[Proposal] - Increase target_staked_ratio from 40% to 55%

We (Knowable) are preparing a governance proposal to increase Namada’s target_staked_ratio to “0.55” from “0.40.”

This governance-ops-proposal discussion follows from this governance-ops-idea topic: [Idea] Raise target_staked_ratio from 40% to 50%

Why?

Namada’s target_staked_ratio is set to “0.4”. This means that if more than 40% of the Namada token supply is staked, Namada’s staking inflation will begin decreasing towards zero.

Such a dramatic change at such an early stage could dampen our momentum by prematurely causing validators to exit from Namada, while not necessarily decreasing stake.

The ratio has risen sharply over the past week or so, and we now have ~36.4% of the NAM supply staked. We think that the time to increase the target is now, and are proposing that the new target be 55%.


(source: Explorer75)

What’s the effect?

The only change from passing this proposal is that staking inflation (and thus, staking rewards) won’t begin decreasing if more than 40% of the NAM supply is staked. Instead, this will begin decreasing if more than 55% is staked.

Further understanding

We’re proposing that the target be 55% because engaged members of our community have signalled that:
a) they favour increasing the rate and
b) they favour a target between 50% and 60%.

Engaged members of our community have also signalled that that this proposal would be a temporary fix, not a permanent solution, and we agree.

We should identify a more permanent solution, but we think that we’ll need some observations after the Phases of Mainnet to better understand and to discuss introducing a more informed solution.

There was a bit more in-depth discussion about some of these nuances summarized here at the end of the idea topic.

Wasm code

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I executed the build of namada-governance-upgrades for brent/increase-staking-ratio branch via earthly +build

Here’s the comparison of the hash of the build vs. the wasm from the propsal.

repo:

# built WASM (from branch of repo)
sha256sum increase_target_staked_ratio.wasm
d5993e238bbe6f5bbb8dfe1ff0a4195d54ea023000404cfd5151c9d6c45a021c  increase_target_staked_ratio.wasm

live prop:

# downloaded WASM (namadillo)
sha256sum e3e24c12-335e-4609-b9ab-9a50a7c86913
d5993e238bbe6f5bbb8dfe1ff0a4195d54ea023000404cfd5151c9d6c45a021c  e3e24c12-335e-4609-b9ab-9a50a7c86913
3 Likes

amazing :raised_hands:

this proposal should execute on Housefire in the next ~5.5 hours
Namada Explorer (have to toggle to “testnet” to see it)

once executed, we should see the parameter update from 0.40 to 0.55 → Testnet Namada Housefire | explorer75 | Powered by pro-nodes75
and then i will launch this proposal on the Namada mainnet

special thanks to Spork for helping me get this done on a Saturday :heart:

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:heart_on_fire: thanks @spork.Knowable!

it appears that Explorer75 didn’t update, but i confirmed using the CLI (command line interface) that the parameter has been changed to 0.55 on Housefire :tada:


ready to launch on mainnet :ship:

1 Like

Namada Prop3 is live!
https://shielded.live/proposal/3

The voting period will be 6 days, and validators will have until this time on January 2 (4 days) to vote :ballot_box:

You can also use Namadillo to vote here: https://interface.namada.tududes.com/governance/proposal/3

2 Likes

Makes sense. This is what I once referred to as A/B testing in crypto. The metrics adjust following market / network demands, not the other way around.

Thank you for adding the WHY section Gavin :pray:

2 Likes

I will be voting Yay on this proposal. My personal cost-benefit analysis is described below:

Benefits

  1. We avoid staking rewards going to 0 in the near future, which can have unpredictable consequences with validators dropping out of the consensus set.
  2. We keep momentum going during phases of mainnet where not much else is possible other than staking (the staking reward acts as a marketing mechanism to stay interested - I’m making money from this woohoo)
  3. We can re-review this once more phases have been enabled, and marketing through other means (functionality, shielded rewards, etc) exist, so it’s more just temporary in my opinion.

Costs

  1. No free lunch. Increasing the ratio means that the cost of security is increased. This is paid by those with less stake towards those with more stake. This is inevitable, but ideally it is set to the minimum required to fulfil the goals.
  2. There is inertia to this parameter change. Stake is accrued to those that benefit by this parameter change, and if it remains in place for too long, it becomes more difficult to reverse the change (since voting power is based on staked nam).

Summary

I see this as a temporary change that will not be in place for long enough for point (2.) under “Costs” to take effect. Otherwise, I would be more weary and probably vote Nay.

4 Likes

We checked wasm and support this proposal.
Validator: pro-nodes75

1 Like

We checked wasm

The disassembly seems too big for me to check - how did you do it?

EDIT: I see in context above that we reproduce the hash via rebuild from known toolchain. Fair enough.

we’re about to be at 38.5% staked :sweat_smile:


about 45 hours to go before the proposal executes

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Yep, I built wasm from the code provided. And then checked it against the code in the proposal. Without disassembly

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Prop3 has passed and has executed :white_check_mark:

Thanks to everyone who voted! :raised_hands: great turnout

Reminder:

We should identify a more permanent solution, but we think that we’ll need some observations after the Phases of Mainnet to better understand and to discuss introducing a more informed solution.
There was a bit more in-depth discussion about some of these nuances summarized here at the end of the idea topic.

2 Likes

Can someone comment on the behavior of the Current annual staking rewards rate parameter?
It’s been 10 epochs since the prop was activated, but I don’t see any changes yet


I haven’t explored the code, maybe it’s the action of the PID regulator. ¯\ (ツ)

ah! to be clear, the reward rate effectively decreases as the claims increase. if 40% of the supply is staked, the reward rate is effectively 12.5%

50% staked? 10% reward rate
55% staked? 9.1% reward rate

if it goes above 55%, then the staking inflation rate begins decreasing toward zero

1 Like