@Juminstock
Thank you!
Now, this is long, but I’ll repost what I wrote in another thread. It’s mostly unchanged, but I’ve combined two posts and edited them slightly.
This proposal points in a slightly different direction than the one @Juminstock made.
1. Fundamental question: the sustainability of dApp Staking (developer rewards)
This is the most fundamental point, but we have to ask: “Do we even need dApp Staking?”
Originally, one of Astar’s differentiators was that it natively supported a mechanism to support developers. At the beginning, I think this helped Astar attract a certain number of dApps.
However, the reality is that it has not produced the results we hoped for—many community members have pointed this out. As I wrote yesterday, developer rewards are not a huge portion of actual inflation, but if the effect is weak, we have to consider tightening that inflation further, or even eliminating it.
2. The legitimacy of staker rewards
Staker rewards are still high. Last year’s tokenomics adjustment lowered APR by a few percentage points, but even so, combined with bonuses it exceeds 17%, which is an extremely high return. That return can directly translate into sell pressure. At current ASTR prices, it amounts to roughly $3.1M per year of potential sell pressure.
This isn’t unique to ASTR, but most altcoins have very thin liquidity, so this kind of sell pressure creates a significant downside risk.
Also, in PoS chains, staking typically entails slashing risk and is compensation for participating in consensus. In Astar, however, the reward is essentially compensation for participation via voting in dApp Staking, and there is very little risk. High APR can be important for increasing TVL, but since TVL is currently trending downward, there isn’t much justification for maintaining the current APR.
That said, lowering APR could cause stakers to exit—and that could itself create additional sell pressure.
3. Transition to Tokenomics 3.0
With the proposed ASTR tokenomics changes from last year, ASTR—which previously had no supply cap—is expected to have a cap. The parameters are not finalized yet, but under the initial plan, inflation would decline roughly as follows:
- Year 0: 4.32%
- Year 1: 3.50%
- Year 2: 2.84%
- Year 5: 1.51%
- Year 10: 0.53%
Since inflation is scheduled to decrease exponentially, dApp Staking will effectively end sooner or later. Therefore, making a fundamental course correction aligned with the tokenomics change is rational.
4. So what do we do?
Given the above, I believe the appropriate direction is to end dApp Staking and move to a different structure.
A. NPoS / DPoS
The simplest option is to move toward a more typical PoS model: stake to validators (collators, in Astar’s case) and earn yield. However, I’m not convinced this is well-suited for Astar.
In this model, the current developer rewards and staker rewards would be allocated to collators, and stakers would receive yield net of collator commissions.
To be honest, this approach isn’t very interesting—and given parachain/Astar characteristics, it may not make much sense. It could look like a forced mechanism created purely to offer yield.
B. A more suitable new model
Because the legitimacy of NPoS/DPoS on Astar seems weak, I’ve considered a structure that may be better aligned.
First, define inflation allocation roughly as follows (parameters are provisional and can be adjusted):
- Treasury: 18%
→ Merge dApp rewards into the treasury and move to direct grants - Collators: 3.2%
→ Given inflation decline and running costs, this might even be increased vs before - Base Staker Rewards: 10%
- Adjustable Staker Rewards: max 40%
→ Reduced from before - Staker Governance Rewards: 28.8%
→ Distribute rewards to those who stake and participate in governance voting
In this pattern, dApp Staking is fully ended and we move to simple staking. The current dApp Staking page could be replaced with a delegation page. It would be even better if it could integrate with Subsquare.
This emphasizes governance participation by reallocating what used to be Bonus Rewards and part of Adjustable Staker Rewards into rewards for governance participants.
Staker Governance Rewards would be calculated periodically (monthly, perhaps). Since Astar currently uses Conviction Voting, the voting power used during that period can be treated as the share ratio for reward distribution. If someone boosts voting power to receive more rewards, their lock period becomes longer—so unless they truly have conviction in ASTR, that behavior isn’t rational.
If we wanted to add more “game elements” to governance, we could consider rewarding voters who chose the ultimately winning option more heavily (or even making it 100:0). But that could distort governance. On the other hand, without any incentive structure, people may vote without thinking. There are trade-offs here and it deserves careful discussion. In any case, once governance has rewards attached, some degree of distortion is inevitable, so if we go this route, we need to design it in a way that minimizes that distortion as much as possible.
If there are no governance votes during a given calculation period, we simply shouldn’t mint those rewards. Since reward ASTR is not minted until distribution timing anyway, there’s no need to burn it. The downside is that if governance doesn’t occur with some frequency, it could further reduce engagement.
As it stands, we still can’t prevent a “stake and forget” behavior. To address this, it might be appropriate to introduce a mechanism where staking rewards are reduced if a user does not participate in governance voting for a certain period, or alternatively, to allocate a larger portion of staking rewards to governance participation rewards.
There is also a risk that delegation becomes the dominant behavior and people stop voting themselves. That said, this may simply mean that those who wouldn’t vote anyway end up delegating.
If we want to add a deterrent to delegation—essentially to encourage direct voting—we could also consider adding a commission to delegation.
Also, under this pattern, UCG would be ended and replaced with direct grants only. Projects applying to ACC would undergo pre-screening and then proceed under governance.