[Ext]: Grant Program Forum Post Part 2 - Macroeconomics and Tokenomics

jakeaujus · July 9, 2024, 3:42pm

The Moonbeam Foundation recently engaged Gauntlet to conduct a macroeconomics and tokenomics study to address the need for a sustainable business model for critical ecosystem functions. The goal was to identify levers and propose adjustments to increase the sustainability and development of the Moonbeam ecosystem. Due to the similarities in mechanism design and applications and pending future analysis, these approaches and insights could also be used for the Moonriver ecosystem.

Levers Considered

Gauntlet analyzed four key macroeconomic and tokenomic levers:

Parachain Bond Reserve (PBR) Take Percentage: This represents the 1.5% proportion, of the aggregate 5% inflation, allocated to the PBR that could be used to pay for existing network infrastructure costs—either by the Foundation directly, or by way of the Moonbeam community controlled on-chain treasury. Increasing this percentage would allow a portion of the growing PBR inflation to be redirected toward supporting ecosystem operational costs.
Stake Increase Percentage: This represents the proportion by which the Moonbeam Foundation increases its contribution to the total stake constituted by the active set of collators. For example, with roughly 384 million GLMR in the active set, a stake increase percentage of 10% would mean that the Foundation would add 38.4 million more GLMR to the active set, resulting in an updated active set size of 422.4 million GLMR.
Transaction Fee Take Percentage: This represents the proportion of transaction fees that the Moonbeam protocol redirects to the on-chain treasury, with the remaining fees burned. The current value is 0.2.
Transaction Fees Multiplier: This represents the potential impact of conducting programs that aim to meaningfully increase transaction volume on the Moonbeam network, which would implicitly lead to higher transaction fees, assuming the Transaction Fee Take Percentage remains constant at its current value of 0.2.

Gauntlet assessed each lever’s potential revenue opportunity and practicality of implementation. The study provided valuable insights into each lever’s relative feasibility and effectiveness.

Joint Impact Analysis

Given the complex nature of the system that represents Moonbeam’s macroeconomics and tokenomics, analyzing the joint impact of these four levers is crucial. To this end, Gauntlet employed a two-step modeling approach.

First, Gauntlet built a simulation of Moonbeam’s operations, considering varying configurations of the levers and future price scenarios for GLMR. This simulation was designed to ensure that the proposed changes would not negatively impact the continued operations of Moonbeam’s network and ecosystem. Next, Gauntlet built a second set of models that distill the data generated from the simulation into a notion of marginal impact. The marginal impact represents the positive revenue opportunity per unit change of each lever individually while accounting for the effects of the other variables in the system. By increasing revenue, the Moonbeam ecosystem can improve its sustainability.

In addition to marginal impact, Gauntlet assigned each lever a practicality score. This score represents the practical difficulty of implementing a change to a given lever. Factors considered include technical complexity, potential higher-order effects that are more difficult to model, community appeal, etc. This score was assigned manually to each lever.

Finally, to determine an overall prioritization, Gauntlet computed a hybrid desirability score for each lever. This score combines the practicality and marginal impact scores, providing a single metric with which to rank the levers.

The combination of these modeling approaches and the hybrid desirability score enables the Moonbeam Foundation to make informed decisions about which levers to prioritize for the ecosystem’s sustainability and growth to present to the community. Gauntlet used the insights gained and the outputs of this research to inform our proposed adjustments below.

Agile CoreTime Funding Analysis

In addition to the four levers, Gauntlet conducted an in-depth analysis of the funding scenario for Agile CoreTime computational resources once Polkadot transitions to this model. The key findings are as follows:

The Moonbeam Foundation currently has 165,000 DOT bonded for a 24-month parachain slot lease and 126,000 DOT being staked, earning a ~9.27% annual return.
Estimates for CoreTime pricing were derived from Polkadot community forum discussions (Initial Coretime Pricing - Governance - Polkadot Forum), suggesting a range of $1,000 to $2,500 per core per month.
Assuming a (highly) conservative estimate of 10 cores needed for Moonbeam each month, the annual CoreTime costs could range from $120,000 (at $1,000 per core per month) to $300,000 (at $2,500 per core per month).

By unbonding the 165,000 DOT used for the parachain slot lease and combining it with the 126,000 DOT being staked, the Foundation would have a total of 291,000 DOT to invest in a vehicle to pay for CoreTime resources.

Given the current DOT staking rate of ~16.7%, staking the Foundation’s 291,000 DOT for a year would generate a return of ~26,975 DOT. This return is sufficient to cover the estimated CoreTime costs under most pricing scenarios, with the Foundation potentially needing to supplement the initial stake with a small amount in the highest-cost scenario.

The analysis demonstrates that the Moonbeam Foundation can largely sustain CoreTime payments using its existing DOT holdings and staking rewards alone, providing confidence in the Foundation’s ability to transition to the new model of paying for computational resources on an ongoing basis.

Proposal: Increasing PBR Take Percentage to 80% and Enhancing Community Participation

Gauntlet proposed several scenarios to the Foundation, and we’re now presenting the selected scenario here. This proposal aims to leverage the findings of our study to optimize resource allocation and increase community participation in decision-making. The key components of this proposal are as follows:

Self-Sustaining CoreTime Costs: As demonstrated by the Agile CoreTime funding analysis, Gauntlet has reason to believe that the network’s CoreTime costs can be paid for in a self-sustaining manner using its existing DOT holdings and staking rewards.
Repurposing PBR Revenue: Given the ability to fund CoreTime costs through DOT staking, the Foundation proposes to increase the Parachain Bond Reserve (PBR) Take Percentage to 80%. The funds from this increased take will be used to further subsidize key ecosystem infrastructure costs which, in line with the broadly intended use of PBR funds, will help to further secure the network (see GLMR Transparency Commitment).
Treasury Allocation: The revenue from the increased PBR Take Percentage could eventually be redirected to the on-chain Treasury. This allows for a governance process and proposal system to assess and deliberate on certain spending choices.
Encouraging Community Proposals: If PBR revenue is redirected to the treasury, the Moonbeam Foundation will encourage the community to submit proposals for covering a subset of the costs currently borne by the Foundation. This approach fosters discussions on alternative providers and the necessity of certain expenses, potentially improving the return on investment for ecosystem costs.
Exploring a 10% Stake Increase in the Future: While not part of the immediate proposal, Gauntlet’s analysis suggests that this change represents yet another safe and meaningful opportunity for the Foundation to further fund infrastructure costs, grants, expansion, etc. We encourage the community’s feedback on this point.

It is important to note that the additional funds from the increased PBR Take Percentage are not intended for unrelated or speculative purposes. Instead, the Foundation aims to stay true to the original goal of these funds, which is to continue supporting core ecosystem infrastructure costs and ensuring Moonbeam’s long-term sustainability as a parachain on the Polkadot network.

Next Steps

The above analysis provides insights into potential strategies for ensuring the long-term sustainability and growth of the Moonbeam ecosystem. As a next step, we invite the community to provide feedback on the proposed changes and their implications, to suggest additional strategies that could be considered, and to move forward with determining the implementation plan for Moonbeam and Moonriver. We look forward to fruitful community discussions—and hopefully future collaborations—to help shape the future of Moonbeam and Moonriver.

aaron.mbf · July 9, 2024, 9:50pm

As a follow up to this post, here is the Moonbeam Foundation’s take:

TLDR;

The Moonbeam Foundation fully supports Gauntlet’s proposal and is looking forward to questions and comments from the community
This proposal would mean the Moonbeam Foundation would have greater capacity to fund community programs, grants and innovative improvements to the core protocol
Gauntlet’s analysis suggests that Agile Core Time for the networks can be paid for via DOT/KSM staking rewards rather than relying on the Parachain Bond Reserve
Network Infrastructure such as block explorers, RPC infrastructure, Oracles and developer tooling can be paid for by redirecting 80% of the inflation going to the Parachain Bond Reserve to the Treasury

The Moonbeam Foundation would like to thank @jakeaujus and the Gauntlet team for their detailed analysis, modeling and for the resulting recommendation that was arrived at in consultation with members of the Foundation.

The fact that the staking rewards from the DOT and KSM reserves accumulated thus far by the Moonbeam Foundation should support agile core time costs in a sustainable manner means that the portion of inflation directed to the Parachain Bond Reserve might be put to other uses.

As stated in the report, the original purpose of this allocation was to ensure the long term sustainability of the Moonbeam/Moonriver networks as parachains on the Polkadot/Kusama networks. At the same time, the utility of the chains themselves are vastly diminished without the presence of key infrastructure components such as RPC services, block explorers, oracles, developer tooling, etc.

This infrastructure is critical to the long term success of the ecosystem and the majority of these costs are currently being borne by the Moonbeam Foundation. By using 80% of the Parachain Bond Reserve inflation, we have a sustainable way to pay for these key infrastructure costs and is in keeping with the spirit of the original purpose of the PBR allocation.

This in turn increases the Moonbeam Foundation’s capacity to fund:

Community, education and outreach programs
Grants and the Innovation Fund designed to attract new teams to the ecosystem
Invest in innovative capabilities for the core protocol
Partnerships that expand the utility and audience of the networks

Moonbeam and Moonriver are still relatively new. The Moonbeam Foundation’s focus remains building out innovative capabilities, attracting builders and fostering a committed and decentralized community.

While focusing on adoption and building traction, it’s important to keep fees low and to continue to invest in the core technology. Therefore, at this point in the ecosystem’s development, the recommendation is to fund these infrastructure costs through inflation rather than attempt to do so through fees. Longer term, as adoption reaches critical mass, the community can look to inverting to a model where these costs are covered by protocol generated fees.

As described in the proposal, the PBR take percentage could be directed to the on-chain treasury. This could be beneficial to the overall ecosystem in several ways:

Allows for greater transparency into network costs and the infrastructure providers selected to provide the services
Allows for greater participation and consultation with the community
Could increase competition to provide certain services and reduce costs

However, this comes with some challenges as well:

Some service providers may be reluctant to adopt the treasury process due to the volatility of the GLMR/MOVR tokens, the lack of a formal legal agreement with a counterparty and/or having the terms/costs of the service made public.
With the increased size of the treasury budget and expansion of the mandate, arguably the current treasury council size and structure may need to be matured in order to have the appropriate level of accountability and expertise.

Despite the challenges, the Moonbeam Foundation would propose that the core protocol be modified in an upcoming release to redirect 80% of the PBR inflation to the on-chain treasury and work to grow/mature the Treasury Council structure and scope over time to address these challenges.

It will take some time for a sizable amount of tokens to accumulate and during this time, the Moonbeam Foundation in consultation with the community would commit to researching and implementing a more robust body to oversee the management of on-chain treasury funds that fosters transparency and accountability while simultaneously is effective at ensuring funds are used appropriately and in the best interest of the community and ecosystem.

Lastly, many may be asking the question why only 80% of the parachain bond reserve inflation? Having the remaining 20% continue to be directed to the PBR helps to mitigate the risk of agile core time costs being larger than anticipated. For example, it may be necessary for the Moonbeam Foundation to accumulate additional DOT to stake to support agile core time needs.

The Moonbeam Foundation encourages community members to engage in this discussion and ask any questions they may have. If desired by the community, we may schedule a Spaces event on X to address questions and concerns raised here.

turrizt · July 10, 2024, 2:16pm

hey @jakeaujus, thanks to you and the entire Gauntlet team for your effort in writing these recommendations!

@aaron.mbf, thanks for sharing the Foundation’s perspective. assuming these recommendations will be accepted by the community, I have some questions for the Foundation gathered from community discussions

Considering the increased size and complexity of the treasury budget, what are the plans to expand and diversify the Treasury Council to ensure it has the necessary expertise and capacity to manage these funds effectively?
How will the Treasury Council assess and measure the impact of projects funded by the treasury? Will there be specific metrics or KPIs that recipients need to report on?
Can tokens allocated in the tokenomics be burned if the community decides so? For example, could a specific amount of tokens be burned while still ensuring sufficient funding for infrastructure and other projects? How will the decision to burn treasury funds be made, and what criteria will determine the amount and frequency of burns?
Will there be guidelines to manage the selling of tokens received by projects from the treasury? Could there be a phased selling mechanism or vesting schedule based on the specifics of the proposal to alleviate potential selling pressure and protect the token’s value?
Are there plans to set a maximum limit on the amount of funds that can be requested per proposal? How will this limit be balanced to ensure that both small and large-scale projects can be adequately funded without overburdening the treasury?
Will the treasury funds be utilized for the Grants program, or will this program be financed separately through the Moonbeam Foundation’s budget? What will be the specific differences between Grants and Treasury funding?
Are there any plans to implement limits on the number of proposals that can be approved within a specific timeframe (e.g., weekly/monthly) to prevent a surge of proposals that could lead to significant token releases and potential selling pressure? How will these limits be determined and enforced?
Will there be a cap on the amount of funds a specific team can request from the treasury within a given timeframe, such as per month or per year? How will these caps be determined and monitored to ensure fair distribution of resources?
Will there be specific limits on the number of development, marketing, community, and infrastructure proposals that can be approved within a given period to ensure a balanced allocation of resources?
Are there specific types of projects or activities that the treasury will not support, such as gambling projects, meme coins, or other high-risk ventures?

I did some rough calculations based on the PBR balance increase. by my estimates, the GLMR treasury will grow annually by around 13M GLMR and the MOVR treasury by approximately 120k MOVR. these are rough, napkin calculations, but it looks like a significant increase that can support the ecosystem and benefit the entire Moonbeam and Moonriver communities

@jakeaujus could you please clarify if these calculations are correct? or perhaps you have more accurate numbers?

lina.k.m · July 11, 2024, 5:15pm

Hey @turrizt !
Thanks for the excellent points and thoughtful questions!
The @TreasuryCouncil definitely has these considerations in mind, and it’s great to know that the community is thinking about these questions as well.

We’re actively brainstorming on these points, and together with the elected Treasury Council members we will share more details in the coming months. This includes guidelines, processes, responsibilities, scope of work, etc. All of them will be shared here on the Forum for community review and input as they’re developed.

In the meantime, if you don’t mind me answering your questions instead of Aaron (who is busy at the EthCC at the moment ) let’s address each question here to give the community a general idea of our direction. While these aren’t exhaustive answers, they should provide some insight.

To manage the potential increase in the treasury budget’s size and complexity, we will need to consider expanding and diversifying the Treasury Council. Here are some initial considerations: Members will be elected based on their expertise in areas such as business development, technology, DeFi, marketing, etc. As the Treasury grows, we will proportionally increase the number of council members to ensure effective oversight and strategic decision-making. This approach ensures the council has the necessary expertise and capacity to manage the funds efficiently.

That’s something for the Treasury Council to develop and propose to the community.

Based on the Gauntlet’s findings, while the community has the ability to propose token burns, such proposals need to be exceptionally well-considered due to the potential detrimental effects on the entire ecosystem. Any such proposals must be detailed and demonstrate a clear understanding of the implications.

It is a good point and the Treasury Council should consider this.

It is something for the Treasury Council to consider and propose to the community as part of this next phase of its evolution.

For the time being, the Grants Program is a separate initiative. However, there might come a time when it can be absorbed by the Treasury, depending on how the community would like it to evolve

This will be considered by the Treasury Council and proposed here on the Forum.

Guidelines and administrative procedures will be developed and proposed here for the community to review and comment.

If there is a need for that, limits on the types of proposal can be introduced.

The Treasury must prioritize projects that demonstrably benefit the Moonbeam ecosystem. While there isn’t an official blacklist, certain project types might not be a good fit. As described above, the focus will be on core ecosystem infrastructure and tooling that are deemed to be essential to the ongoing support and operation of the parachain.

If there are suggestions, more points we should consider, advice - I’d ask everyone to share them here and contribute.

And I’ll tag my colleagues from the Treasury Council to chime in here as well @dev0_sik @_yrn @micheleicebergnodes .

micheleicebergnodes · July 11, 2024, 9:01pm

First of all let me say Thank you @turrizt for this post, you well know how much I deem key the community focus and all these points are coming from daily discussions inside tg groups so really, you outlined the key items on which we will work in the incoming months, like @lina.k.m already explained here above.

From my side just few comments with reference to some items out of your list:

I personally think that here you touched one of the biggest point in terms of how much our Community is concerned when it comes to funding initiatives. They always ask “what if they dump on us?” and tbh is a reasonable question. We nees to find a good balance between strategic funding for the growth of the project and the preservation of token’s value. Vesting could be an idea, but also other mechanism could be considered. For sure this will be a Priority.

Here I totally agree with @lina_k_m, at the moment the two entities (Grant Committee and Treasury Council) will be kept separated. For sure considering the increased budget about Treasury, scope of action for Treasury Council will be significantly enlarged but this do not necessarily imply an overlap with Grant Committee scope. Indeed I think that this tokenomics change will trigger the opportunity to better specify the two different scopes allowing an higher degree of specialization for both.

Also on this key question I think that @lina.k.m answer is the correct one: to cope with an increased budget / amount of responsibilities we need to develop a new Council structure capable to manage the additional complexity, leveraging on all the skills we can retrieve among our amazing Community members. Know How, Committment & Teamwork will be the key assets, and MB Eco owns all of these.

Here you touched another key point dear @turrizt, indeed. Personally I am not in favor of “blacklisting” as a general approach but yes, when it comes to manage Community resources the Risk/Benefit ratio is the key parameter, for sure we cannot afford “wild adventures” with the money of the Community. So yes, case by case we will consider the content of each proposal looking at all the possible implications for the Project and the Community, applying the mid/long term perspective that a serious/high value project like Moonbeam deserves.

cryptoabe · July 15, 2024, 7:11pm

This makes total sense. All for it

legendnodes · July 21, 2024, 6:09pm

Thanks @jakeaujus for your analysis and proposal.

The general idea of allocating more funds to the community program by utilizing DOT/KSM rewards is great. Having said that, I would be carefully counting on it for the long term for the following reasons:

It’s true that the nominal APR is ~16.7%, however the real APR (adjusted 10% inflation) is ~6%. Obviously DOT can go up or down, but being conservative, I’d assume token price devalued by the yearly 10% inflation.
In addition, I’m sure you all are aware of the Polkadot inflation discussion suggesting reducing it to around 6-7%, which will also affect the expected rewards from this vertical (if it’ll pass)…
Reducing DOT unbonding period from 28 days to 2 days (probably will be a range of 2-28 days) is also on the pipe-line, and once implemented it should increase the staking rate since more people will be willing to stake on-chain due to this significant change. This will obviously reduce the income from this root as well.

Hence, I’d be much more conservative with the expected income by staking DOT rewards.

Beyond that, I was wondering if you made any simulation where the 5% inflation is linear and not exponential. Making it linear (i.e. 50m fixed every year) will reduce the inflation rate year by year and is supposed to reduce selling pressure accordingly. This way, in $ value we may see even higher earnings compared to higher inflation scenarios. Eventually, (imo) a healthy economic ecosystem derives from price and not number of tokens.

Last but not least - did you check the burning performance and how efficient is it? The general feeling (at least mine) is that it doesn’t move the needle much.
I believe that more steps should be deployed/taken in this area since it’s also an important mechanism that can help us reduce inflation in a generic way and not by just cutting it randomly.

Thanks again for your work!
Rafael

steve_martin · July 24, 2024, 8:30am

Price is seemingly a taboo word - and should not be discounted as an effective tool to attract development and fund development.

The following statement emphasizes pre-bias towards funding infrastructure through inflation instead of mechanisms that encourage token price appreciation (in part discounts it).

*While focusing on adoption and building traction, it’s important to keep fees low and to continue to invest in the core technology. Therefore, at this point in the ecosystem’s development, the recommendation is to fund these infrastructure costs through inflation rather than attempt to do so through fees.

In consideration, I believe that the current defensive and strategic play by the Moonbeam Foundation is counter to stimulating growth as market conditions are now signalling changes in market sentiment. I note the opportunity to invest in ‘infrastructure’ has passed as overall supporter sentiment (because of downward price pressures due to inflation and vesting schedules) is shaking even the strongest of holders on which you should rely. I see this as a negative feedback loop. I feel holders/users/investors/ the broader community were anticipating an announcement to reduce inflation; unfortunately, this isn’t; the case, or at least it is yet to be addressed.

Further, I feel this project lacks a sound understanding from the investor’s point of view, reenacting what Acala did to the Polkadot Ecosystem (not listening to the community concerns about ACA emissions). Another negative feedback loop. Further, Moonbeams holding of 422m units is a worry - as no clear guidelines say how they must be in part bought, sold or allocated to ecosystem growth. Until such time things change, my DCA schedule must discontinue. I will continue being an avid supporter, but inflation and vesting schedules are seemingly eroding my position as token inflation is also classified as taxable income here in Australia.

aaron.mbf · July 28, 2024, 2:49pm

Thanks Rafael,

To be clear, the idea is tfo use staking rewards from DOT and KSM to buy core time for Moonbeam and Moonriver.

You make some good points around assumptions that have been made. In fact, we don’t really know what the market will be for Polkadot yet. That said, even with a reduction in staking rewards due to some upcoming changes, we believe that we should be ok.

However, to help mitigate risk, of the 1.5% inflation that is currently going to the PBR, the proposal is to send 80% of it to the treasury and keep the other 20% flowing into the PBR for the time being.

With regards to a linear inflation model vs an exponential model, I don’t think Gauntlet looked at that but perhaps @jakeaujus can chime in. Certainly if the Moonbeam/Moonriver networks are successful in the long term, it would be logical to reduce inflation and move to a model where the primary source of funds is from fees. Note also that with an increase in activity, business models for many infrastructure service providers become less reliant on subsidies from the network or the Foundation as their number of paid subscribers should go up.

You are correct that currently burned fees do not have a major impact on inflation. To give you some idea, total fees burned in 2023 was approximately 1.17M GLMR.

As a young network, the Moonbeam ecosystem is still in the phase where investment is needed to build out capabilities and traction. Longer term, as the ecosystem matures, the idea would be to curb inflation. In the meantime, certainly if the treasury begins to grow very large, token burns are possible via governance.

aaron.mbf · July 31, 2024, 12:39pm

Thanks for your feedback. Do you have some suggestions in terms of where to cut if we were to lower inflation?

Here are some examples that I think may have other adverse effects but perhaps you feel otherwise:

stop funding public RPC infrastructure - teams deploying would need to pay a provider directly
raise network fees so that fees can pay for more of the infrastructure costs
stop subsidizing block explorers, oracles, developer tooling, etc
stop funding grants to attract teams to the ecosystem
stop funding improvements to the protocol

Could you please be a bit more specific in terms of which “vesting schedules” you refer to? I will note that the Seed Funding, Strategic Funding, Take Flight and Crowdloan have all been fully distributed at this point.

Can you indicate the source of this figure? It’s also not clear who you are referring to that is holding 422 M units?

legendnodes · August 8, 2024, 2:19pm

Hi Aaron,

Although you didn’t refer the questions to me, I’ll be happy to share my thoughts here.

I’ll start with that wouldn’t stop any funding of what you’ve mentioned. We might can be more efficient with the spending, meaning getting higher utility for the same amount, but I wouldn’t cut anything

The big elephant in the room is GLMR price. If it was 5x for example (or higher), we theoretically could cut the inflation by half at least without stopping any funding since the income in $ value is big enough

I’m not going to provide suggestions on how to boost the token price because I believe that eventually it’ll happen naturally when people will be more aware of the huge discrepancy of GLMR price and GLMR tech. Having said that, as I mentioned before, I believe that reducing the inflation should come from a better burning mechanism. Obviously we can increase the transaction burn to 90% for example - it may create a positive psychological effect since the difference between 80% to 90% isn’t material. However, there could be other options such burning GLMR in any MRL transaction - for example 1 GLMR in the current price and lower when GLMR goes significantly higher. Maybe burn 1 GLMR anytime someone revokes. We can also burn x% of Moonbeam profits only if it doesn’t risk the network

I’m just throwing ideas, maybe they aren’t good and I haven’t thought about it enough, but my point is that we need to find solutions to reduce inflation not by arbitrary decision to cut it in x%, but in a way to minimize it by effective burning

Therefore I believe that the real work that should be done is to figure out what’s the best way to create effective burning. I’ll give it a deep thought by myself and hopefully other people will do it as well and we can join forces here

Thanks again,
Rafael

micheleicebergnodes · August 8, 2024, 3:51pm

Thank you a lot Rafael, I will start this kind of brainstorming also from our side but let me tell in advance that the simple idea of switching from 80% to 90% the burning of fees sounds really interesting to me… And agree with you, we do not have to cut nothing about the key items, eventually is a matter of improving current burning mechanisms.

aaron.mbf · August 13, 2024, 7:17pm

Thank you for the input here. I am circling back with the team to take a look at the fee burn suggestion you have made and will report back on that. It seems like a good idea.

Also, in terms of the order of things, originally I was thinking that once we bring the conversation to a close, we would:

Have an on-chain but symbolic vote (ie. system remark) on the proposed changes
If it passes, schedule the changes for an upcoming runtime upgrade

However, we’re taking a look at the new “parameters” pallet in the Polkadot SDK.
The idea here is that certain network parameters/constants could be modified via governance as opposed to having to be done as part of a runtime upgrade.

If this seems feasible, then we may:

Add parameters for things like % of fees burned (vs. going to treasury) and % of PBR inflation directed to treasury in an upcoming runtime upgrade but leaving the values as they are
Based on the proposed changes, have a governance vote to change the parameters.

I think this seems better and would be more efficient since we can proceed with the development of the “parameters” pallet integration while we continue to refine the proposal.

Stay tuned…

steve_martin · August 14, 2024, 5:25am

I believe the 422m figure was taken from an audio/video of Derek. Correct me if I am wrong. This is what the Moonbeam Foundation holds. Inflation is an arbitrary value in which price fluctuates based on supply and demand. To attract investors they must see the “number go up”, to signal to investors that the network has confidence in itself.

Agreed, the vesting schedule is nearly complete bar early founders etc. But this should be a time to signal that perhaps more attention should be placed on the market structure and downward pressures before risking becoming a mere oscillator (which is most certainly not ideal in Moonbeam’s situation given current circumstances). An oscillator means it would be something like XRP or ADA - fading into obscurity. I would recommend you take these charts to a VC/trader you trust and get a second opinion. In my experience, I am observing this as Moonbeam’s last chance to get this right. The sell-side on the books has since increased up 1.2m from 3m on Binance to the point of nearest major resistance of 0.48c since the last retrace. I wish it were not the case.

The moving average on the 99 also fell shy which further signals to me there is an oversupply and/or weaker demand even prior to the previous market crash. Therefore I would recommend reducing emissions, or risk going much further down and destroying market confidence. In the advent this happens, moonbeam will not recover. How you reduce emissions is up to you and the team.

turrizt · August 14, 2024, 7:26am

hey @steve_martin, thanks so much for being a Moonbeam supporter and for actively participating in the forum by sharing your thoughts, concerns, and ideas. It’s really much appreciated!

I’m someone who’s probably watched every podcast / video with Derek, and I haven’t come across any mention of the figure you cited. It would be great if you could share the video / podcast where this was mentioned so we can have more context

however, a quick fact check suggests that this information might not be accurate. according to Moonbeam’s tokenomics, the Moonbeam Foundation does not hold anywhere near 422m GLMR. the GLMR tokens allocated to the Foundation are not freely available for general use. instead, they’re specifically designated for certain purposes with clear restrictions and goals - such as securing parachain bond reserves, supporting long-term protocol development, and funding ecosystem initiatives. this structured allocation ensures that GLMR tokens are used responsibly and in line with the network’s strategic needs

regarding the second part of your post, it’s important to note that certain discussions might fall outside the guidelines established in Moonbeam’s code of conduct, which has been in place since the network’s launch. I hope you understand that these are topics best handled outside of this forum

legendnodes · August 15, 2024, 5:59am

Many thanks Aaron for your detailed explanation.

Looking forward for your updates after you’ll make internal testings.

steve_martin · August 15, 2024, 5:55pm

I apologize if the number I mentioned was incorrect. I’m uncertain of its origin, particularly since I, too, have seen all of them. I’m prepared to concede this point and have no intention of revisiting the entire series. Regarding the no-price conversation, I am merely referring to the supply and demand dynamics, which are inherently linked to psychological factors. Often after 2 years the revolving door can continue spinning if you catch my drift. This conversation is like that in the polkadot discussions about inflation when it directly correlates to price (which is difficult), as it was the reason the conversation was sparked. But yeh, I get you. I will refrain from talking about trade. @legendnodes I like this idea. 1 glmr is nominal and means much more to me than a % of something.

aaron.mbf · September 16, 2024, 2:44pm

Hey all - I wanted to provide a long over due update on this matter.

Firstly, the proposal will be amended to also include increasing the fee burn to 100%. This change is based on feedback received from the community. It doesn’t impact the current sustainability modeling and will create a deflationary force as transaction volume increases.

In terms of how this will be rolled out:

RT3300 will contain the needed chain parameters that can be modified via governance. RT3300 is expected to go live on Moonriver in early November and Moonbeam mid to late November
The two needed parameters are (1) percent of parachain bond inflation directed to treasury and (2) percent of fees burned vs directed to treasury
Once RT3300 is live, a governance proposal will be created to modify these parameters to 80% and 100% respectively
If the governance proposal passes, then the changes will be live.

turrizt · September 16, 2024, 3:33pm

thanks a lot for the update, Aaron!

sounds bullish to me!