Kusama originally launched with an issuance of 10 million KSM tokens. Today, about 6 years after its creation, we have already reached over 17 million. This is neither financially sustainable nor financially responsible, as the network is not financed by innovation and business, but by a steady expansion of its money supply (KSM tokens), which leads to a steady devaluation of its value.

This selling pressure stems from the fact that around 50% of all tokens newly created through inflation are immediately sold by nominators and validators. In addition, it is obvious that those who understand Kusama's tokenomics have an incentive to exploit this system by betting on falling prices (= short selling Kusama). Both of these practices must be stopped in order to build a future that is not based on exploitation and investor fraud, but on the creation of business models that are sustainable and fair.

It is often said that Kusama stands out for testing changes for Polkadot, but in this fundamental evolutionary step, Kusama has not yet been given its due responsibility. This proposal aims to change that: The total supply is to be limited to 21 million KSM. The inflation schedule offers an initial 55% cut to emissions, starting on October 31 (2025), with a softening curve to cap (15% every two years).

Polkadot's proposal 'Hard Pressure Capped & Stepped Supply Schedule' should serve as a model for restoring Kusama to its former glory, to a network that develops business models through innovation and development on its own, and can thus finance itself sustainably. And so the content of this motion should also be enshrined in JAM. (DOT proposal: https://polkadot.subsquare.io/referenda/1710)

Committing to long-term fiscal responsibility with a Capped & Stepped Supply implies:

• cutting unnecessary expenses
• subsidizing inflation with new sources of revenue.

Gavin Wood says he consulted renowned economists on this topic and always spoke out explicitly in favor of this model in his interviews, which is why I am convinced that Kusama will not only benefit from it, but will flourish. (Interview with Gavin: https://www.youtube.com/watch?v=RVEVb2SmcsI)

Let us remember that Polkadot has conducted research on this topic and that the unpleasant figures describing the current emergency cannot be dismissed. Clear action is needed, and it is needed now!

TLDR:
Total Supply: 21M KSM (21 000 000; like BTC).
Inflation Period: 2 Years.
Step: Initial Step = 55%, then 15% of remaining supply (21M minus Total Issuance) every two years.
First Step date: October 31st 2025 (Reformation Day).
Extra Request: Enshrine in JAM.

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Response and explanation to questions from 'Attempt at Governance Kusama (AAG #269)'
(Video: https://www.youtube.com/live/MnFTnwOVJW8?si=Pfp0QjUwippUM41u)

First of all, I would like to thank you for presenting my proposal! In this regard, I would like to comment on the questions and concerns that have been raised. In my opinion, the most important question, which underlies the others, focused on the consequences for validators that would arise if the proposal were accepted, which is why I would now like to explain my view on this.

In a nutshell, the current Kusama system suffers from a mixture of (misplaced) incentives that tempt its participants to act against the interests of the system itself. What do I mean by that? The 10% inflation rate and the absence of a limited total supply mean that new participants stay away because the price is constantly falling due to inflation. (Supply and demand curve: https://www.britannica.com/money/supply-and-demand)

So while supply increases towards infinity, demand falls towards zero. After all, no one wants to lose their money. So many are selling their KSMs, and others are shorting them as well, which brings me to the validators. It is well known that validators finance themselves from their commission on staking rewards. So when the price falls, they earn less or have to sell more of their commission share.

What can they do about this? One option is to increase the minimum commission that everyone who stakes KSM must pay them. This happened recently, but it didn't help much because it is not a remedy for the problems caused by inflation and the lack of total supply; it merely prolongs the bleeding a little. (Proposal #533: https://kusama.subsquare.io/referenda/533)

While the 50% increase in the commission for validators at the time may have brought relief (no one knows for sure because they do not disclose their income and expenses transparently), it damaged the overall Kusama system because it became less attractive for ordinary people to participate and stake as it was less profitable.

Basically, there is a systematic incentive for participants and validators to play off each other, and this is precisely what needs to change. The price action, even if some people don't want to hear it, must not lead to disagreement, but rather unite. It is perfectly legitimate to want one's efforts, whether in the form of money or computing power, to be rewarded.

Both normal participants and validators have an interest in seeing positive price developments, because this means that validators earn more and normal participants also have more, as their investment increases. However, this requires three things:

• a lower inflation rate (part of this proposal)
• limited supply (part of this proposal)
• specific business models and applications that generate revenue for the Kusama system and thus stimulate demand (not part of this proposal)

Since I can't conjure up business models out of thin air, I limit myself to what I can personally contribute, and that is to address the fundamental problem of perpetual inflation and unlimited supply, which is slowly but surely breaking Kusama's neck.

It's true that the timeline is tight, but it is possible, and since the developers at Polkadot are currently working on the same thing, it can certainly be coordinated with them. The same applies, by the way, to a solution that ensures the validators' income remains secure. Polkadot and Gavin have announced that they are working diligently on this.

Where there's a will, there's a way! And as a canary network, it is still up to Kusama to boldly lead the way, not the other way around. The most important thing, however, is that we stick together and don't let ourselves be played off against each other. Together we are considerably stronger than divided.