Out of 5% annual inflation, 1,5% is allocated as parachain bond reserve.
The address that holds this reserve (approx 23mil glmr or ~6m$) can be found here:
Given that :
Recently Moonbeam extended Polkadot parachain slot until 2025
With Polkadot 2.0 this reserve should be re adjusted
Any potential new lease after 2025 will be not expensive
Current balance could sustain long-term payment for either parachain slot or core time
I believe this 1,5% can be potentially be 0%, reducing either the total inflation to 3.5% or to 4% while 0.5% can go to stakers/collators.
This motion could benefit both token holders and ecosystem via well placed marketing/tokenomics update documentation.
I’m sure well suited active contributors can push this as a proposal for the community to decide, if of course gets a positive feedback.
Really good discussion to be kicked off. Thanks a lot.
As a reference: the reserve acc holds 6m$ worth of GLMR and slot 44 which is valid until June 5, 2025 was 162.800 DOT which equals to roughly 900k $.
I am very confident that we’ll be out of parachain slot wars in 2025 and even if not the current reserves should be more than needed to obtain a new slot.
The exctrinsic to end filling the reserve would be parachainStaking.setParachainBondReservePercent() and require a root track referendum.
I would tend to bring down the inflation to 4% while still benefitting the stakers with .5% more rewards.
hey, IMO, It’s a bit early to decide that we won’t need the parachain bond reserve after we move to agile coretime. we’re still not sure what it will cost to buy blockspace. before, we used DOTs to lease a slot and got them back when the lease ended. now, it’s like buying a slot, so we need to keep topping up the DOTs to keep everything running well
also, the variable nature of DOT’s value further complicates the estimation of financial requirements for bulk purchases
Moonbeam burns 80% of its fees and uses 20% to fund public goods, so it doesn’t generate revenue. If we stop using the parachain bond reserve, it’s not clear how we’ll get more DOTs when we run out of the current reserve
The current bond reserve is 6m$ and considering core-time a “pay as you go”-solution it woud maybe be a great opportunity to turn the bond reserve into DOT, stake these DOT and use the staking rewards to pay coretime in the future.
Sure we don’t know the details and numbers yet but on a napkin it looks good
Also 6m$ in DOT now could be 6m++$ in DOT during coretime-times
yeah, stake DOT makes sense in terms of the rewards, which can be used to pay for coretime. however, I’m constantly considering that the genesis allocations for grants and liquidity incentives will, in time, be fully utilized
perhaps in the future, by voting, we could allocate these funds not only for the parachain bond reserve, but also for grants to developers, liquidity incentives, and similar purposes. however, if we abandon the parachain bond reserve, what alternative sources will we have for funding these needs? I have doubts about the treasury’s capacity to cover these expenses
I’m not very active on Moonbeam, but I just want to share my feeling on this one.
Tokenomy are a very powerfull tool, who can make an ecosystem good.
It’s important to see what is the main objective.
On my side, I think than on retails user, nobody care if the inflation is at 5%, 4%, 3.5%.
No retails user will buy or used more Moonbeam Network if the inflation go from 5% to 3.5%.
It have 0 impact for them, maybe on whale I don’t know, but retail just 0.
So the impact of this change is on reality very low, ok holder of token will be less diluted but they already win more in staking so not very important.
What is the best to the ecosystem is to grow the economy of the ecosystem.
Growing the economy will attract user, retails and whales, and make more transactions.
And it’s what Polkadot in general miss, user & transactions.
It’s not holder and staker who never do a transaction who develop the ecosystem. They secure the network, but they don’t develop it.
I suggest maybe to use this 1.5% inflation who look available to develop the economy by subvention DeFi inside MoonBeam.
Subvention some Pool, Money Market, or other key DeFi Product with this 1.5% will have really more impact from my point of view than just reduce inflation for all.
As it will grow APR of the product, some very active DeFi user will be attracted, and it will generate TVL, transaction.
This type of active DeFi user also speak to many retails user of the different opportunity they find, and so attract to explore and use the ecosystem.
yeah, that’s a great point. i completely agree with you. reducing inflation seems more like a psychological factor. when it’s reduced to 3.5%, someone might still say, “oh, it’s still high - let’s reduce it even more”
so, I really don’t see the benefits of this. essentially, these funds go into the parachain bond reserve and just sit there. the foundation has its selling guidelines, which can be found on the transparency page. here’s a snippet:
The Foundation may liquidate GLMR from time to time, when expenses cannot be paid in GLMR. A prime example would be liquidating GLMR in order to accumulate DOT for parachain sustainability purposes as described above. When undertaking these activities the Foundation will strictly adhere to the following Structured Selling Guidelines:
The seller only makes offers above market price, and doesn’t sell into bids.
Daily sales remain materially below a fixed amount set based on medium term volumes, and with the constraint of remaining below 5% of estimated real market volume on any given day.
while I love the discussion, I really believe that these funds are crucial for the network’s growth and health. the decision to adjust inflation should probably be made with a long-term view, considering the new agile core team model and the sustained health and growth of the network
Have to disagree, I mean idle funds that keep growing for some unknown time in the feature is not enough imho. There is the treasury for future development.
Main question to be answered is if this excess inflation % should be allocated elsewhere or leave it as it is.
Imho, it could be used either in Apr boosting as @norisknofun stated or maybe paying gas for txs in on chain games or removed.
Always with a focus to users/txs and proper DD
I think you all have a very valid discussion here.
Web3 is an ever-evolving world where only the fittest survive. It’s valid for users, projects and of course blockchains. Within the context of Polkadot 2.0, the programmed end of the parachains model, we better have this discussion now than later.
Reducing the parachain bond reserve to 0.5% seems to me like a good in-between evolution of our tokenomics. The amount here is not the most debatable point in my opinion.
What really matters here, is what we should do with these GLMR?
Or in other words: What is the most optimal way to spend them?
I personally believe we have 3 main/fair options to explore here:
Giving them back to the holders through extra staking incentives
Adding them to the Grants committee budget
Creating a new redistribution model for the most-used dApps
The 2 first options have already been discussed.
However, the latest has yet to be explored imho. We’ve seen that Moonbeam Ignite and deFi incentives have the power to strongly increase our chain activities. Why not going one step further and incentive all the dApps that generate real transactions?
For instance, we could decide to create a new process, similar to a dApp-staking model, where the top dApps on the chain (according to the web3go dashboard) would receive GLMR tokens to:
pay for gas fees (encouraging callPermit precompiles),
redistribute extra rewards (Ignite-style).
This model would increase the sustainability of small to mid-size teams and also benefit to the broader ecosystem.
If you like this idea, I have several points to discuss with you:
At what frequency should these dApps chosen?
Who’s responsible for choosing the dApps?
What’s the selection process should be ?
Is it a community decision to take (permissionless) or a grant committee one?
How many dApps shoud be supported?
I really believe these GLMR could really support the dApps that are currently active on Moonbeam.
We have the chance to build on an upgradeable network, let’s use this perk!
I share Turritz view. Financial Sustainability is key. At the same time we have to understand if some resources can be optimized in order to have more liquidity to boost network growth. Never forget that Staking APR is important to attract new hodlers. But I agree with @MAR1, to increase transaction and network activities we have to push further on the way marked with Ignite.
Let me say that @seppybaal post here is great, triggering a strategic discussion, credits to him!!!
So far we have (without particular order) several ideas/thoughts:
leave everything is it is (5% infl)
remove 1% and add 0.5% to stakers (4% infl)
add 1.5% to grants (5% infl)
add 0.75% as a permanent pool for Apr boost across the board of defi projects + 0.75% as a permanent pool for gas payment across the board of gaming projects. Maybe a spin with “dapp staking”. Numbers are just for reference .(5%infl)
I don’t used on chain games, so I don’t have think of it.
But it’s clearly a very great idea to subvention transaction for on chain games.
With some cap of transaction by day to protect against abuse.
It’s something who can be done.
This type of subvention with also defi subvention will have clearly more impact for the economy of the ecosystem than a news “MoonBeam inflation go from 5% to 3.5%” or “MoonBeam Staking grow up”.
The network don’t need more holders.
The network have enough holders on staking who do nothing during 3 years.
We have enough of them.
Staking securise the network, but don’t make live the network.
Let’s have people who do transaction on the ecosystem.
Don’t forget than boost staking APR will reduce DeFi economy of the ecosystem.
DeFi product who used GLMR must give more rewards than Staking to pay the risk of the product to attract user. If not they think it’s not enough pay, they just put in staking.
So boost Staking APR will just again reduce number of user & number of transaction on the ecosystem.
Staking rate for DeFi is the same than Central Bank rate for global economy.
Going up reduce DeFi.
Going down develop Defi.
in fact, the current staking rewards already exceed inflation, so I don’t see the point of adding an additional portion to increase them atm. I believe that we need to offer incentives for developers and a variety of incentives for users. we should ensure that developers also have a strong motivation for development. an idea similar to Astar dApp staking appears both reasonable and intriguing. we should consider how to effectively utilize these funds, as this will contribute to the long-term development of the entire ecosystem
we require more killer dApps and active users who will engage with ecosystem projects. this will lead to more transactions, increased user activity, and higher TVL. we must also strategize on how to attract new, active users to our ecosystem
Yes agree but indeed considering @seppybaal consideration, basically we have 1.5 points to be considered.
0.5 can be kept as now for CL slot/Polkadot
0.5 can be used to boost Defi
0.5 could be considered for Staking APR
The key point arose by Seppy is this: we can discuss on how to optimize this part of tokenomics to vitalize our Eco.
by increasing the staking APR, we find ourselves in the current liquidity saga where parachains lack sufficient DOT liquidity. the high on-chain staking rewards on Polkadot incentivize users to stake on-chain rather than utilize it within the ecosystem. our ecosystem requires more liquidity and activity
I agree. I don’t think we need to allocate 0.5% extra for the staking APR.
I would rather see 1% being allocated to all Dapps building on Moonbeam (DeFi + Gaming) taking into account objective metrics such as the number of Transactions and/or the number of unique wallets interacting with the Dapps over a certain period of time (last 7 days, last 30 days etc…)
Allocating this 1% to the active Dapps building on Moonbeam would be a great way to not only attract more users but also more builders on the chain.
