Hello to the Validator Community!
I am writing this post because of a few discussions I have had with prospective new applicants about the risk-reward ratio of obtaining and registering 20k CELO and the constant rewards of 75k cUSD which has been reported to be less than that annually.
Wanted to start a discussion on how the validator community feels about getting rewarded in cUSD vs getting rewarded directly in CELO.
Obviously having a reward be in CELO means that validators benefit from the upside of the CELO price, but obviously there’s a risk if the CELO price downtrends which might mean less validators might participate.
Alternatively, if the price of CELO keeps increasing, then 20k CELO becomes an impossible barrier to entry for the return given in cUSD, especially when there are alternative modes of earning yields on your CELO. Tarun Chitra wrote a great paper on this phenomenon of staking vs. DeFi yield tradeoffs and security risk in this paper here.
Personally, I don’t think adjusting rewards via governance proposal is a good approach because it feels we are just adjusting to market behavior which is never constant. I see two potential approaches:
- Register your validator in a fixed cUSD amount and get rewarded the 75k cUSD.
- Register your validator in 20k CELO and get rewarded for validating in CELO.
I want to ask folks here who are validators on their thoughts here on this topic, and especially interested in hearing from Foundation Voting Recipient cohorts as well.