

A fully active validator operating at 3% commission can stand to earn 
(800/1000)* 4 * 30 * 0.03 = 2.88 KSM/month. : 

- with KSM priced at 25$ this equates to ~ 72.00 USD/month.

- with KSM priced at 34$ this equates to ~ 97.92 USD/month.

- with KSM priced at 50$ this equates to ~ 144.00 USD/month.

A fully active validator operating at 10% commission can stand to earn 
(800/1000)* 4 * 30 * 0.1 = 9.60 KSM/ month.

- with KSM priced at 25$ this equates to ~ 240.00 USD/month.

- with KSM priced at 34$ this equates to ~ 326.40 USD/month.

- with KSM priced at 50$ this equates to ~ 480.00 USD/month.


**Known constraints**

A significant change of KSM price can have a positive or a negative impact to the changes proposed. This proposal is not trying to set permanent staking parameters i.e.  In a scenario where KSM hits $100 anyone can start a new proposal to decrease the commission rate.



**[Full Proposal](https://docs.google.com/document/d/1sHrRM7wPv390GfhdPJeUKtfKD81X5ME5OIGrlDXqOXI/edit?usp=sharing)**

Sets the minimum amount of commission that each validators must maintain.

This call has lower privilege requirements than `set_staking_config` and can be called
by the `T::AdminOrigin`. Root can always call this.

- This proposal wants to change the minimum commission rate for validators from 3% to 10%.
- The current commission rate is not enough to cover the costs of running a validator.
- Increasing the commission rate will help make the network more sustainable.
- The proposal does not affect the inflation rate of the cryptocurrency.
- The earnings of validators will increase with the higher commission rate.
- The proposal is not permanent and can be changed in the future if needed.

#79 Kusama Validator minimum commission rate

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