Executive Summary
The Andromeda Contributors have made significant progress toward the imminent launch of aOS. As we near launch on mainnet, essential components like the staking system are being finalized to ensure a sustainable and economically beneficial distribution of ANDR staking incentives.
This proposal outlines the methodology and goals for implementing the staking module, aligning and funding the rewards structure.
To execute, fund and launch the Staking Module, 4 on-chain decisions are required to achieve quorum, with the broader rationale laid out within the signaling proposal.
Background
In recent months engineering and business contributors have been working to put the final touches on the aOS, as well as building the larger ecosystem network effects and making sure that the global community stays engaged.
The deployment of the staking system requires careful consideration to ensure sustainability and alignment with the community’s principles.
The Andromeda DAO itself has a large reserve of tokens within the protocol treasury. By design the community itself is empowered to shape the best use of these network resources to drive sustainable growth.
The ANDR token system is non-inflationary (no new ANDR tokens can be minted); founded on the principle that everything needs to be paid for by one entity or another, not just creating new tokens to solve a problem. The staking program aims to support validators through a transparent and finite token emission process, moving away from inflationary systems commonly found in blockchain networks.
Goals
By building a sustainable rewards framework, the community seeks to provide a predictable and fair system for validators while maintaining financial prudence within the ecosystem.
A finite token emission model ensures that rewards are distributed sensibly, reflecting the operational costs of the network whilst avoiding unsustainable practices or inflated emissions.
Staking Proposals
The 4 proposals to be enacted on chain are as follows
Proposal A : (Signaling)
Are you aligned to the implementation of the staking module
(Yes / No / NoWithVeto / Abstain)
Proposal B : (Upgrade Chain)
To execute with the chain upgrade required to initiate the staking module
(Yes / No / NoWithVeto / Abstain)
Proposal C : (Community Pool)
To transfer X ANDR tokens to allocate DAO funding to the staking wallet
(Yes / No / NoWithVeto / Abstain)
Proposal D : (Change Parameter)
To set the initial drip rate for staking rewards at X ANDR per block
(Yes / No / NoWithVeto / Abstain)
Drip Rate
Reward tokens are dripped out of the rewards account to the standard distribution module and participants in the staking program. If that rewards account drips all the rewards and is empty, then rewards to validators will also stop and require revisiting via additional governance proposals.
Staking Rewards Account
The DAO will vote to fund a “rewards account” that is also managed and controlled by the DAO. This provides for a budgeted amount of tokens that will be used to “drip” or pay the validators on a block by block basis.
A key consideration should be to consider the financial stability of validators ensuring that their role in securing the network is sustainable and incentives are appropriate for their contribution to the protocol.
Next Steps
As the staking module goes live, community feedback will be crucial in determining the optimal token distribution and rewards structure.
Following the approval of Step #1 : (Signaling) this proposal is to enable the chain update.
Proposal B : (Upgrade Chain)
To execute with the chain upgrade required to initiate the staking module
(Yes / No / NoWithVeto / Abstain)
By reaching quorum the module will go live, but rewards won’t be automatically enabled as the rewards account will be empty and the default drip rate will be 0 ANDR per block.
Once the chain is upgraded and the module is enabled, two proposals will still be needed:
Proposal C : (Community Pool)
To transfer X ANDR tokens to allocate DAO funding to the staking wallet
(Yes / No / NoWithVeto / Abstain)
Proposal D : (Change Parameter)
To set the initial drip rate for staking rewards at X ANDR per block
(Yes / No / NoWithVeto / Abstain)
By engaging in open discourse and collaborative decision-making, the Andromeda Community can shape a sustainable staking model that supports validator profitability and contributes to the long-term success of the ecosystem.