Node Policy

Defines the minimum and maximum amount of native tokens a node operator must bond or stake to participate. This creates skin in the game to ensure honest behavior and network security. Key parameters include:

• Minimum Stake: Barrier to entry for node operators.
• Maximum Stake: Prevents excessive centralization of voting power.
• Slashing Conditions: The amount of stake at risk for protocol violations.

Specifies the algorithm for distributing block rewards, transaction fees, and MEV (Maximal Extractable Value) to node operators and their delegators. Policies define:

• Commission Rate: The percentage the node operator takes before distributing rewards to delegators.
• Distribution Frequency: How often rewards are calculated and paid out (e.g., per block, per epoch).
• Reward Curve: How rewards scale with stake or uptime (e.g., linear, logarithmic).

Encodes Service Level Agreements (SLAs) that nodes must meet to remain in good standing and receive full rewards. This includes:

• Liveness Requirements: Minimum acceptable uptime percentage.
• Signing Accuracy: Correct participation in consensus (e.g., block proposal, attestation).
• Jailing Logic: Conditions under which a node is temporarily removed from the active set for violations.

Governs how the policy itself can be changed, reflecting the decentralized governance of the network. This involves:

• Proposal Mechanisms: How changes to staking parameters or reward rates are suggested (e.g., via governance token votes).
• Upgrade Paths: How new policy logic is deployed, often requiring a hard fork or governance-controlled smart contract upgrade.
• Parameter Flexibility: Distinguishes between dynamic parameters (adjustable via governance) and immutable constants.

Sets the terms for third-party token holders (delegators) to contribute stake to a node operator's pool, amplifying network security. Rules cover:

• Delegation Limits: Caps on total delegated stake per node.
• Unbonding Period: The mandatory waiting time for withdrawing staked funds, a critical security feature.
• Delegator Rights: How delegators can switch operators or claim rewards independently.

Defines the cryptoeconomic penalties applied to a node's staked funds for malicious or faulty behavior, such as double-signing or extended downtime. The policy specifies:

• Slashing Offenses: The exact protocol violations that trigger a penalty.
• Penalty Severity: The percentage of stake slashed, which can be minor (e.g., 1%) for liveness faults or severe (e.g., 100%) for safety faults.
• Whistleblower Incentives: Rewards for network participants who provide cryptographic proof of a slashing offense.

Node policies are defined by a set of key-value parameters that dictate a node's function. These include:

• Minimum Stake/Delegation: The required token amount to participate as a validator or delegator.
• Commission Rate: The percentage of rewards a validator takes before distributing to delegators.
• Slashing Conditions: Rules specifying penalties (slashing) for malicious or negligent behavior like double-signing or downtime.
• Uptime Requirements: Minimum operational standards to remain in the active validator set.

Node policies are not static; they are often managed through on-chain governance. Token holders can propose and vote on parameter changes, such as adjusting inflation rates, slashing percentages, or block gas limits. This allows the network to adapt its economic and security model over time without requiring a hard fork for every adjustment.

Policies are enforced at the client software level. When a node operator runs a client (e.g., Geth, Prysm, Cosmos SDK), the software's codebase interprets and enforces the network's consensus rules and policy parameters. Configuration files (like config.toml or genesis files) are used to initialize a node with the correct policy settings for a specific chain.

The policy defines the cryptoeconomic incentives that secure the network. This creates a game-theoretic model where rational actors are incentivized to behave honestly. Key elements include:

• Block Rewards & Transaction Fees: The issuance schedule for validating blocks.
• Unbonding Periods: The time tokens are locked after unstaking, acting as a security delay.
• Jailing: The temporary removal of a faulty validator from the active set.

Policies define different roles and requirements for nodes, creating a tiered system:

• Validators/Producers: Nodes that create blocks, requiring significant stake and high uptime.
• RPC/Archive Nodes: Provide data query services, often with high storage requirements.
• Light Clients: Consume chain data with minimal resource footprint, relying on full nodes for verification. Each tier has a distinct policy regarding hardware, software, and stake.

A node policy typically includes several key components that define its role and behavior on the network:

• Validation Rules: The specific logic for accepting or rejecting blocks and transactions (e.g., minimum gas price, block size limits).
• Peer Connection Rules: Criteria for accepting inbound connections and selecting outbound peers (e.g., whitelists, geographic restrictions).
• Resource Management: Configurations for memory, CPU, and bandwidth usage to prevent resource exhaustion attacks.
• Governance Parameters: Settings that determine how the node responds to protocol upgrade signals or contentious chain splits.

A well-defined node policy is a primary defense mechanism against network-level attacks. Key security functions include:

• Sybil Resistance: Limiting connections from a single IP or subnet to mitigate eclipse attacks.
• Transaction Filtering: Rejecting transactions with non-standard opcodes or suspicious patterns to prevent resource drain.
• Consensus Enforcement: Stricter block validation than the protocol minimum to guard against selfish mining or chain reorganization attacks.
• Data Availability: Policies on storing historical data impact a node's ability to verify the chain's full state, affecting security assumptions for light clients.

Node policies create inherent trade-offs between network resilience and individual node autonomy.

• Standardization vs. Fragmentation: Widespread adoption of default policies (e.g., Geth's) increases network homogeneity but reduces client diversity, a critical decentralization metric.
• Resource Requirements: Stricter policies (e.g., requiring full archival data) increase operational costs, potentially centralizing node operation among well-funded entities.
• Censorship: Policies that filter transactions based on origin or content can lead to network partitioning, undermining permissionless access.
• Governance Centralization: If policies are mandated by a central development team or foundation, it can centralize operational control over the network.

How policies are implemented and vary across clients significantly impacts network health.

• Client-Specific Defaults: Different execution clients (Geth, Erigon, Nethermind) and consensus clients (Prysm, Lighthouse, Teku) have unique default policies, creating a natural defense against bugs affecting the entire network.
• Fork Choice Rule Adherence: A node's policy must correctly implement the network's fork choice rule (e.g., LMD-GHOST in Ethereum) to maintain consensus.
• MEV-Boost Relay Policies: In Ethereum, validators using MEV-Boost delegate block proposal to relays, whose policies on transaction inclusion and censorship directly affect network-level outcomes.

A concrete example is the min-gas-price configuration in Geth. This policy parameter allows a node operator to set a minimum acceptable gas price for transactions they will include in a block they mine or propagate.

• Purpose: Protects the node from being spammed with zero-fee transactions and allows the operator to prioritize economic value.
• Network Effect: If a majority of miners set a high min-gas-price, it effectively raises the floor for transaction fees across the network.
• Censorship Risk: It can be used to filter out transactions from specific applications or users by setting an impossibly high minimum, demonstrating how local policy can have global censorship implications.

Operators should consciously configure their node policy to balance security, performance, and network health.

• Audit Defaults: Understand and question the default settings of your client software.
• Diversify Peers: Configure peer connection policies to connect to a diverse set of clients and geographic regions.
• Monitor for Centralization: Be wary of policies that push reliance on centralized infrastructure like specific RPC providers or MEV relays.
• Contribute to Diversity: Consider running a minority client to strengthen the network's resilience against client-specific bugs.
• Document Configuration: Maintain clear records of policy changes to diagnose issues and reproduce setups.