Develop a mechanism to lock a percentage of staking rewards as set out in the details of this referendum
Dear community,
There were discussions about reducing Kusama's inflation in a similar manner to the reduction on Polkadot. On Polkadot, it was anticipated that by reducing token supply with constant demand that we would see an increase in the token price. This expected result was not observed.
As a further result of reducing inflation on Polkadot, staking rewards were also decreased. If applied to Kusama this would be disastrous to nominators; they would earn fewer rewards through inflation and also face further reduced rewards as validators apply higher levels of commissions to meet operational costs.
I believe we can maintain existing (or even higher) levels of inflation if we focus on reducing the transferable supply of staking rewards instead of reducing issuance. While the locked tokens can't be sold, they can be used to stake or in governance, similar to existing governance locks. It is important for the security of the network that these locked tokens have some anticipated value. We can, at a later date, look at methods and conditions for unlocking tokens in a manner that won't introduce a supply shock.
This "out of the box" concept is (in my opinion) well paired with Kusama's original experimental theme.
Request:
- Develop functionality to lock a percentage of staking rewards
- This should be driven by a storage value with an initial setting of 0 (all transferable)
- The community should be able to vote on this value via the root track
- Validators should receive fully transferable staking rewards up to the maximum commission
- Functionality should be scheduler friendly, such that we can increase or decrease the amount by increments over time
If this proposal is passed it is my intention to follow-up with other proposals which seek to further define functionality surrounding these locked tokens as well as to suggest other avenues of use.
Regards,
Will
Comments (10)
Proposal Failed
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Nay
Aye (38)0.0 PAS
Support0.0 PAS
Nay (12)0.0 PAS
Comments (10)
Note: I am speaking personally, not in my role as a Web3 Foundation employee.
This is an experiment ready-made for Kusama. I like the fact that it keeps people more aligned with the ecosystem. I like the idea of starting at 0 and modifying it upwards, a bit at a time. Also, this is just what we should be doing on Kusama, trying things out and seeing if they work. Inflation on Kusama is already much higher than on Polkadot, so I do think something should be done and why not try something different than what Polkadot is doing? This is Kusama, expect chaos!
I do have a few concerns:
- It adds even more complexity to an already-complex staking system, and
- Staking rewards are generally (depends on jurisdiction) taxable upon receipt, even if they are locked. Which means that if the locked percentage is high enough, it could mean that theoretically people are paying taxes on staking rewards that outweigh the value of the rewards received.
- I would like to hear more from validators and how this would impact them. I know Kusama validators are often in an economically precarious situation.
- I think the parameter should be modifiable via Staking Admin track, not just Root track.
Note: I am speaking personally, not in my role as a Web3 Foundation employee.
This is an experiment ready-made for Kusama. I like the fact that it keeps people more aligned with the ecosystem. I like the idea of starting at 0 and modifying it upwards, a bit at a time. Also, this is just what we should be doing on Kusama, trying things out and seeing if they work. Inflation on Kusama is already much higher than on Polkadot, so I do think something should be done and why not try something different than what Polkadot is doing? This is Kusama, expect chaos!
I do have a few concerns: