TL;DR
The Astar Foundation is considering a significant initiative to burn its parachain auction reserve, initially set aside during the network’s genesis deployment. This drastic move is prompted by the imminent upgrade of the Polkadot network — Agile Coretime, which will phase out the crowdloan concept. Burning the reserve could benefit ASTR holders by decreasing the total staked supply, thus increasing staker rewards. The suggestion is open for community discussion and voting will be conducted after 3 weeks of posting. If there is a consensus, the foundation will proceed to burn the reserve. If not, alternative solutions will be considered for further discussion and voting. The foundation also proposes transferring the ASTR rewards generated through dApp Staking to the on-chain treasury to fund future initiatives.
Introduction
Astar Foundation is considering a transformative initiative to burn the parachain auction reserve, a significant allocation set aside during our genesis deployment. This strategic move aligns with the upcoming Agile Coretime upgrade coming to Polkadot, which will phase out the crowdloan concept. The wallet holding the parachain auction reserve can be found here. The reserve was used during the launch in the first phase of Astar dApp Staking. It has successfully generated 70 million ASTR in rewards through our dApp Staking mechanism, and this reward part will be transferred to our on-chain treasury, which can be used for future treasury initiatives coming from the Astar community.
Astar Network secured its renewed parachain lease again in 2023, and it was solely funded by the Astar Foundation. Astar Foundation has lost DOT staking opportunities. Astar Foundation waived this opportunity to create a proposal to receive some ASTR from the parachain reserve allocation.
We believe this burning event could significantly benefit ASTR holders by decreasing the total supply and enhancing staker rewards. It is essential to emphasize that this is a suggestion from the Astar Foundation, and we aim to open up a discussion to understand the community’s sentiment.
We welcome all community members to share their opinions and suggestions over the next two weeks. If there is a consensus, we will proceed to a vote. If not, alternative solutions will be considered for further discussion and voting. This collaborative approach ensures that all voices are heard and that we make the best decision for the future of Astar Network.
Let’s Dive Deeper
Genesis Allocation
At the launch of Astar Network, a substantial parachain reserve allocation was created to incentivize and reward users who would participate in future crowdloans. This strategic reserve aimed to secure the network’s position on Polkadot by encouraging community support and participation in the crowdloan campaigns necessary for acquiring and maintaining parachain slots. However, with the pivot in Polkadot developments and the introduction of Agile Coretime, this reserve will no longer be needed for its original purpose, prompting us to consider burning the allocation to enhance our tokenomics and overall network efficiency.
Benefits for You
As we mentioned, this would benefit our ASTR holders and stakers. Let’s delve further to elaborate on our reasoning.
The Astar Foundation has consistently focused on refining our tokenomics to foster a more robust and sustainable ecosystem. Our recent Tokenomics 2.0 initiative is a testament to this commitment. The proposed burning of the parachain auction reserve aligns with these improvements, addressing early-stage inflation issues by reducing the overall token supply. This move aims to correct past imbalances, creating a more realistic and sustainable token economy. By decreasing the total issuance, we enhance the value of remaining tokens and boost staker rewards, further strengthening our network’s economic model.
How can it benefit you as a staker, or if you join dApp Staking today?
Burning a portion of the genesis allocation reduces the overall supply of ASTR tokens. Since the total issuance of tokens decreases, the total value staked and total value locked (TVL) in dApp staking, as a proportion of the reduced supply, effectively increases. This higher TVL implies a larger share of the network’s staking rewards will be distributed among the remaining stakers. As a result, individual staker rewards will see a boost due to the reduced supply and the relative increase in the total staked value.
Agile Coretime (The End of Crowdloans)
Agile Coretime is a significant advancement for the Polkadot ecosystem, fundamentally changing how blockspace is allocated and priced. Unlike the traditional crowdloans, which required users to lock up their DOT tokens for extended periods to secure parachain slots, Agile Coretime allows for more flexible and efficient utilization of blockspace. This system dynamically allocates coretime based on demand, enabling projects to purchase blockspace in a more cost-effective and timely manner.
Astar Network will leverage Agile Coretime to optimize our operations and reduce dependency on crowdloans, and battle with others that are our partners to extend its lease slot. By utilizing this new model, we can buy coretime using DOT tokens as needed, ensuring continuous and seamless operation without the long-term commitment previously required. This approach not only enhances our network’s efficiency but also provides greater flexibility and scalability as we continue to grow and evolve.
When deployed, Agile Coretime will allow projects like Astar Network to bid for blockspace dynamically. The pricing will adjust based on current demand, ensuring a fair and market-driven allocation of resources. This dynamic pricing mechanism helps to better align the cost with actual usage, providing a more sustainable and predictable model for securing necessary blockspace.
Solutions
Burning 350 Million Tokens (~$38M USD)
The Astar Foundation proposes burning 350 million ASTR tokens from the parachain reserve. This action would significantly decrease the total ASTR supply, leading to a deflationary effect that can increase the value of the remaining tokens. The action will be done by utilizing the burn extrinsic of pallet balances. This extrinsic was recently merged in the latest Polkadot release, implemented by our core engineers #1 #2. This reduction in supply will also enhance staker rewards, as the relative total value locked (TVL) in staking will increase, providing a more rewarding staking environment for our community. I would also like to use this opportunity to discuss if this should be done in batches to make sure our tokenomics evolve in the best direction. For example, burning equal parts over x months. Our dynamic inflation is able to adapt to those movements.
Read more about our dynamic inflation in our latest blog post: https://astar.network/blog/dynamic-staking-astar-s-innovation-that-adapts-to-market-conditions-37
Rewards move to On-Chain Treasury
Another opportunity involves transferring the ~74 million ASTR (~$6.5M USD) rewards generated through dApp staking to the Astar on-chain treasury. This move will bolster our financial resources, allowing for greater flexibility in funding future development initiatives, community projects, and strategic investments with community involvement, ensuring the long-term sustainability and growth of the Astar Network.
Agile Coretime with DOT
To ensure continuous and seamless operation under the Agile Coretime time model, we plan to use funds from our on-chain treasury to purchase coretime with consensus from our community. This strategy allows us to dynamically acquire blockspace as needed, providing greater efficiency and cost-effectiveness compared to traditional crowdloans. By leveraging the treasury’s resources, we can adapt to market conditions and optimize our blockspace usage.
An example of a possible solution: it could be an opportunity to explore Hydra’s DCA feature to automate the swap of ASTR tokens from the Astar treasury to DOT in the omnipool and keep DOT in the Astar treasury for Agile Coretime bids.
Short-term vs. Long-term Impact
In the short term, burning a significant portion of the ASTR supply will reduce inflationary pressures and potentially increase the token’s market value. This immediate impact can boost investor confidence and enhance the attractiveness of staking rewards. In the long term, these measures contribute to a more sustainable token economy by correcting early-stage inflation issues and aligning the total token supply with realistic market conditions. This proactive approach ensures that Astar Network remains competitive and resilient, fostering continued growth and innovation within our ecosystem.
By implementing these opportunities, Astar Network aims to create a more efficient, sustainable, and rewarding environment for all stakeholders, reinforcing our commitment to continuous improvement and community engagement.
Next steps
To ensure a smooth and transparent transition, we propose the following timeline and action items for community discussion and decision-making:
- Open Discussion (3 Weeks): We invite all community members to share their opinions, suggestions, and feedback on the proposed initiatives. This period will allow us to gauge sentiment and gather diverse perspectives.
- Community Vote (1 Week): If there is a general consensus from the discussion, we will proceed to a formal vote on Townhall. Townhall will offer a place where all ASTR holders can vote on the proposal. This vote will determine whether we move forward with the burning of the 350 million ASTR tokens and the transfer of staking rewards to the on-chain treasury.
- Implementation: Based on the vote’s outcome, we will execute the necessary actions to burn the tokens and reallocate the staking rewards. This will include utilizing the burn extrinsic of
pallet-balances. - Continuous Monitoring: Post-implementation, we will closely monitor the effects of these changes on the Astar Network and all features attached to our tokenomics.
We encourage everyone to participate actively in this process, ensuring that our collective decision reflects the community’s best interests and supports the long-term success of Astar Network.
We know there may be a good alternative to burning them. In any case, we need consensus among the Astar community because the usage will be different from the original intention (securing a parachain slot through auction). It would be good if this discussion generated an actionable idea.
I hope you understand. Just my opinion.