Aurora validator v 2.0 setup

AuroraDAO
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According to the AURORA token economy, it was decided to allocate 30M AURORA tokens to be distributed to NEAR ecosystem in a form of a farming rewards to the ones who are delegating NEAR tokens to Aurora validator. At the moment the code for the new version of the validator that allows such mechanics is close to be finalised, so it’s worth discussing the setup parameters.

Parameters

The validator has three parameters, one of which is uncontrollable, while other two are controllable by the owner of the validator.

  • NEAR burn. This parameter is describing the percentage of the mined NEAR, which would be
    burned.
    The parameter is specified at the moment when the validator factory (not the instance of the validator) is deployed. Important mechanics is that NEAR Foundation needs to approve the factory contract; only after that the locked NEAR can be staked with the validator. Having an ability to use locked NEAR is crucial for the success of the validator, since a lot of investors and NEAR team members have their NEAR tokens in a locked condition.
    It is expected that the NEAR burn would be 30%.
  • Validator fee. This is the cut that a validator would take from the staking rewards. This parameter is specified by the party that deploys the instance of the validator.
    It is expected that the Aurora DAO would be the deploying party.
  • Farm parameters, namely the amount of tokens that would be distributed to the delegators and the duration of the farming period. This parameter, again, is specified by the validator deploying party.

Initial considerations on the validator parameters

Initial considerations on the above parameters were described high-level in the token economy proposal: 10% NEAR burn, 20% validator fees and 30M AURORA over the period of the next 3 years (10M AURORA per year). Taking into account the expected change in the NEAR burn rate and having more information on the fair market value of NEAR and AURORA tokens, there is a need to reconsider the parameters of the validator.

General considerations

The main value that would be important for the delegator is APY on his investment. Normally, the higher is the APY, the higher is incentive to delegate with Aurora validator. There are other cases why delegators will or will not delegate with Aurora validator, but we are not taking these into consideration here.

Another important piece to count for is the expenditures on the Rainbow Bridge maintenance and the transactions on Aurora (which currently are free). There is no way how to make a good projection for these taking into account the ever-changing landscape of the crypto prices and fees, however the rough estimation is: the bridge fees would take 250 ETH and around 800k NEAR for Aurora transaction fees.

Interestingly, with some setups of the validator, it is possible to keep the transaction fees on Aurora zero, maintain the high APY for the Aurora validator delegators and have a non-negative balance sheet.

The prices of the tokens that were taken for the calculations are the following: AURORA $21.95; NEAR $14.7, ETH $3800. Attached to the post is the Excel spreadsheet where one can tune the parameters and simulate different scenarios.

Validator parameters estimation.xlsx (16.8 KB)

APY and Fees calculations depending on the validator fee percentage and the total stake
APY and Fees calculations depending on the validator fee percentage and the total stake1920×1389 276 KB

Proposal

  1. To set up the validator fee to 100%.
  2. Set up the farm of 5M AURORA tokens for a length of 1 year.

Motivations

  1. As expected, the validator fees depend only on the validator cut and the total amount of staked NEAR. The first parameter linearly increases the fees.
  2. With a big farm size, NEAR rewards are contributing pretty weakly in the total APY. Even for a 5M Aurora farm with 30M NEAR staked the difference in the APY is the following: 5% fee – 32.2% APY; 100% - 24.9%. The lower is the total staked amount, the lower is the the influence.
    So it’s not that important for the user APY what is the validator cut. The important piece is the size of the farm.
  3. 5M AURORA farm with 100% validator fee capable of covering the all costs of the Aurora project maintenance with 12.5M NEAR staked, which seems pretty achievable, especially with almost 60% APY for this setup. If users will stake more, the APY would drop; however up to 70M NEAR staked, users would get higher APY than conventional NEAR staking.
  4. There’s always an option to add additional farms (and increase user APY) when the user incentives are not working as expected. That’s why it’s worth sticking to low-time low-amount option in the beginning and see how the ecosystem would evolve.
  5. In case Aurora validator would be net positive even after paying for the transaction fees and Rainbow Bridge, the excess funds can be used for other purposes, like additional audits, user insurance, etc. Alternatively, the validator fee can be decreased over time.

Validator parameters estimation.xlsx (16.8 KB)

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Although I think 5M aurora is a bit much, compared to the current 1M circulation in the hands of users, but there is no better way to better continue to subsidize the user experience.

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Thanks for the comment, @luoquecrypto.near. In fact, in the hands of the users is much more than 1M of AURORA tokens, since 1M was only sold. There’re 9M of AURORA that were delivered by the DAO to the market to bootstrap the ecosystem in various forms, including setting up the pools on AMMs and other activities.

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Hello !
Please, motivate Ledger to support Aurora :green_heart:
Happy 2022 year !

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The beauty of Aurora is that it’s fully compliant with Ethereum. There’s no need to specifically support Aurora for Ledger. You can just use the normal Ethereum wallets with ledger support.

Ledger Live support of Aurora is a separate topic.

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Thank you, it works perfectly :slightly_smiling_face:

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Am I understanding this correctly?

You want to set up a custom NEAR validator for Aurora.

And that would implement a revenue-sharing model that would allow us to keep:

  • Rainbow Bridge free indefinitely
  • Aurora gasless indefinitely

Right?

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Dear Alex,

I wonder about the % of APY. Ex: I have 5 M $Near and start to staking to become a validator. Then if i choose 5% and get about 156% APY of $AURORA, but if i choose 100% then only get 149.3%. So what is the motivations and benefits for NEAR hodlers to maintance 100% of transactions fee of rainbow bridge and aurora? Pls reply. Thank you.

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**A fee-free blockchain is a good wish, but it is very difficult to achieve. **

  1. According to the hypothesis you put forward, the distribution of 5M aurora can attract 70M near stake to the validator nodes of aurora, which means that we exchanged $115M(5M aurora @ $23) for 80M. For us, we used aurora with a market value of $1.43 in exchange for $1. For near holders, 10% of the income is almost the same as when they pledged on other validator nodes, not to mention after the native deifi protocol on near goes live. In summary, this is not a good deal for us and near holders.I think the actual amount of staked NEAR and the income generated will be much lower than planned. It is a bit similar to a one-year skyward fundraising…

  2. In fact, for high-performance chains, even free rpc is already a bit unsustainable. For example, bsc, matic…bsc nodes with poor performance at peak times often have to pay higher gas price transactions than high-performance rpc nodes in order to be normal.In the same situation, matic cannot work normally even if you add more gas price, it often takes a long time, even more than 1 hour …Fee-free chain plus free rpc is definitely a disaster. Here is a robot contract on the bsc chain: Contract Address 0x038d51ae282c2c16d8bae1908f468bc919f2eb1b | BscScan, and bsc has hundreds of such robots. This can only be regarded as a violent use, and it is far from reaching the point of a malicious attack. If the transaction is free, perhaps 99% of the transactions on aurora will be issued by 1% of traders. For a cost-free evil environment, you can refer to telegram and discord,what did ordinary users there go through. Blockchain technology currently has certain limitations, and it is still not economical and practical. If you want to choose one of the two, I think it is the best way to do a good job in the user experience (in fact, the near transaction costs are already very low), the extremely fast rpc, high-speed blockchain performance, support the ecology to increase development efforts, These all need money. Fee-free blockchain is good, we can take it as an ultimate goal, don’t rush for a while

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Correct. I don’t understand what you mean by revenue-sharing model, since all the validators of the NEAR blockchain have this approach.

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@meocuksuk , the validator fee is determined not by the delegators. It’s determined by the owner of the validator. So, this is the choice of a DAO.

Literally, in the tables in the original post, the DAO chooses the column and depending on it delegators delegate. Obviously, the higher the APY, the more people would delegate.

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Hey, @luoquecrypto.near , thanks for sharing this. You’re exactly right about the RPC, and I’m with you. Though my conclusions are a bit different. Here are my thoughts.

  1. In a chain where transaction fees are low, indeed their cost is comparable with the RPC calls. Still a couple of orders of magnitude higher, but already much closer. If we take into account the fact that there many RPC calls for a single transaction (get the nonce, get the gas price, estimate the gas consumption, etc.), the gap is even more loose.
  2. Paid RPC would be a disaster for the user. In fact, even on Ethereum the RPC is for free for both end users (Metamask) and developers (free plans on Infura and Alchemy). Why is it working like that? Because Metamask earns money from a different thing (swaps inside a wallet), and Infura’s business model is freemium. Why would anyone bother about the network where the RPC is not for free now?
  3. Free services is a core of the web2 world and people got used to it. Just look at Facebook, Google and dozens of popular AAA and mobile games. These are free. And of high quality. And, obviously, Facebook servers serve much more requests than all the blockchain RPCs combined. What is the difference? Why Facebook model works then? And again, the answer is that Google is earning money in a different place: through ads and ad-free subscriptions. That’s it. This is how the world works and this is how it is convenient to billions and we have nothing to do with it, just admit it as a fact.
  4. Wait, but how they protect from the DDoS attacks if their RPCs are free and open?. The answer is not in the payment requirement. This is a completely different problem! Everyone needs to protect against DDoS. But this should be done with advanced schemes of reacting on the spam and bots. And this is already implemented in Aurora RPC. Same approaches should be used for transactions. And using them, legit human behavior should not be limited neither on the read requests (RPC), nor on the write requests (transactions). Bots should be banned.
  5. If Aurora RPC would ban bots, then isn’t it censorship? It is. And there’s no problem with it. Because Aurora RPC is provided by Aurora Labs, a single company. But there are no restrictions on running your own Aurora RPC. In fact, it’s just several lines of CLI commands. But, if you run your own RPC, you need to think about NEAR to pay for the transaction fees, your server maintenance, etc.

NEAR blockchain provides all the decentralisation and protection from the spamming of the network that are possible on the level of the protocol. Aurora RPC provided by Aurora Labs can implement different models, which are more profound and convenient for the end users. Free transactions (under normal circumstances) is just a beginning of this journey. There are many things that can make blockchains user-friendly and easy to use. I personally see no point in sitting under low-level gas UX dogmas, when we can change it. Aurora validator is one possible path of getting to the better future.

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what a fucking giga chad

lfg

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So the validator is live now. Im ready to switch my whole bag of NEAR staking to there. When do we get rewards? Any early extra incentives?

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The validator is aurora.pool.near. The farm is created and it would start distributing AURORA in about 3 days from now, so everyone would have time to move their NEAR tokens before farming starts.

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So we have time to move from the “old” validator to the new one.

Moving…

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Is going to be some kind UI to know the current APY?
Rewards will be given every epoch?

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I’m new to this so don’t judge too harshly. if i have 500 near for example . what will I get from staking in 1 year (or in 1 month)

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Yes, the PR to the NEAR wallet is in the preparations. It would show the APY, as far as I know.

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Thanks for asking. We are here to help you to understand.

It’s hard to say, since it is not clear how much NEAR would be staken with the validator. In case it would be 10M NEAR it means that each two NEAR will earn 1 AURORA over a year time. So, here’s the simple calculations table for you:

Total staked NEAR Total earnings in AURORA, if you’re staking 500 NEAR
5M 500
10M 250
15M 166.66
20M 125
25M 100
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