[CVV009] Update to the Association Delegation Policy

Proposal Discussion
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Summary

This proposal introduces:

  • A rank-stable delegation allocation method
  • A deterministic, multi-stage overflow handling mechanism
  • An additional Testnet participation requirement
  • The removal of non-algorithmic (off-chain) eligibility criteria
  • A rank-aware undelegation recommendation

The goal is to ensure that delegation at the current treasury scale remains aligned with decentralization objectives while improving the objectivity and enforceability of validator eligibility.

This proposal is operational in nature and does not impact delegators directly.

Motivation

CVV002 was designed under a significantly smaller delegation base. With a substantially larger treasury stake:

  • A limited eligible validator set (e.g. ~36 validators after entity filtering) leads to very large per-validator allocations
  • Fixed-percentage allocation can distort validator rankings
  • Validators selected for decentralization support may be pushed into top ranks, defeating the policy’s intent

Additionally:

  • Some eligibility criteria currently rely on manual/off-chain verification, which is not scalable or objective
  • There is currently no enforced linkage between Mainnet and Testnet participation, limiting Testnet robustness

This proposal addresses both the allocation logic and eligibility framework.

Specification

Definitions

  • Let S10 be the total stake of the validator ranked #10 at the start of the allocation round
  • Let Target Stake (T) be defined as:

T = 0.9 Ă— S10

  • “Eligible validators” refers to validators satisfying all CVV002 criteria, as modified by this proposal
  • The initial calculation of ranks and total stakes will be done omitting the association-delegated stake on all nodes.

Part A — Delegation Allocation

Step 1: Rank-Stable Gap Allocation (Entity-Filtered Set)

  • Apply existing eligibility rules, including entity-based filtering (one validator per entity)
  • For each entity, select the lowest-ranked validator node (by total stake) for inclusion in this step
  • Consider eligible validators ranked below the top 10 (rank #11 and lower)
  • Starting from the lowest-ranked validator and moving upward:
    • Allocate delegation only up to the amount required to reach Target Stake (T)

Continue until:

  • All such validators reach T, or
  • The available delegation pool is exhausted

Outcome:

  • Delegation does not elevate validators into the top-10 boundary
  • Entity-level decentralization is preserved
  • Allocation prioritizes weaker (lower-ranked) nodes within each entity

Step 2: Extended Gap Allocation (Entity Filter Lifted)

If excess delegation remains after Step 1:

  • Lift the entity-based filtering constraint
  • Allow multiple validators per entity
  • Recompute the eligible set

Apply the same logic:

  • Consider validators ranked below the top 10
  • Allocate only up to the amount required to reach Target Stake (T)

Outcome:

  • Additional allocation capacity
  • Rank stability preserved

Step 3: Overflow Distribution (Extended Eligible Set)

If excess delegation still remains after Step 2:

  • Expand the eligible set to include validators that satisfy all criteria except current top-10 exclusion
  • Distribute the remaining delegation equally per validator

Outcome:

  • Preserves relative ordering
  • Avoids material ranking distortion
  • Provides a simple, deterministic fallback

Part B — Eligibility Updates

1. Testnet Participation Requirement

All eligible Mainnet validators must:

  • Operate a Testnet validator node for each Mainnet validator node
  • Ensure the Testnet node is:
    • Paired via Casper Account Info Contract on Testnet
    • Achieving ≥ 99% monthly performance or daily performance, with a force majeure clause for infra issues, outages, testing & experimentation

Activation:

  • Effective starting July 01 (next stake distribution term)

Rationale:

  • Strengthens Testnet reliability
  • Ensures validators support network readiness and upgrades
  • Creates a measurable, on-chain verifiable participation signal

2. Removal of Off-Chain Eligibility Criteria

The following class of criteria is removed:

  • Any requirement relying on manual or off-chain verification, including:
    • Forum participation checks
    • Manual identity or activity validation by the Association

Rationale:

  • Improves objectivity and transparency
  • Eliminates operational bottlenecks
  • Ensures eligibility is fully algorithmic

Future Work:

  • These criteria may be reintroduced once trustless or algorithmic verification becomes available

Part C — Undelegation Recommendation

When undelegation of tokens is required, the Association is recommended to:

  • Prioritize undelegation from higher-ranking validators (by total stake weight) first
  • Ensure that any undelegation operation does not alter the relative ranking of validators

Rationale:

  • Maintains rank stability during both delegation and undelegation flows
  • Avoids unintended promotion or demotion of validators
  • Preserves the integrity of the allocation policy over time

Properties

This proposal ensures:

  • Rank stability: No promotion into top-10 positions due to delegation or undelegation
  • Decentralization alignment: Focus on sub-top-10 validators
  • Deterministic allocation: No discretionary decisions
  • Scalability: Suitable for large treasury delegation sizes
  • Objective eligibility: Fully algorithmic criteria
  • Testnet strengthening: Incentive alignment across networks

Backward Compatibility

  • Modifies CVV002 allocation logic
  • Removes certain eligibility criteria
  • Adds new Testnet requirement (delayed activation: July 01)
  • Introduces undelegation recommendation
  • Does not impact delegators

Implementation Notes

  • S10 must be measured at the start of each allocation round.
  • Allocation must use pre-delegation stake values.
  • Step 1 must select the lowest-ranked node per entity under entity filtering.
  • Step 2 requires temporarily lifting entity constraints during allocation only.
  • Testnet performance must be measured over monthly and daily windows; then the higher one out of two values should be taken. If there is a force majeure for a specific node, the operator needs to disclose it ahead of time in the Validators Guild so that an exception can be added.
  • The lower-stake nodes get filled first with entity filtering at step 1. Step 2 continues with the remaining tokens instead of starting over with total recalculation.
  • Mainnet operators can join Testnet any time they like. There is no need to apply or participate in lotteries etc. It’s a permissionless network.
  • Pairing via Account Info Contract must be verifiable on-chain.
  • Undelegation operations should simulate post-action rankings to ensure no ordering violations.
  • The Association may, on an exceptional basis, exclude or suspend validators from consideration where required to address legal, regulatory, or contractual risk.

Conclusion

This proposal updates both delegation distribution and eligibility evaluation to ensure:

  • Delegation remains aligned with decentralization goals at scale
  • Allocation remains stable under large treasury participation
  • Validator requirements are objective and enforceable
  • Testnet participation is strengthened ahead of future upgrades
  • Undelegation behavior remains consistent with rank stability principles

The Process

Timeline:

This is expected to be a fast-paced discussion and voting process to be able to provide the association with an updated policy by the start of the next quarter (April 01).

  • Proposal Posted: March 26, 2026
  • Proposal Discussion and Iteration Period Ends: March 30, 2026
  • Validator Vote: March 30 - April 01, 2026
  • Implementation: Effective immediately following vote, as soon as operationally possible

Proposal Lifecycle

  • Stage: Pre-Vote
  • Voting Options
    • For: Support the proposal.
      • 011de3a86cd71d98a83bddf57384e1a0c3b4ea5be696fcbd6fa9a80b3cdcf396de
    • Against: Oppose the proposal.
      • 0118c145c88386f6cf0dd12c30702742013ab23260253e8748f620dd31c27ccadb
    • Abstain: No opinion.
      • 015dc16c2072eaf747f559385ee0ac277fbf91ab87b536da8c5bb6177940e833ac
  • Voting Starts: ~14:08 UTC, March 30, 2026 (at block height 7121301)
  • Voting Ends: ~14:08 UTC, April 01, 2026 (at block height 7142901)

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 21825.
  • Voting token contract: TBD
  • 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%
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