I want to try to do some general analysis of the incentives, benefits and weaknesses with the proposal and see if you - and anybody who has made it this far down the thread - would agree.
Here’s my basic premise, please correct me if I have any of these fundamentals wrong:
If the indexer keeps their reward cut parameter unchanged and the amount of GRT delegated to the indexer increases (new people delegate), the effective cut increases as well. This is negative for the delegator but positive for the indexer.
If the indexer keeps their reward cut parameter unchanged and the amount of GRT delegated to the indexer decreases (people undelegate), the effective cut decreases as well. This is positive for the delegator but negative for the indexer.
/premise
Thus the indexer has an incentive to update the rewards cut to maintain the effective cut when people undelegate. This proposal would provide them the tools to do so without breaking the cooldown, which is a benefit to indexers.
I think it is also therefore a benefit to the health of the eco system. Simply put, it allows an indexer to scale with unforeseen undelegation in a way that might prevent especially smaller indexers from going bankrupt. It would also be easier for them to explain to delegators that they are not trying to scam them by being able to point to the cooldown protocol allowing them to do this, and that the delegators’ effective cut has been maintained.
It would also provide indexers the option to update the rewards cut to maintain effective cut when new people delegate. That is a benefit to indexers who want to do so to compete for delegators, and a benefit to delegators who have the opportunity to earn more rewards by looking for indexers who historically use this option.
The proposal still does have the weakness that an indexer can chose not to update their cut parameter as they gain more delegators, who then see their rewards diluted and the effective cut grow despite the cooldown. This is not a weakness introduced by the proposal, but one that remains not completely solved (though the proposal does help by at least introducing the option for the indexer who wants to use cooldown but also maintain effective cut as their delegation grows).
Hopefully free market mechanisms are enough to respond to this remaining weakness, and I think the proposal helps those mechanisms work by improving the strength of the signal an indexer can send about their intent to maintain effective cut.
So, I can see no downside with this proposal from the indexer perspective, they only gain options. I also see no downside from the delegator perspective, except perhaps that it doesn’t completely solve the problem of an indexer who doesn’t update when delegation grows (but the proposal does improve on this situation too).
I admit I haven’t considered the curator perspective at all in this, honestly I don’t understand it enough. Do you have any insight in how, if at all, they have touch points with this proposal?
I’m interested in all opinions on if my analysis seems valid.