Is our goal for the Cosmos Hub still to attract 67% of the ATOM supply to stake?
If our goal is still 67%, we have overshot that. I capture stats on the 20th of each month, and we have been above our target since July 20, 2019. What this tells me is that even though inflationary staking rewards are at their lowest possible rate, it’s still more than enough to meet our staking goal.
1.4M new ATOMs created each month. Are we paying too much for network security?
Right now we are minting new ATOMs, increasing the supply, and doing that to fund staking-based network security. Around 1.4M new ATOMs are created each month. Why are minting so many? Since the rate of inflationary rewards has bottomed and we’re holding steady at 72% of the supply staking, it makes me think that we could have a smaller rate of staking rewards and still meet our 67% staking target.
Who benefits from excessive security spending?
Validators and stakers get 98% of the inflationary rewards. Who decides how these parameters are changed? Also validators and stakers, and particularly those willing to hold ATOMs the longest. Why would the majority of voting power agree to a smaller rate of rewards? Excessive rewards enable those with the strongest positions to be able to further monopolize their ownership of the network, which makes distribution less likely. So in the short-term this seems to benefit stakers/validators, but in the long run it may hinder broader adoption.
Distribution problems in staking networks
Proof of work chains use real resources that typically have to be paid for by selling a portion of the earned tokens, which ideally leads to a wider distribution of the token. But the supply side of staking networks is different–the participation costs aren’t nearly as great. A well-funded operation can afford to hold their position and compound it. It seems to me that staking networks tend to incentivize monopolies on token distribution.
Currently the Community Pool is allocated 2% of inflationary rewards. What if this rate changed algorithmically? When inflation is at its minimum and staking participation exceeds 67%, more of the inflationary rewards could be directed to the Community Pool. Thoughts about this? Keeping in mind that we may all be biased toward excessive inflation