Reducing inflation and setting a realistic target for coretime sales

Root

1mo ago

14 Comments

Rejected

Content

AI Summary

Reducing Inflation

Some time has passed since our wild cousin Polkadot successfully reduced its annual inflation to 8%(with gradual reduction), as a KSM token holder I believe our loved bird is due an adjustment of its inflation parameters as well. Instead of copy-pasting Polkadot's model, Kusama can try something different, some DOT holders were left wondering if inflation could be lower, I propose we reduce it to 5%. The high initial inflation was good for early bootstrapping and incentivizing participation, the ecosystem has matured enough to aim for long-term sustainability.

Changed parameters

Setting MaxInflation: From 10% to 5%
UseAuctionSlots: From true to false.
From the docs:

With the move to agile-coretime, this parameter does not make much sense and should generally be set to false.

NOTE: As IdealStake is "75%", UseAuctionSlots = true had the effect of making the real target around 45%, this is intentional as it would increase the treasury income to around 10% with current staking levels.

Reducing ideal bulk coretime sales

The reduction of inflation should be balanced with an increased demand for the KSM, the main utility of KSM is to pay for coretime(which gets burned) but current prices are virtually 0 making it hard for the system to benefit from its main product offering. Elastic scaling will help grow demand for coretime and thus KSM, there might also be new sources of KSM demand like Kreivo's memberships but we need to adjust the core business model.

A while back I proposed setting a minimum price but it was pointed out by @seadanda that a better approach is to change the parameter that controls the ideal target for sales to a value that better reflects the expected demand of the Kusama cores to stop the price from further being driven to 0 and quite the opposite drive its price up to a more realistic value.

Note that this number is not set in stone, it's a starting point that can help us better discover coretime's true value.

Changed parameters

Setting ideal_builk_proportion: From 100% to 40%

The proportion of cores available for sale which should be sold.
If more cores are sold than this, then further sales will no longer be considered in determining the sellout price. In other words the sellout price will be the last price paid, without going over this limit.

As self-proclaimed Kusama enthusiast#1, not only as KSM-only holder but as full-time exclusive builder on this network for several years, I hope this proposal well received and not seen as malicious as I only have the best intentions for this ecosystem :)

Edited

Status

Decision14d

Confirmation1d

Attempts

Tally

0.9%Aye

50.0%Threshold

99.1%Nay

Aye

≈3.2KKSM

Nay

≈347.55KKSM

0.0%
0.0%
0.0%

Threshold

Support0.06%

≈9.71KKSM

Issuance

≈15.91MKSM

Votes

Nested

Flattened

Calls

How OpenGov works↗

Call

Metadata

Timeline4

Votes Bubble

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Comments

DDbQ...XVS6

We appreciate the other commenters and echo their sentiment that this is likely an inappropriate time to do this on Kusama.

The situation here is different than it was on Polkadot, with an already tight security budget due to market conditions that is just enough to cover ongoing hardware costs, even when making the (nonsensical) assumption of valuing the time and administrative overhead at zero.

To our knowledge, there are several efforts underway to revitalize Kusama and help it live up to and grow beyond its current reputation as a chaotic playground, such as privacy-focused tech (see, for example, this forum discussion: https://forum.polkadot.network/t/make-kusama-chaotic-again/11123). This would work towards pulling the much more efficient lever of demand, rather than adjusting supply while risking the compromise of Kusama’s security.

Regarding the coretime sales, in our view, current prices are an attractive offer for cheap compute, and efforts such as lower parachain/data deposits (https://github.com/polkadot-fellows/runtimes/pull/501) are an important contribution towards fostering an environment that supports tinkerers that do not have the ability or do not want to commit lots of capital upfront. It might also be an idea worth exploring to further support such experimentation with treasury loans specifically for this purpose.

Up 1

GCMG...9erp

I agree 100% with everything said in the posts above.

When Kusama expanded to 1000 active validators and KSM’s price fell, we set a 10% minimum commission (see https://kusama.subsquare.io/referenda/79) to stop operators from cutting rates too low and prevent the race to the bottom. This step helped maintain hardware standards and costs. Slashing rewards by half now will contradicts this effort, leaving many validators at a operational loss. This wont be sustainable for network security or decentralization.

Dd93...A5km

deigenvektor.io voted NAY, as we believe that without addressing the issue of validator income, operating kusama validators would become even less sustainable. We are open to supporting proposals that address both inflation and validator income.

Fa6m...wiBr

Dear Proposer,

Thank you for your proposal. Our first vote on this proposal is NAY.

The Root track requires 60% quorum according to our voting policy. This proposal has received one aye and six nay votes from ten members, with two members abstaining. Below is a summary of our members' comments:

Some voters expressed support for the initiative, emphasizing its potential benefits despite concerns about diminishing validator income. However, a majority opposed the proposal, citing the need for a more robust plan and wider community discussion prior to implementation, especially given the current financial strain on validators. Several voters abstained, highlighting the aggressive nature of the proposal and the potential risks to network stability. Overall, the sentiment leaned towards caution and the need for further deliberation.

The full discussion can be found in our internal voting.

Kind regards,
Permanence DAO

Edited