RFC: Altair Block Rewards Activation and Treasury Burning Proposal

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Short Summary: Activate Block Rewards on Altair and burn part of Altair Treasury

High-level objective: This proposal is aimed to facilitate the future integration for Developers and protect Altair tokenomics from additional dilution of the token supply

Background

Based on this message (Upcoming Runtime Upgrades on Centrifuge 1019 & Altair 1027) and in accordance with this the Block Rewards and Collator cycle has been successfully implemented, but not activated yet.

In order to mirror (with Centrifuge) all on-chain changes and facilitate future testing and implementation i would like to propose Activate Block Rewards on Altair chain with the same parameters as was described here CP6: Block rewards and Collator Cycle.

This means that Block Rewards on Altair will mint, if this proposal passes, an additional 3% (annual) of new tokens into Altair’s treasury.

On Centrifuge, the Treasury was never funded and it currently contains only 68 CFG. On Altair, we have a different situation and the treasury already contains 94.3234 M AIR. In my opinion, the additional minting of tokens will only worsen the tokenomics and the value of the token.

Calculation:

  • Total Issuance 477,091,000 AIR
  • Altair Treasury: 94,323,400 AIR
  • Inflation 3% = 14,312,730 AIR
  • Block rewards = Annual Inflation/Total blocks produced in 1 year = ( 14,312,730 AIR/ Year) / (2,628,000 blocks/year) ≈ 5.4462 AIR/block
  • Daily rewards minted: 39,212 AIR
  • Collators rewards (annual): 12,000 AIR * 10 collators * 12 months = 1,440,000 AIR

To avoid any additional diluting of Altair token supply, therefore, I propose to Altair token holders the following:

Change or improvement:

  • Activate Block Rewards on the Altair chain ( 3% of annual Total Supply )

  • Burn:

  • 15,752,730 AIR - the equivalent of an annual minting of tokens (including collator rewards) with Block Rewards

  • 21,833,429 AIR tokens. - the equivalent of the amount that modlcb/bridg holds.

Total Burn: 37,586,159 AIR tokens

If this proposal passes the amount in Treasury will be reduced to XX (Balances → set.Balance → Treasury Wallet address → newFree 78,570,757)

Benefits for Altair

Based on the above, I believe that this proposal is in the interest of the Altair Community for several reasons:

  1. Activating Block Rewards with the same parameters will facilitate any future integrations
  2. The burning of a portion of Altair Treasury will keep the tokenomics unchanged with activating of Block Rewards.

This will ensure that the total supply of AIR will not increase over the course of the first year.

This proposal could be revisited in the future by Altair Community.

The RFC will be open for 7 days.

Looking forward to any feedback, suggestion, improvement or/and any concerns that you might have with this proposal.

Next steps

If there is support for this proposal, the next step will be to create an on-chain proposal.

If you have any questions or comments, please feel free to reply to this post.

13 Likes

Thanks for putting this together @ImdioR. Given the very high initial supply for a Kusama parachain a token burn to stabilize the supply is highly needed.

I would like to hear the feedback from our Altair collators on this RFC @TheMarcus @pmensik @cardinate @Ryabina @Validatrium @The_Phunky_One_Lucky @n1trog3n @pathrock @Su-Staker.Space @shez

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PathrockNetwork definitely agrees and supports the proposal.

The benefits described burning tokens to stabilize the supply makes a lot of sense.

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StakeCraft supports this proposal.
We agree with the economic component of the vote. Everything is clear and logically written

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Hello @ImdioR, hello @Tjure07,

Thanks for the proposal, which I fully support.

Supply and demand determine the price, and if the Altair treasury already contains ~94M AIR tokens, it makes sense that we introduce the proposed token burn mechanism to reduce the supply and stabilize and increase the value of the AIR token.

Optionally, we could also consider introducing community staking for the collators so that more tokens are bonded.

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validatrium.com supports this proposal.
We agree and everything is clear for us too

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The proposal makes sense to us (Good KarMa Capital).

But seeing as the treasury has so much AIR right now (about 20% of total supply), we wonder if it makes sense to burn even more…?? Unless the council has plans for the AIR in the treasury, it seems it will sit idle and not serve the project or community in an effective way. Perhaps burning more at the start and then letting the 3% annual emissions help fund the treasury over time?

Just a thought.

Hey, Ivan.

Just getting around to reading and responding now, but the Lucky Friday team certainly approves as well :four_leaf_clover:

I do agree with everyone else that the burn to offset the inflation is a nice touch to stave off the dilution of the AIR token supply.

I will be sure to let the team know and look forward to voting on-chain to show our support as well!

Gratefully,

Ryan / Phunky

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Thanks for your comment Matthew but maybe this is something which could be discussed after this proposal with the defined parameters has been implemented and a basic burn of the block rewards takes place.

Do you have an idea for a burning ratio (e.g a one time burn)?

Oh. My bad. I thought RFC stood for “Request For Comment.”

I was just giving my thoughts on the proposal by ImdioR above.

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Hi TheMarcus

You are not wrong. This is RFC and anyone could comment this and propose feedback, opinion or thoughts!
Can you provide some information (numbers) and explain them?
thank you!

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The reason why i suggested burning 1 year of block rewards minting is this:

  1. The Altair Treasury will not be funded immediately and will take some time
  2. In order to not ask for burning small amounts each time the proposed numbers correspond of 1 year of BR which gives to all time and the possibility of understanding how this will impact the Altair community and in case we always can burn more if needed.

So @TheMarcus please comment on, and provide some more info about your suggestion here or in a separate RFC (if this is related to AIR burning we can always adjust this proposal because now this is RFC - Request for Comments).

Thank you in advance.

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I think this proposal is fine, and as you said we can always revisit burning more in the future. I was just thinking that with so much AIR in the treasury sitting idle, perhaps it might make sense to burn even more for price support and rely on future emissions to build the treasury’s holdings back up.

But I don’t have any math to support why this would be better. It was really an off-the-cuff comment.

Of course, Matthew! Everyone can comment on this RFC and I second your thought of an additional token burn. Imo this could be discussed after these basic changes took place

Good day here!
Looks like this topic was forgotten.
In addition to what was written above, I would like to add additional tokens that should be burned in my opinion:

This is a CFG module bridge account that received AIR tokens in automatically during the airdrop distribution in July 2021.
Right now the wallet balance holds 21,833,429 AIR tokens.
These tokens can`t be moved nor used, so makes sense to burn them, imho.
Any objections?

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Does this mean, these tokens are stuck and no one has access to them?

If so I totally agree to burn them because basically they are worthless and artificially keep up the total supply

Yeah, I think so.

I guess @WilliamFreude can enlighten us about the access that Bridge account has.
Also would be great to hear the timeline for when the next RU will happen on Altair.

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If they’re stuck, let’s burn em! :fire:

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Thank you for your feedback.
Just added in the RFC the proposal to burn tokens from the bridge account.

Yes, these tokens are stuck because they belong to a keyless module account which can only be “controlled” via Governance.

+1 for burning them

1 Like