According to the Wiki article - https://wiki.polkadot.network/docs/learn-nominator#oversubscribed-validators only the top 256 nominators of an oversubscribed validator receive rewards. It also mentions that this number can be changed via governance. What is the rationale for it to be 256? Why can't every nominator be rewarded? In case of a slashing event, will only top 256 nominators be slashed or every nominator subscribed to the validator gets slashed?
Two reasons, the former being more important:
- It somehow encourages decentralization. One very large validator, despite being very profitable, will have a limited capacity for nominators to join and actually earn rewards. This incentivizes nominators to avoid these bottlenecks.
- Given the above, since Polkadot currently has 300 validators, it can, in principle, support 76k rewardable nominators. Given the current count of nominators (~20k), I think there are stronger arguments to keep this number at 256. Once a high percentage of the 76k is reached, it is reasonable to increse it further.
payout_staker transaction's weight is a function of this. If this number is increased, this payout will be more costly for validators.