[ACP-247] V2: Delegation Multiplier Increase only & mark it as Implementable #263
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This PR introduces **ACP-246: Delegation Multiplier Increase & Maximum Validator Weight Reduction**, a focused optimization of Avalanche's validator staking economics. ### Proposed Changes - **Delegation Multiplier**: Increase from 4x to 24x - **Maximum Validator Weight**: Reduce from 3,000,000 AVAX to 1,000,000 AVAX - **Minimum Validator Stake**: Remain at 2,000 AVAX (unchanged) ### Why This Matters Real validator distribution data (Oct 28, 2025) reveals a critical inefficiency: - **52.8% of validators (451)** have ZERO delegations - **58.7% of validators (501)** have <1k AVAX delegated - Validators actively avoid accepting delegations because current economics don't justify it **Root Cause**: Current 4x multiplier creates marginal profitability (~$180/month net) that makes validator operations uneconomical, especially for smaller validators. ### Solution Impact At current conditions ($20 AVAX, 8.25% APY, 5% delegation fees): | Metric | Current (4x) | Proposed (24x) | Improvement | |--------|---|---|---| | Validator Monthly Net Profit (full delegation) | $180 | $455 | **+152.8%** | | Break-even Delegation Capacity | ~30% | ~8-10% | **Much easier** | | Delegation Fee Income | $55/mo | $330/mo | **+600%** | | Maximum Delegations per Validator | 8,000 AVAX | 48,000 AVAX | **+500%** | ### Network Benefits 1. **Activates Dormant Validators**: 451 validators with zero delegations become economically viable (+$3,300 annual profit each = ~$1.5M network-wide wealth creation) 2. **Enables Single-Node Operations**: Validators no longer need multiple nodes to achieve profitability 3. **Improves Capital Efficiency**: Better utilization of validator infrastructure capacity 4. **Prevents Centralization**: 1M AVAX cap (0.14% per validator) is more conservative than current 3M cap (0.42%), with real data showing no validators exceed 2.5% currently 5. **Maintains Backwards Compatibility**: Existing validators, delegations, and reward calculations unaffected ### Considerations - **For Validators**: Significant profitability improvement across all stake sizes - **For Delegators**: Slight APY dilution (~7.84% after fees, same as current) offset by: - More validators accepting delegations - Better fee market competition - More professional, sustainable validator operations - 52.8% increase in active validator options - **For Network**: ~$1.5M+ annual wealth creation in validator ecosystem, better decentralization through viable small validators ### Validation - All economic calculations verified at $20 AVAX with 8.25% APY - Real validator distribution data from Oct 28, 2025 confirms the 52.8% underutilization problem - Implementation requires only 2 parameter changes (minimal risk) - Full backwards compatibility maintained ### Discussion Points This proposal prioritizes **validator capital efficiency and network decentralization** over maximum accessibility. It's complementary to (but separate from) proposals to lower validator entry barriers or improve geographic diversity.
…ht-reduction/README.md Co-authored-by: Stephen Buttolph <stephen@avalabs.org>
Co-authored-by: Michael Kaplan <55204436+michaelkaplan13@users.noreply.github.com>
All references to 1M max stake limit are eliminated, as discussed in the last ACP Community call. Focusing on delegation multiplier will make it easier to analyze post-ACP effects and work with more precision on new ACPs that tweak validation parameters.
michaelkaplan13
approved these changes
Jan 16, 2026
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@michaelkaplan13 what else is needed to merge the PR? |
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This PR follows the actions proposed in the recent ACP Community Call in December to remove the max stake limit from the proposal and only include the delegation multiplier from 4x to 24x.
This PR also moves the ACP to the Implementable phase, ready for validator signaling.
For any question or discussion, please comment in the related discussion thread, unless it's a specific request of change in wording or content in the actual ACP text.