a few comments:
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at this moment, the sputnik meta-pool council must be involved in setting protocol fees, so even if the DAO is attacked, it does not translate into the risk of setting fees to 99%. But you have a good point, so we will also propose a 10% cap by contract code to remove that risks.
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The mpDAO or LNR holders setting fees to 99% is not a plausible scenario. It does not make economical sense because it will mean the destruction of the LST protocol, in exchange of 3 months of staking rewards. Let’s refrain from posting scenarios where the consequence is a destruction of the protocol, let’s start from the base that POS works because the players have skin in the game and they don’t want to destroy their own protocols.
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Regarding assigning all stake to a 99% fee validator, right now by contract code no validator can receive more than 49.99% of the total stake managed by the meta-pool smart contract. (49% is still high, we will propose to the DAO to setting the cap at 5%). Even if by some attack a validator is assigned 49.99%, the stake movement is not immediate. Under normal conditions a 49% assignment will require 8 to 10 months to become effective stake, and even in the worst case scenario of somehow full control by some attacker, moving stake requires 4 epochs, and by contract code you can not move stake if the users require unstaking, so again, worst case scenario means the destruction of meta-pool protocol but no risk for the NEAR protocol itself or risk for the underlying user’s NEAR (they will have enough time by contract to unstake and recover their NEAR)
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metapool.sputnik-dao needs 2 people to approve a proposal, that’s another good point and even if we have been operating since NEAR’s day one without any incident, that can be improved by moving metapool.sputnik-dao to a 3 of 5, or 4 of 7 council. Point taken. Will be improved.
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“why not make a new LST that has 0% fee”?, because part of the advantage of LSTs is that we actively monitor validators to balance increasing the Nakamoto coefficient with obtaining a good yield for the users. You need to pay people for their services. You need to pay for monitoring. You need to pay for maintenance. You need to pay for validation.
But having an LST contract that is non-upgradeable and with a fixed fee to cover operations is not a bad idea and the meta pool team is keen build that as public goods.
The idea is to code and deploy a third LST, a Neutral LST, non-upgradeable and with a fixed fee. Let’s call the token NLST.
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If you stake there you can use the NLST to vote to which validator your NEAR will be staked (we already do something similar here: https://www.metapool.app/stakevote/?network=near )
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The key problem here is validator monitoring, that must be done off-chain for now. This can be solved at first via feeding the NLST contract with our own validator monitoring, just to avoid high-fee validators or offline ones, and in the near future (pun intended), as a V2, that could be solved by an AVS on a NEAR restaking platform. In any case you need protocol fees either to pay for the maintenance, the monitoring or to pay for the AVS service. TANSTAAFL