Algorand Node Runner incentive design needs improvements for long term decentralization?

Greet all again!

This thread is about my question/feedback about theNode Runner incentive policy I’ve understood so far about Algorand. According to https://algorand.foundation/the-algo/algo-dynamics and https://algorand.foundation/faq#running-nodes-, current network is most likely powered by whitelisted node runners (referred to early backers) till 2024, and there is no incentive in place to encourage community participation in terms of running nodes.

This is one of my major investment concerns because the network/community is not clearly interested in being more decentralized in a 4y time frame. One might argue that it will have a negative impact on the community growth because new members are not incentivized to be ACTIVELY engated and stay with the network, Current participation reward is a nice way to growth Algorand wallet users but I am afraid it won’t have too much positive impact on the growth of core community members.

Curious to hear other community members’ thoughts and Algorand Team’s comments. Cheers!

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Hi Leo,

We touched on this recently. As you say, right now the relay node runners are a permissioned group. This has been done, up to this point, to ensure network performance and as you say, there is no incentive in place for the community to run nodes today. There are 2 important dynamics that will change this over the coming years.

The first is that we are currently evaluating a technical approach that will enable permissionless relay node running - the mechanism under evaluation is essentially running two node lists in parallel - the current list and a permissionless list. This will enable us to deliver the performance levels we all desire for the network but will also enable decentralization. This is an active area for our technical teams today.

Second, as we move to transaction rate performance improvements this year, we may require community run relay nodes to facilitate this new performance threshold. This may then bring forward the need to incentivize community node running ahead of 2024, if required to support the new performance level.

You say that you believe the community is not interested in running relay nodes. I have actually found this to be the opposite. The wider community of Algorand is very interested in running relay nodes and its one of our most asked questions. Based on community feedback, I believe there will be a very strong interest in taking up the opportunity to run permissionless relay nodes either from 2024 onwards or earlier if needed and/or technically possible. Incentives to support community run relay nodes is something the Foundation would engage the community on for input. This is also a thread within the current Governance proposal.

For today, our focus is to drive the widest participation in the network possible - and the easiest and most compelling way for the community to do this is via algo holding and participation. Our community is growing rapidly today, from the developer communities here and on discord, our community members in our reddit and telegram channels (and other community led channels on telegram) and our social communities on twitter and wechat. At a another level, our partnerships, grant recipient projects and application community now numbers over 500 participants across every continent, building on Algorand. The engagement and enthusiasm in the crypto community with the Algorand project is really heating up.

Apologies for the long answer, you asked a very interesting question and I wanted to try to answer it in a comprehensive way. And as you can tell, 2021 looks like its going to be a very interesting and exciting year for Algorand - hard not to be excited about the potential for the Algorand ecosystem as a whole.

Steve

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