Distribution
Overview
This simple distribution mechanism describes a functional way to passively distribute rewards between validators and delegators. Note that this mechanism does not distribute funds in as precisely as active reward distribution mechanisms and will therefore be upgraded in the future.
The mechanism operates as follows. Collected rewards are pooled globally and divided out passively to validators and delegators. Each validator has the opportunity to charge commission to the delegators on the rewards collected on behalf of the delegators. Fees are collected directly into a global reward pool and validator proposer-reward pool. Due to the nature of passive accounting, whenever changes to parameters which affect the rate of reward distribution occurs, withdrawal of rewards must also occur.
Whenever withdrawing, one must withdraw the maximum amount they are entitled to, leaving nothing in the pool.
Whenever bonding, unbonding, or re-delegating tokens to an existing account, a full withdrawal of the rewards must occur (as the rules for lazy accounting change).
Whenever a validator chooses to change the commission on rewards, all accumulated commission rewards must be simultaneously withdrawn.
The above scenarios are covered in hooks.md
.
The distribution mechanism outlined herein is used to lazily distribute the following rewards between validators and associated delegators:
multi-token fees to be socially distributed
inflated staked asset provisions
validator commission on all rewards earned by their delegators stake
Fees are pooled within a global pool. The mechanisms used allow for validators and delegators to independently and lazily withdraw their rewards.
Shortcomings
As a part of the lazy computations, each delegator holds an accumulation term specific to each validator which is used to estimate what their approximate fair portion of tokens held in the global fee pool is owed to them.
Under the circumstance that there was constant and equal flow of incoming reward tokens every block, this distribution mechanism would be equal to the active distribution (distribute individually to all delegators each block). However, this is unrealistic so deviations from the active distribution will occur based on fluctuations of incoming reward tokens as well as timing of reward withdrawal by other delegators.
If you happen to know that incoming rewards are about to significantly increase, you are incentivized to not withdraw until after this event, increasing the worth of your existing accum. See #2764 for further details.
Effect on Staking
Charging commission on Atom provisions while also allowing for Atom-provisions to be auto-bonded (distributed directly to the validators bonded stake) is problematic within BPoS. Fundamentally, these two mechanisms are mutually exclusive. If both commission and auto-bonding mechanisms are simultaneously applied to the staking-token then the distribution of staking-tokens between any validator and its delegators will change with each block. This then necessitates a calculation for each delegation records for each block - which is considered computationally expensive.
In conclusion, we can only have Atom commission and unbonded atoms provisions or bonded atom provisions with no Atom commission, and we elect to implement the former. Stakeholders wishing to rebond their provisions may elect to set up a script to periodically withdraw and rebond rewards.
Contents
Concepts
In Proof of Stake (PoS) blockchains, rewards gained from transaction fees are paid to validators. The fee distribution module fairly distributes the rewards to the validators' constituent delegators.
Rewards are calculated per period. The period is updated each time a validator's delegation changes, for example, when the validator receives a new delegation. The rewards for a single validator can then be calculated by taking the total rewards for the period before the delegation started, minus the current total rewards. To learn more, see the F1 Fee Distribution paper.
The commission to the validator is paid when the validator is removed or when the validator requests a withdrawal. The commission is calculated and incremented at every BeginBlock
operation to update accumulated fee amounts.
The rewards to a delegator are distributed when the delegation is changed or removed, or a withdrawal is requested. Before rewards are distributed, all slashes to the validator that occurred during the current delegation are applied.
Reference Counting in F1 Fee Distribution
In F1 fee distribution, the rewards a delegator receives are calculated when their delegation is withdrawn. This calculation must read the terms of the summation of rewards divided by the share of tokens from the period which they ended when they delegated, and the final period that was created for the withdrawal.
Additionally, as slashes change the amount of tokens a delegation will have (but we calculate this lazily, only when a delegator un-delegates), we must calculate rewards in separate periods before / after any slashes which occurred in between when a delegator delegated and when they withdrew their rewards. Thus slashes, like delegations, reference the period which was ended by the slash event.
All stored historical rewards records for periods which are no longer referenced by any delegations or any slashes can thus be safely removed, as they will never be read (future delegations and future slashes will always reference future periods). This is implemented by tracking a ReferenceCount
along with each historical reward storage entry. Each time a new object (delegation or slash) is created which might need to reference the historical record, the reference count is incremented. Each time one object which previously needed to reference the historical record is deleted, the reference count is decremented. If the reference count hits zero, the historical record is deleted.
State
FeePool
All globally tracked parameters for distribution are stored within FeePool
. Rewards are collected and added to the reward pool and distributed to validators/delegators from here.
Note that the reward pool holds decimal coins (DecCoins
) to allow for fractions of coins to be received from operations like inflation. When coins are distributed from the pool they are truncated back to sdk.Coins
which are non-decimal.
FeePool:
0x00 -> ProtocolBuffer(FeePool)
Validator Distribution
Validator distribution information for the relevant validator is updated each time:
delegation amount to a validator is updated,
any delegator withdraws from a validator, or
the validator withdraws its commission.
ValidatorDistInfo:
0x02 | ValOperatorAddrLen (1 byte) | ValOperatorAddr -> ProtocolBuffer(validatorDistribution)
Delegation Distribution
Each delegation distribution only needs to record the height at which it last withdrew fees. Because a delegation must withdraw fees each time it's properties change (aka bonded tokens etc.) its properties will remain constant and the delegator's accumulation factor can be calculated passively knowing only the height of the last withdrawal and its current properties.
DelegationDistInfo:
0x02 | DelegatorAddrLen (1 byte) | DelegatorAddr | ValOperatorAddrLen (1 byte) | ValOperatorAddr -> ProtocolBuffer(delegatorDist)
Params
The distribution module stores it's params in state with the prefix of 0x09
, it can be updated with governance or the address with authority.
Params:
0x09 | ProtocolBuffer(Params)
Begin Block
At each BeginBlock
, all fees received in the previous block are transferred to the distribution ModuleAccount
account. When a delegator or validator withdraws their rewards, they are taken out of the ModuleAccount
. During begin block, the different claims on the fees collected are updated as follows:
The reserve community tax is charged.
The remainder is distributed proportionally by voting power to all bonded validators
The Distribution Scheme
See params for description of parameters.
Let fees
be the total fees collected in the previous block, including inflationary rewards to the stake. All fees are collected in a specific module account during the block. During BeginBlock
, they are sent to the "distribution"
ModuleAccount
. No other sending of tokens occurs. Instead, the rewards each account is entitled to are stored, and withdrawals can be triggered through the messages FundCommunityPool
, WithdrawValidatorCommission
and WithdrawDelegatorReward
.
Reward to the Community Pool
The community pool gets community_tax * fees
, plus any remaining dust after validators get their rewards that are always rounded down to the nearest integer value.
Reward To the Validators
The proposer receives no extra rewards. All fees are distributed among all the bonded validators, including the proposer, in proportion to their consensus power.
All validators receive fees * voteMul * powFrac
.
Rewards to Delegators
Each validator's rewards are distributed to its delegators. The validator also has a self-delegation that is treated like a regular delegation in distribution calculations.
The validator sets a commission rate. The commission rate is flexible, but each validator sets a maximum rate and a maximum daily increase. These maximums cannot be exceeded and protect delegators from sudden increases of validator commission rates to prevent validators from taking all of the rewards.
The outstanding rewards that the operator is entitled to are stored in ValidatorAccumulatedCommission
, while the rewards the delegators are entitled to are stored in ValidatorCurrentRewards
. The F1 fee distribution scheme is used to calculate the rewards per delegator as they withdraw or update their delegation, and is thus not handled in BeginBlock
.
Example Distribution
For this example distribution, the underlying consensus engine selects block proposers in proportion to their power relative to the entire bonded power.
All validators are equally performant at including pre-commits in their proposed blocks. Then hold (pre_commits included) / (total bonded validator power)
constant so that the amortized block reward for the validator is ( validator power / total bonded power) * (1 - community tax rate)
of the total rewards. Consequently, the reward for a single delegator is:
Messages
MsgSetWithdrawAddress
By default, the withdraw address is the delegator address. To change its withdraw address, a delegator must send a MsgSetWithdrawAddress
message. Changing the withdraw address is possible only if the parameter WithdrawAddrEnabled
is set to true
.
The withdraw address cannot be any of the module accounts. These accounts are blocked from being withdraw addresses by being added to the distribution keeper's blockedAddrs
array at initialization.
Response:
MsgWithdrawDelegatorReward
A delegator can withdraw its rewards. Internally in the distribution module, this transaction simultaneously removes the previous delegation with associated rewards, the same as if the delegator simply started a new delegation of the same value. The rewards are sent immediately from the distribution ModuleAccount
to the withdraw address. Any remainder (truncated decimals) are sent to the community pool. The starting height of the delegation is set to the current validator period, and the reference count for the previous period is decremented. The amount withdrawn is deducted from the ValidatorOutstandingRewards
variable for the validator.
In the F1 distribution, the total rewards are calculated per validator period, and a delegator receives a piece of those rewards in proportion to their stake in the validator. In basic F1, the total rewards that all the delegators are entitled to between to periods is calculated the following way. Let R(X)
be the total accumulated rewards up to period X
divided by the tokens staked at that time. The delegator allocation is R(X) * delegator_stake
. Then the rewards for all the delegators for staking between periods A
and B
are (R(B) - R(A)) * total stake
. However, these calculated rewards don't account for slashing.
Taking the slashes into account requires iteration. Let F(X)
be the fraction a validator is to be slashed for a slashing event that happened at period X
. If the validator was slashed at periods P1, ..., PN
, where A < P1
, PN < B
, the distribution module calculates the individual delegator's rewards, T(A, B)
, as follows:
The historical rewards are calculated retroactively by playing back all the slashes and then attenuating the delegator's stake at each step. The final calculated stake is equivalent to the actual staked coins in the delegation with a margin of error due to rounding errors.
Response:
WithdrawValidatorCommission
The validator can send the WithdrawValidatorCommission message to withdraw their accumulated commission. The commission is calculated in every block during BeginBlock
, so no iteration is required to withdraw. The amount withdrawn is deducted from the ValidatorOutstandingRewards
variable for the validator. Only integer amounts can be sent. If the accumulated awards have decimals, the amount is truncated before the withdrawal is sent, and the remainder is left to be withdrawn later.
FundCommunityPool
This message sends coins directly from the sender to the community pool.
The transaction fails if the amount cannot be transferred from the sender to the distribution module account.
Common distribution operations
These operations take place during many different messages.
Initialize delegation
Each time a delegation is changed, the rewards are withdrawn and the delegation is reinitialized. Initializing a delegation increments the validator period and keeps track of the starting period of the delegation.
MsgUpdateParams
Distribution module params can be updated through MsgUpdateParams
, which can be done using governance proposal and the signer will always be gov module account address.
The message handling can fail if:
signer is not the gov module account address.
Hooks
Available hooks that can be called by and from this module.
Create or modify delegation distribution
triggered-by:
staking.MsgDelegate
,staking.MsgBeginRedelegate
,staking.MsgUndelegate
Before
The delegation rewards are withdrawn to the withdraw address of the delegator. The rewards include the current period and exclude the starting period.
The validator period is incremented. The validator period is incremented because the validator's power and share distribution might have changed.
The reference count for the delegator's starting period is decremented.
After
The starting height of the delegation is set to the previous period. Because of the Before
-hook, this period is the last period for which the delegator was rewarded.
Validator created
triggered-by:
staking.MsgCreateValidator
When a validator is created, the following validator variables are initialized:
Historical rewards
Current accumulated rewards
Accumulated commission
Total outstanding rewards
Period
By default, all values are set to a 0
, except period, which is set to 1
.
Validator removed
triggered-by:
staking.RemoveValidator
Outstanding commission is sent to the validator's self-delegation withdrawal address. Remaining delegator rewards get sent to the community fee pool.
Note: The validator gets removed only when it has no remaining delegations. At that time, all outstanding delegator rewards will have been withdrawn. Any remaining rewards are dust amounts.
Validator is slashed
triggered-by:
staking.Slash
The current validator period reference count is incremented. The reference count is incremented because the slash event has created a reference to it.
The validator period is incremented.
The slash event is stored for later use. The slash event will be referenced when calculating delegator rewards.
Events
The distribution module emits the following events:
BeginBlocker
proposer_reward
validator
{validatorAddress}
proposer_reward
reward
{proposerReward}
commission
amount
{commissionAmount}
commission
validator
{validatorAddress}
rewards
amount
{rewardAmount}
rewards
validator
{validatorAddress}
Handlers
MsgSetWithdrawAddress
set_withdraw_address
withdraw_address
{withdrawAddress}
message
module
distribution
message
action
set_withdraw_address
message
sender
{senderAddress}
MsgWithdrawDelegatorReward
withdraw_rewards
amount
{rewardAmount}
withdraw_rewards
validator
{validatorAddress}
message
module
distribution
message
action
withdraw_delegator_reward
message
sender
{senderAddress}
MsgWithdrawValidatorCommission
withdraw_commission
amount
{commissionAmount}
message
module
distribution
message
action
withdraw_validator_commission
message
sender
{senderAddress}
Parameters
The distribution module contains the following parameters:
communitytax
string (dec)
"0.020000000000000000" [0]
withdrawaddrenabled
bool
true
[0]
communitytax
must be positive and cannot exceed 1.00.baseproposerreward
andbonusproposerreward
were parameters that are deprecated in v0.47 and are not used.
:::note The reserve pool is the pool of collected funds for use by governance taken via the CommunityTax
. Currently with the Cosmos SDK, tokens collected by the CommunityTax are accounted for but unspendable. :::
Client
CLI
A user can query and interact with the distribution
module using the CLI.
Query
The query
commands allow users to query distribution
state.
commission
The commission
command allows users to query validator commission rewards by address.
Example:
Example Output:
community-pool
The community-pool
command allows users to query all coin balances within the community pool.
Example:
Example Output:
params
The params
command allows users to query the parameters of the distribution
module.
Example:
Example Output:
rewards
The rewards
command allows users to query delegator rewards. Users can optionally include the validator address to query rewards earned from a specific validator.
Example:
Example Output:
slashes
The slashes
command allows users to query all slashes for a given block range.
Example:
Example Output:
validator-outstanding-rewards
The validator-outstanding-rewards
command allows users to query all outstanding (un-withdrawn) rewards for a validator and all their delegations.
Example:
Example Output:
validator-distribution-info
The validator-distribution-info
command allows users to query validator commission and self-delegation rewards for validator.
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