- Astar Tokenomics 2.0 aims to lower inflation, align transaction fees, and introduce a scalable dApp staking system for sustainable growth.
- Collaborative research with external tokenomics experts led to a new dynamic model, targeting an inflation rate around 5.8%.
Introduction: A Fresh Take on Blockchain Economics
Hello to the Astar community and beyond! We’re thrilled to delve into the intricacies of the freshly minted Astar Tokenomics 2.0—a sophisticated financial model designed for Astar’s sustainable development and increased user engagement. Three months of collaboration with external tokenomics specialists have culminated in a nuanced model that we believe will take Astar to the next level.
4/ Congratulations to @AstarNetwork on securing a self-funded parachain slot on Polkadot!
❓What's next for Astar?
— Polkadot (@Polkadot) September 4, 2023
The Quandaries of Current Tokenomics: A Deep Dive into Block Rewards and Fees
Astar’s existing tokenomics is designed around block rewards emitting 253.08 ASTR tokens per block, establishing an annual inflation rate of about 9.5%. Various actors within the network, like collators and the on-chain treasury, receive these rewards. Transaction fees for blocks are calculated differently depending on whether they are native to Substrate or part of the Ethereum ecosystem. The disparity in these fees is one issue our new model aims to correct.
Rent fees apply to actions that create new on-chain storage. They are critical for Astar, which supports both Wasm (ink!) and EVM smart contracts, each with its own fee structure.
Problems to be Solved
- High & Fixed Inflation: Current block rewards remain unchanged irrespective of the network’s usage, leading to inefficiencies.
- Scalable & Inclusive dApp Staking: The fixed nature of the dApp staking reward pool limits scalability and inclusiveness.
- Fee Alignment: Native and Ethereum transaction fees currently lack alignment, leading to inconsistencies.
- Treasury & Collator Rewards: Both the treasury and collator rewards are excessively high and need rationalization.
The New Paradigm: Unveiling Astar Tokenomics 2.0 and Its Approach to Inflation
Unlike the rigid structure we have now, the new model introduces dynamic inflation, which will be recalibrated annually. Based on current metrics, the projected inflation rate would be approximately 5.8%.
The treasury, previously receiving a dynamic allocation of block rewards, will now get a fixed 5% of the annual inflation, simplifying its financial logistics.
The collator share of inflation will decrease to 3.2%. However, they will earn more through transaction fees due to a more equitable fee structure between Substrate native and Ethereum fees.
dApp Staking: The New Frontier for Profitable Stakers
Stakers will enjoy an inflation-adjusted return, calculated against a more attainable ideal Total Value Locked (TVL) of 50%.
The new model introduces a tier system in dApp staking, calibrated based on the ASTR token’s average price, to ensure meaningful rewards for all dApps, both new and existing.
By aligning these various elements in Astar Tokenomics 2.0, we believe we are laying a robust foundation for the network’s future growth and sustainability.