KIRA (Kusama Inflation Reduction Act)
This KIRA WFC proposal aims to make Kusama more attractive and to promote its adaptation. Not only for new users, but also for all existing users. To achieve this, the following is proposed and put to the vote:
1) Reintroduction of treasury burning
Kusama has spending periods. It is proposed that the treasury burns 0.5% of its unspent amount of KSM per spending period, thereby reducing the amount in circulation. The treasury burns at Polkadot should serve as a model. [Paragraph has been edited]
2) Introduction of a general voting fee
OpenGov allows anyone with KSM to vote. It is proposed that a modest voting fee of one per mille, i.e. 0.001, is due for each KSM used, which is burned (not locked) in the process and thus removed from circulation forever. KSM that are used with conviction are taxed according to that (1x conviction = 1 KSM, 2x conviction = 2 KSM, etc.).
In the case of delegated votes, the original wallets are taxed. The person who receives delegated votes only pays fees on their own KSMs, but not on those that have been delegated to them for voting.
Example: Person A votes for a proposal and commits 100 KSM with a conviction of 3x. 100 KSM x 3 = 300 KSM. 300 KSM x 0.001 = 0.3 KSM fee.
This mechanism ensures that the demand for KSM is slowly but surely increasing. Due to its low level, it does not prevent anyone from voting, but ensures that those who wield political and economic power make a contribution to the community as a whole. [Paragraph has been edited]
3) Introduction of a general treasury tax for outflows
In the case of treasury proposals, it is usual for the KSM or stable coins paid out to be sold. To counteract this selling pressure, it is proposed that the treasury automatically burns (not locks) 10% of the amount paid out from its own holdings in addition to the payout, which in turn reduces the amount in circulation.
Example: Group A requests 100 KSM from the treasury. The proposal is accepted. The treasury transfers 100 KSM to group A. The treasury burns 10 KSM from the remaining assets.
4) Reduction of the maximum inflation rate
Kusama's main problem is its current maximum inflation rate, which leads to a long-term supply surplus, which in turn leads to a price reduction according to the laws of supply and demand.
As this model has demonstrably not led to more adaptation and thus jeopardizes the long-term financing of the project, also with regard to investor protection, it is proposed that the maximum inflation rate be set at 5% per year.
Two points should be mentioned in this context:
A few weeks ago, the minimum commission rate for validators was increased from 10% to 15%, giving validators 50% more income than before. A reduction in the maximum inflation rate therefore does not harm them in any way, as this percentage amount is not affected. On the contrary, they will also benefit from a reduction in the maximum inflation rate.
Secondly, and for all those who are worried about their staking rewards, rest assured that with the current inflationary strategy and the consequent fall in prices, these are not worthwhile on balance anyway. For precisely this reason, a reduction in the maximum inflation rate is needed, which incidentally has also been implemented at Polkadot.
Conclusion
With these changes and future adjustments to the Coretime pricing model, Kusama would become considerably more attractive again. Why exactly?
a) The amount of newly created KSM is significantly reduced, which increases the supply much less quickly. KSM therefore becomes more valuable because it is scarcer.
b) The amount of KSM in circulation is slowly but steadily reduced by the newly introduced fees, which also lowers real inflation. KSM therefore becomes even more valuable as it is scarcer.
c) Although the percentage of staking rewards will decrease due to the reduction in the maximum inflation rate, the value of staking rewards will increase as the reduction on the supply side leads to a price increase (supply shock).
d) Due to the voting fee, it will slowly but steadily become necessary to buy more (new) KSMs in order to maintain the previous voting strength, which will increase the buying pressure.
Thank you very much for supporting this proposal and have a wonderful day!
PS: If you would like this proposal to be put to a vote, please consider paying the decision deposit, as it is unfortunately impossible for me to do so. :'(
KIRA (Kusama Inflation Reduction Act)
This KIRA WFC proposal aims to make Kusama more attractive and to promote its adaptation. Not only for new users, but also for all existing users. To achieve this, the following is proposed and put to the vote:
1) Reintroduction of treasury burning
Kusama has spending periods. It is proposed that the treasury burns 0.5% of its unspent amount of KSM per spending period, thereby reducing the amount in circulation. The treasury burns at Polkadot should serve as a model. [Paragraph has been edited]
2) Introduction of a general voting fee
OpenGov allows anyone with KSM to vote. It is proposed that a modest voting fee of one per mille, i.e. 0.001, is due for each KSM used, which is burned (not locked) in the process and thus removed from circulation forever. KSM that are used with conviction are taxed according to that (1x conviction = 1 KSM, 2x conviction = 2 KSM, etc.).
In the case of delegated votes, the original wallets are taxed. The person who receives delegated votes only pays fees on their own KSMs, but not on those that have been delegated to them for voting.
Example: Person A votes for a proposal and commits 100 KSM with a conviction of 3x. 100 KSM x 3 = 300 KSM. 300 KSM x 0.001 = 0.3 KSM fee.
This mechanism ensures that the demand for KSM is slowly but surely increasing. Due to its low level, it does not prevent anyone from voting, but ensures that those who wield political and economic power make a contribution to the community as a whole. [Paragraph has been edited]
3) Introduction of a general treasury tax for outflows
In the case of treasury proposals, it is usual for the KSM or stable coins paid out to be sold. To counteract this selling pressure, it is proposed that the treasury automatically burns (not locks) 10% of the amount paid out from its own holdings in addition to the payout, which in turn reduces the amount in circulation.
Example: Group A requests 100 KSM from the treasury. The proposal is accepted. The treasury transfers 100 KSM to group A. The treasury burns 10 KSM from the remaining assets.
4) Reduction of the maximum inflation rate
Kusama's main problem is its current maximum inflation rate, which leads to a long-term supply surplus, which in turn leads to a price reduction according to the laws of supply and demand.
As this model has demonstrably not led to more adaptation and thus jeopardizes the long-term financing of the project, also with regard to investor protection, it is proposed that the maximum inflation rate be set at 5% per year.
Two points should be mentioned in this context:
A few weeks ago, the minimum commission rate for validators was increased from 10% to 15%, giving validators 50% more income than before. A reduction in the maximum inflation rate therefore does not harm them in any way, as this percentage amount is not affected. On the contrary, they will also benefit from a reduction in the maximum inflation rate.
Secondly, and for all those who are worried about their staking rewards, rest assured that with the current inflationary strategy and the consequent fall in prices, these are not worthwhile on balance anyway. For precisely this reason, a reduction in the maximum inflation rate is needed, which incidentally has also been implemented at Polkadot.
Conclusion
With these changes and future adjustments to the Coretime pricing model, Kusama would become considerably more attractive again. Why exactly?
a) The amount of newly created KSM is significantly reduced, which increases the supply much less quickly. KSM therefore becomes more valuable because it is scarcer.
b) The amount of KSM in circulation is slowly but steadily reduced by the newly introduced fees, which also lowers real inflation. KSM therefore becomes even more valuable as it is scarcer.
c) Although the percentage of staking rewards will decrease due to the reduction in the maximum inflation rate, the value of staking rewards will increase as the reduction on the supply side leads to a price increase (supply shock).
d) Due to the voting fee, it will slowly but steadily become necessary to buy more (new) KSMs in order to maintain the previous voting strength, which will increase the buying pressure.
Thank you very much for supporting this proposal and have a wonderful day!
PS: If you would like this proposal to be put to a vote, please consider paying the decision deposit, as it is unfortunately impossible for me to do so. :'(
Threshold
Threshold