Top 5 Validators

The Terra validators are the network nodes responsible for proposing blocks in the proof-of-stake consensus mechanism in the Terra blockchain. The voting power of each validator node is proportional to the amount of staked LUNA assigned to the validator. This staked LUNA can be currency held by the node itself, or it can be delegated by other LUNA holders to that node. Users usually delegate their LUNA to a node in order to share in the staking rewards. There is a competitive market where staking nodes attract delegated holdings by competing on returns, uptime or less tangible benefits like community membership.

The top 5 staking nodes by total voting power (owned LUNA plus delegated LUNA) are shown below. The largest of these nodes (Staking Fund) holds just over 8% of the total network voting power. Together, these 5 nodes hold just under 30% of the total network voting power. This indicates a reasonable degree of decentralisation in the Terra consensus network, which is a positive for network security & longevity.

Top 5 Validators - Owned or Delegated?

Current State

To understand the split between owned & delegated LUNA for the top 5 validates, we will first take a peek at the underlying data for these nodes. The results are in the table below. We can see that the proportion of owned LUNA is very low compared to delegated LUNA. The node with the largest proportion has only 3.4% owned, and the other nodes have almost zero.

Change Over Time

For us to understand if this arrangement has changed over time, we will sum the data for all top 5 validators for both owned and delegated LUNA, and express this as a percentage split of the total. We have chosen monthly granularity as the numbers change quite slowly.

The graph below is the percentage split of owned & delegated LUNA for the top 5 validators. It is quite a low number, less than 2% of the total voting power of these nodes. The number has trended down over the graph period, from around 1.5% in October 2020 to less than 0.5% now.

Case Study - DokiaCapital

DokiaCapital is one of the top 5 staking nodes, with around 3.8% of total voting power. From the table above, this is the only node with a significant holding of owned staked LUNA. As this node seems to be different from the other 4, it is worth having a look at it in isolation. The graph below shows the change in the proportion of owned vs delegated LUNA for DokiaCapital over time. As we can see, DokiaCapital had over 10% owned staked LUNA in October 2020. This held steady until recently, when it dropped to as low as 2.3% before recovering to the current 3.4%.

Explaining the Change

The percentage of owned vs delegated for DokiaCapital may have decreased for a couple of reasons - either there was less owned LUNA, or more delegated LUNA. As is typical in data analysis, it turns out to be a bit of each. The graph below shows the amount of staked LUNA (owned and delegated) assigned to the DokiaCapital node. We can see that the owned amount stayed steady for most of the period at around 1M LUNA, before dropping and settling at 0.5M LUNA at current. The amount of delegated LUNA also stayed steady for the first 6 months, until rapid growth of around 50% happened over a few months. Both of these factors combined to push the owned percentage from 10% down to 3.4% over the 10 month period examined.

Conclusions

We have looked at the ownership of the staked LUNA assigned to the top 5 delegator nodes on the Terra network. It turns out that the vast majority of the voting power attributed to these nodes has been delegated by other LUNA holders. The proportion of owned staked LUNA has decreased over time. We concluded by examining the one node in this group who held a material amount of LUNA. This node, DokiaCapital, also had a reduction in proportion of owned staked LUNA over time. This was examined, and it was a combination of both decreased holdings and increased delegation which drove the change.