Kusama originally launched with an issuance of 10 million KSM tokens. Today, about 6 years after its creation, we have already reached over 17 million. This is neither financially sustainable nor financially responsible, as the network is not financed by innovation and business, but by a steady expansion of its money supply (KSM tokens), which leads to a steady devaluation of its value.
This selling pressure stems from the fact that around 50% of all tokens newly created through inflation are immediately sold by nominators and validators. In addition, it is obvious that those who understand Kusama's tokenomics have an incentive to exploit this system by betting on falling prices (= short selling Kusama). Both of these practices must be stopped in order to build a future that is not based on exploitation and investor fraud, but on the creation of business models that are sustainable and fair.
It is often said that Kusama stands out for testing changes for Polkadot, but in this fundamental evolutionary step, Kusama has not yet been given its due responsibility. This proposal aims to change that: The total supply is to be limited to 21 million KSM. The inflation schedule offers an initial 55% cut to emissions, starting on October 31 (2025), with a softening curve to cap (15% every two years).
Polkadot's proposal 'Hard Pressure Capped & Stepped Supply Schedule' should serve as a model for restoring Kusama to its former glory, to a network that develops business models through innovation and development on its own, and can thus finance itself sustainably. And so the content of this motion should also be enshrined in JAM. (DOT proposal: https://polkadot.subsquare.io/referenda/1710)
Committing to long-term fiscal responsibility with a Capped & Stepped Supply implies:
- cutting unnecessary expenses
- subsidizing inflation with new sources of revenue.
Gavin Wood says he consulted renowned economists on this topic and always spoke out explicitly in favor of this model in his interviews, which is why I am convinced that Kusama will not only benefit from it, but will flourish. (Interview with Gavin: https://www.youtube.com/watch?v=RVEVb2SmcsI)
Let us remember that Polkadot has conducted research on this topic and that the unpleasant figures describing the current emergency cannot be dismissed. Clear action is needed, and it is needed now!
TLDR:
Total Supply: 21M KSM (21 000 000; like BTC).
Inflation Period: 2 Years.
Step: Initial Step = 55%, then 15% of remaining supply (21M minus Total Issuance) every two years.
First Step date: October 31st 2025 (Reformation Day).
Extra Request: Enshrine in JAM.