Aurora (network) is launching the Aurora Validator with an aggressive $Aurora rewards scheme that threatens to destabilise, weaken and potentially take over the network. These concerns have been acknowledged by the Aurora team and dismissed as it is their position that “it is the NEAR Foundation who has to ensure decentralisation, not us.” This is an urgent thread to get community input on the issue and explore alternatives.
- NEAR just released an update that enables individual validators to offer Staking Rewards (additional rewards on top of the standard ±10% $NEAR). Learn more
- Aurora is the first validator to offer additional staking rewards. Initial Blog Post
- The original post on Aurora’s governance forum contains a lot of details about how the validator will work and calculations about income fees, etc. However, they notably do not include ANY calculation or risk assessment to show they properly considered the risk of decentralisation.
- @alex.shevchenko recently posted a Twitter Thread clarifying some of the most common questions. Again, zero mention to any risks or considerations in regards to the effect Aurora validators can have on decentralisation.
Key Figures - Aurora Validator
- The Aurora validator is being deliberately set up with an aggressive rewards schedule that designed to reach 80m NEAR
Key Figures - Staking Ecosystem
- There are currently 324m NEAR being staked across 73 validators
- The top validator has 42m NEAR
- Top 8 validators have 33% of delegated NEAR (107m NEAR combined)
- We explicitly tell stakers that delegating to delegators other than the top 8 improves the decentralisation of the network
Existential Threat to NEAR
I’m going to be blunt as not many people seem to be paying attention: the setup described above is a recipe for disaster which creates many risks, challenges and outright existential threats to the network.
Given the current setup, I believe it is reasonable to assume Aurora validator reaches at least 80M NEAR. This has many potential implications that all need to be considered carefully:
- 80M NEAR (Aurora’s target) represents close to 25% of the Network, dangerously close to being able to overpower every single other validator.
- Where are the 80M NEAR coming from? It is safe to assume that most of the NEAR will simply be reallocated from existing validators. This in turn means that there is a real risk that many validators will not have enough NEAR to keep their seat - now we have one Master Node with 25% of the Network AND fewer and fewer validators.
- Having ALL the incentives of the ONE Aurora Validator (‘the Master Node’) with 25% of the stake tied to a different coins presents all sort of nightmarish scenarios. What happens if the price of Aurora dumps? (Very few coins in circulation now, very little use for the coin). Or what happens if the price of Aurora gigapumps (EVM growing much faster) - then the existing rewards would be enough to take over more than 33% of network. Normally, the ups and downs in the market are shared across all validators and their stakes. But creating a divergence between the economic reality of NEAR node stakers and Aurora rewards stakers creates all sorts of problematic scenarios. I strongly believe that the Validator Staking program should be on top of NEAR rewards (baseline + bonus) to mitigate these scenarios.
- Even if we take corrective measures after we realise that the Aurora validator is disproportionally large, I fear some of the damage is permanent and hard to compensate for (including repetitional damage). Why should we wait until after the entirely predictable problem eventuates to think of solutions and alternatives.
- Market Perception - decentralisation, specifically lack thereof, is the knife that will be used to attack us. We have seen how many chains have come and gone, blockchain project’s do not last if they are controlled by a handful of people or if the network is not secure.
- I hate to say this, but there is also the reality of Aurora and NEAR pathways and interests diverging at some point. Even though common sense would suggest Aurora needs NEAR as a security layer, some of the behaviour and messaging I’ve seen on the Aurora side sets off the hostile takeover vibes.
- Finally, and the reason why I am bringing this debate to the NEAR Community, the Aurora team do not currently think it is their responsibility to ensure the decentralisation of NEAR validators (even though they are the ones creating the threat).
While there may be some disagreement on some of the points above and the assumptions made, I believe that there is a range of changes and simple initiatives that could be implemented to prevent any of the risks above while enabling Aurora to operate their validators and attain their desired goals.
Suggestions to Aurora Team
- Reconsider the ways in which the $Aurora tokens that have been committed to the NEAR Ecosystem are distributed. Rather than having 5M solely to the Aurora Node:
1.1 Allocate $Aurora tokens to DEXs (I also note that $Aurora rewards on REF have run out and the Aurora team has not replied to the request to extend them yet)
1.2 Consider allocating a chunk of $Aurora tokens to other validators. This could be done through Meta Pool; have Metapool distribute $Aurora to stakers in the same way they are currently distributing $META.
- Recalculate the Rewards Structure so that the upper limit at which $Aurora rewards are still higher than traditional validators is lower (i.e 60M, perhaps 70m max., down from the current 80m). This could be set as a % of total NEAR staked and could be promoted as a standard - no single node should have more than x%
To the NEAR Foundation
- Increase the amount of NEAR allocated to Metapool from the current 1.5m, this seems to me like the easiest and fastest way to ensure that the network remains decentralised (Metapool rebalances to all validators outside of top 8, based on performance).
- Consider hard-coding a delegation limit per validator to ensure no one validators can grow enough to overtake the network.
- Liaise with Aurora team and be vocal about the need to preserve decentralisation. Collaboration over cannibalisation.
To the Community
- Restrain from delegating to Aurora Validator until some of the issues above have been addressed
- Join the conversation here, on the Aurora Governance forum, and anywhere you feel you can communicate your views and concerns to others
- If you do want to capitalise on early APY of Aurora validator, consider distributing your stake across at least two validators (Aurora + 1 out of the top 8, Metapool probably easiest).