The team at Tezos.Community has been blown away by the community’s engagement in the baking and delegation process, and in its trust in Tezos.Community as a delegation service. We are humbled by the hundreds of people who have chosen to trust their baking to us. As of the completion of “Cycle 0”, over 6.3M XTZs have been delegated to Tezos.Community.
When we set up our delegation service, we expected to be competing with a wide range of service providers. We looked towards Tezzigator, Cryptodelegate, XTez.io, and Bakechain as excellent teams that had similar perspectives as ours. We did not intend to be among largest providers, we just wanted to provide a good service to the community and generate some delegation rewards to fund the activities we provide at Tezos.Community.
Due to the dynamics of the delegation process and the massive response to our service, we now find ourselves in an over-delegated state. This means that we do not currently have sufficient XTZ bond coverage for all of the baking and endorsement processes that will be assigned to us. Because of the planned ramp up of bond requirements, we will be positioned to fully bake a number of cycles, but will eventually become over-delegated as the network moves towards steady-state.
Successful delegation happens when supply and demand match. Delegators with too much demand have two levers they can move to regain a balance: Increase the number of XTZs they have for bond coverage, and increase the fees they charge. Under current conditions, we are planning to do both.
The Tezos.Community Delegation Pool - available for enrollment now
We are announcing the formation of a Delegation Pool for XTZ holders who want to join us in providing bond coverage, and sharing in the delegation rewards received for doing so. Our plan is to share the fees we collect as a delegation service with the pool participants 50% / 50%. We anticipate that Delegation Pool participants will earn between 10% -15% annual return. We plan to enforce this payout through a smart contact developed during the betanet timeframe, but the process will initially be managed centrally.
If you would like to be considered for the pool, please send us a note to email@example.com.
Increase in Delegation service fees beginning with Cycle 10
Because Tezos.Community will now be sharing rewards with the new delegation pool members, we will slightly decrease the rewards we provide to those who delegate to us. Beginning in cycle 10, Tezos.Community will adjust the payout it pays to an 85% / 15% split. This means that 85% of all fees we receive - baking, endorsing, and transactions - will be returned to those who delegate to Tezos.Community. For cycles 7-9, we will maintain our 90% / 10% split.
If you are no longer interested in delegating to Tezos.Community you can change your delegate assignment at any time in your KT1 wallet.
Enforce a First Come - First Served Rewards Model beginning with Cycle 10
Even with implementing the delegation pool and modestly increased fees, it is possible that Tezos.Community will become be over delegated somewhere between cycles 10-20. We’ve polled the community on how we should handle payouts in that scenario, and the consensus is that full payout should be made on a first-come first-served basis. This is consistent with how the other large delegation services (Cryptodelegate and XTez) are planning to handle over-delegation. We will provide a look-up feature for your KT1 address to determine if you will be qualified for payout during a given cycle.
Thank you for your support of Tezos.Community. We will update this document as more information becomes available. If you have any questions, you can connect with us on twitter @tezoscommunity or drop us a note at firstname.lastname@example.org.