Reconsidering Astar's Token Economics

Economics
1

Our technical and ecosystem development is unstoppable. Our team has been working hard to make a lot of progress. One of the most important tasks our leadership team is working on is token economics.

We are aware that some community members say that our inflation is high. Though we have dApp staking that incentivizes developers to build on Astar, the inflation rate can still be high. Through our token economics research, we will find a good balance. Another thing we want to check is the proper gas fee. Since our gas fee is dramatically cheap, it is easier for users to use Astar Network, but we are not able to burn tokens to make a deflation.

To make the long story short, there are mainly two objectives.

  1. Identify the best inflation rate.
  2. Identify the proper gas fee per transaction.

And here is the plan for the upcoming three months. We are going to work with an external specialist.

Month 1:

  • Current model research
  • Benchmark report of the current model
  • Issue mapping
  • Beginning of mathematical specification

Month 2:

  • Token model featuring:
    — Inflation model audit to fulfill Astar Economy needs
    — Design and audit of the tier model parameters for dApps staking V3

Month 3:

  • Validation of the fee model, inflation model, and tier model parameters for dApps staking through cadCAD
  • Digital clone of inflation, fee, and staking systems

In Q3, we plan to update our token economics, and I guess Astar will be more deflationary so that the network will be more attractive to investors.

This is a rough plan and estimate, and not all details are covered.
We will keep our community updated as we make progress and all results will be presented publicly

32 Likes
6

Sounds good! By incentivizing users to stake their ASTR tokens via multiple dApps, the platform can attract more active participants and reduce the risk of centralization.

Additionally, by evolving the ASTR inflation rate, the platform can adapt to changing market conditions and maintain a healthy token economy. By adjusting the inflation rate, the platform can balance the needs of the community and the token economy, and avoid inflationary pressures that can dilute the value of existing tokens.

Overall, motivating users for dApp staking and evolving the ASTR inflation rate are key strategies in building a strong and sustainable blockchain ecosystem. By providing attractive incentives, balancing token supply and demand, and promoting community engagement, the platform can create a positive feedback loop that benefits both users and the overall token economy.

Peace out, thank you for the proposal @sota :v:

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9

Very nice step to consider Tokenomic for Astar. However can we have finite supply once we hit 10B emission? (it is in another 3 to 4 years I think).

From my PoV as a common retailer , we will have a “minimum target to hold” in the future. As in inflation mode, it will be very hard to predict how much that common retailer need to hold. Not a lot of Astar holders understand the concept of Astar network itself, most of it only knew that Astar had a partnership with big companies from Japan.

And also the new tokenomics plan need to increase competitive environment between dapps builders, as for now I see that a lot builders sitting comfortably and only did few things because at least they got basic income from staking reward. Very few that still did a heavy community engagement like Astar Degens.

And since this WASM environment already launched and a lot of dapps will came. It is very fair for me to do a relisting dapps in staking area. So all veteran members of the community and new members can give better judgement. And all builders will remember to give the very best to Astar community.

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I would like to contribute as well my ideas, I am no expert but this has been my observation for a while in crypto.

Why don’t we apply what is already out there in the market? The Burn Mechanism (like BNB is doing and Pancakeswap) and Reward Halving (like BTC and LTC is doing, TAO which they will do, and etc).

  1. Burn Mechanism with a pre-determined Max Supply i.e from current max supply to 2.1B or 1B then we stop the burn. Should include when and how often, and target years of completion.

  2. Reward Halving, it lessens emission for all stakers yet beneficial for all.

This duo features, would help create additional Astar store of value and appeal the masses to hold.

I want to see Astar side by side with ETH and BTC :grin: and I know that will be the goal of Team Astar and whole Japan. I see team Astar so highly and I know whatever the challenge they can make it done. ~cheers Sota-san :beers:

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14

It is fascinating to see how the Astar team is working hard to optimize their token economics and create a more sustainable ecosystem. The plan to work with an external specialist to identify the best inflation rate and the proper gas fee per transaction is a wise move that shows the team’s commitment to finding the right balance.

I have often explored the idea of creating a self-funding DAO, and it is not impossible to achieve using Astar’s ecosystem. A DAO that can fund itself with strategies derived from A.I. data-sets would be a game-changer, as it would eliminate the need for external funding and allow the project to be self-sustaining. However, creating a self-funding DAO requires a lot of work and careful planning.

To achieve this, I think a team will need to come up with a robust token economics model that incentivizes users to hold and use the ASTAR token. The team’s plan to update their token economics, make the network more deflationary, and attractive to investors is a step in the right direction. A more deflationary token will create scarcity, making the token more valuable, and incentivizing users to hold onto it.

The use of cadCAD to validate the fee model, inflation model, and tier model parameters for dApps staking is also an excellent move. cadCAD is a powerful tool for simulating complex systems, and it will allow the team to test their models before implementing them on the live network. This will help to reduce the risk of errors and ensure that the models are working correctly.

Overall, it is clear that the Astar team is dedicated to creating a sustainable ecosystem, and their efforts to optimize their token economics are a testament to this. While creating a self-funding DAO is not easy, the team’s commitment and hard work make it seem possible. I look forward to working on these results with their research and the updates to the Astar token economics in the coming months.

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15

Wonderful motives. For me, I feel that DApp nominators should also be rewarded with dApps tokens on which they staked.

This would create a collective involvement of nominators in electing projects with great prospects so as to benefit from their eventual success.

Also, developers will be encouraged to build competitive projects with aim of creating real-time value for their nominators and investors.

2 Likes
16

Thanks for sharing the update on the Astar Network’s token economics review. It’s good to see that the team is taking a thoughtful and data-driven approach to finding the right balance between inflation and deflation. I also think it’s a good idea to review the dApp staking rewards for developers, as it seems like some projects are receiving high rewards without necessarily using them to further the development of their applications on the platform. Perhaps it would be better to allocate these rewards only to the top projects that are actively contributing to the development of the platform and showing continued progress.

At the same time, I think it’s important to be careful when making changes to the token economics, as any adjustments could have unintended consequences.

Overall, I appreciate the team’s efforts to ensure the long-term sustainability and success of the Astar Network.

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20

Reward halving is a good idea. E.g, the inflation is halved in every X years.

Hence, stakers, validators, dApp rewards are getting halved. Not that difficult to implement.

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21

IMHO, a solution like raise the gas fee is not adapted.

  1. that not impact classic users (claim 1 time /day on dappstaking instead of 2 or , 1 a week instead of 3). There’s always possibilities to reduce cost and optimize APR with reasonnable fees when you’re an APY hunter. Also with this reason, THAT will NOT RAISE the traffic on network, and i’m prety sure it’s gonna reduce extrinsics.

2)that not impact investors. They don’t care about fees, they care about profit. The investment will not grow because a blockchain got high fees. It’s because there’s usecases and dapp used with an high traffic on network. You can get 100 dapp more with 100 tx/day each, it’s not the same that got 3 killer/dapps with 10k/tx daily.
Investors watch fees burned because it’s a great indicator, but that doesn’t mean the token will moon. It significate there’s a trafic.
And with the strategy of raise fees, we just artificially raise the traffic impact (always low) on the token. Daily activity will be the same (or lower than i show in point 1) but $fees/daily could probably be higher.

  1. it’s contradictory with all in web 3 at the moment. Everyone search efficiency and low cost.
    That’ll not seduce devs to go on a project which voluntary raise fees (New users too).it would be bad publicity.
    When i use a blockchain i want low fees to multiplicate opportunities in differents dapps.

Thanks for reading me, all this post is written in respect of all team members. I just want to expose my opinion.

I prefer imagine a short term futur with strong dapps, used by an incredible numbers of users, seduced by low fees and scalability of Astar.

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25

I think this discussion about Tokenomics always ends up being guided by ideological aspects.

Hiring an expert for this review is a way to frame this discussion outside of that.

But I think that these adjustments (to establish a good relationship between issuance mechanisms, incentives, fees and burns) actually need a scheduled periodicity.

After all, we are in a very recent market and all movements are extremely sudden. And to continue sailing safely in these seas we need a good navigator.

A specialist like that, in my view, should not just carry out sporadic work, which is probably only noticed as necessary at a time when we already have a real problem ahead of us.

Therefore, I suggest that after making these adjustments, some form of periodic fine-tuning is established. Following the pattern of other industries. Which is the quarterly review.

In this way, we have established an operational framework that the traditional market already adopts and thus we can also be better understood by large corporations and governments, which also establish this same criterion.

If this quarterly review seems too much for Astar (due to the likely development demands it might generate), I think at the very least we should think about it each year.

But as Astar operates in the crypto market, I think that one year is like ten in other industries and we will certainly have problems generated by this speed to solve.

In the not too distant future we can think of an on the fly solution, like those adopted by airlines to adjust the price of their seats.

With Artificial Intelligence and big data we can somehow make this systemic. And in my view that would be the next step.

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Hello everyone,

we’d like to update the progress with the external team so far.

Month 1 has been completed. We’ve received a report containing systematized information about our tokenomics, and issues with it. We will share this report, in a more digestive format, later when we’ll have a solution, since that is better for the network as a whole.

Month 2 is underway. Fee model changes have been proposed and we are discussing and analyzing it within the team. Staking rewards, collator rewards, dApp rewards and inflation are all being (re)modeled and we’ll also be discussing those very soon.

Both the external team and Astar core team are working hard and closely to get this done!
As proposed solutions becomes more mature, we will share them here.

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29

The token inflation is still too high, considering the current burn rate, the inflation rate should be controlled at most 3% to secure all users’ profit and further willingness to stake more ASTAR.

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Why we can’t implemente the same mecanism that Injective are doing? Burn a % of Astar protocols fees that can be trade for Astr tokens for arbitrage opportunity in an auction. Exemplo: protocols like arthswap, Astrid dao, starlay finance made 10k Usdt fees in one week. Astr Holders in an auction can trade his Astr tokens that has a 950 Usdt value for that 10k Usdt. Astr tokens are burn and the Holders receive this 10k Usdt that can be used to buy more Astr and participate in another action. This would bust Astr utility in that same way Inj tokens are skyrocketing. Made ASTR deflacionary and give more utillity.

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I have realized that when it comes to token economics, we actually have 2 topics, gas fee, and inflation rate in this channel. Let me close this channel and make 2 different posts so that we can discuss more efficiently.

Please post the inflation topic here

I will make another post about the gas fee tomorrow.

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34

well it goes hand in hand.

If you are considering an ETH type model, it controls inflation by burning more as the network is used more.

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My only concern is that the burn mechanism might contribute to $ASTR being called a security.

1 Like