Hybrid Inflation Model

[Dinonard]

Description

Purpose of this task is to bridge the gap between Tokenomics 1.0 and Tokenomics 2.0.
In order to utilize the newest model, we require fully functioning dApp staking v3.
However, it's possible to take some steps towards lower inflation immediately.

Proposal

Introduce a new pallet, e.g. block-rewards-hybrid which will change how block reward is distributed.
The major differences compared to the current pallet's functionality would be:

1. treasury can receive only fixed inflation, dynamic part is completely removed
2. dApp stakers receive the dynamic part in exactly same way as they do today, only the 'remainder' is not deposited to treasury, it's burned instead

Another strong requirement, unrelated to the new pallet implementation, is to keep dApp rewards & staker rewards exactly the same as they are today - they shouldn't feel this change in respect to how much ASTR/SDN they earn.

Implementation Suggestion

• reuse pallet-block-rewards code, only minor modifications should be needed (this pallet will be deprecated & removed in a few months anyways)
• reducing treasury & collator rewards will have a direct impact on the block reward so it's important to recalculate reward portions of how much rewards goes to each actor
  • These are two possible solutions (there might be others) which can be explored:
  1. Keep block reward the same introduce burn parameter into the new pallet which simply burns portion of the block reward that's not used.
  2. Reduce block reward to the maximum possible amount required, recalculate all reward portions, burn excess inflation if ideal TVL hasn't been reached.

Due to simplicity, I'd suggest to go with the 1st solution.

Resources

Please refer to Astar forum post about Tokenomics 2.0 for more details.