I appreciate the effort that has been invested in tackling areas of improvement in the network, the benefits are well articulated. I share the major concern of the weakening effects on decentralization that have been expressed in prior posts. We had broader discussions around stake centralization in the protocol two years ago. Back then, we already had a high concentration in the protocol where the top 5 Indexers had about 50% of total stake and this was broadly recognized as a critical issue within our community:
There were a lot of discussions and ideas presented to address stake centralization. In this forum post, we discussed proposals such as a decentralization delegation tax, new delegation rejection for Indexers or Indexer decentralization thresholds. We also discussed changing the static 16x delegation cap in order to achieve more stake decentralization. Aside from a minor update to the Indexer table UI in the Explorer, these ideas have largely remained on the drawing board.
@Brandon suggested an update to GIP-0058 aimed at mitigating the anticipated centralization effects. We could broaden that approach and seize this moment to incorporate additional measures that bolster Indexer and stake decentralization, even if they don’t directly pertain to GIP-0058. For instance, revisiting the delegation cap discussions from yesteryears, we could contemplate lowering the cap below 16x. This would bring more larger indexers at/near the cap limit and encourage future delegations to gravitate towards smaller Indexers, who generally have more cap room. Naturally, such discussions and proposals would happen in separate threads and end up in different GIPs, but the approval from the Council could be sought as a package together with GIP-0058.
I acknowledge that introducing seemingly unrelated elements into a focused discussion is unconventional and harder to navigate. However, the point of the matter is that past decentralization initiatives garnered significant community support but failed to materialize into actionable outcomes. By bundling GIP-0058 with other proposals, we might achieve an overall trade-off where centralization dynamics from GIP-0058 are sufficiently offset by other decentralization-supporting changes.