Community Call to Action - Deliberation about token inflation

I was talking about my family and friends as far as investing only. For sure the tech is amazing. I was a programmer for over 20 years so I can appreciate the tech.

I ask my brother to buy 50k of ICP and lock it for 8 years. He would receive zero rewards or anything. He said no. Can you help me to convince him? I am kidding for fun of course. LOL.

You told me it was fair for seed investors because they were early and we need to respect that. OK, agree

I bought ICP during 2021 with the promise of 20-25% rewards. I am at big lost, while financing lots of dev for a year. How is this fair, like for the seed, to remove my rewards and do anything to the seeds? I was very early too? I bought some at 300$ on June 2021. That show you how strong was my belief and my support to IC. Why only us, the early retail at lost would have to take all the lost and the punishment?

I think we need to be creative and burn ICP, not being punitive.

Taking 25% of a market place transaction fee (not on the nft price itself) can be very beneficial for everyone if the ICP price goes up by 50%. So no one loose anything, neither the dev, neither investors.

If nobody never pay anything, this protocol, as good as it can be, will die. No business or organization can survive with no fee, no income. ETH has huge fees and is a success.

The one that are making money with the network should pay. As first and as an example, these marketplace are they only one making money right now on their fees. I do not think scooping a small cut on their profit would kill the dev.

If IC is used only because it is free, we have a bigger problem, much bigger.

If new investors do not come in because they have no incentive at all. No more locking in the NNS. Everyone want to sell because of all this… For sure the ICP price will keep going down, and fast too. Who will finance the DEV then?

What would be the plan B if that does not work and make the situation much worst?

Can we take that chance?


Hi @Kyle_Langham ,

Thanks for joining in on the fun. I hope your appearance in this thread helps to uncover the qualm’s some governance holders have had with your recent takes. Let me provide the disclaimer - I’m extremely grateful for the value you have poured into ICP both with/without DFINITY. Please continue to do what you do.

I’ve had a chance to listen to your new podcast, and I agree with most of your take (Bob is a builder, nice lol). To surmise for the broader community:

“The governance participants are not the ones to grow the ecosystem. Governance participants need to be focused on how you incentivize those token stakeholders to grow the ecosystem such that governance participants benefit from it. Governance participants can capture all the value from the product, and token stake holders are the ones who create the value.”

99% agree with your take and believe this is a material problem with the current structure of how rewards are allocated.

For the broader community to think on – How would you feel if your Governance rewards are directly attributable to the growth of developers?

Let’s dive in. Imagine a future state #IC where a portion (Small? Large? All?) of rewards are allocated to developer projects building on the #IC. Imagine a rewards system in which we as a community hold a vote (With the aid of the NNS voting system) to allocate a portion of our rewards into developer projects collectively. (Or not? Should each party individually choose?) Lets imagine our rewards are allocated into Distrikt, and it goes on to become the next billion user social media platform. Is it not they who will ultimately drive the value creation for the underlying?

@Kyle_Langham – I’m not totally sure how this idea could play out, but I am fascinated. In this hypothetical, How could we prevent IC token holders from acting merely as a dilutive instrument to drive the value for developers? This would imply the cycle computation “burn” for their projects would need to be net beneficial to governance holders in the long run (How would one go about mathematically extrapolating)

Perhaps this leads us more into @varon1980’s thoughts on Twitter. Should our rewards be dependent on the cycle burn rate developers are using? They Grow - We grow. They Lose - We lose. I like the mutually beneficial structure to this approach. I tend to think this may be the more appropriate direction. Obviously, such a state would ensure longer stakers are receiving an outsized proportion of rewards similar to our current system.

This discussion may be better suited in another thread, but lets go with it. I can always change the tile around if we get more participants.

Thoughts, All?


That is very much possible and somewhat planned, with latest changes to how rewards are distibuted, undistributed rewards can be stored in a treasury and used to pay devs.

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Hey @coteclaude,

I’m sorry you have experienced substantial implied losses from the monetary value you have provided to the #IC. I’m in the same boat as you bud, believe me.

I think Kyle’s initial remarks on Twitter were half baked and purely theoretical in nature, and have been discussed ad nauseum in the most recent episode of @nueroticpod. (Highly recommend the listen)

It is my belief he thinks the rewards should not be eliminated, but rather, should be indicative of developer growth. Our protocol doesn’t survive without developers building amazing projects on the #IC. However, we [governance holders] extract value from the NNS while developers are building. We are both siloed. We need to construct a rewards system that is mutually beneficial to both of us.

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Hey @Zane,

Thanks for chiming in. Can you link me with the appropriate thread? Think I half read through earlier this morning, but cant seem to locate.

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Sure! ReProposal: Spam Prevention - Convert from system-based rewards to voter based rewards - #5 by kvic

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@Kyle_Langham, I appreciate your studied analysis of the various pressures on ICP value.

For high-level context - about 0.5 - 1M ICP is spawned (or merged at the time of dissolve) per month, whereas 3-4M ICP dissolves, so there’s much more ground to be made by convincing current dissolves to re-commit to the IC.

It looks like we can expect substantial downward pressure on the ICP token price over the next 2 years due to upcoming dissolves. Assuming current 6-month trends otherwise hold, at what point would you expect the amount of burned/staked ICP to reverse the ICP price slide? Is it simply a matter of weathering a 2-year storm?

To point out the obvious, current dissolves are more likely to recommit when they foresee a profit.

Ok, just glossed over - thanks for posting!

I like the vision of having a community run Treasury that allocates ICP to developers. However, I do not think the current construction will work in a long run setting.

With the proposition above - unallocated rewards are distributed into a community run treasury. From there, the treasury will allocate to projects (By NNS vote?) My thoughts are similar, but with slight (Important) caveats. This doesn’t solve the the structural problems our current reward system has.

The current relationship of rewards for Governance Participants vs. Developer rewards is unilateral. That is - Developers create value, Governance participants extract value. As developers continue to build killer apps, we continue to dilute their holdings by extracting rewards. This perhaps results in downwards price pressure, removes eyes from our token, and ultimately, removes eyes from our devs apps.

My thoughts on this are slowly pivoting into something of the sorts:

What if our rewards were baselined to our developer growth/app usage? (computational burn rate? Active users?) In this system, we would create a mutually beneficial relationship with our devs. The current structure benefits us at the expense of them.

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That is a bit unfair, governance participants extract value sure but they also lock their own money into the system reducing the circulating supply.

Then you’d have way less stakers joining the NNS, nobody is willing to take that kind of risk especially considering the need to lockup for long period of time, it’s already quite unbalanced as it is: lock your money for 8 years in a volatile asset with unguaranteed APR, if you add APR based on burn rate it’s just not worth it and you might get the opposite of what you’re trying to achieve, more circulating tokens and downwards price pressure.


That is a bit unfair, governance participants extract value sure but they also lock their own money into the system reducing the circulating supply.

Hmm, partially agree with you. Companies in the public space can increase/decrease their “Dividends” at their peril. Why can we as a community not engage in discussion on the merits of decreasing? (I already see plenty on increasing lol) Our purchase of ICP reduces the circulating supply, sure. But how does this help our developers? Is our purpose not to increase adoption by means of supporting our devs?

Let me provide the disclaimer - I too fear a rapid reduction would result in younger neurons trying to dissolve, and may further result in token pressure. Tough one for sure.

Then you’d have way less stakers joining the NNS, nobody is willing to take that kind of risk especially considering the need to lockup for long period of time

You got me on this one - think I agree with you here.

I would imagine, given the low cycle burn rate in the current state of the #IC, rewards would be drastically lower. But in the future state of the #IC, rewards may be dramatically higher. (Would need someone with mathematical prowess to conceive such an idea/model) As an 8 Year holder (and a 6 month and 1 yr), this would be something I would be onboard with.

An alternative idea - what if a portion of our rewards were automatically diverted to developers, and the rest we retained? (Under the current model)

This would require a way to measure the value that a dev/project contributes. This is currently, at least theoretically, determined by what users are willing to pay for using that dev’s project/dapp.

Reverse gas doesn’t mean everything is free. Devs are taking risks with their work, just as investors are with their money. But they also stand to reap profits when it succeeds.

I’m not worried about current inflation cause:

  1. Lots of it comes from Genesis neuron unlocks
  2. The IC has incredible potential, so I don’t mind temporarily diluting token value to increase my token holdings cause I know if devs keep building and the network can become deflationary I’ll benefit from my temporary loss, it’s unlikely price will raise at the moment even if no more tokens were minted, I’d rather accumulate by buying and staking so when the bull comes back I have as many ICPs as possible.

Developers already have Dfinity issued grants, maturity coming from the NNS which can be invested via SNS and community fund and possibly in future an NNS treasury, imo that is already a lot.

Such a system will make it harder to predict tokens issuance, I think we are getting too ahead of ourselves with all these proposed changes to tokenomics, imo our priority should be to make sure operational costs for devs are as low as possible and APR for staking is as high as it can be while still allowing deflation with realistic network usage, reaching that sweet spot should be our goal instead of favouring one side.

Basing issuance on burn rate will make it harder to estimate how this goal can be achieved and add yet another value we have to spend time and effort tweaking. In my opinion at the moment we have more concerning stuff to care about than inflation caused by staking such as this one: Question regarding RE EXC-1168: add non-subsidised storage cost on 20+ node subnets (behind the flag) - #17 by Zane


I won’t speculate on price, but I will say that the amount of dissolve was significantly higher in Dec - May and has decreased by ~2M starting in June. In addition, staking has negated a lot of the effects of dissolves, see this article for more detail. You can read my old Substacks to see what I thought about the relationship between price and dissolves.

But my bigger point is that the NNS could and should play a HUGE role in stewarding the IC, including growing and sustaining the IC. That, not tokenomics, is the key to success.


This is what venture capital is… investing in a product you believe in for long term gains without any idea if and when those gains will be realized. I think the thing I’m arguing for is we (the NNS participants) should think of ourselves more as venture capitalists, who look to the long term for their payout and are willing to provide expertise and talent to the company for which they’ve invested in order to increase the chance of success. Currently, the NNS is passive investors. If the NNS, which will reap 100% of the gains of the Internet Computer, are passive, who will be active?


Well not quite, when a VC invests in a company he knows exactly what he’ll get in terms of stocks, he doesn’t know whether the company will be succesful or not and if so how much, that’s very much different from the NNS where APY isn’t guaranteed. Imo it’s a bit naive to think by offering stakers LESS you’ll get them to work harder to guarantee the project’s success, what will happen is less people will stake and those who have will want out.

IMO most of these discussions about governance are coming from community members convinced they can pump the token’s price by tweaking a couple values, on one side you have people advocating to lower the bar to entry and make the NNS more appealing for newcomers, even suggesting higher rates to compete with CEXes staking options and on the other people asking for austherity.
It’s a reactionary and tunnel vision way of doing things, which I’ve seen a lot of in game dev: gamers think they can solve everything by doing simple tweaks: buff this, nerf that, but many times the problem requires broader changes, which are often not even directly related to the cause of discontent.

In the NNS case I think we should first and foremost improve the governance experience, e.g by adding more voting options (spam, abstain), improving the UI (dashboard is a good starting point), rewarding long term stakers (let’s put age bonus to work) and then look into ways to promote those who are active, e.g DAOs that verify IC code changes or work on code changes dictated community proposals.


A bit OT but I have a doubt on how yearly inflation is calculated, is it based on a fixed number, e.g number of tokens at genesis or on the current supply? So in 5 years the 5% inflation could look completely different based on how many tokens have been minted.

It’s a bear market, with ICP also having downwards pressure due to exchanges’ manipulation and hit pieces in media, and the unfortunate but unavoidable unlock schedule. I think it would be extremely damaging to base tokenomics/governance inflation discussion on the past year and a half. Let’s go for structural changes that actually enhance the governance experience and relationship between devs and holders instead of making rash decisions that won’t make the price appreciate.

Be patient and have a time view of at least a couple of years, don’t let this bear market push you into making bad decisions.


Have you notice? I do not blame anyone for my lost. I am the only one responsible for my stupid investment. If Dfinity and their insiders, with their voting power, decide to remove the rewards, I will just feel more stupid but will still not blame anyone else than myself.
No one would invest in ICP anymore. Good luck to find new fresh money then…
I am not the only one feeling this way, believe me my friend.
Dfinity need to be creative and find solution so investors feel a little less stupid, not more.


So say we all :beers:

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Hey @Zane,

Thanks for conversing!

So, you are not worried about [Circulating supply] inflation because it comes from Genesis neuron unlocks, & because it #IC has incredible potential. This is the common logic our community (My self at one point included) employs when trying to tackle the inflation [Circulating supply] narrative.

Fancy me this – 35ish million tokens were dissolved off the NNS from 11NOV21’ – Present: representing a ~29% reduction. During this time our token was trading for $47.33 and currently trades for $6; representing an 87% drop in token price. This is a material problem in the current state of the #IC. No matter how much we love this tech, I’m worried this type of future circulation increase would be price prohibitive for our token.

Forget the price prohibitive – this may be catastrophic for our token. Why is this not something that we can address? My goal is simply to reduce the circulating supply. As Kyle mentioned in the above thread – there is “north of 200 million tokens that are liquid and available to be staked” – of which, ~86 million represents dissolving tokens. How is this not something that represents a potential for a dire outcome if it’s not addressed?

Per Kyle - “For high-level context - about 0.5 - 1M ICP is spawned (or merged at the time of dissolve) per month, whereas 3-4M ICP dissolves, so there’s much more ground to be made by convincing current dissolves to re-commit to the IC. “

We are experiencing net outflows of approximately 3 million tokens monthly. (~18 M $ of tokens monthly) We are not in the business of hoping the novelty of the tech will help to subdue the supply pressure of our token – for which it clearly has not done up to this point. Why do we think this will be any different over the next 6 months? Insinuating that this is a means to pump the token price is categorically false – my goal is to reduce the circulating supply pressure.

Interested in your take here.

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