This proposal, if passed, will modify the BaseProposerReward and BonusProposerReward parameters from 50% and 4% respectively to zero.
Rationale
CosmosSDK has depreciated these fields in future versions. Setting these parameters to zero now will replicate the behavior of future CosmosSDK versions and avoid any undesired changes in transaction reward distribution behavior during future upgrades.
How these parameters work
The BaseProposerReward and BonusProposerReward parameters determine how inflation and fees are distributed to validators. Of the total inflation and fees for a given block the percentage value of the BaseProposerReward parameter is distributed directly to the proposer. With the rest being pro-rate distributed to all active validators.
The BonusProposer reward works the same way if the validator includes more than a certain percentage of commits from other validators. So under ideal conditions the proposing validator would receive 54% of the total inflation + staking rewards for the block they proposed given the current values of these parameters.
Potential Downsides
As outlined in the Althea L1 whitepaper, it’s key that MicroTx fees are distributed directly to validators, to create the proper incentive structure for responsive processing of time sensitive MicroTx payments. Setting these parameters to zero will break that incentive until a new chain upgrade is executed that modifies the MicroTX module to handle fee distribution itself.
An upgrade to CosmosSDK v0.46 with this change is being developed. But if the community chooses to execute an unlock proposal before this upgrade is ready the incentive structure would not be ideal.
In the case that the community chooses to maintain the existing parameters, significant ongoing development time may be needed in the future to modify the CosmosSDK distribution module for each upgrade to maintain this behavior. This would be especially concerning in the case of an emergency software upgrade, where the time to make such changes may not be available.
Finally, the proposed resolution to fee handling, where MicroTx module fees are distributed to the proposer by the MicroTx module and not the distribution module differs in behavior from what was previously proposed. While the current settings would distribute up to 54% of the MicroTx module fee to the proposer the proposed change would distribute 100%. Furthermore distribution of fees for all other non-evm transactions would follow the new distribution module behavior. Meaning all fees are distributed solely pro-rata to any active validator.
It is possible for the MicroTx upgrade to be expanded to perform the same distribution. But fee distribution for other transactions can not be changed without adopting the development burden of a forked distribution module, including the previously outlined security upgrade risks.
Followup
If this proposal is passed additional proposals will be required in the future to upgrade the chain to sdk v0.46.0 with a patch to the MicroTX module fee distribution behavior re-introduced as a custom implementation instead of a distribution module parameter.