Thanks for the feedback. To respond to the common feedback from both @Sparta and @aaronwade regarding the motivation for delegating under reduced inflation:
I think that these questions are particularly valid under the original 2.0 proposal - where delegation on validators elect the set and help carry governance weight, but don’t necessarily subject themselves to more security or economic skin-in-the-game to prevent misbehavior. More stake on a node brings value and does increase the cost-of-attack on the network by taking over the validator set, so it should be rewarded appropriately according to the market.
However, I’ll actually answer this in the context of the MFS Proposal in which the role of delegation plays a more active role in node operation and security. If you haven’t seen that proposed alteration to 2.0, please give it a read.
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There is value to the network in delegation in that it provides more security on node operator behavior. If the stake on a node can be frozen with zero rewards (or even slashed) under misbehavior, then there is a higher cost of attack on the network, and users can use those nodes to fulfill requests with higher confidence. But of course this value has to be incentivized.
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Even though reward %s may decline as fees rise, it does not mean that they decline to zero. Combine this with rising fees, and delegators should be looking at their total incentive and return rather than just inflation percentage. Ultimately the market will determine the rewards for delegation. Nodes will need to set their reward/fee cuts to the rate that attract delegation if delegation is in fact something that node operators need to attract in order to maximize their own rewards. In the MFS proposal, it is necessary for any newer node who hasn’t built up enough stake to maximize their reward potential. So yes, they should be willing to share their fees and rewards generously until they achieve that milestone themselves. Delegators have an opportunity continuously “activate” newer nodes, which help the network decentralize and scale.
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I should note that this is a big change from the behavior of current delegation - which can effectively be “set-it-and-forget-it.” I think it can be argued that this isn’t necessarily helping the network tremendously and is being overcompensated. However active delegators under MFS could significantly outearn inactive ones, and help the network significantly in the process.