Announcing the Solana Foundation Delegation Strategy

Hi All,

We’ve just announced the Solana Foundation’s auto-delegation strategy!

tl;dr -

The Foundation is committing to delegate 100,000,000 SOL (over 80% of the Foundation’s treasury) through an auto-delegation strategy that targets the following goals:

  • Improve the network’s censorship resistance and security by incentivizing an even stake distribution to avoid a small number of nodes accumulating a large majority of delegations

  • Encourage growth in the number of validators by providing a baseline delegation, the size of which is inversely related to the size of the number of nodes on the network, to lower-staked nodes to help make running a well-performing validator a financially feasible operation for new entrants to the network.

To these ends, the Foundation will deploy an autonomous script that dynamically and uniformly divides and delegates a pool of 100,000,000 SOL in such a way to maximize the minimum number of unique nodes that constitute 33% of global stake.

We hope to start testing on Tour de SOL by the end of next week and launch on Mainnet Beta in the beginning of December.

All the gory details are in the post but happy to answer any questions or discuss here!

Update 11/19:

The spirit of this delegation strategy is to encourage network growth as well as the redistribution of node-stake to achieve a more secure network. The Solana Foundation is willing to provide a delegation to multiple validator nodes operated by a single entity, if it adds to the security of the network.

Validators may be eligible to receive a delegation on another node if their non-Foundation delegations on a single node are greater than the threshold amount that defines the security group. In other words, validators who are not receiving a Foundation delegation because they are within the security group, are eligible to receive a delegation on an additional node to encourage stake distribution.

All nodes are always subject to certain performance requirements in order to remain eligible for the Foundation’s delegation, regardless of stake distribution or accumulation.

Validators who meet this requirement and who are willing and able to operate an additional well-performing node, may reach out to the Foundation (operations@solana.foundation) to request an additional node be added to the Foundation’s auto-delegation program.

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What are the considerations of the prerequisites? For existing validators this is good because it will limit competition. But for the censorship resistance it is of course really bad. As is the delegation by the foundation if it is not immutable unless by the community. Both are very much in risk of being censored by a central authority. I would go further and suggest that all validators create a new node with a new keypair and stake via a stake o matic kind of way so they can’t be tracked. If you want a censorship resistant network we need to be sure that there is no central list with validator users and no central party that can have such a big impact.

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This foundation strategy will substitute the matching of a delegation via Stake-o-Matic, correct?

Not a substitute necessarily, but it will precede any “auto-delegator” matching grants. We have to see the “auto-delegator” work (i.e. re-delegation scripts, stake-pools and related staking derivatives) develops a bit more before we revisit how the Foundation might be able to help encourage this ecosystem.

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I cannot give a full picture but I hope to share our current situation at Forbole. On the current mainnet, we have 0.76% voting power, but over 70% is our self-delegation. Excluding this, our voting power will become 0.19%. If this does not improve after inflation is enabled, the income is not enough to cover infra cost, not to mention the manpower we foresee.

Forbole is known as a grassroot validator and hence we don’t have strong relationship with VCs and centralized custodian providers. From all our previous experiences with other networks, validators like this are facing an unfair competition. Without inflation, the current delegations have already shown an apparent tendency toward centralization. I think the situation will only become worse after inflation is enabled as CEX will also come into play.

Solana should have more validators like us who come from other parts of the world. I think fully automated delegation methodology is a good thing in the long run but I doubt if this can help validators like us before we throw in the towel due to the high infra and knowledge requirement. The recent network issue has shown the contribution of various validators which cannot be measured by the automated script. I think Solana Foundation (and in fact the founding team as well) need to apply a more qualitative approach.

Disclaimer: this comment is for the benefit of Forbole only. This may not align to everybody’s interest.

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