Introduction
Currently, XDC masternodes are promoted to validator nodes using a round-robin system. This system ensures fairness while assigning validator roles to standby nodes. However, the existing approach has a potential drawback: certain nodes may remain as validators for extended periods, which raises concerns about decentralization.
This proposal aims to address this issue by presenting a refined mechanism to promote decentralization, while balancing fairness and efficiency.
Proposal Details
1. Periodic Rotation of Validator Nodes
Objective:
- Prevent any single node from operating as a validator for extended periods and enable more operators to participate.
Details:
- Set a maximum tenure of 1 year for validator nodes.
- After the tenure ends, the node returns to the standby pool.
- Introduce a 3-year cooldown period, during which the node cannot serve as a validator again.
2. Improved Selection Mechanism: Combination of Registration Order and VRF
Objective:
- Balance fairness and unpredictability while prioritizing nodes with stable performance.
Details:
- Split the selection process into two components:
Registration Order RotationAllocate 50% of slots based on the order in which standby nodes were registered.
Performance-Based VRF SelectionUse Verifiable Random Function (VRF) provided by the decentralized oracle Plugin to randomly select the remaining 50% from nodes with stable performance.
Benefits:
- Maintains fairness based on registration order.
- Introduces unpredictability via VRF, enhancing security and decentralization.
3. Transparent Performance Evaluation Criteria for Standby Nodes
Objective:
- Ensure a transparent selection process and maintain network reliability.
Details:
- Establish criteria such as uptime, response times, and historical performance for evaluating nodes.
- Nodes failing to meet these performance standards will be excluded from selection.
Benefits of the Proposal
Promoting DecentralizationReduces the risk of network dominance by specific nodes over extended periods.
Improved FairnessCombines registration order and VRF to create a balanced and inclusive selection system.
Enhanced Efficiency and StabilityPerformance-based criteria ensure network-wide reliability.
Encouraging New ParticipantsCooldown periods create more opportunities for new nodes to serve as validators.
Conclusion
This proposal provides a practical and effective approach to improving decentralization and fairness in the XDC network. By enhancing the round-robin system with registration order rotation and performance-based VRF, it ensures the stability and security of the network while enabling broader participation.
Implementing this mechanism will help the XDC network evolve into a more decentralized and sustainable ecosystem, driving its long-term growth and success.
This is merely one proposal, but it represents a realistic and meaningful approach to enhancing decentralization, fairness, and efficiency within the XDC network. By incorporating detailed implementation plans, this proposal can become even more feasible and effective.
This proposal is intended to serve as a starting point for discussion and thought within the community. My goal is not to present a final solution, but rather to raise key questions and ideas that could spark further exploration. I believe that by engaging in thoughtful discussions, we can refine and develop this concept to better suit the needs of the XDC network and its stakeholders.
I look forward to hearing your thoughts and feedback on how we can improve the validator node rotation system, and how we can ensure that decentralization remains at the core of the network's future development.
Thank you for taking the time to consider this proposal, and I’m excited to continue the conversation with all of you!
Discussion (4)
I appreciate this insightful and well-structured proposal addressing the enhancement of decentralization within the XDC Network's validator node rotation system. Your thoughts on incorporating periodic rotations, registration order, and performance-based selection strike a compelling balance between stability and fairness.
Thank you very much for your thoughtful response and for acknowledging the need for enhanced decentralization within the XDC Network.
I’d like to share an illustrative example to further explain my perspective, not only for you but also for others who may be following this discussion. This is the well-known story of the Bitcoin Pizza.
The Bitcoin Pizza Example
On May 22, 2010, Bitcoin was first used in a real-world transaction when Laszlo Hanyecz paid 10,000 BTC for two pizzas. At the time, 1 BTC was worth approximately $0.004, making the total cost of the pizzas $40.
Laszlo’s decision was monumental—it proved Bitcoin’s utility as a means of exchange. However, if he had held onto those 10,000 BTC, their value today (assuming a BTC price of $30,000 in January 2025) would be $300 million.
This story highlights two key points:
Application to the XDC Network
In the XDC Network, the initial 108 validator nodes were established by individuals who believed in the project when it was just an idea. Their contributions have been vital, and they’ve been appropriately rewarded through incentives and the appreciation of XDC’s value over time.
However, as the network matures, it’s crucial to create opportunities for newer participants while still respecting the contributions of the early adopters. The periodic rotation system proposed here aims to strike this balance. It ensures that:
Early contributors are recognized and respected.
New participants are incentivized, fostering decentralization and long-term network resilience.
This is not about diminishing the role of the initial 108 validators but rather about building an inclusive and adaptive ecosystem that evolves with time.
Conclusion
The Bitcoin Pizza example reminds us of the balance between honoring early contributions and embracing new participants to sustain growth. By implementing a fair and transparent rotation system, I believe the XDC Network can achieve greater decentralization while maintaining its security and stability.
Thank you again for your thoughtful engagement. Your support and feedback are invaluable as we work together to strengthen the XDC ecosystem.
Non starter for me- the present system does not have any issues with security or decentralisation. The 108 validators receive extra rewards and credits as they were the ones that invested when XDC was just an idea, the stby nodes came later to expand the network and create backups. The proposal speaks of rotating nodes based on seniority of registration yet completely ignores the same principle of seniority of the validators. The selection of the validators is already transparent on the network, from the original 108 nodes.
Thank you for sharing your thoughts. I completely agree that the initial 108 validator node operators played a crucial role in laying the foundation of the network, and their contributions should be appropriately recognized.
However, I believe that at this stage of the XDC Network’s development, it is necessary to transition to a system that prioritizes decentralization and fairness.
The Bitcoin Pizza Example
Let me illustrate this with the famous Bitcoin Pizza story. On May 22, 2010, Bitcoin was first used in a real-world transaction when Laszlo Hanyecz paid 10,000 BTC for two pizzas through a forum. At the time, 1 BTC was worth approximately $0.004, making the total transaction worth $40.
While Laszlo took a risk to prove Bitcoin’s utility, if he had held onto those 10,000 BTC, their value would now be around $300 million (assuming BTC at $30,000 per coin in January 2025).
This example demonstrates the immense value early adopters can receive over time. However, despite Laszlo’s risk and contributions, the growth of Bitcoin was not limited to his actions alone. The network thrived because it embraced new participants and scaled accordingly.
The Current Situation with XDC
Similarly, the initial 108 validator node operators took a significant risk when XDC was merely an idea. Their efforts have been rewarded through incentives and the rise in XDC’s value.
Yet, today, XDC has matured into an ecosystem beyond its initial concept. At this stage, perpetuating exclusive privileges for early investors could potentially hinder decentralization and demotivate new participants who are vital for sustained growth.
Prioritizing Fairness and Decentralization
While respecting the importance of early contributors, the proposed rotation system aims to provide opportunities for new participants while preserving the network’s security and decentralization. This approach promotes a balanced and inclusive system that strengthens the network.
Just like the Bitcoin example, it’s essential to consider not only the past contributions but also the present and future sustainability of the network. I believe this proposal is a key step toward advancing the XDC Network to the next level.