Meter Ecosystem - Roadmap to 500 Nodes

Hello Meterians,

We take this opportunity to propose a formalized incentive program to decentralize the Meter Network further to remain true to the ethos of blockchain.

Through this incentive program, Meter ecosystem nodes should get Foundation vote delegation to ensure they are profitable while securing the Meter Network further.

The key focus of this incentive program is;

1. Higher decentralization to ensure liveness and security of the Meter ecosystem thereby cementing our claim of the most decentralized side-chain scaling solution

The immediate goal is to increase the node count.

2. Showcase the efficacy of the ‘HotStuff Consensus’ by maintaining the speed and performance of the ecosystem while supporting a higher number of nodes.

Note: With this program, we propose to increase the committee size from the current ‘300’ to ‘500’ so that all validators continue to get emission rewards

3. Higher Staked MTRG generating passive income

By incentivizing the nodes, we anticipate an additional lock-up of 700,000 MTRG in the nodes. However, this lock-up is expected to take effect over a broader horizon.

4. Streamlined process for Node creation and incentives

Current Foundation Delegation to Node Operators:

The Foundation has been delegating the votes to the Node Operators on a first-come-first-serve basis. However, the process of delegation is not formally communicated. The votes delegation was in the range of 200K (Earliest node operators and active community participants) down until 50K (newly added nodes).

This proposal focuses on the equitable distribution of MTRG going further.

Proposal for Foundation Delegation Strategy:

While the purpose of the incentive program is highlighted earlier, the key guiding principles for the Foundation Delegation strategy are;

  • Ensure equitable allocation of Foundation votes to node operators
  • Ensure incentives to node operators are maintained by increasing the committee size from ‘300’ to ‘500’
  • Assign utility to the ‘Founding Validator’ NFT
  • Strike a balance between returns received by the community;
    • Staking – The overall staking APY should remain >10%
    • The founding validators (Total 100 NFTs) receive higher APY than non-founding validators
    • The non-founding validators receive significantly higher APY than staking

1. Foundation Delegation

Foundation Votes Delegation MTRG Allocation Total Nodes Total Allocation
Founding Validators (Nodes 1-100) 50000 100 5,000,000
Nodes 101-500 22500 400 9,000,000

At first glance, this allocation is lower than the current delegation of 50000 votes to nodes. However, the ecosystem can now support a substantially higher number of nodes of 500 compared to the current 150 nodes.

IMPORTANT: The Total MTRG allocation cannot be increased substantially as this will reduce the APY to both Node Operators and Staking

2. Current Foundation Votes reallocation:

  • The foundation should recognize the contribution by the early adopters and should continue the allocation of the current votes to the nodes who have received more than the proposed votes
  • We estimate that the increase of nodes from the current 150 to 500 will potentially materialize over a broader horizon.
  • The foundation should delegate 22500 MTRG to any new node created while ensuring that staking returns are not degraded substantially under 10% APY (increase delegation further reduces overall staking and node operation APY)
  • After exhausting the available delegation, the approach would be to reduce allocations of existing nodes to meet the proposed delegation amounts

3. Total Annual MTRG Earnings by Node Operators for 2000 MTRG,

Node Total Rewards (MTRG)
Founding Validators 838.45
Nodes 101-500 509.06

4. Percent APY of Node Operation net of annual node operation cost of $580 USD

MTRG Price 5 10 15 20
Total Returns net of Node Operation cost
Investment Value 10,000 20,000 30,000 40,000
Founding Validators 3,612.27 7,804.54 11,996.81 16,189.08
Nodes 101-500 1,965.31 4,510.61 7,055.92 9,601.23
APY
Founding Validators 36.12% 39.02% 39.99% 40.47%
Nodes 101-500 19.65% 22.55% 23.52% 24.00%
APY – Delegation to Node 10.78% 10.78% 10.78% 10.78%

The returns are net of Node Operations cost of ~$40 USD per month with a buffer of $100 USD (Total $580 USD).

There are few insights from the vote delegation;

  • Rewarding the founding validators
    • The APY of founding validators is larger which achieves 2 purposes
      • Rewards nodes that helped bootstrap the ecosystem
      • Creating a secondary market for the founding validators NFT
  • Creating a node is considerably more profitable than staking your MTRG
  • The APY changes with an increase in MTRG price due to the effect of fixed operational cost of $580 USD

IMPORTANT – Increasing the Foundation delegation further reduces the staking and node operation APY due to a greater number of MTRG locked in staking.

Additional Comments :

  • The vote delegation should be re-evaluated when the node operation APY increases substantially. There are 2 counter mechanisms to reduce the node rewards;
    • Reduce the emission rate – This would provide a long-term effect of lesser MTRG in circulation
    • The Foundation might also re-evaluate MTRG delegated to the nodes in case there is an additional MTRG requirement for liquidity incentives
  • Active community members would get higher MTRG delegation within the supply constraints
  • Users holding ‘Tesla Founding Validator’ NFTs should reach out to the Foundation with the below information;
    • Ethereum address holding the NFT
    • Candidate address of Node to avail benefit of higher allocation
  • It is the responsibility of the community members holding the NFT to reach out to foundation to reap additional delegation benefits (@sg_meter)
3 Likes

I have read the whole proposal and I think it is excellent. Finally, now there is a clear vision of what are the advantages of the nodes and above all of how the votes will be distributed from here on out. Surely this will allow to increase the number of validator nodes and favor the decentralization of the meter ecosystem.
And finally, there is great use in owning the TESLA NFT.

Excellent proposal. Allows for the expansion past 300 nodes to grow the network of validators and gives an accurate picture of what rewards to expect for future validators

1 Like

Thank you @sg_meter to submit this proposal, we did need more proposals like this to get more nodes for the meter’s decentralization.

Here are some of my concerns:

  1. Whether we really can reach 500 validators as the proposal?
  2. How the proposal will impact the $MTRG price.
  3. Too many validators held by one of us whether is meaningful for meter’s decentralization?

Here are my suggestions for reference:

  1. proposals should not impact the old nodes who have already gotten votes from the team.

  2. by now NFT still not be used in accelerating the reward of running nodes, we can incentive old nodes to use their NFTs to create new nodes, I am sure that we can add more 100 nodes. Before talking about 500 nodes, why not be sure reach 250 nodes first.

thanks for the awesome information.

  1. Whether we really can reach 500 validators as the proposal?

The objective of this proposal is to provide a platform for the ecosystem to reach the 500 nodes. There are clear incentives that have been outlined to all the ecosystem participants and any new users joining the ecosystem. We acknowledge that we might reach the objective over the broader horizon but we have provided clarity to the participants on what they can expect when they decide to become a node operator.

  1. How the proposal will impact the $MTRG price.

The price impact is difficult to ascertain. The fact is that proposal has the potential to lock a minimum of an additional 700K MTRG long term into the staking. Based on the broader understanding, we do anticipate a positive impact on the price due to lockup of additional MTRG into node operation which could otherwise be free-floating, and also the buying pressure from new users who might find a minimum of 20% node operation APY attractive

  1. Too many validators held by one of us whether is meaningful for meter’s decentralization?

Ideally no. But we are walking a fine line. Without a proper KYC, there is no full-proof way to restrict users from creating any number of nodes. We might need a broader discussion on this topic.

Here are my suggestions for reference:

  1. proposals should not impact the old nodes who have already gotten votes from the team.

As mentioned in the proposal, the existing nodes will be impacted to align with the proposal since we do not want to increase MTRG allocated to staking to a point that it substantially reduces the staking APY. However, the proposal also outlines the approach to smoothen the effect for the existing node operators.

  1. by now NFT still not be used in accelerating the reward of running nodes, we can incentive old nodes to use their NFTs to create new nodes, I am sure that we can add more 100 nodes. Before talking about 500 nodes, why not be sure reach 250 nodes first.

For the reasons mentioned above, the votes on the existing nodes will need to be slowly reallocated as we approach the objective of 500 nodes. This is a strategic proposal with an intention to be a guideline in the short to medium term. Setting smaller goals would only increase the administrative and governance burden when we are aware that 250 nodes is not our short to medium-term goal in terms of decentralization.

1 Like

I understand that the objective of this proposal is to provide a platform for the ecosystem to reach in the distant future a total of 500 nodes. Moreover, i appreciate that there is as part of the proposal a guideline for the allocation of Team votes to the Validator nodes. It is clear that these guidelines would be used to promote and entice new investors/validators which i personally believe to be a positive step forward. However, currently +150 Validator nodes on the Tesla net provide more decentralization when compared to other prominent billion dollar market cap projects with Meter still at a much earlier stage of development/exposure. Why am I making this statement? Because it is important not to disremember retrospective aspects of the meter ecosystem growth specifically the blood sweat and tears of those with the belief, trust, appetite for high risk, and courage to support and invest in a project during its infant stage. These individuals were gifted votes (understandably without term) and they have formed the absolute rock base of the Meter Telsa infrastructure. Therefore, i believe the votes should remain without re-allocation in the majority of cases and further validator expansion initiatives could follow a similar approach as suggested in the proposal with a reduction of the required 2000Mtrg ( 500Mtrg /per node) to stimulate further decentralization. Furthermore, on the topic of ‘Too many validators held by one of us’ - how is this even up for discussion with 150+ validators already deployed there is no danger of anyone person causing disruption to the network of having additional power on the Dao side. We must also seriously consider the possibility that this proposal introduced in its current state may act as a double-edged sword and lead to an unfavorable loss of current validator count due to the suggested vote re-allocation. It really is all about timing and ideally the price of MTRG should stabilize above $20 before taking a risk of a disruption to your validator base. Lastly, appreciate the time and effort of the team on this proposal which clearly has some good points to consider.

I understand the sentiment of some of the earliest validators. Some points to ponder;

  1. We need not compare ourselves with protocols which have not been able to attract community to create nodes as actively as Meter has. One of our core differentiation point is the Hotstuff consensus and its capability. The more we demonstrate this capability, the more value we add to the protocol. Everyone in the ecosystem stands to gain much more by ‘FAIR VALUATION’ of meter ecosystem

  2. The roadmap of 500 nodes is to create a strong differentiation which could gain us traction. If we consider this number of nodes as a good medium term plan, the total APY calculations are not that intuitive.
    a. We need sufficient number of MTRG allocated to the nodes to make the ecosystem more secure
    b. However, the number cannot be sufficiently large beyond which the staking APY and the returns of node operators start to decline

We will not be able to accommodate substantially more nodes while continuing the current allocations and maintaining the current APYs. With these allocations, we will start to see dropping APYs with more nodes for everyone in the ecosystem leading to reduced MTRG in staking and increase sell pressure.

Also, the reallocation is not something the foundation will do overnight. As more nodes join the ecosystem, the reallocation can be gradual to accommodate only the new nodes that have joined. The earliest nodes also own the NFTs. It is very difficult to estimate the exact time horizon when the 500 nodes plan will come to fruition. Thus, the existing allocation could continue until such timeframe.

are my thoughts correct? If the node receives 509 tokens per year (which corresponds to 42.4 tokens per month) multiplied by the rate that will be. Now, for example, it will be only 42.4 x 3.1 $ = 131$ And I also need to pay for the server ($40 ) there remains $ 90 of net profit? Did I count everything correctly? I was a participant in the counter testing program in 2021. Can I count on priority or can I only be a node from the 101-500 list?

Your calculation is correct. Also, with the proposal, there is no distinction on when the nodes have joined the network but that they hold the Tesla Founding Validator NFT. Anyone holding the NFT is eligible for the additional votes