Hi all. One of the top priorities that the network would benefit from addressing is getting more LPT into the hands of high performing node operators - those who are running GPUs on the network and are performing reliable transcoding work. More LPT for these node operators would:
- allow node operators to lower prices because of the offset in value that the additional LPT is earning - making the network cheaper for broadcasters and attracting more demand.
- make high performing node operators even greater committed stakeholders in the future growth of Livepeer - encouraging greater ecosystem contribution and collaboration. When it is only fees that are earned, it is very competitive. But when there is also LPT on the line, then everyone wants what is good for the network as a whole.
Today there are over 50 nodes performing valuable work, but less than 20/day from this group calling reward to earn their LPT.
This is supposed to be enabled by the daily reward calls, the reward cut parameters, and the ability to attract delegators through the sharing of earned fees, however there are a few roadblocks that are preventing this from achieving its full potential.
- Gas prices are high, and therefore calling reward is often unprofitable if the node hasn’t attracted a lot of delegated stake.
- Attracting stake is difficult if the node isn’t calling reward already reliably (chicken + egg problem)
- Delegators have high transaction costs, and a tough UX to move stake around.
- It is not clear to delegators why they should move stake and how they may be helping the network. Even when it is in their economic upside to do so.
So what can we do about it?
This thread is the beginning of a discussion as to what we can think about doing to help solve the challenge of getting more stake into the hands of high performing node operators. The solution here doesn’t come from a single change or upgrade through governance. It is likely a combination of:
- Scaling work - to reduce the costs of reward calls and staking actions.
- Product work - to make it easier to view the economic benefits of moving stake around, and to make the UX of splitting stake across nodes easier.
- Community awareness and education - can we as a group focus on a goal and take collective operational actions to get stake to move towards higher-reward-cut-but-high-performing nodes to allow them to call reward profitably? Does this help the network?
- Protocol updates and governance - should the community consider governance actions to actually effect the way that inflationary LPT is distributed?
- Extra-protocol operations - should DAOs or Grant nodes help step in to solve this problem by distributing LPT outside of the protocol to those who are demonstrably performing well?
I’d love to hear people’s ideas here.
Some people have suggested showcasing nodes sorted by “yield”, in a more DeFi-esque style. Because the yield on inflationary LPT is pretty constant across nodes, the highest yield performers would be the ones with the greatest share of fees earned and lowest existing stake. Yield seeking delegators would move lots of stake onto these nodes to chase the future earnings, and then as more stake comes in, fee share could be lowered, and some would move onto other nodes, finding a more distributed equilibrium with roughly proportional stakes. Rather than a skewed stake distribution like exists right now.
Other suggestions are just to focus on L2 scaling to make reward calls close to free, and make it easy for delegators to move stake for free in seconds through good UX.
Another idea is to rally the community around the goal of activating X node operators to be able to profitably call reward each day, and to see if we can collectively pull it off through shared awareness and action.
What do you think?