[Secondary Proposal] Decrease Inflation


Staking rewards were an integral part of API3 tokenomics as DAO participants took on the risk of potentially having their stake slashed for which they had to be adequately compensated. One of the ways this could have happened was through the coverage products that were mentioned throughout the whitepaper, which would have been able to force a payout in the event of malfunctions of our data feed offerings. While some work has been made towards offering a coverage product, the demand simply isn’t there.

As we now aim to focus on capturing OEV to generate revenue, the need to compensate stakers for the potential of getting slashed no longer exists. As such, this proposal aims to set the staking target to 40% of the total token supply, which is expected to start reducing the APR. The goal will be to keep the staking rewards steady at 2.5% while counteracting the inflationary aspect through the decrease in API3 supply through revenue generation.


By calling the setStakeTarget function on the API3Pool.sol contract with 40% as the input parameters.


This proposal is being brought forward by Burak Benligiray, Andre Ogle, Ashar Shahid, Varia law and Yondhi AB. These members are long-term contributors to API3 who among other things have led the “1B20N24” efforts and currently work on making OEV Network a success.

Explanation of Proposal Parameters

The target contract 0x6dd655f10d4b9E242aE186D9050B68F725c76d76, with the target function signature “setStakeTarget(uint256)”. The parameter stated is the new target at 40% expressed as [“400000000000000000”] (where 10^18 represents 100%).


It’s probably worthwhile context to mention that the current staking target can be read from the contract and is 50%.


If I am correct:

The Staked amount at the moment is 62,193,792.28 Tokens, which represents 45.83% of the total supply. A target of 40% would introduce reducing the APR. Current Epoch APR is 41.5%, which means, if target would be met further (over 40% of Tokens staked), it would take 39 weeks, or 9 months until the 2.5% would be reached.

@UgurMersin, are there changes in the APR step-sizes planned, or do you think 1% should be good to go?

Something that can be tackled after this proposal, but we were thinking about it.
Will create a post for it to discuss how quickly we want to drop the APR.

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The proposal is up for voting now: https://api3.eth.limo/#/governance/secondary-100

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