Automated Treasury Delegations

How to Apply

Create a Pull Request that adds your validator to the validatorWhitelist in data/configuration.json.

Please provide information in the pull request on past experience in operating validator nodes and overall details on the setup.

Applications will be reviewed periodically and individually, but please note there are no guarantees of being accepted.

Rationale

The treasury delegations are intended as a "Universal Basic Income" to help cover validator operating costs. As validators have different commission levels, delegations will be adjusted accordingly, so that high commission validators receive a smaller delegation than their lower commission peers.

Validators will also be rewarded for having skin in the game and taking a long term view of the project. As such self delegations are rewarded with a delegation bonus, calculated as the self-delegation multiplied with a constant (see below).

Finally, to incentivise outreach and promotion of their e-Money validator service, the treasury will also match the first 250000 NGM community delegations.

Adjustments to the delegations will be made around the start of each a month using the below algorithm.

Algorithm

The delegation algorithm uses the following variables when considering how much to allocate to a validator:

Variable	Description
medianCommission	The median commission for all validators.
validatorCommission	The current commission level for the validator.
selfDelegation	The current self delegation for the validator.
communityDelegation	The current community delegation for the validator.

It uses the following constants:

Constants	Value	Description
minimumCommission	0.05 (5%)	The minimum commission for a validator to be eligible.
minimumExternalDelegations	6000	The minimum amount of external delegations for a validator to be eligible.
scaling	0.75	Scaling value used to adjust some of the constants below.
medianDelegation	500000 * scaling	Delegated NGM if the validator commission matches the median for all validators.
maximumBaselineDelegation	750000 * scaling	Maximum NGM delegated after adjusting for commission.
maximumSelfDelegationBonus	500000 * scaling	Maximum NGM added as a bonus for self-delegation.
maximumCommunityDelegationBonus	250000 * scaling	Maximum NGM added as a bonus for community delegations.
selfDelegationMultiplier	2	Multiplier for calculating self-delegation bonus.

The total delegation per validator is calculated as:

commissionAdjustment = medianCommission / validatorCommission
baseDelegation = Min(maximumBaselineDelegation, commissionAdjustment * medianDelegation)
selfDelegationBonus = Min(maximumBonusDelegation, selfDelegation * selfDelegationMultiplier)
communityDelegationBonus = Min(maximumCommunityDelegationBonus, communityDelegation)
totalDelegation = baseDelegation + selfDelegationBonus + communityDelegationBonus

Example Data

Example data is available here: allocations.csv

Planned Parameter Changes

Date	Change
2022-12-01	minimumExternalDelegations = 4000
2023-01-01	minimumExternalDelegations = 5000
2023-02-01	minimumExternalDelegations = 6000