I often get asked by node operators how they can attract more delegated stake towards their node. While there’s no silver bullet, here’s a summary of some of my common advice:
TLDR - The two most surefire ways to attract more stake are 1) by producing the best yield for delegators or 2) by becoming well recognized for great contributions to the project through the community over time.
If you’re not familiar with basic Livepeer token economics, or staking concepts like reward cut and fee cut, you may want to watch this Ultimate Staking Guide video from @Titan-Node.
Producing the best yield for delegators
While in the long term, token holding delegators benefit most from growing use of the Livepeer network and a successful project, in the short term, many delegators may be optimizing for yield on their staked LPT. The explorer interface sorts by forecasted yield by default, and there is certainly power in being listed first when new delegators are evaluating whom to move their stake to.
The way to have a high ranking in this category is to have a competitive reward cut, sharing most of the LPT rewards back to delegators, combined with a generous fee cut, sharing some portion of the ETH that you are earning for transcoding back to delegators. AND TO ACTUALLY BE EARNING ETH via effective global transcoding.
You’ll notice that most of the nodes with higher forecasted yield (for 150 LPT staked which is the editable-but-default input amount) happen to have lower amounts of stake in the thousands, rather than the hundreds of thousands like the high stake nodes. This is because the shared ETH fees are split up proportionally amongst the delegators by stake, and so if one were to stake 150 LPT towards a node with 1500 delegated LPT, then they would earn 10% of the shared ETH fees, whereas staking that same 150 LPT towards a node with 150,000 LPT would net them only 0.1% of shared fees. Delegators can earn larger yield by finding high performing nodes that are outperforming larger staked nodes and earning outsized fees, who happen to have lower stake already. This is by design, as it leads to the “activation” of newer nodes, and leads to more even stake distribution if everyone is acting in their game theoretic self interest.
A concrete strategy here would be to set a very low reward cut and a very low fee cut, demonstrate the ability to earn ETH fees and share them, working your way to the top of the leaderboard, attracting a bunch of stake as a base, and then over time gradually adjust those numbers to more healthy levels, building up some self stake, while maintaining some existing delegated stake via momentum, reliability, and continued strong performance. I’m not suggesting rugging your delegators with sudden major reward cut shifts, but communicate about the gradual updates transparently, and consider leveraging some tactics in strategy two…
Demonstrating continuous project and community contribution
It would be great if attraction of stake was purely meritocratic based upon successful global transcoding ability. With enough demand side ETH fees and the right UX for delegators, this may one day be the case. But it’s also worth recognizing that delegators are humans, subject to human psychology, and effective marketing and communication to humans can play a factor in their decision making process about whom to stake towards.
Token holding delegators ultimately want the network to fulfill its potential, to be successful, and to grow over time, and that only happens with a thriving community of people making this project happen - not only through node operation but through many forms of contribution. Delegation, along with the reward cut, are a great way of routing network ownership and incentivizing many types of contribution, and over time we’ve definitely see delegation flow towards nodes who are effectively marketing the contributions that they’re making to the project beyond just transcoding. These contributions come in the forms of community participation and support, writing documentation and tutorials, building tools for delegators and node operators, creating marketing and educational materials, designing and running pools, testing out and discussing video hardware innovations, helping demand side builders and creators with their projects on top of Livepeer, and more.
While the above is definitely true, there’s no protocol-baked-in silver bullet mechanism that instantly rewards stake for contribution. I am optimistic that this community pays attention, cares, and rewards contributors over time for consistent presence and positive intent, so if you feel you’ve been helping the project and haven’t yet attracted stake, don’t hesitate to speak up and market the contributions a bit so that people become aware. Here are some concrete recommendations.
- Create a campaign page here in the forum. (Posts tagged with “transcoder campaign.”) Introduce your node, brand it. Revisit the post 1x/month and highlight any updates or community contributions.
- Consider a node brand, logo, and even a web site. See some examples. Definitely use ENS to put a name on your node so it is recognizable.
- Participate in the Discord chat within the #orchestrating channel. Support new O’s and users.
- Join the weekly orchestrator watercooler chats in Discord on Mondays.
- Build, test, write, support, contribute in some of the ways highlighted above. Don’t hesitate to share these on your campaign post and in Discord.
- Let the stats speak for themselves - perform highly on the regional transcoder leaderboards, build up a history of ETH earnings, and have sensible reward cut.
Hopefully this is helpful advice for those getting started with Livepeer node operation. What other tips do people have for attracting stake?