Progressive Minimum Commissions

SIMD
1

Hi Solana community,

I’m exploring ways to improve decentralization of Solana. With the network’s stake concentration issues, I think a progressive minimum commission system could help in two ways:

  1. make validators more profitable to run, incentivizing more people to run validators
  2. Incentivize delegation to smaller validators to reduce stake concentration

The Problem

• Stake is heavily concentrated among a few large validators, leading to a super minority of only 22 validators and potential risks to network resilience.

• Small/new validators often set 0% commissions to attract delegation, but this creates a “race to the bottom” that’s unsustainable—many operate at a loss after hardware/voting costs.

• Delegators favor trusted big players for uptime/security, exacerbating centralization, even as programs like SFDP try to help.

The Idea: Progressive Minimum Commissions
Enforce tiered minimum commissions via a governance-approved SIMD, based on a validator’s effective stake percentage of the total network stake (calculated per epoch for fairness). Examples:
• Small validators (<0.01% network stake): 1% minimum commissions – Easy bootstrapping to attract stake and cover costs.
• Medium (0.01-0.1% stake): 2% min commissions – Balanced profitability without deterring delegators.
• Large (0.1%+ stake): 3% min commission (scaling up so maybe 0.5% stake = 5% minimum commissions etc up to 10% minimum commissions for 1%+ stake) – Higher cut reflects their dominance, but pushes delegators to smaller options for better yields.
Validators could still set higher rates voluntarily, but the floor ensures baseline economics. Implementation: Update the staking program to reject invalid rates; grandfather existing setups with a phase-in period (e.g., 6 epochs).

Why This Works (Incentives)

• Profitability Boost: Small validators get a fighting chance without subsidizing 0% forever—e.g., at 7% network APY, even 1% on 100k SOL delegated yields ~70 SOL/year to cover ~$300/month hardware.

• Stake Redistribution: Delegators chase yields, so higher mins on big validators (reducing their APY edge) naturally spreads stake, improving decentralization.

• Network Benefits: More validators = better security; aligns with SFDP’s goals of supporting under-staked operators.

• Minimal Downsides: No hard caps (avoids sybils/splits); no reward penalties (keeps large validators engaged); adjustable tiers via future votes.

Compared to alternatives like max stake caps or reward slashes, this feels lighter—focuses on market incentives over mandates.

What do you think? Validators: Would this help your ops? Delegators: Would you shift stake for better yields? Core devs: Feasible in the staking program?

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2

Hi Heartbreaker,

Interesting post and suggestion. :thinking:
The problem I can see is that if a large validator wants to circumvent the minimum comission, they can split their stake into smaller nodes. This scheme would incentivize this behavior, and so it would obscure which nodes are controlled by the same party (so it could seem like there’s more nodes, but in fact we would just be unaware).

Random comment: every time I hear that in the Solana network 22 or so validators have >33% stake I think wow that’s pretty good. :joy: (In my experience many blockchains present some creative accounting/representation or are just impossible to assess for decentralization. Let me know if you’re aware of good/transparent examples of decentralization.)

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