[CVV006] Proposal: Implement Minimum Validator Fee Mechanism

Proposal Discussion
1

Summary

Currently, validators on the Casper Network can set their validator fee to 0%. While this may appear attractive to delegators, it creates unhealthy competition that undermines validator sustainability. Running validator machines requires significant costs, and validator fees are the only source of income for operators. With fees at 0%, validators are forced to spend without earning, threatening the stability and security of the network.

To address this, it is proposed that the Casper codebase be updated to support a minimum validator fee parameter on the chainspec.

Problem

  • Inflation distribution: Around 8% of new CSPR is distributed annually through staking rewards.
  • Validator rewards: Delegators earn from inflation, while validators rely on a self-set commission fee (the validator fee) as their only income.
  • 0% fee competition: Because validators can set their fee to 0%, delegators naturally prefer them. This creates a race-to-the-bottom dynamic that leaves validators without revenue.
  • Sustainability risk: If validators cannot cover costs, they will leave the network, reducing decentralization and security.

Proposed Change

  1. Introduce chain-level minimum validator fee as a chainspec parameter in the Casper protocol.

    • Validators will not be able to set their fee below this minimum.
    • This ensures all validators have at least a baseline income stream.
    • It doesn’t impact/limit the reservation delegation rate.
    • It doesn’t work retroactively, i.e. there is no migration needed, and the new limit only applies to new calls to add-bid.
    • It will be released as part of Casper v2.2.

  2. Phase approach:

    • Step 1 (this proposal): Implement the code logic for a minimum validator fee, making it possible to enforce such a rule.
    • Step 2 (future governance proposal): Decide the actual minimum percentage (e.g., 2%, 5%, etc.) through community discussion and vote.

Benefits

  • Protects validator sustainability.
  • Ensures fair competition (delegators still have choice, but not at the expense of validator survival).
  • Strengthens network decentralization and long-term security.

Next Steps

  • Approve implementation of the minimum fee parameter in the Casper blockchain code.
  • After the feature is merged, open a new proposal to decide the exact minimum fee value.

Proposal Lifecycle

  • Stage: Pre-voting
  • Voting Options
    • For: Support the proposal.
      • 011de3a86cd71d98a83bddf57384e1a0c3b4ea5be696fcbd6fa9a80b3cdcf396de
    • Against: Oppose the proposal.
      • 0118c145c88386f6cf0dd12c30702742013ab23260253e8748f620dd31c27ccadb
    • Abstain: No opinion.
      • 015dc16c2072eaf747f559385ee0ac277fbf91ab87b536da8c5bb6177940e833ac
  • Voting Starts: ~10:19 UTC, September 18, 2025 (at block height 5503579)
  • Voting Ends: ~10:19 UTC, September 21, 2025 (at block height 5519779)

How to vote:

  • A voting token, with a total supply of 100.00, for the proposal will be created, and distributed to Mainnet validators based on their network weights as of era 19505.
  • Voting token contract: CSPR.live
  • Make your decision and send all (recommended) voting tokens to one of the corresponding addresses below.
    • For: 011de3a86cd71d98a83bddf57384e1a0c3b4ea5be696fcbd6fa9a80b3cdcf396de
    • Against: 0118c145c88386f6cf0dd12c30702742013ab23260253e8748f620dd31c27ccadb
    • Abstain: 015dc16c2072eaf747f559385ee0ac277fbf91ab87b536da8c5bb6177940e833ac

Evaluation of the results:

  • Quorum ratio: +50% network weight (>50.00 tokens, including the abstains)
  • Decision threshold: Simple majority (+50% of participating weight, excluding the abstains)
  • Example:
    • For:35.00, Against: 25.00, Abstain: 15.00
    • Quorum reached with 75.00%, proposal accepted with ~58.33%
Proposal: Enable Minimum Validator Fee Mechanism