Avalanche Validators Prioritize APY Over Total Income
A new analysis of data from Avalanche's P-Chain reveals that validators prioritize annualized yield (APY) over total staking income when making decisions. This preference structure has significant implications for upcoming protocol changes, including proposals to lower the minimum staking duration and adjust staking reward parameters.
The study analyzed 278 weeks of data from Avalanche's P-Chain and found that validators optimize for APY rather than total period income. This means that changes to yield curve parameters have a more pronounced influence on validator behavior than simply lowering the minimum staking duration.
Simulations showed that reducing the min_consumption_rate (a parameter tied to the yield curve) from 0.10 to 0.08 encourages validators to stake for longer periods, with an average duration increase of 68% (from 10 to 16.9 weeks). However, reducing the minimum staking duration alone has minimal impact on staking behavior and results in a significant 53% decline in delegation activity.