Validator Fee: Harmonic Mean

Adjustment of Our Validation Fees Based on the Harmonic Mean

Dear nominators,

In our quest for fairness and transparency in the operation of our validator within the network, we want to share with you an important update on how we will determine our commission fees. We have decided to base our validation fee on the harmonic mean of the commissions set by the other 68 validators in the network. This decision has been based on the system used by the Kairos validator, which is a benchmark for us.

What is the Harmonic Mean and Why Did We Choose It?

Instead of using a common average, we use what is called the harmonic mean. This special method of averaging helps to balance these extremes. It works like this: first, we take the inverse (i.e., 1 divided by the amount) of what each person asks for. Then, we calculate the average of these inverses. Finally, we take the inverse of this average. The number we get in this way is less likely to be influenced by very high or very low values.

Practical Application in Our Validator

We observe the commission fees that other validators have set. Then, we apply the harmonic mean method to obtain a number that reflects a fairer and more balanced general commission rate in the network.

By basing our fee on the harmonic mean, we ensure that our validator is not only competitive but also fair. This means that we do not set our fee too high, which could be unfair to our nominators, nor too low, which might not be sustainable for us. Each time we adjust our fees, we will do so following this approach based on the harmonic mean, allowing us to adapt fairly to changes in the market and in the network.

Thank you very much, and if you have any questions, please do not hesitate to contact us.