Possible Optimizations of NNS Tokenomics (Updated!)

[Accumulating.icp]

I can’t help but feel like there are better ways to “reduce inflation” than penalizing those who have staked for extended periods of time.

@Accumulating.icp

Lately I’ve been considering various factors that contribute to the sustainability of the supply of $ICP - one of which is staking, and in turn the yield correlated to it.

The current APY Scale can be found below;

6 Months - 8.9%

1 Year - 9.4%

2 Years - 10.5%

3 Years - 11.5%

4 Years - 12.6%

5 Years - 13.6%

6 Years - 14.7%

7 Years - 15.7%

8 Years - 16.7%

Information provided can be cross referenced at:

https://dashboard.internetcomputer.org/governance

This depicts that 6 Month Neurons are incentivized at 53% of the rate of 8 Year Neurons (8.9%/16.7%), while having the staking obligation of 6.25% of an 8 Year Neuron (6 months/96 months).

Additionally, a pattern that can be noticed within the staking reward scale, is that each additional year of staked time, results in about a 1% increase in rewards - however, the base layer of rewards, is 8.9% for only a 6 month timeframe.

For example, the APY scale clearly is not proportionate to begin with, so maybe that’s a better place to start than making such a drastic change that will affect the staking parameters of 56% of staked ICP.

I also have to question, how many voting rewards have to be taken away for inflation to be “acceptable”? This is not the first time we’ve gone in to change the reward scheme for the purpose of altering inflation.

Have you considered exploring the other face of the coin; the deflationary mechanics of the network?