Param Change: Set ValidatorLiquidStakingCap to 100%

Title

Set the ValidatorLiquidStakingCap to 100

Summary

ValidatorLiquidStakingCap represents the percentage cap on the portion of a validator's stake that can be liquid i.e. the share of each validator's total delegated ATOM that can be provided by one or more liquid staking provider(s). For example, if the parameter is set at 50% and a given validator already receives 50% of its ATOM from either LSM tokenized shares or interchain accounts (ICAs), then Cosmos Hub prevents further LSM tokenizations and ICA delegations to that validator. To keep the design simple while adding a bit of extra security, this feature was introduced. But, it's not strictly necessary, and the safety guarantees provided by the validator bond factor are sufficient. Thankfully, the attack vector that the Validator Liquid Staking Cap prevents against is unlikely. So governance can choose to set the parameter to 100%, effectively turning off the parameter. Also, the current 50% ValidatorLiquidStakingCap restricts liquid staking delegations to smaller validators. If the parameter is set at 100% then smaller validators will no longer be restricted. Liquid Staking will remain safe because the 25% Global Cap and the Validator Bond requirement will remain active, as explained in the Liquid Staking Module Forum Post.

References

This proposal has been discussed on the forum here.

Governance votes

The following items summarize the voting options and what it means for this proposal:

• YES - Allow validators to recieve up to 100% of their delegations as liquid stake
• NO - Make no changes to the Validator liquid staking cap
• NO WITH VETO - A 'NoWithVeto' vote indicates a proposal either (1) is deemed to be spam, i.e., irrelevant to Cosmos Hub, (2) disproportionately infringes on minority interests, or (3) violates or encourages violation of the rules of engagement as currently set out by Cosmos Hub governance. If the number of 'NoWithVeto' votes is greater than a third of total votes, the proposal is rejected and the deposits are burned.
• ABSTAIN - You wish to contribute to quorum but you formally decline to vote either for or against the proposal.