dApp Staking Model: Criticisms of the old model and new proposals

[Manu0x51]

I’ve used NotebookLM to help me synthesize the key points from our recent discussion: [Astar Forum Link].

I did this to ensure the summary is as clear and objective as possible, as I believe a truly open conversation about our dApp model is long overdue, given four years of results.

What are the real issues with our current dApp Staking model?

1. Runaway Inflation: The system has essentially turned into an inflation machine. It’s minting tokens without creating the proportional economic value the network needs to thrive. Simply put, dApp Staking isn’t driving the growth we all expected.
2. The “Free-Loader” Problem: We’re seeing too many “parasitic” projects or half-baked developments. These entities extract economic value—taking ASTR tokens from staking rewards—without giving anything back to the ecosystem in terms of innovation or tangible contributions.
3. A Lack of Leader Projects: Despite having many participants, we’re missing that “flagship” project—a real spearhead capable of leading the network toward true market relevance and adoption.
4. Too Much Optimism, Not Enough Filtering: Initially, we may have been overly optimistic. Our selection filters weren’t rigorous enough, which let low-quality projects in and eventually forced the Community Council to step in with painful delistings.
5. Building on Uncertainty: The current model creates a risky economic dependency. We’re essentially operating on the “hope” that hosted projects will eventually provide value. When that return doesn’t happen, it creates a wave of uncertainty that hurts both our markets and our ecosystem’s stability.
6. The Bottom Line: I still believe the core idea behind dApp Staking is a “gem,” but our current methods have hit a breaking point. We need a 180-degree turn to make this network economically sustainable.

An Analogy to Think About:

Imagine dApp Staking as a massive scholarship program where students keep collecting funds without ever graduating or producing useful research. The school keeps printing money to pay them, but because the actual “knowledge” (economic value) isn’t growing, the entire institution faces financial collapse.

How do we fix the dApp model?

The proposals on the table suggest a total shift in direction: transforming Astar from just a dApp infrastructure into a living, breathing Economic Hub. Here’s the breakdown:

• Becoming an “Economic Financial Hub”: Astar needs to evolve. We should create a “Star Product” dApp that serves as the ecosystem’s centerpiece, hosting both traditional and innovative financial tools in one seamless interface.

• Massive Stablecoin Integration (USDSC): We need to leverage USDSC to capture fresh liquidity from both institutions and everyday users. This would allow for ASTR trading pairs that actually stabilize and attract people to the network.

• Diversifying our Financial Tools: This Hub should offer interconnected services through vaults and liquidity pools, including:

  • Lending and Borrowing.

  • Savings and Farming tools.

  • Rapid Swaps and Commodity markets.

  • Third-party Asset Management (AUM).

• A Radical Reform of dApp Staking: Instead of an isolated system that just pumps out inflation, dApp Staking would become a core part of the Hub. Crucially, builders would no longer be rewarded with just new ASTR tokens, but with USDSC liquidity generated from real Hub revenue (like lending fees).

• A Hybrid Governance Model: We’re looking at a two-pronged approach:

  • Centralized: For quick technical calls, financial alliances, and yield strategies.

  • Decentralized: For community voting, managing collective funds, and implementing tech like Account Abstraction.

• “Buy-back and Burn” Mechanism: A major proposal involves using 70% of the Hub’s revenue (the portion not going to staking) to buy back and burn ASTR tokens. This creates the deflationary pressure we need to support the token’s value.

• Smart Contract Automation: All of this—capital distribution and governance—should be handled by Solidity smart contracts to ensure transparency and automatic monthly triggers based on actual earnings.

An Analogy to Think About:

We’re trying to move Astar from being a “small town that prints its own money” to pay for public works (causing inflation) to a “Financial Holding Company” that manages profitable businesses. In this new world, the public works (dApp projects) are paid for by the holding company’s actual profits, keeping the local currency strong and in high demand.

How would “Lending” revenue support our projects?

Lending revenue would become the financial engine for hosted projects. By reinvesting direct liquidity, we move away from an inflationary system and toward one based on real-world profits.

• Revenue Allocation: The proposal suggests taking 30% of the monthly income, specifically from lending and injecting it into dApp Staking. The other 70% stays in the Hub to keep things running and support the ASTR token through buy-backs.

• The Power of Stablecoins (USDSC): Unlike the current model, support would be paid out in USDSC. This is a game-changer because it gives builders stable, real liquidity to fund their work while protecting the ASTR token from constant sell pressure.

• Fair Distribution: Imagine $1 million in revenue; $300,000 would be split among, say, 50 projects. This could be an equal split (giving everyone $6,000) or based on performance metrics like TVL (Total Value Locked) or community votes.

• Transparency and Resilience: Because this is automated via smart contracts, it’s transparent and reliable. This makes the entire ecosystem more resilient; the survival of a project no longer depends on “hope,” but on a steady cash flow generated by the Hub’s financial activity.

An Analogy to Think About:

Think of it like a massive shopping mall (the Economic Hub). The mall decides to take 30% of the rent paid by established shops (the lending revenue) to directly fund innovative startups that set up kiosks inside (the hosted projects). Instead of giving these startups “store coupons” that lose value (ASTR inflation), the mall pays them in cold, hard cash (USDSC). This gives them stability and makes the mall a magnet for new talent.

[sanyun]

Yes, I personally agree with your idea, especially dapps, many dapps have stopped developing, even Twitter accounts have stopped updating, but they are still enjoying the benefits of the astr ecosystem, which is vampire behavior, the governance team has said to clean up 5-7 per month, but according to the current situation, the progress is slow.

In the new year, we need to act quickly, and what is known so far is that there is a burndrop activity and a new DEX project, so before that, shouldn’t we quickly clean up useless dapps?

As an additional question, when will the measures to fix the maximum supply be implemented?

[you425]

Thanks for putting this together. Since your summary covers the broader scope of “Astar’s Financial Hub,” it makes sense to keep this thread more focused on dApp Staking (which is why I suggested splitting the discussion into separate threads).

As a baseline, dApp Staking currently accounts for the following portions of ASTR inflation:

• dApp Rewards: max 13%
• Base Staker Rewards: 10%
• Adjustable Staker Rewards: max 55%
• Bonus Staker Rewards: 13.8%

At the moment, the discussion is largely centered on developer rewards, but this is not a particularly large share of total inflation. The 13% figure assumes that all tier slots are filled; in reality, only 29 out of 60 slots are currently being used:

• Tier 1: 2/3
• Tier 2: 3/12
• Tier 3: 10/18
• Tier 4: 14/27

Because reward scaling by “level within a tier” makes the calculation more complex, I excluded levels and did a simplified estimate. Under that assumption, the actual emissions appear to be roughly ~50% of the 13% allocation, i.e., around 6–7%. Also, since Tier 1— which accounts for a large share—includes Astar Core Contributors and the Community Treasury, it is less likely to translate directly into sell pressure (at least the Community Treasury would not sell this directly).

In other words, if the concern is that “inflation from dApp Staking is diluting ASTR’s value,” then discussing only developer rewards is not sufficient.

In practice, staker rewards make up 78.8% of inflation at maximum—this assumes the dApp Staking staking ratio reaches 50%. The actual staking ratio is around 18.7%, so Adjustable Staker Rewards would be roughly ~17%. Recalculating based on actual emissions (again, roughly), developer rewards are about ~10% of inflation, while staker rewards are about ~60%.

These are rough numbers and not perfectly precise, but they should capture the overall inflation picture. And as the numbers show, focusing only on the developer side has limited impact—we need to think about more fundamental solutions.

[you425]

@sanyun

As an additional question, when will the measures to fix the maximum supply be implemented?

The exact schedule hasn’t been announced yet, but during the November community call, they mentioned “early 2026.”

[Marroz]

Thanks for the data and graphs – very clear and useful. The pie chart showing current dApp rewards at 7%, tiers occupied only at 44%, and especially the breakdown shifting most of the weight to stakers (60%) provide important context.I understand the suggestion to focus this thread only on dApp staking, but this post was explicitly created as a summary of the previous thread opened by Vangardem (“Astar: From dApp Staking to Astar’s Financial Hub”). The title alone says it all: the transition from dApp staking to the Financial Hub has been a single, broad discussion from the start. Splitting it now, with all the interconnected aspects – inflation, incentives, TVL, burn, real dApp usage – would unnecessarily fragment the conversation, putting more emphasis on form than substance. There are too many linked issues: the entire forum wouldn’t be enough to open a separate thread for each one.That said, if you prefer to split it, go ahead and do whatever you want. You decide the topics to tackle and we’ll analyze them point by point if that makes you feel better.The numbers you shared confirm what you yourself said: a radical change is needed, from the ground up. It’s true, the developer share is lower than expected and part of Tier 1 (Core/Treasury) doesn’t create direct sell pressure. But with ASTR’s current market cap and volumes, every single percentage point of inflation is felt hard – and I’ve already said plenty about this in other threads that are now closed; I’ll gladly bring it up again as soon as a dedicated thread opens, because certain points keep getting ignored or downplayed.The real problem isn’t just the amount of tokens minted: it’s that most of these emissions – both developer and especially staker – generate no proportional value. Low TVL, low fees, little real dApp growth. Tokens coming out without creating any concrete return on ASTR.A concrete example is the end-of-period bonus reward (that significant part of staker inflation): today it’s only claimed by those who don’t move their tokens the whole time, further rewarding passive and immobile staking. I’ve talked about it before, but if you want a separate thread, go ahead. My idea: instead of giving it automatically to those who stay still, tie it to active governance participation – those who vote on proposals get the bonus, otherwise it goes straight to Treasury or gets burned. At least that way we start addressing the governance issue, which has never been seriously tackled in years.And this is exactly the vicious circle I already highlighted in the previous thread: passive staking rewards are too high. A top protocol like Aave on Astar would barely get used – everyone would rather leave tokens staked and earn more doing nothing. Result? No real activity in the ecosystem, no organic cash flow, no strong reason to hold ASTR long-term.You can’t possibly take one single problem and try to solve it in isolation from the others. Astar is like a complex machine made of interdependent gears: each component, examined alone, might seem functional and even justified, but if it’s not synchronized with the ones next to it, the whole mechanism doesn’t turn properly. In the end the machine stays still or spins uselessly. It’s precisely this lack of synchronization that’s kept us stuck for years.The key point is that this topic can’t be split: dApp staking and Financial Hub have to run in parallel. If we significantly lower staker rewards today without anything in return, we simply give people fewer reasons to hold ASTR. dApp staking with its vicious circle is still Astar’s core business – it’s the main reason people hold the token. We can’t dismantle it without having a ready alternative system that provides real, active incentives.The Astar Economic Hub could (and should) be exactly that alternative system: a place where we not only build, but above all actively use. The goal has to be clear: rewards for those using the Hub or the dApps built on it – lending, farming, swaps, everything that generates real revenue – must necessarily be more attractive than passive staking. Otherwise the incentive to move tokens will never exist and the discussion will keep stalling, as it’s happened too many times already.

[you425]

If we’re going to discuss what the title actually says, then all the more reason we should stay focused on dApp Staking, shouldn’t we? The title is “dApp Staking Model: Criticisms of the old model and new proposals.” The focus is dApp Staking, which is why we moved this to a new thread. The first post includes some non-dApp-Staking elements because it was a summary of the parent thread and they are still related, so I don’t think we need to eliminate them entirely—but to keep the discussion coherent, we should narrow the scope to a reasonable range. I’m not asking for overly granular splitting.

Also, even before we talk about a Financial Hub, if we change the structure of dApp Staking, that will inevitably change the Hub discussion as well. If anything, I believe we should address dApp Staking first.

Putting that aside, we need to move forward in a concrete and constructive way.

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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.

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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.

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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.

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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. This aligns with the intent of what @Marroz commented, and it’s also something I’ve been thinking about for some time.

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.

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.

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This is meant as a proposal to temperature-check what people think. Completely different ideas are welcome, and this can also be refined further. There will also be implementation challenges.

[you425]

Come to think of it, I forgot to include this in the proposal, but as things stand, we can’t prevent a “stake and forget” behavior. To address this, it might be appropriate to introduce a mechanism where staking rewards decrease if a user does not participate in governance voting for a certain period, or alternatively, to allocate a larger share of staking rewards to governance participation rewards.

There is also the possibility that delegation becomes the dominant behavior, and users stop voting themselves. That said, this may simply mean that people who wouldn’t vote anyway end up delegating.
If we want to introduce a deterrent to excessive delegation—essentially encouraging people to vote themselves—we could consider adding a commission to delegation.

[pitcoin777]

I fully agree with the direction outlined. This discussion is not new — similar ideas were already explored years ago within Astar SpaceLabs, particularly around whether the ecosystem should adopt a more permissive or a more restrictive approach to dApp participation.

The original vision, strongly associated by Sota, was that dApp Staking would function as a form of “dApp Darwinism.” In this model, the community and stakers would organically select the winners. In practice, this meant a fully permissionless system, where value recognition was driven entirely by stake delegation:

-Valuable dApps would naturally attract stake and rewards.
-Non-valuable dApps would receive little or no stake and fade out.
-The control, in theory, was 100% in the hands of the community.

Where this model broke down**

While elegant in theory, this fully permissive approach introduced several structural vulnerabilities:

• Some dApps actively lured stakers with unrealistic or misleading promises, distorting rational capital allocation (e.g. Neurolanche and many others).

• The Astar Foundation was implicitly placed in a position of endorsement, even when dApps later acted in ways that harmed the community — intentionally or not (e.g. Starlay-related issues, NFT rugs, Neurolanche, among others).

This created a reputational and governance risk that a purely permissionless model did not sufficiently mitigate.

What is fundamentally wrong with dApp Staking today?

Beyond governance concerns, I believe there is a deeper economic and incentive misalignment.

At present, there is no clear or compelling reason for an established, high-quality dApp to join dApp Staking:

• Rewards are too small to be economically meaningful, especially under current market conditions.

• The Astar is less engaged, which limits organic user acquisition.

• Astar does not currently offer a strong active user base that would justify the operational cost for a mature dApp — for example, one already successful on chains like Avalanche — to deploy on Astar, bootstrap a new community, manage support, marketing, liquidity, and governance.

From a rational DeFi perspective, the cost-benefit equation simply doesn’t close.

A more realistic path forward

Given these constraints, a more effective approach would be to pivot away from dApp Staking as a primary growth lever and instead adopt a grant-based strategy focused on top-tier projects.

• A curated grants program would allow Astar to:
• Allocate capital intentionally, not passively.
• Attract teams with proven traction and product-market fit.
• Set clear milestones, accountability, and KPIs.
• Reduce reputational risk.
• Deploy treasury resources where they generate the highest long-term ecosystem value.

In short, moving from permissionless hope to intentional capital allocation may be necessary for the next phase of Astar’s ecosystem growth.

[Gaius_sama]

Although I am interested in the broader idea of transforming Astar into a financial hub, this is a separate topic from dApp Staking and should be discussed as such.

After reading this thread and the previous one, I still see some confusion around how large and complex dApp Staking actually is. From my perspective, the main concern being discussed is the inflation allocated to dApp developer rewards. While this does contribute to overall inflation, as outlined by @you425, it represents only a small portion of the total issuance and distribution within the dApp Staking system.

To give some context, and these numbers are rough estimates based on extrapolations:

• Total yearly issuance for dApp Staking is around 490M ASTR
  • Approximately 30M ASTR, or about 6%, goes to dApp rewards
  • Roughly 460M ASTR goes to stakers, including bonus rewards

Because of this, proposals that drastically redesign or replace dApp Staking from scratch would have a relatively small impact on inflation coming from dApp rewards, while having a very large impact on stakers. This balance needs to be carefully considered in any discussion around a new model.

So far, I do not see discussions that fully take into account both sides of dApp Staking: dApp rewards and stakers. These two elements are deeply interconnected. Any change to one directly impacts the other. I do not expect regular stakers to accept a model where their staking rewards are significantly reduced or stopped altogether if dApp Staking were to be terminated.

Regarding the idea of integrating USDSC into dApp Staking, while it may be interesting to explore within the broader vision of a financial hub, it should not be considered as part of dApp Staking itself. dApp Staking is a core mechanism of Astar L1. USDSC is not native to Astar L1 and is a third party asset (Startale) from another ecosystem (Ethereum/Soneium). Integrating a non native token into such a core mechanism introduces significant risk.

What happens if USDSC encounters technical or business issues after becoming a core element of dApp Staking? Would we then need to redesign dApp Staking once again? This is not a sustainable approach.

For these reasons, USDSC should be excluded from dApp Staking discussions. Those discussions should remain centered on the native token of Astar L1, the ASTR token.

On the foundation side, we are actively working on a new tokenomics proposal, going beyond Tokenomics 3.0, which includes a revamp of dApp Staking. We are aligned with many of the concerns and issues raised in this thread. We expect to share our proposal for dApp Staking in the coming weeks.

In the meantime, you are welcome to raise any additional concerns related to dApp Staking and tokenomics in the following thread:

Astar Foundation Forward: Tokenomics & dApp Staking discussion

Hey Astar community, As part of our ongoing Astar Foundation Forward initiative, we want to open an honest conversation about two topics that directly impact the future of our ecosystem: Tokenomics and dApp Staking. We’ve been listening to your feedback, reviewing data, and having internal discussions. Now it’s time to bring this conversation to you, because the decisions we make here will shape Astar’s path forward, and we believe you should be part of it. I. Tokenomics 3.0: We’re Listening F…

Finally, to come back to the idea of transforming Astar into an economic hub, this is indeed aligned with one of the directions we want to set for Astar in 2026. The goal is to launch financial products that generate real revenue, which can then flow back into ASTR value through buybacks or other value preserving mechanisms. This is something we will also reveal this month with the foundation of Astar FI.

I look forward to continuing this discussion.

[Juminstock]

@you425

If we’re going to discuss what the title actually says, then all the more reason we should stay focused on dApp Staking, shouldn’t we? The title is “dApp Staking Model: Criticisms of the old model and new proposals.” The focus is dApp Staking, which is why we moved this to a new thread.

This was precisely the reason why this new thread was opened, so I agree that we should avoid further diverting the conversation.

@you425 @Manu0x51, that is why, just as G’ mentioned above, you should join the conversation focused on dApp Staking in this thread.

Astar Foundation Forward: Tokenomics & dApp Staking discussion

Hey Astar community, As part of our ongoing Astar Foundation Forward initiative, we want to open an honest conversation about two topics that directly impact the future of our ecosystem: Tokenomics and dApp Staking. We’ve been listening to your feedback, reviewing data, and having internal discussions. Now it’s time to bring this conversation to you, because the decisions we make here will shape Astar’s path forward, and we believe you should be part of it. I. Tokenomics 3.0: We’re Listening F…

I find it extremely interesting to continue discussing this, and I will take it to the thread linked above.

[you425]

Thank you.
Let’s move the discussion about dApp Staking to that thread.

[ERC20s]

@Gaius_sama

Total yearly issuance for dApp Staking is around 490M ASTR

• Approximately 30M ASTR, or about 6%, goes to dApp rewards
• Roughly 460M ASTR goes to stakers, including bonus rewards

Almost half of that 30m goes to core and treasury..

So we’re talking about 20m ASTR going towards 69 dapps..
Which means the average dapp earning $263 worth of ASTR a month..

Probably should of been having these discussions when the prices were 10x higher..

I vote for this moving forward:

@ERC20s

What I think would work is if we mint 2% ASTR a year and use it to buy back ETH..
Then after 35 years we can do a “100% ASTR buyback with ETH”..

Can do 3% to help pay for costs.. But thinking about the long-term future is important..