Executive Summary

We propose optimizing Kusama's validator set from 1,000 to 500 validators while reducing total rewards by 25%. This strategic adjustment will increase individual validator compensation by 50%, attract higher-quality infrastructure providers, and reduce KSM inflation by 25% - creating a more sustainable and robust network for all stakeholders.

The Vision: A Stronger, More Sustainable Kusama

Kusama has always been about bold experimentation and pioneering change. Today, we have an opportunity to strengthen our network's foundation while addressing two critical challenges: validator sustainability and token economics.

Current Challenges → Our Solutions

📊 Calculation Basis (as of June 24th, 2025)

• KSM price: ~$14 USD
• Reward per era: ~813 KSM
• These values are used for illustration. The percentage improvements (50% increase in validator rewards, 25% reduction in inflation) remain constant regardless of token price.

🔴 Challenge 1: Unsustainable Validator Economics

Currently, validators earning minimum commission receive only $205/month - barely covering costs in EU/USA and completely inadequate for quality infrastructure in Asia, Africa, or South America.

→ Solution: Our proposal increases validator rewards to $307.50/month - a 50% increase that makes running quality infrastructure profitable worldwide.

🔴 Challenge 2: Sell Pressure from Inflation

Continuous token emissions create downward price pressure, affecting all KSM holders.

→ Solution: Reducing total rewards by 25% directly cuts inflation, benefiting long-term holders while still improving validator economics.

The Mathematics of Success

Current State:

• Total inflation funds both validator rewards AND treasury
• 813 KSM per era × 4 eras/day × 30 days = 97,560 KSM/month validator rewards
• Divided by 1,000 validators = 97.56 KSM per validator
• At 15% commission: 14.63 KSM (~$205) per validator

Proposed State:

• Total inflation reduced by 25% (affecting both rewards and treasury proportionally)
• 75% of current rewards = 73,170 KSM/month validator rewards
• Divided by 500 validators = 146.34 KSM per validator
• At 15% commission: 21.95 KSM (~$307.50) per validator
• Treasury also receives 25% less funding (maintaining the current reward/treasury ratio)

Why This Makes Kusama Stronger

1. Attracts Professional Operators

Higher rewards mean validators can afford enterprise-grade hardware, redundant connections, and 24/7 monitoring. This improves network reliability for everyone.

2. Enables True Decentralization

With sustainable economics, we can achieve meaningful geographic distribution beyond just EU/USA datacenters. Validators in Singapore, São Paulo, Nairobi, and beyond become economically viable.

3. Reduces Inflation Without Compromising Security

Less KSM minted means less sell pressure, while 500 professional validators provide more than enough security and redundancy for our network.

4. Creates a Competitive, Merit-Based System

Validators must earn their position through quality service, not just by running minimal setups. This drives innovation and excellence.

Implementation: Thoughtful and Measured

We propose a phased approach to ensure smooth transition:

• Phase 1 (Months 1-3): Reduce to 750 validators

• Phase 2 (Months 4-6): Reduce to 500 validators

Safety Measures:

• Continuous monitoring of network health metrics
• Community checkpoints at each phase

Addressing Concerns Proactively

"Won't this centralize the network?"
500 professional validators running quality infrastructure provide better decentralization than 1,000 validators where many struggle to maintain uptime. Quality over quantity has always been Kusama's way.

"What about smaller validators?"
The increased rewards make it easier for dedicated smaller operators to compete. Those running validators as a hobby can still participate through nomination pools.

"Is 500 validators enough?"
Leading networks operate successfully with similar numbers. Polkadot has 600 validators, Cosmos has ~175, and they maintain excellent security and uptime.

The Path Forward

This proposal represents a win-win-win scenario:

• Validators win with sustainable economics
• Token holders win with reduced inflation
• The network wins with higher quality infrastructure

Kusama has always been about bold moves that strengthen our ecosystem. This optimization continues that tradition - making our network more attractive to professional operators while improving token economics for all holders.

Let's Build a Stronger Kusama Together

Vote YES to:

• ✅ Increase validator rewards by 50%
• ✅ Reduce KSM inflation by 25%
• ✅ Attract world-class infrastructure providers
• ✅ Enable true global decentralization
• ✅ Create sustainable validator economics

The future of Kusama is in our hands. Let's make it stronger, more sustainable, and ready for the challenges ahead.