Decentralizing Aleph Zero: Mainnet commission increase schedule

As we are now confident that the Community Validators Mainnet update has been successful, we wish to further our efforts in decentralizing and democratizing the Aleph Zero network. Our goal is to make participation comfortable and profitable for both nominators and validators, and two areas of focus in this announcement are: slightly raising the minimum validator commission to reward the Validators fairly, and
raising the commission on Foundation nodes to encourage nominating Community Validators.

As with every action we take, we’ve designed this in a responsive and data-driven manner to ensure all stakeholders are exhaustively informed and the process is transparent and fair to everyone involved. Below, you will find the schedule of the changes to be introduced gradually in the next quarter including both the validator’s (commission %) and the nominator’s (APY %) perspectives.

First of all, our goal within the next quarter is to have at least 50% of the total funds staked nominated on community validators. Before and after each of the steps listed below, we will evaluate our progress toward the end goal and, if necessary, introduce adjustments.

The schedule will look as follows:

• Dec 16th 2022: Foundation nodes — 3.5%,
• Dec 30th 2022: Foundation nodes — 5%,
• Jan 13th 2023: Foundation nodes — 6.5%, (minimum community commission — 3%),
• Jan 27th 2023: Foundation nodes — 8%(minimum community commission — 4%),
• Feb 10th 2023: Foundation nodes — 9.5%, (minimum community commission — 5%),
• Feb 24th 2023: Foundation nodes — 11%,
• Mar 10th 2023: Foundation nodes — 12.5%,
• Mar 24th 2023: Foundation nodes — 14%. 

If the above does not make us reach the goal for community validator nominations, we will continue raising the Foundation nodes’ commission. Conversely, if we reach the goal earlier, we will stop raising the commission of Foundation nodes. Below you will find how staking on validators with different commissions influences the APY, calculated based on the current staking percentage:

• if you nominate a validator with 2% commission, you get 12.7% APY,
• if you nominate a validator with 3.5% commission, you get 12.5% APY,
• if you nominate a validator with 5% commission, you get 12.3% APY,
• if you nominate a validator with 14% commission (which is the maximal amount the Foundation nodes may reach according to the plan above), you get 11.1% APY. 

Please note that raising the commission doesn’t impact the reward APY much from a nominator’s perspective—but it does make the validator’s lives significantly better from an economy standpoint. 

As an additional motivation behind switching to nominations to community nodes, please note that there is no automatic slashing on Aleph Zero: we assume good faith and, if we suspect a problem with a node, we contact the Validator and work together to resolve the issue. 

We strongly believe that the changes described above promote the decentralization of the network and will benefit the whole Aleph Zero community. Let us know if you have any questions! 

As always, thank you for your support and suggestions!