The State and Direction of Decentralization & Nodes on the Internet Computer

Hi @shayaaa, thanks for this observation! We have looked at the rates and also had feedback from some smaller (potential new) Node Providers. For smaller Node Providers, the remuneration might be on the low side even with a multiplier as their Opex expenses (ISP and data center costs) are relatively high for them with only a few nodes. Whereas this is not the case for Node Providers with a large number of nodes. This is something that might need to be taken into account (and voted of course by the community) for the future.

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Due to the community decentralization benefits of having more node providers instead of always larger node providers, I think it makes sense to offer a discount to smaller node providers to offset the centralization incentive from economies of scale - not a complete offset, of course, but at least somewhat.

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@SvenF I appreciate the reply and it made me think of something… I’ve heard that on Solana you need about $2MM to run a profitable validator yet they are able to have “smaller wallet” people join validators because of their design - - other PoS chains are able to do similar things with pooling resources. I know this isn’t exactly possible on ICP but would there be a possibility for something like “Parent NP’s" that establish the nodes to the network and then “decentralize” themselves by selling interests in their node? If there is enough community interest, could something like a “NodeDAO” that pools money together and operates nodes as a community be another possibility?

What purpose would that really serve to “decentralize” anything? Everyone has heard of the “$5 wrench attack” to steal someone’s crypto by physical threat or force. For NPs, I would call a similar attack on decentralization the “5 cent paper attack”. If a sniveling little bureaucrat from one of a dozen three-letter U.S. agencies threatened to slap economic sanctions, no-fly-list sanctions, terror watch list sanctions, indefinite detention without trial, etc. on a node provider (use your imagination for more examples based on prior U.S. precedents), would all those “decentralized” nodes of his get shut down from that one piece of paper too? My guess is yes, they would.

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There are two things to consider.

  1. Who controls the nodes and signs the lease agreement with the data center. This is what is important for decentralization.

  2. Who benefits from the NP rewards.

It doesn’t matter if 10,1000, or 10,000 people own the NP rewards if you have one person that controls it.

So yeah, you can decentralize ownership but ultimately somebody needs to control the machines in the data center which is all that matters from a security standpoint.

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@dfisher Would there be any possibility for the SNS launch a “DAO” that controls a node(s)? Could the control of the node somehow be under the control of the DAO itself so all stakeholders can make decisions? (sorry I’m not very technical so forgive me if these ideas are dumb/not possible)

No that’s not possible. The SNS is great for things that exclusively live online like a website.

If it interacts with the real world then the SNS is not great. In this case we have physical servers a person controls, someone needs to sign a lease with a data center, enter the data center, access the servers etc etc. An indiviudal is going to control this. It cannot be handed over to the SNS for control.

@dfisher Understood, thank you