Decentralization of validation service — why should we care?

Parachain decentralization

So why do we need collator set decentralization in a parachain, since the parachain with only a handful of collators running is still a secure one? Well, the problem here is called censorship resistance. In a nutshell, this means if the parachain is operated by only one or few parties, they can easily collude to censor transactions from certain people or entities and thus make the entire network stray from the original blockchain promise.

Community vs big players

Keeping censorship resistance in mind, it becomes clear that multiple entities participating in producing blocks on the parachain is an important concept. This is not just the number of collating nodes, but rather it is the effective control of the nodes. The parachain might have 64 collators in the active set but only have 8 entities controlling those nodes. This leads to the conclusion that we must strive to preserve smaller independent node operators in the active collator set. The main reason is that such collators will almost never have more than one node and thus providing true diversity and decentralization of the active set — as opposed to the big players who like to gather more and more capital to spin up more nodes and take even bigger profits as a result.

Staking on exchanges

This is a practice that Polkadotters have been wildly criticizing since the inception of our community. To put it simply, staking in the centralized exchange means that you are supporting CEX itself, not the underlying network. The more people are staking with exchanges, the more validators can actually exchange operate and thus undermine the level of decentralization.

Moonbeam — case study

One of the biggest examples of these issues is Moonbeam, an EVM-compatible parachain running on Polkadot. Moonbeam is running on top of Proof of Stake and it allows up to 64 collators to be in the active set and participate in block production.

Anonymity

We (and the community) don’t know these entities and certainly don’t know what their future intentions with the network are — is it just to take profits or is there any other purpose?

Participation

Since these players are anonymous, they don’t usually participate in any technical discussions with the Moonbeam team or other validators. This can potentially lead to worse node performance (and thus bringing less rewards for their delegators) but also to malfunction of the service because communication with the team about the technical issues is crucial for collator stability.

Gaming the system

We have been in the Moonbeam collator set for a couple of months and it was a really interesting show to watch (to say at least). There are delegations (and their revocations) happening on a weekly basis in total amount of sometimes more than 1m GLMR — which sometimes leads to spinning a new, anonymous node and sometimes it seems that big players are juggling with their tokens just to have more fun :-)

Involvement

And finally, the cherry on top. Community collators are important because they return part of the rewards to the community of the project — they are active on Discord to help delegators, writing guides and articles or creating tools and dashboards within the community to help all delegators and validators. One of the best examples being our own Polkadotters community where staking rewards allow us to work full-time on producing tons of content for the entire DotSama ecosystem.

CDF — Community to the rescue?

As an response to this situation we have decided to come together with other community collators and set up a Collator Delegation Fund — we use our staking profits to delegate GLMR to other community collators who are endangered by the big players and might slip out of the active set. This is a great initiative which helps to keep the community involved in producing blocks and decision-making within the Moonbeam governance process!

Conclusion

As you can see, community involvement in running parachain projects is an important topic. Such collators/validators are not only the most reliable but they also deeply care about projects they are validating in and do their best to help its ecosystem and community to strive and grow!

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Polkadotters | Kusama & Polkadot validators

Polkadotters | Kusama & Polkadot validators

Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS