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Proposal to Remove Staking Rewards for Tokens Unbonded by Delegators During the Unbonding Process

Moonbeam’s current staking implementation allows delegators to receive staking rewards for tokens that are being unbonded. A new proposal to disincentivize this behavior by no longer providing staking rewards during the unbonding period will be put forward for democratic vote. This is an important measure in order to maintain security and sufficient decentralization of the Moonbeam Network.

If approved, this change will be implemented for Runtime 1500, which is expected to be released sometime in May 2022. The change will prevent delegators from getting reward payouts on their pending unbonded amount effective immediately after their request is scheduled, instead of when it is executed.

Summary of Changes to Staking

Current Unbonding Process New Unbonding Process
  1. User initiates unbonding of staked tokens
  2. While unbonding, user continues to receive staked tokens [on a per-round basis] for the tokens being unbonded
  3. Once the unbonding period has ended, a user executes the unbond and the tokens become freely transferable
  1. User initiates unbonding of staked tokens
  2. While unbonding, user will not receive rewards for the tokens being unbonded
  3. Once the unbonding period has ended, a user executes the unbond, and the tokens become freely transferable

Why This Change Matters

To guarantee that network participants agree on a single version of events and reach consensus when processing transitions, Moonbeam uses an active monetary incentive to ensure both collators and delegators play fair within the network.

Currently, the staking mechanism assumes delegators perform cautious and active due diligence while pledging a stake of their native assets to their preferred collator. This secures and decentralizes the Moonbeam Network. At present, delegators are allowed to send a request to unbond all or some of their stake while still receiving rewards accounting for those tokens being unbonded. If passed, this proposal will change this process so delegators will no longer receive rewards while waiting for unbonding.

The removal of the rewards during the unbonding period has a significant benefit to the collator community and the network as a whole. The delays between the request to unbond and its execution are at 14,400 blocks (~2 days with 12 second block time) in Moonriver and 50,400 blocks (~7 days with a 12 second block time) in Moonbeam. Some delegators are abusing this feature by canceling requests prior to the end of the period, allowing them to continue to earn rewards while essentially maintaining liquid tokens that can be executed and unbonded at a moment’s notice. This was not the intention of the system design, since delegators gain both liquidity and rewards while putting unnecessary pressure on active collators.

Without this proposed change, unstable delegations can cause a lack of consistency that incentivizes delegators to stake with only top-selected collators, making it difficult for abandoned collators to be selected for the next block production and rewards. As a result, collators can lose their spot in the active set and therefore remove the opportunity to participate in the validation process. This inconsistency works against the decentralization of the network. This change in rewards structure will reduce the number of tokens that sit in the unbonding period but remain unexecuted, making it easier for collators to anticipate the ebbs and flows of their overall stake and plan accordingly in order to remain in the active set.

For questions related to this staking change, please join us in the #staking channel on Discord.

 

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Elizabeth Browning

Author Elizabeth Browning

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