Signaling Proposal: Approve the Stride Delegation Process Osmosis Advisory Council

Proposal Discussion
1

Signaling Proposal: Approve the Stride Delegation Process Osmosis Advisory Council

For the past 3 weeks, Stride has been accepting applications for its host chain delegation program, the process by which Stride governance selects the validators to which it delegates OSMO liquid staked via the Stride protocol.

As part of this process, Stride publicly solicited applications from Osmosis community members to serve on the Osmosis advisory council, a body of 5 members that will select the Osmosis host chain validators according to preselected objective criteria. As one of many checks and balances in the Stride Host-chain Validator Selection Process, the Stride community brings this signaling proposal to ask the Osmosis community to ratify the selected candidates for the advisory council.

Background on the Delegation Process

Stride protocol is designed such that STRD stakers vote to determine which host-chain validators receive delegations. At any time, anyone is free to make an onchain governance vote to add or remove validators from a host-chain validator set. But it is always STRD stakers who have the ultimate authority to approve or deny any changes.

STRD stakers need a systematic, organized, and fair framework for selecting host-chain validator sets.

Such a framework was developed and implemented in late 2022. Called the Stride Host-chain Validator Selection Process, it was used to select a set of thirty-six Cosmos Hub validators to receive delegations from Stride protocol. STRD stakers responded favorably to the Process, and voted to approve the new validator set. Since the Process was used in late 2022, several small optimizations have been made, to make it more organized and efficient.

Much thought has gone into this Process, to make it as fair and responsible as possible, both from the perspective of Stride protocol and host-chains.

Over the next few months, the Stride Host-chain Validator Selection Process will be used to select new validator sets for Osmosis. Hereā€™s what the process will look like:

Step 1: Applications

To be eligible for a delegation, validators must meet these four minimum thresholds:

  1. An uptime of greater than or equal to 99% in the last months

  2. A commission less than or equal to 10%

  3. Voted for at least seven of the last ten governance proposals

  4. Has been in the active set for at least three months

If a validator is eligible, then it needs to fill out an application to be considered for a Stride protocol delegation. On the application form, validators must answer two key questions. Their answers will be used by the advisory council to evaluate them. The two key questions are:

-How have you contributed to your blockchain technically in the past six months?

-How have you contributed to your blockchain socially in the past six months?

Individuals who wish to join the advisory council need to fill out an application, too. The advisory council is a group of five people who evaluate validator applicants. Anyone is free to apply to join the council, but only individuals who are knowledgeable about the relevant blockchain and are well-known and respected by the relevant community will be chosen. Stride Labs has the executive role of proposing a five-member advisory council.

Step 2: Advisory council approved by host-chain

As a check on the power of Stride Labs, an onchain signaling proposal is then submitted to the relevant chain, asking stakers if they approve of the chosen advisory council. This is purpose of the current proposal.

If governance approves the council, then it can move on to evaluating validator applicants. If governance disapproves, Stride Labs must change the members of the council, and the new council members must be submitted in a new signaling vote.

Step 3: Evaluation

Once the validator applications have been received and the advisory council has been approved by the relevant host-chain, then the council members independently evaluate validator applicants, giving each validator a score out of ten.

The five council membersā€™ scores are then averaged out, giving each validator a final score out of ten. If a council member has a conflict of interest about a certain validator, they do not evaluate that validator.

Step 4: Ranking in quartiles and weighting

Once each validator has a final score, validators are separated into four quartiles, based on their existing delegations. For example, the top twenty-five percent of validators are in the first quartile, the next twenty-five percentiles are in the second quartile, and so forth.

In each of the four quartiles, validators are ranked based on their final scores. The top nine validators in each quartile are chosen, resulting in a set of thirty-six validators from across the active set.

Finally, each validator is weighted to determine the share of the total delegation it will receive.

See full evaluation details here: Evaluation Categories + Method - Google Docs

Step 5: Proposal submitted to STRD stakers

The resultant host-chain validator set is then presented to STRD stakers, who have complete authority to approve or deny the set.

The Current Proposal

We are currently in Step 2 of the Process. An advisory council of 5 members has been selected by Stride Labs, and the Stride community is seeking approval of this council by Osmosis governance. The 5 member council is composed of the following members:

Should the following members be approved by governance, they will begin evaluating validator applications on August 21, and the validator set will be chosen no later than August 28. The selected validators will be put up for discussion on Strideā€™s governance forum on August 30, and put up for an on-chain vote on the Stride blockchain on September 06. If this vote passes, the delegation process will be complete.

  • Vote YES on this proposal to express approval of the selected 5 member advisory council
  • Vote NO on this proposal to express disapproval of the selected 5 member advisory council

Estimated on-chain date: Friday, August 11.

2 Likes
2

Good to see a heavy delegation from Osmosis relevant people. I canā€™t think of any clear reasons to object, assuming that John (a41) will abstain from judging on at least the application from their own validator.

Small question arising from the proposal text:

  • if I read correctly you are splitting the validator set in 4 groups, 1 per 25% of the group (validator 1 - 38, validator 39 - 75, validator 76 - 113, validator 114 - 150)
  • if you take the top 8 of each group, that results in a set of 32 validators (4 x 8). The text says 36, which means you would take the top 9.
  • might be good to do a small check there ^^

Other question, but maybe more applicable for the aftermath; if we strive for decentralisation of voting power, would we not be able to implement some kind of ā€œpenaltyā€ for the first quartile and make the shares for the other 3 quartiles a bit bigger? For example, assume each group gets 100k OSMO to divide. You could also choose to make the first group receive 85k (since they have a substantial share of VP already) and up the other groups to 105k per group. Down the line the same amount of OSMO is delegated, but you are actively contributing to decentralisation of VP.

And lastly; is in the instruction for the committee included that services for which a grant has been given that they are excluded? Letā€™s take for example one of the most recent ones regarding the incentives program from Hathor Nodes. They got a sizeable grant, so I assume that the same service is not also rewarded with delegations, since that would be double-incentivized. I personally would hate to have to compete to sponsored and paid for services, while I have to do it out of my own time and pocket. And I guess I will not be the only one around on that field.

4 Likes
3

There was a section on the application to disclose validator links, they can then be excluded from the calculations.

I am pleased to be included in this - I was initially hesitant to apply. Noting that while I am listed as a member of Osmosis Labs, I applied as an interested community member/staker of both tokens rather than as a representative.

On the proposal itself, I donā€™t think this needs ratifying by Osmosis so much as by Stride governance. The proposal seems like a further endorsement of stOSMO above other LSTs, which I disagree with until the previously discussed limits are put in place. Although this methodology is an excellent step in the right direction.

4 Likes
4

Whoops! Good callout It should be the top 9 in each group. Will fix!

And yeah as Johnny mentioned, any council member who represents a validator will be excluded from evaluating their own validator.

As far as the quartiles go, there are some changes being discussed with respect to this process that might make something along the lines of what youā€™re saying possible decentralizing the set is important, but we also want to consider things like the LSM and self-bonding requirement (and what impact that may have), as well as a few other factors.

Itā€™s not specifically excluded, but the council can certainly take this into account when making scoring decisions!

3 Likes
5

Thanks for your feedback on the process Johnny. Iā€™m curious to know if others feel this way.

The purpose of having councils ratified by the host chainā€™s governance is to help ensure that the host chain has an adequate say in the way that assets are delegated to the active set. Essentially, Stride wants to ensure that delegations take into account the specific decentralization and stake weighting needs of the individual host chain.

For example, having a council member like you that has a healthy level of concern about LST dominance might shape the way that delegations are distributed (potentially reflecting Osmosisā€™s more conservative view of LST network effects). I donā€™t view it as an endorsement of LSTs by Osmosis governance, but rather as an opportunity for Osmosis to manage any perceived risks through the host-chain delegation process.

However, if Osmosis governance feels like this isnā€™t necessary or isnā€™t the best use of the governance process (governance fatigue is real), Iā€™d definitely like to know that so this can be taken into account as this process continues to improve in subsequent iterations.

3 Likes
6

Iā€™m not so scared of governance fatigue. Osmosis governance is for me on of the most intense, but nearly drama-free. Mainly because we have a good set of contributors over here who are really sharp on making drafts better. I simply love it. We donā€™t always agree, but we also almost always reach a good compromise on which we can build.

4 Likes
7

@LeonoorsCryptoman, @JohnnyWyles, & @RoboMcGobo

  • I really like polls.
  • I like polls.
  • I both like and dislike polls.
  • I dislike polls.
  • I really dislike polls.
0 voters

:innocent:

3 Likes
8

@RedRabbit33 fair enough :joy:

  • This is a proper topic for Osmosis governance
  • This is not a proper topic for Osmosis governance
0 voters
2 Likes
9

Guess Iā€™m in the minority :sweat_smile:

1 Like
10

I think its an appropriate topic for governance in terms of Stride Governance communicating these processes and decisions to Osmosis Governance. The fact that Stride Governance is providing Osmosis Governance the opportunity to confirm or reject this process should be commended in my opinion.

Unless there is someone that strongly objects to the process and the council members, and wants to make a motion for a roll call vote, like in parliamentary procedure, I donā€™t see a need for an on-chain proposal.

I do see some benefit to holding an on-chain vote though, if it were to confirm the process, council, and the decisions made by the council and Stride Governance as it would legitimize the process as one that Osmosis Governance has endorsed as a fair one.

Personally, I would rather see Stride and Osmosis Governance both pass a proposal that codifies the process and procedures of how Stride will select which Osmosis validators it will delegate to and how often its chosen validator set will be renewed, a bi-lateral treaty so to speak, to solidify the partnership between the two communities. I think Osmosis would also benefit from establish a similar relationship with Quicksilver. Such ā€˜treatiesā€™ between both liquid staking providers could be used as the vehicles to advance a liquid staking module, liquid staking cap, help lower the cost of incentive spending, and chart a path forward for the use cases for both stOSMO and qOSMO.

1 Like
11

Hi. I think I made the mistake of providing the wrong link on the contribution part when filling up the delegation form. Any way I can revise it? Who should I contact regarding this matter?

Thanks.

2 Likes
12

Hey! DM me on telegram please @RoboMcGobo