Validator Group Voter Reward Commission

Governance
1

Validator Group Voter Reward Commission Proposal

Dear Celo Community,

As a response to CGP 271, the community proposed CGP that eliminated validator rewards, Celo Core Co. proposes a voter reward commission mechanism that allows validator groups to receive a configurable percentage of voter CELO epoch rewards.

Under this mechanism, validator groups would be able to set a voter reward commission rate, subject to a governance-defined maximum cap. The commission would be deducted from voter rewards before distribution and allocated to the validator group.

This mechanism matches the commission mechanism used by Cosmos and other delegated Proof of Stake protocols, where validators compete on commission and uptime to determine a fair reward for their efforts.

Example

If a validator group sets a 10% voter reward commission and voters for that group earn 10,000 CELO in epoch rewards:

  • Voters receive 9,000 CELO through vote credit inflation.
  • The validator group receives 1,000 CELO released from the treasury.

The total reward distribution remains unchanged; the mechanism only changes how rewards are allocated between voters and validator groups.

Motivation

Validator groups play an important role in the Celo ecosystem through governance participation, community engagement, and ecosystem development. This proposal introduces a voter reward commission mechanism that allows validator groups to receive a configurable percentage of voter rewards, providing an additional tool for groups to sustain their operations and align incentives with delegators.

As with other validator group parameters, voters retain full discretion over where they delegate their stake and can consider commission rates when selecting a validator group.

The voter reward commission mechanism is intended to:

  • Better align incentives between validator groups and delegators.
  • Support sustainable validator group operations.
  • Create additional flexibility in how validator groups structure incentives.
  • Encourage competition among validator groups based on commission rates and the value they provide to voters.

Proposal

This proposal introduces a new validator group parameter:

  • Voter Reward Commission — a configurable percentage of voter epoch rewards allocated to the validator group.

Key characteristics include:

  • Validator groups may configure a voter reward commission rate.
  • Commission updates follow the same delayed activation pattern used for existing validator commission updates.
  • Governance may define a maximum allowable voter reward commission through a configurable cap.
  • If governance lowers the cap, previously configured rates above the new cap are automatically constrained during reward distribution.

Economics

This proposal does not increase CELO emissions, inflation, or overall reward spending.

The commission is taken from the existing voter reward allocation and redirects a portion of rewards from deferred Locked Gold claims (vote credit inflation) to immediate treasury releases for validator groups.

As a result:

  • Total rewards distributed each epoch remain unchanged.
  • The economic cost of the rewards program remains unchanged.
  • No additional CELO is emitted.

The proposal only changes how rewards are distributed between voters and validator groups.

Technical Overview

Epoch Reward Distribution

The proposal introduces a voter reward commission distribution mechanism that:

  • Deducts the configured commission from voter rewards during reward processing.
  • Releases the commission amount from the treasury to the validator group.
  • Distributes the remaining rewards to voters through vote credit inflation.
  • Emits a new VoterRewardCommissionDistributed event.

Validator Group Configuration

Validator groups gain the ability to configure:

  • A current voter reward commission rate.
  • A pending voter reward commission rate.
  • A delayed activation block for commission updates.

The queue-and-activate workflow mirrors the existing validator commission update process and reuses the existing commissionUpdateDelay parameter.

Governance Controls

The proposal introduces a new governance-controlled parameter:

maxVoterRewardCommission

A value of:

  • Fixidity 1 = no cap
  • Any other value = maximum allowable voter reward commission

The maximum commission is validated both when a commission update is activated and when rewards are distributed. This ensures governance decisions take effect immediately, including situations where governance lowers the cap after a validator group has already queued a higher commission rate.

Security and Testing

The implementation includes extensive unit, fuzz, and integration testing covering reward conservation, commission activation delays, governance cap enforcement, and edge cases. Storage changes have been designed to maintain upgrade safety.

Deployment Considerations

Following deployment, maxVoterRewardCommission will be set to Fixidity 1, which will allow validator groups to set any commission.

The accompanying governance proposal should therefore set an initial maximum voter reward commission as part of the upgrade process.

Implementation

Implementation PR: https://github.com/celo-org/celo-monorepo/pull/11694

We welcome feedback from the community and look forward to discussing this proposal.

Celo Core Co.

4 Likes
Celo Governance Call #91 | Jun 18th, 2026
2

I would like to be part of validator and voters

1 Like
3

TL;dr - Should groups be rewarded for merely existing?

I understand what the proposal will do, but don’t understand the why.

What are voters paying for and why would they signal support for a 10% reduction in their bottom line? In Comet BFT / Cosmos architecture, your validator share percentage is to pay validators for the costs of operating the network. What equivalent work are groups providing to voters here?

Right now, there is no mandate to do anything as a validator group. The only barrier to entry is that you have locked up N x 10,000 CELO and accrued enough votes to be in the elected set.

As a validator group, sure, why not? I could only support this proposal.

As a voter without a group of my own, I wouldn’t be happy paying someone 10% in perpetuity for merely having interacted with the celocli and performed a few transactions.

Longer term, I think it would be great to have this mechanism, I even commented something like this on another thread in the past. But I feel it’s shuffling paper around at the expense of voters until the validator groups actually have important, non-optional, and valuable blockchain work to do.

1 Like
4

@Thylacine These are some great questions.

With this in place, we could return to requiring validators to run an RPC node, which would be one reason to pay them. We could also collectively come up with other roles that validators perform, e.g. watching the proposer and initiating a fault proof game if the proposer ever proposed a bad Celo state root on Ethereum.

Additionally, some people have expressed interest in donating all of their rewards to projects working on public goods. Such projects could charge a 100% commission and only folks interested in donating their voter rewards would vote for (aka delegate to) those validator groups.

We plan to update mondo.celo.org to list the commissions, so voters could have full visibility into how much a validator is charging.

1 Like
5

Some decent ideas in there, but I feel these programs should be developed and operational first, before asking the community to take a reduction in their epoch rewards. We shouldn’t expect economically rational voters to signal Yes on something that hurts them today, but has a chance to be “worth it” in a future currently un-scoped initiative.

I’m not here to naysay everything, and I don’t have any alternatives immediately at mind, but we should be clear about what problem we’re trying to solve for with this (and any) proposal.

2 Likes
6

Re-reading the text here, is it safe to read that the purpose is to:

  • Incentize governance participation
  • Incentivize community engagement
  • Incentivize ecosystem development

Brief thoughts:

Governance

I think this should be incentivized. We already have half the mechanism to do this - delegated voters. A way to do that would simply be to reward proportionally based on each delegate’s voting power (already on-chain, verifiable) and their continued activity acting on behalf of their delegators (voting on proposals - also on-chain and verifiable).

This is a good candidate for a reward system because all the pieces are on-chain, and all the behaviour modifying incentives are in alignment: a delegate attracts more voting power the more thoughtfully and clearly they engage with proposals in the forum, and encourage others to safely delegate to them.

Engagement

In my opinion this never works and you just get forum/Discord/social grinders begging for role upgrades and other nonsense. If there’s some other mechanism or if engagement doesn’t mean what I think it means, let me know.

Development

There are already many grant and other programs that fulfill this requirement.

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Honestly I think we should move forward, drop the validator/group setup completely and if not possible without a bunch of core contract painful work, then rebrand those entities to be focused around the L2.

1 Like
7

we woulkd like if someone can take action and we can go ahead of the matter.

8

The mission is clear

1 Like
9

This is interesting message, I think the upgrade is good and I want to share the message and keep in my box also

10

Based on Cosmos (5%), Akash (5%), and Osmosis (5%), and considering the discussions around these percentages, it may be worth establishing an overall minimum allocation percentage. This would help prevent stake from becoming concentrated among a small number of validators and support a more decentralised delegation strategy.

I also have a few questions regarding validator commission changes. Is there currently a cap on how much a validator can increase its commission rate between epochs? If not, this may be worth considering, as many delegators tend to stake and forget rather than actively monitor validator commission rates on a daily basis. In my view, validators should not be able to increase their commission by more than a defined percentage relative to their current rate within a given period.

Additionally, if governance decides to lower the maximum allowed commission rate, how would this be reflected in Celo Mondo for validators that are already above the new limit? If reductions are required, would validators be able to lower their commission without any rate limits?

11

I like the idea of incentivizing folks to participate directly in governance through the delegation mechanism. Will think with the team some more on how to do this best.

12

Kind of like my previous point, most Cosmos validators either don’t vote or don’t take the time to read the proposals. Good idea, Thylacine!

It might also make sense to tie validator staking capacity to governance participation, similar to how the number of signers of groups can limit capacity. Validators that consistently participate in governance could earn higher capacity, while those that never vote would have lower limits.

13

This are really good questions.

There is no cap right now for how much a validator can increase their commission, but any increase won’t go into effect until the next epoch, so users on top of their game can react before being affected by any increase.

There is also no governable global minimum, but that’s certainly something that could be added and set via a vote.

As for your question about lowering the max commission. If governance lowers it, it will automatically lower all higher commission rates to this max. The effective rate is basically a max of the commission a validator sets and the max.

14

I actually don’t think we should tie governance to anything related to what we are referring to as “validators”. For better or worse, there is no such concept as a validator on this network anymore. All we have is a legacy on-chain structure that allows people to create a named CELO locking and staking group.

Besides, under the current delegate system any individual or community member can become a good governor. Maybe they specialize in DAO management, maybe they’re just a good thinker and communicator, etc. It shouldn’t have anything to do with running a staking group.

A more future proof system would be ripping out the group/validator structure, bootstrap a new opt-in system for the challenger/proof system so anyone can participate. Keep governance as it’s own thing, reward good governance somehow (would probably need to be some ranking system based on their off-chain activities and participation).

I guess the governance proposal for the group rewards has sailed through or will, but I don’t really understand it at all. Community voted away the last thing validators had to do (get rewarded for running RPCs) under the guise of cost cutting, and now this proposal wants to reward groups for simply having a group?

Like I said, works fine for existing groups, why wouldn’t they upvote this? More returns for them, no change to their responsibilities. For non-group holders and voters I don’t see the rationale on why they would vote Yes on this.

15

Incentives to the governance, validators are correct