Regen Foundation’s Delegation Strategy for the 30mm Community Staking DAO Allocation
Leading up to the April 15th Mainnet Launch of Regen Ledger, we at Regen Foundation published our delegation strategy for the Foundation’s 5mm REGEN.
Regen Foundation also stewards 30mm REGEN in an allocation focused on our Community Stake architecture. We’re working as quickly as we can to distribute this “cREGEN” (community REGEN—permanently locked) through the enDAOment process. In the meantime though, we need to develop a strategy for how we steward these tokens.
On April 28th, I posted a proposal regarding delegation strategy of this allocation for public comment on the Regen Forum. On April 29th, I presented the basics during the Regen Network Community Developer Call. And then on May 4th, our Board Directors Gregory Landua and Kei Kreutler along with myself hosted office hours on the topic on the Regen Network Discord server. Public comment closed on the May 11th.
The Foundation plans to delegate 5mm cREGEN per month until 5mm cREGEN remain in this pool. The remainder will be used for Community Staking DAOs that we’re launching this year. If the pace of enDAOment (Community Staking DAO initialization) is moving along more quickly than that, the Foundation may not stake the full 25mm, as more would be going directly to DAOs.
Stake will be delegated across the most of the active validator set.
There are two metrics that we will be using at first to determine delegation:
- Rankings (by stake)
- Commission rate
We use rankings to create a bell curve for stake distribution across the set. Chris Remus, a founder of Chainflow, has commented on the general trend in PoS networks for stake to centralize amongst just a handful of validators at the top of the rankings. Chainflow is also backing this approach in the Regen ecosystem with a Delegation Program. Stake centralization is inversely correlated with network security. To compensate for this, the Foundation will reduce its allocations to top validators.
On the other end of the spectrum, network security is also affected by the dynamism of the validator set. For this reason, we also taper delegation weight as we approach the end of the active validator set, so that new validators have a better chance of being able to break into the set.
We equalize for commission rate (down to 3%)—a validator with a higher rate gets less stake than a validator with a lower rate, to equalize for their revenues from this stake.
The weighting by ranking utilized during this first round of delegations will be as follows:
- Rank 1-5: no delegation
- Rank 6-10: 0.25 weight
- Rank. 11-15: 0.5 weight
- Rank 16-35: weight of 1
- Rank 36-40: 0.5 weight
- Rank 41-45: 0.25 weight
- Rank 46-50: 0.125 weight
Community members had a number of great questions and contributions to the policy:
- Regen Ledger is focused on ecological regeneration. What are the ways that validators might contribute to this aim at the application level, and is there some way of systematically tracking these contributions? One corollary is the praise and CSTK score in the Commons Stack community.
- In the future, the Foundation might consider a validator security audit, similar to what Celo performed?
- There was discussion around a minimum commission correction. Originally I had proposed 1% (as some validators charge 0%). After community dialogue, this has been moved up to 3%. One factor to hold in mind here is that even if we’re compensating for validator take, larger delegations still result in higher governance weight.
- Foundation policy on delegating to exchanges, once exchanges start running nodes (this may be solved simply through the commission adjustment)
- If and when the validator set is expanded, this policy will be adjusted accordingly
Sometime during the month of May, Regen Foundation will stake 5mm cREGEN according to this policy. We will continue to upgrade and iterate as we delegate and re-delegate in future months.
Other Foundation Delegations
At mainnet launch, the Foundation delegated its 5mm endowment across 25 validators. Due to some moniker alterations between testnets and mainnet, some validators didn’t make it onto this list. Some founders in Regen Network decided to address this issue by redelegating a portion of their own REGEN to these nodes. The Foundation is not going to relegate any of this pool at the moment, but will at some point in the future.