1 Click Decentralized Delegation

Community & Grants Network Participants
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I have discussed with a few people in discord a concept to would promote stake decentralization that also helps attract new delegators to the network.

3rd party wallets such as Exodus or Atomic Wallet have services that allow wallet holders to stake within existing Proof of Stake systems to earn interest while keeping their userbase on their platform. It is likely a matter of time where these start centralize stake through their own efforts to delegate to a single entity (as we have already seen with exchanges).

We could facilitate their goals in a way that helps us also distribute stake amongst a group of ‘current top indexers’ and use it as a launchpad to further promote the graph protocol all while setting a precedent for other protocols to maintain stake decentralization.

As a basic concept I believe this should look like:

The high level logic would essentially answer the question ‘which indexers are providing the most value relative to their size and would provide a suitable return to a delegator using a simplified decision process’.

Let S be total stake (both self stake and delegated)
Let Q be total query fees produced over N period of period of epochs (not query fees claimed but what the consumer actually pays)
Let R be the rate of return for the delegator (1 - Effective Cut %)
With P being the resulting point score to determine highest proportional producers.

P = S / Q * R

Gather the top 10/20 indexers with the largest point system and randomly select one to receive the delegation.

Concerns Voiced

  • The algorithm must be open source for all indexers to understand and must reward productivity

  • Part of the utility that the network ‘buys’ from a delegator is forcing them to make a choice with the assumption that they chose a quality indexer.
    Response: Delegators will still have all existing options when selecting an indexer. However if we enable this functionality, the network would benefit by promoting decentralization of delegation and steering them towards indexers most deserving of additional support as well as adding additional avenues for people to discover the graph protocol.

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Generally good idea. But large Indexers obviously can optimize their parameters to these requirements and will keep growing, even with rotation mechanism. Also, the query distribution algorithm prefers large indexers now, so it gives us additional points.
We need to have a lower coefficient for Indexers with total stake higher than X, in all initiatives, or we will get even more centralized network than we have now.

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Regarding the query distribution algorithm favoring large indexers, can you expand on this a bit more? Is it a proportional to the size of stake?

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As I know, it depends on self-stake. I don’t know the exact weight of this parameter, but if 2 Indexers will have the same cost models, Indexers with larger self-stake will get more queries. And if I’m not mistaken, even if the price from the larger Indexer will be slightly higher he will still get more.

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It makes sense that we would want to have a better understanding of the metrics on which indexer is selected to serve a query. Once that’s understood we can align our metrics to achieve proportional parity. To my knowledge this isn’t open source atm, correct?

This proposal would then become a further incentivization for indexers to configure their way to be the best indexer (assuming the logic on which indexer is selected is also thoroughly vetted).

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I’ve been giving thought to this recently as well.
I think there are methods that can be created that would allow the stake to be split amongst multiple Indexers, rather than one at a time. I have not had a ton of time to devote, so I know there may be some flaws in what I’ll layout, but I’ll add them here to perhaps get some more input on them.

  1. Can we introduce the idea of a proxy delegator?
    As it stands, there is an imbalance between the time many delegators would like to allocate towards research versus the amount of time we’d optimistically like them to make. If there are any trusted and respected community members, Delegators would be able to allow this proxy to decide on their delegation’s assignment. At any moment, the Delegator can revoke this right, and remains in control of their GRT. This is a common practice on DPOS blockchains already.

  2. Liquid staking
    Create a smart contract that stands between Delegators and Indexers. Delegators would transfer their GRT to this contract, and in return receive a 1-to-1 token in return “xGRT”. The smart contract would delegate any liquid GRT periodically (perhaps once per day to batch transaction costs). It would delegate proportionally towards a list of Indexers that are registered to it. This registration can be controlled either algorithmically or manually, depending on what is desired. (examples: a trusted person can build a list, similar to the proxy idea above. The contract can require all Indexers who want to be eligible top have their query fee cut and indexer reward cut be within a specified range, a group of users can decide together to create a list, etc…)
    At any point, a Delegator can return their xGRT to the contract to initialize a withdrawal request. A benefit of this is that xGRT can remain liquid while the delegation is active. This allows them to be trade-able (assuming at a discount considering it has the thaw period still).
    Upon redemption, it would be entitled to a pro-rata portion of the contract’s holdings.