cPGF validator subsidy for 167 validators from 0% → 0.67% (unrevised)
Reduced staking inflation from 5% → 2.75% (revised from 2.5%)
Lowered staking target ratio from 55% → 42.5% (revised from 40%)
Currently 41.77% of the ~1.037B NAM supply is staked, so if we set a target below this, it will immediately begin decreasing the staking inflation (which would also have been cut), and we don’t want to shock to the system by having further rewards decrease immediately after this cut.
At 42.5%, we should have just over 7.5m NAM head room before hitting our staking target.
Just recognizing a valid concern that I hadn’t fully considered.
If validators are the de facto decision-makers (since they inherit delegator voting power by default), then bundling a validator subsidy with a proposal to reduce inflation could distort decision-making.
I think we should avoid bundling proposals whenever possible. Even well-intentioned, the order matters.
To avoid any perceived quid pro quo, we will propose the cPGF proposal first. Then afterwards the community can separately vote on inflation and staking target changes.
This keeps the proposals decoupled, lets each stand on its own merits, and avoids the appearance of vote-buying (even though that’s not what’s happening!)
I should like to hear your thoughts particularly on the pgf inflation in my comments above. I think continuing with 5% on that is inappropriate, especially if we cut staking inflation in (almost) half. (a move I am also somewhat skeptical about) At this point with 23m nam in the pgf treasury, we could almost lower pgf inflation to zero for a time without much impact on operations.
We are overlooking the effects on sentiment. The discourse has been very technical, while the emotional side is disregarded.
When delegators see that the staking reward rate is halving from 12% to 6%, I expect a big sell-off. Maybe more than we are accounting for, because people will dump just out of principle when FUD spreads.
Validator subsidy and inflation changes will be moot when there is a supply shock and the market price tanks.
From an individual delegator’s perspective, the drop in staking rewards is way bigger than the reduction of the inflation rate. 12 → 6% rewards versus 5 → 3.42% inflation. The 1.6% lower inflation does not make up for the loss of APR.
On second thought, it’s probably better to close this topic so that @Veildev can start a fresh one, which will much clearer. We can reference this topic there.
