Try Quests to earn cryptoThe Eclipse Score
Question:
Invent an easy-to use "Eclipse Score", based on at least 3 metrics, to rank validators who are not effectively representing their delegators via voting.
(For example: if you participate in only 5% of votes but are in the top 5% of validators by LUNA delegated, you should have a terrible Eclipse Score!)
Provide a table and at least 1 visual that displays validators according to your Eclipse Score, e.g. a bubble chart with LUNA Delegated vs. Votes Attended. Additionally, analyze the top 5 best and top 5 worst validators according to your Eclipse score.
Overview of essay:
In this essay, we are going Determine the performance of Validators on Terra blockchain be define score, This investigation divided into the following parts:
- Used metrics and Eclipse Score
- Top 5 best Validators
- Top 5 worst Validators
- Summary and references
Terra blockchain and Validators:
After the sudden and horrific collapse of the Terra network, many investors are worried about the future of the stablecoin Terra and the Luna Classic blockchain. Although Terra Network was completely destroyed, the founders quickly launched a new version called Terra 2.0.
Finally, it was decided that a new network (and not a fork of the previous network) would be formed and its native coin would be awarded to the holders of Terra Classic network tokens. This proposal, which was known as No. 1623 and as "Terra Ecosystem Restoration Plan - No. 2", was finally approved on May 25, 2022 by the majority of the participants (65.5% of the votes). Receipt. A new network called Terra was created with native digital currency Luna (LUNA). The technical name of this chain is Phoenix-1 and the name of its test network is pisco-1. The previous network will continue to work with a new name; This network will be called Terra Classic chain and all its tokens will have the classic extension. Like the previous network, Terra's new network is a member of the Cosmos ecosystem and is based on the Cosmos-SDK development kit and the consensus of Tendermint. This network will no longer have a native stablecoin as before, and the treasury, oracle, and market modules (all three related to controlling the mint process and burning algorithmic stablecoins) have been removed from it.
Terra is a public blockchain based on Proof of Stake (PoS). This means that the impact of each Validators vote depends on the amount of Luna tokens he has staked as collateral.
These tokens can be directly staked by validators or LUNA holders can represent them to delegators. In the Terra model, Luna holders do not directly stake their tokens, but instead delegate their tokens to validators. So holders who want to use staking rewards but don't intend to run a full node can earn money in this way, which is called a proxy. The impact of each validator's vote depends on the amount of tokens he has staked. These tokens are either owned by him or assigned to him through representatives.
Important note:
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Huge nodes with tons of staked tokens can potentially deceive to profit by double signing blocks. That means they say funds went one place, but they actually went another.
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Centralized exchange nodes are EXCLUDED from receiving airdrops. This is a big deal if you stake Terra tokens, because there are so many airdrops.
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Always use official websites to stake on Terra
Ref→ blocksunited
Methodology:
To handle this investigation, the Data provided by Flipside community has been adopted, accordingly.
The data related to Terra network have been shown by Terra tables on Flipside. The sub-parts of this mentioned table have been utilized by its application:
- Determination of net staked Luna:
- (Delegation+redelegation)-Undelegation
- Self Delegation→ Delegated by Validator to itself
- Active period of Validator→ Time period between first and last activity
- Participation on Governance of Terra:
- Count of proposals
- Count of votes
- Eclipse Score
- The eclipse score is defined by the use of combination of the above metrics. In the definition of this score, the self delegation, count of voted proposals and net stake amount of LUNA on Validator have been considered:
(share_activation_period*Self_delegation*NO_PROPOSALS)/(NET_STAKE) as Eclipse Score- As you can see and according to the formula:
- The self delegation has positive impact
- count of proposals and net stake must be kept in relation with each other
- The active period of Validator has positive vibe
Key Findings:
- The performance of the top 5 best Validators on Terra by the use of Eclipse definition provided in the Methodology section has been analyzed:
- The top 5 worst Validators have less self delegation than other Validators and Also as can be seen Kucoin as CEX appears as worst Validators and we notice in the first part that CEXs are worst Validators due to the experiences and their features.
- The worst Validators have high volume of net staked LUNA and can manipulate the outcomes.
- These Validators has participated on the small part of the governance proposals and the ratio of the amount of stake to the participation in the vote is very heterogeneous.
- The worst Validators changed their votes less than other Validators and it can be used as a negative point for selection of Validators.
Key Findings:
According to the defined eclipse score, first lets analyzed the various part of this metric:
- Most of Validators have volume of net staked between 2-5 million LUNA.
- The highest volume of self delegation happened on Delight Validator.
- Most of the Validators have participated on the 20-50 proposals on Terra governance and voted less than 10 times.
- By the use of the definition of eclipse score, the rank of Validators has been shown in the scatter plot and above table accordingly.
- The Flipside Validator is on the 4th rank of the best Validators for staking on Terra based on my definition.
Key Findings:
The performance of the top 5 best Validators on Terra by the use of Eclipse definition provided in the Methodology section has been analyzed:
- The top 5 best Validators contains self delegation and the main reason of that is “If they have skin in the game, then they have a reason to keep the node running.”
- The best Validators have considerable volume of net staked LUNA but not high to manipulate the outcomes.
- These Validators has participated on the large part of the governance proposals and the proportion of the staked LUNA and participation on governance has a reasonable relationship.
- The top Validators changed their votes more than worst Validators based on the circumstances of the network and also opinion of regular voters.
Conclusion:
By considering the outcomes of this analysis the following statements could be concluded:
- Terra is a decentralized network that allows people to stake their tokens and become validators. Validators are responsible for the maintenance and security of the network. Staking is the process of locking up tokens to gain rewards in return. The longer you stake your tokens, the higher rewards you will receive.
- The active period is the length of time that a validator needs to remain active in order to continue receiving rewards. Delegation is when someone entrusts their tokens to a validator, who then uses them as part of their stake in order to generate rewards. Terra provides an opportunity for users to earn passive income by staking their tokens and delegating them to reliable validators.
- The selection process is an important part of Terra's infrastructure, as it determines who will have access to the network and how much influence they have on it. It also helps ensure that only trustworthy and reliable validators are chosen, so that the network remains secure and reliable. Terra's selection process requires careful consideration of various criteria such as reputation, technical expertise, and financial stability.
