Two major governance proposals are set to reshape Celestia’s tokenomics. The first seeks to reduce TIA inflation by 33%, aiming for long-term sustainability. The second proposes locking staking rewards for locked tokens, aligning incentives with Celestia’s vesting schedule. If implemented, these changes could significantly impact the network’s economic design.
Reducing TIA Inflation by 33%
Celestia’s current inflation model was initially based on Solana’s schedule to simplify early economic design. However, there is growing consensus that the rate remains too high. The new proposal suggests a 33% reduction in inflation, which would accelerate the disinflation curve while maintaining security.
Currently, Celestia’s inflation stands at around 7.2%. If the proposal passes, this would decrease to approximately 4.8%. Advocates argue that Celestia has been overpaying for security, with staking yields being disproportionately high compared to other networks. Reducing inflation aims to strike a balance—ensuring network security while improving economic efficiency.
The adjustment would take place in the next major upgrade, projected for May 2025. Some voices within the community have suggested going further, with a 50% reduction, but the current proposal represents a middle ground that maintains incentives while curbing excessive issuance.
Locking Staking Rewards for Locked Tokens
A second governance proposal seeks to address an issue in Celestia’s staking rewards system. Currently, staking rewards for team and investor allocations are unlocked, allowing them to be sold on the market. This is standard practice among many PoS networks, including Solana, Sui, and Aptos, but it introduces potential sell pressure and misalignment with long-term vesting schedules.
The proposed fix would lock staking rewards in line with the four-year unlock schedule. With only about 50% of the supply currently unlocked and 1.25 years into the vesting period, implementing this change now would still have a meaningful impact.
One concern raised is potential circumvention. Without safeguards, validators could create private validators with 100% commission to effectively bypass the restrictions. To prevent this, the proposal includes a cap on validator commissions at 25%, ensuring rewards remain distributed fairly.
Economic Impact and Community Response
Together, these proposals reflect an effort to refine Celestia’s economic model. By reducing inflation and aligning staking rewards with vesting schedules, Celestia aims to enhance token utility and network sustainability.
Community response has been largely supportive, with many viewing these changes as necessary adjustments. While some argue inflation should be reduced even further, others see the current proposal as a balanced approach.
If passed, these changes could set a precedent for other PoS chains reconsidering their economic structures. With governance votes on the horizon, stakeholders will soon decide the future economic trajectory of Celestia.
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