Astar Foundation burning proposal of 5% of Astar genesis allocation

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

39 Likes

Thank you for the proposal. It is very appealing.

Indeed, since we are transitioning to Agile Core Time, the ASTR allocated for cloud loans will no longer be needed. Burning this amount would be beneficial for the community.

One concern I have is the unclear cost required for Agile Core Time. Depending on this cost, it might be more prudent to allocate part of the ASTR to ongoing usage-based fees rather than burning the entire amount.

If the 74M ASTR obtained by staking 350M ASTR is sufficient to cover the costs, then it would be good to proceed with burning the entire amount.

Regarding the method of burning, we could burn it all at once or use it slowly to offset inflation. Although there is not much practical difference between these two approaches, burning it all at once might have a greater marketing impact.

8 Likes

This is still not so clear at this stage.
One solution we have been brainstorming about is to use our treasury to account for DOT to pay for this Agile Coretime.

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.

I also proposed to do this in batches. We did some research with our core runtime engineers and it might not make any big difference. We will follow the process agreed on with our community.


Here you can find some research we did regarding the pricing of Agile Coretime. Because we still have our lease for the current parachain for another 450 days. We still have time to investigate the best approach to buy for the coretime.

Pricing Mechanism:

  1. Phases of Coretime Sale:
  • Interlude Phase (Renewals): Exclusive for renewals, providing guaranteed coretime at predetermined prices (previous price + renewal bump or market price).
  • Leadin Phase: Dutch auction style, prices decrease linearly from a high starting point to a minimum over the lead-in period.
  • Stable Minimum Phase: Remaining cores are sold at a stable minimum price until the end of the period.
  1. Renewal Pricing:
  • Renewal prices are predetermined and adjusted based on the previous period’s market price and renewal bump, ensuring price predictability and stability.
  1. Price Adjustments:
  • Uses an exponential model where the minimum price adjusts based on the last sale’s target price, preventing significant price manipulation.

Resources for Further Details:

3 Likes

I see, we can certainly take a wait-and-see approach as the lease term is still in place.

From reading the documentation, it seems to me that the staking rewards currently accumulated would be sufficient to ensure a long term. If that is the case, it seems that the 350M ASTR can be put into Burn.

2 Likes

That’s correct.
The accumulated rewards should be more than sufficient to move this forward.

2 Likes

Very gratifying to see this initiative from the Team. It would truly be a great step taken, the entire network will benefit from this attitude. A faithful sample for all bettors who have remained firm since the beginning of the Network, going through this entire extremely critical and bloody cycle. I share the same thought as @you425
How an exemplary marketing attitude would burn everything down at once. As you have already made clear, this DOT network upgrade will be approximately 450 days away, there will be enough time for new accumulations of cash to come from the Dapps reward for rent. In general, I will keep following other comments. Let more technical people express their opinions.
forgive me the english

1 Like

Hey team ,
I fully support burn, because Astar’s token emission is to huge and its sufficient to cover all the needs.
Burning can give impetus to the growth of the token in the moment and in any case will have a positive impact on the opinion of future investors and traders , of course a smaller supply is more profitable than a larger one.
In addition to the project and technological aspects, the price of the token itself is critically important. The price of a token is an indicator of the health of a crypto project, burning will help strengthen this health.

Do the best !
Always yours me :slight_smile:

1 Like

I also agree with burning it.

However, since the percentage is so large, why not give about 5% as a surprise to Astar holders who have real value?

For example, users who hold 500,000 ASTR (staking), or are in the top 10 of Yoki Origin.

1 Like

Thank you for your proposal. I now understand the reasons behind the proposal and which ASTR you are considering to “Burn”.

I also understand the impact that this will have. However, I would like to know if there are any potential disadvantages or negative impacts if we proceed with this. Some of the points I was concerned about were resolved in the comments by @you425. If possible, please let me know about any other potential disadvantages or negative impacts.

Unfortunately, I have not yet come up with an alternative proposal, and I would like to refer to the comments of others.

1 Like

This still would require changing the meaning of this allocation. I do think what you just brought up is important, and it is much aligned with another proposal I’m currently building up. This one is related to the old dApp Staking v1, v2 wallet that cumulated unclaimed rewards from the first iteration of dApp Staking that have never been claimed and are currently not claimable anymore since the release of dApp Staking v3.

It currently holds around 20M ASTR tokens that can go to those dApp stakers. Keep your eyes on this forum. I’ll share more about this soon :wink:

2 Likes

Here we find an attitude of controversy and potential denial,

for many in the community. Unfortunately, we know that there are many bettors and dividing them using quantity criteria would be harmful, as I left above in my comment, many are those who embraced the network since its inception, surfed the bleeding of the market and could not be penalized for the simple fact of not be in a numerical qualification. As for the Game yokes, it is notable that they already have a schedule and part reserved for this, so there is no reason to complete this reserve with the part destined for burning.

It’s nothing personal @ I just don’t agree :handshake:t2::+1:t2: I hope you understand. Just my opinion.

Hi @Maarten

would it be possible to have graphic and figures of current state of the Foundation, and what this 350M bring as value and interest for the foundation to get a better idea of the impact of this burn on the current and futur finance of the Foundation ?

Also, since dApp staking V3, there is currently an important need of found to reenforcement the viability and usefullness of the Unstoppable Grants. Why not use part, if not all, of those found for that purpose.
Rewards produced by staking those 350M Astr could either be burn (would have the same effect on the inflation without destroying potentially important asset for the futur and/or DCA for core time purchass).

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Would it be possible to be more concrete what kind of graphic and figures you are referring to? Talking about the Astar Foundation treasury or the other allocations shared in the image in this section: Astar Foundation burning proposal of 5% of Astar genesis allocation

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Do you propose to use the rewards that are part of this wallet to be used for the Unstoppable Grants program as addition to what the wallet currently owns instead of moving it to the treasury?

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Good proposal, burning will act as a deflationary mechanism and being tokens that were intended for a purpose that is now almost extinct (Parachain leasing), a burn would be ideal, as it would help boost both the TVL and the stakers as stated, after all it is a good amount of tokens that will go out of circulation, and this is always good for any economy, maybe we have stumbled upon a great opportunity derived from an unexpected change as Agile Coretime for such reason we must take full advantage and the time is now.

It is a very good idea to take the tokens generated as staking rewards to the treasury, then we could decide what to do with them in a separate proposal, I think there is enough time to think about the next steps and put them to the best use.

Great decision from the Astar Core Team!

3 Likes

I think it’s an incredible initiative to burn this amount of ASTR tokens.

But at the same time, I see an opportunity to delegate a percentage of these tokens that were used for the burn load to other initiatives, such as:

  • Grants for future applications: There is some resistance from projects coming only for dapp staking rewards with unclear rewards they will receive.
  • Liquidity incentives for users/dApps to ignite DeFi or gaming, similar to what Arbitrum is doing with their STIP allocations.
  • Vesting airdrops for some other campaign like YOKI, similar to OP and Arbitrum’s strategy to maintain engagement for retail investors to hold their tokens, provide liquidity and interact with protocols.
  • Boost DApp staking protocols (Tier 1, 2, 3, 4) that achieve specific milestones (active wallets, transactions, traded volume).

The percetange to allocate for this iniciatives can be discussed, because I dont have an idea now haha

What do you think @Maarten?

2 Likes

I support the burn incentive of the original 5%.

The token pool had a clear purpose, and this purpose is no longer here.
Therefore, the only thing fair is to remove it completely from the circulation.

4 Likes

No, I’m talking about allocating the 350M Astr, or most of it, to the Unstoppable Grants program.

the rewards you mentionned are only 74M ASTR which would only give the capacity to promot at most 4 dApp to Tier 3 considering a full support from 0 to the minimum threshold of 15M or 1 dApp to Tier 2. I do not deny that it would be a good start but it is far to be not enough IMO.

I beleive that the USG need this financial capacity to help promizing project to establish themself at least for the definit period of time without being limite to few project. Tier 4 rewards are just a joke and do not help projects. Tier 3 is the minimal to have the support effect. But to promot dApps to Tier 3 required a lot of found.

1 Like

The purpose of this request is to evaluate financial viability of the foundation and see if those found should be kept for another purpose.
I have no idea of what’s the current assets owned by the foundation, what its current income/expense and where they come from.
So how could we judge if it is a smart move to burn 38M$ if we don’t know what’s coming in or out of the foundation wallet?

Thanks for sharing.
Your proposal is to give this allocation a new use case in general and utilize it in the Unstoppable Grant program. This proposal is noted and can be discussed in future forum posts if others see this as a valuable path.

1 Like