Hey everyone!
We propose making the first adjustment to the Multi-Asset Shielded Pool’s (MASP) Proportional Gain and Derivative Gain parameters since incentives went live! As a reminder, the MASP currently supports 11 assets (including NAM), 7 of which are incentivized via inflation mechanics: USDC, ATOM, OSMO, TIA, stATOM, stOSMO, stTIA.
TLDR - Rewards are adjusting too slowly for some assets and too quickly for others. We’re tuning the parameters so shielded pool incentives react more predictably.
In our original Phase 4 forum post, we noted that all initial suggested parameters were designed and intended to be configurable. They were originally selected based on calculated assumptions with the understanding adjustments would almost certainly be required as the MASP grew in size and function.
So, we propose updating the configurable Proportional Gain (p_gain_nom) and Derivative Gain (d_gain_nom) parameters, tailoring them to the asset-specific needs of each incentivized asset.
Background
Since launch, all incentivized assets have been set to the same values
-
p_gain_nom = 50 (Directly scales the inflation response based on deviation from the target (the “Pool Minimum”). A higher value means faster, stronger adjustments.)
-
d_gain_nom = 85 (Adjusts the response based on the rate of change of deviation. A higher value slows the response, helping smooth short-term fluctuations and prevent overshooting.)
Why and How to Adjust?
Based on the historical data, it’s clear that the current gain values are less than optimal for several assets. In some edge-cases, the proportional and derivative gains need to be increased by 10x or more, because small pools need higher sensitivity so that they don’t stagnate while being under-incentivized.
Currently, the fractional change in inflation from one epoch to the next is largest for assets with the lowest inflation rates. This creates a situation where those assets adjust too slowly to deviations, leaving them persistently under-incentivized. By raising the gain values the system will respond more sharply as deposits remain (or fall) below the target, ensuring that incentives adjust at a meaningful pace. The suggested values should help normalize the rate of change of inflation across assets, while also serving as a manual calibration to address deposit discrepancies relative to asset caps as they stand today. TIA’s values were used as the reference point.
This kind of calibration wasn’t unexpected, and was mentioned in the Phase 4 design post.
| Asset | Current p_gain_nom | Current d_gain_nom | Proposed p_gain_nom | Proposed d_gain_nom |
|---|---|---|---|---|
| USDC | 50 | 85 | 29 | 49 |
| ATOM | 50 | 85 | 126 | 214 |
| OSMO | 50 | 85 | 4.74 | 8.05 |
| TIA[1] | 50 | 85 | Reference | Reference |
| stATOM | 50 | 85 | 2032 | 3455 |
| stOSMO | 50 | 85 | 63 | 107 |
| stTIA | 50 | 85 | 563 | 956 |
Adjust Shielded Set Reward (SSR) Targets
In addition to the proposed gain modifications, we suggest reducing the Shielded Set Reward targets for each incentivized asset.
Reasoning: Focus on PMF
Namada’s MASP already provides deep support for core shielded assets, enough to enable the majority of shielded transactions while maintaining strong privacy guarantees. Narrowing the scope of incentives allows for future experimentation and further focus on the most active pools, like USDC, while reducing inflation on underutilized pools.
While the MASP has achieved impressive raw deposit numbers, reaching meaningful USD values faster than most comparable shielding products - we see this as just the beginning. With Phase 1 validation complete, we’re narrowing the scope of incentives to run more focused experiments in hopes of positioning the MASP to achieve true exponential scale in the near future.
Below are the suggested updated targets, alongside the current values:
| Asset | Current Target | Suggested Target | % Change |
|---|---|---|---|
| USDC | 2,200,000 | 1,100,000 | -50.00% |
| ATOM | 500,000 | 125,000 | -75.00% |
| OSMO | 13,300,000 | 1,500,000 | -88.72% |
| TIA | 1,260,000 | 110,000 | -91.27% |
| stATOM | 31,000 | 15,000 | -51.61% |
| stOSMO | 1,000,000 | 700,000 | -30.00% |
| stTIA | 112,000 | 50,000 | -55.36% |
Rationale
The suggested SSR targets were selected by looking at what a “typical” upper-end transaction might be and making sure that a single transaction wouldn’t make up more than ~10% of the pool for that asset. On the low side that works out to around $10k (for something like stTIA), and on the high side closer to $100k (for USDC). The idea is to maintain meaningful privacy, while eliminating excess capacity that inflates supply without adding privacy guarantees.
Thanks for reading! Looking forward to hearing thoughts/feedback
Veil
TIA’s values were used as the reference point. ↩︎
