It is much better to give users more expectations than to give them more rewards, such as some future airdrops in the ecosystem, and those who want to participate in the airdrops can participate in staking.
Been asking about this myself for a good while. I believe the omission is intentional, but I like you believe stables are needed for the ecosystem. Perhaps not necessarily as incentivized (though that would be ideal), but they need to be part of the canonical IBC model imo.
Appreciate the thinking behind this proposal! I think the “5% isn’t that much” argument needs a closer look. If the asset pools are as large as expected, even a tiny premium leads to large payouts, which could disproportionately benefit whales or early movers. That introduces centralization risk, even if unintentional. More importantly, shielding for yield doesn’t necessarily equal meaningful privacy adoption. It could just create a short-term farm. I’d like to better understand how this is being designed to include a broader range of users and contributors, especially smaller participants and validators who are core to the network’s sustainability. I’m assuming community control over the asset diversity in the MASP in the future is one option.
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Hey everyone, I just want to quickly update this thread to keep everyone in the loop, especially for those who might not be following the discussion on Discord.
After some initial feedback from community members, there’s been positive support for adding USDC incentives to the Phase 4 proposal. The thinking here is that including USDC incentives now would help bring in more users to Namada and accelerate PMF.
We’re aiming to get the Phase 4 proposal onchain as soon as possible so that it can activate next week, and we’re leaning towards incorporating USDC into this same proposal rather than spinning up a separate one, since that would save time and keep things moving.
Feel free to drop any last min thoughts here, but it seems like this update has been well received so far. 
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Fwiw, double checked the hash of the phase4.wasm file in the namada-governance-upgrades repo and it matches with the proposal’s wasm on-chain :).
sha256sum phase4.wasm
24bf5c40b7c41a13eb1a7694ca60e31b8e99e70d80c1bbc46bcea731ad1a8b93 phase4.wasm
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update from discord, the author of proposal 22 for phase 4 has asked for the proposal to be voted down since there is some need for adjustments. another similar proposal for phase 4 will be shared within a week.
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I found some problems with your token economic model shielding reward 4, such as the fourth stage inflation reward. My opinion on it is that the application should be driven by demand, not inflation. Inflation will not increase the token price, and many users are unwilling to participate in token holding, because inflation is likely to cause users to lose their principal, and the income is only a short-term behavior. The demand drive will drive the token price up, and demand needs to drive a large number of user bases, and rewards are given to first-time users. I think educational rewards are one of the entrances. Use shielding rewards to cooperate with some projects, such as buying the original tokens of project A at a low price, airdropping them to users holding project B, and users holding B tokens use the nam shielding address to receive airdrops, or users holding B tokens use the shielding function to get A token airdrops. In this way, project A has obtained funds and the NAM chain has helped to cover more users, and NAM has also gained more people using the shielding function. Continuously use the income to purchase original tokens and airdrop them to users of different chains, and the number of users continues to grow, and the income continues to grow.
Pre-registration attracts a large number of users
Users are for me, and I am for users. The pre-registration airdrop of Sumo promotes users to enter the privacy shielding set. Users contribute to the handling fee for a period of time, which is equivalent to the project party purchasing new tokens and airdropping them to users. Users get multiple growth of new tokens, and the new project party gets more users. At the same time, there will be no inflation (user handling fee rewards are capped). The handling fees created by users in the future with nam or other handling fee coins (handling fees have a capped reward), the handling fee income will promote the growth of nam coin prices. An application that saves money will gain a greater sense of recognition and bring a benefit-out effect. Continuously attracting pre-registered users of Sumo will first bring benefits to the project party, making the price of nam higher, and making the nam project more flexible. Continuous healthy development, rather than the current inflationary model of shielding rewards. As long as you are strong, there is no need to please customers with benefits. Strong customers will also get more benefits, rather than inflation causing the token price to fall. It will cause users to lose their principal, and users are unwilling to favor it for a long time. Unless it is just an educational reward. I think the inflation rate of 5% is too high, and 2% educational inflation is appropriate. I think it is better to use the remaining 3% to attract new users.
Example: The mod test network announced 2 billion test network addresses a month or two ago, and now it is expected that there will be 3 billion addresses. It can attract mod test network users to register for pre-airdrops, and try to attract more than 1 billion addresses. Then a team will pre-register for the mod test network, and users who have used the nam shielding function have the idea of airdrops, and promote no less than 100 million addresses to use the nam shielding function. When the mod airdrop comes, the original tokens of the airdrops of mod or other projects will be purchased according to the fees created by mod users, and airdrops will be created according to the fees, and the wallet funds will be referred to. Then the fees created by mod pre-registered users in the future are the income of the nam project, and the expected benefit-out effect is also the project income. Mod pre-registered users also get the benefits of the growth of original tokens.
Phase 4 is finally here?? Proposal #28 is live!
Hey everyone! We just submitted Proposal #28 to activate shielding rewards for seven IBC assets:
- 500k ATOM (max 0.9% NAM inflation)
- 13.3m OSMO (0.9%)
- 1.26m TIA (0.9%)
- 31k stATOM (0.9%)
- 1m stOSMO (0.9%)
- 112k stTIA (0.9%)
- 2.2m USDC (1.8%)
Proportional and derivative gain values are currently set to 50 and 85 for all assets.
Voting is now live. Validators should cast votes before Sunday!
Also linking a few resources that may help!
WASM: update `phase4` parameters by Fraccaman · Pull Request #60 · namada-net/namada-governance-upgrades · GitHub
Reward simulator by Knowable: https://rates.nam.run/
MASP/staking dashboard by Knowable: https://metrics.namada.net/
Proposal on Namadillo Namadillo - Namada User Interface
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Can you explain proportional and derivate gain values?
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I have to be honest, that at this stage, given the current landscape, I have a hard time supporting a proposal where we do not similarly incentivize nam in the shielded set. (unless plans to do so are imminent). See also comments on inflation in a parallell thread. 7.2% total is a lot, especially if we are cutting down pos inflation too. With respect to nam and the current state of that, with this proposal, we are incentivizing people who want to shield assers to swap their nam into other assets and shield them to earn nam. It seems backwards.
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you can play with the gain values here and simulate the outcomes: https://rates.nam.run
with a little help from a 
, the gain values refer to the PD (Proportional-Derivative) controller parameters used to calculate NAM rewards
Gain Values
Kp (Proportional Gain): 50
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Controls how strongly the system responds to the current difference between actual and target shielded amounts
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Higher Kp = more aggressive response to being above/below target
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When shielded amount is below target, higher Kp increases rewards more
Kd (Derivative Gain): 85
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Controls how strongly the system responds to the rate of change in shielded amounts
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Higher Kd = more response to sudden increases/decreases in deposits
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Helps smooth out reward fluctuations and prevents overshooting
How They Work Together
The PD controller calculates NAM rewards using:
Reward = f(Kp × current_error + Kd × change_in_error)
Where:
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current_error= target_amount - current_shielded_amount -
change_in_error= previous_error - current_error
PD Controller Context
Typical Characteristics:
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Kp range: Usually 0-100+ (can be much higher in some systems)
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Kd range: Usually 0-100+ (often higher than Kp)
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Current values (50, 85): These appear to be moderate to high gains
What This Suggests
Kp = 50:
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Moderate-high proportional response
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System responds fairly aggressively to current target misses
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Not extreme, but not conservative either
Kd = 85:
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High derivative response
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System is quite sensitive to rate of change
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Suggests the protocol wants to dampen oscillations strongly
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thanks! (15 chars)
The purpose of shielded rewards is to bootstrap each kind of token we want to support. Once we get to target size, rewards can taper off to 0, assuming it’s enough for the pool to begin to grow organically (because people value shielding; see Railgun monthly revenue).
What is our goal for growing the pool of shielded NAM? ie. “We want x NAM shielded because it enables y-sized shielded NAM transactions.”
There are now 33.5m NAM shielded NAM, and for the last month it’s been up only. For those that want to do shielded NAM transactions, fwiw my rule of thumb is for the pool size to be least 10x the size of my transaction. In which case I can currently shield 3m NAM transactions 
Assuming the purpose of NAM is to secure, govern, and ensure DoS-resistance for the chain, Namada primarily wants holders to stake NAM (rather than shield) so that users can securely deposit and shield tokens from other chains (Namada’s core value proposition).
In other words, we stake NAM so that our users can safely deposit + shield, and it’s better for Namada if its holders stake rather than shield NAM, given the choice.
cc @cryptosj
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