[Proposal] Deprecate Seigniorage Reward Policy and Increase Gas Fees by 5x

Governance & Proposals
195

Hey thanks for your answer.

I’m referring to this part of the initial proposal:

and this part about rewards in the docs

The Terra protocol incentivizes validators and delegators with staking rewards. Staking rewards come from two sources: gas and swap fees.

So if I understood correctly, for the rewards to stay the same, the overall staking had to be x5 too, otherwise the rewards should have risen after the x5 in a significant way.

Maybe someone can shed a light on this?

Thanks!

1 Like
196

@christophweegen I will defer to the technical experts but as far as I am aware the gas fees go 50/50% to community pool and oracle pool. I checked on LUNCPenguins (I don’t know of another source to check the oracle pool) and on 17/1/23 the balance was 258,103,170,860 and on 19/1/23 it was 258,641,905,035 so this is 269M LUNC depleted per day paid out to rewards. Even with a 5x gas increase we need to make up more to cover a 269M per day drop in the oracle pool. It would be great it we could fill this drop, reduce the dropping of the oracle pool, to preserve rewards. I proposed an idea for that in my thread “Vision for LUNC”.

197

@christophweegen yes this is correct - the staking rewards come from 2 sources: the Oracle Reward Pool (OP) and gas fees.

The Oracle Reward Pool is a depleting reserve, so rewards from the oracle pool would go down with time - https://luncpenguins.com/wallets/holdings.html?wallet=terra1jgp27m8fykex4e4jtt0l7ze8q528ux2lh4zh0f

The gas fee increase has definitely increased the staking rewards, however since the gas fees are still very low and combined with the fact that the oracle pool is depleting (thereby reducing staking rewards), the overall effect on staking rewards may not be completely seen.

From a long term perspective, either the oracle pool needs to be replenished or the gas fee needs to be increased further, or a combination of both to sustain staking rewards.

1 Like
198

It is possible to increase the payment for gas by 2-3 times.

2 Likes
199

@dfunk thanks for the explanation.

I have some questions, maybe you could please answer them.

  1. When the Oracle Reward Pool will be empty, how will it affect staking rewards i.e. which percentage does the Oracle Reward Pool holds in staking rewards compared to gas fees?
  2. How can the Oracle Reward Pool filled again?
  3. IMHO withdrawing staking rewards and staking itself should be exempt from the x5 fee. It got really expensive to withdraw and compound ones staking rewards on a daily basis. We shouldn’t “punish” delegators, since this will make people think twice about staking on Luna Classic.

Maybe at least the last point may need further discussion in it’s own topic?

Thanks and have a nice day!