Change in stake rewards rate: 2023-Jan-13 and 14

Ecosystem
1

Between 2023-Jan-13 and 14 the staking rewards jumped from approx. 16% to approx. 20%. The Polkadot docs mention the share split in 2020, but no mention of this change. Anyone know what happened?

The data:

era block era_date era_timestamp total_issuance era_staked era_reward era_remainder staked_pct era_return pa_return
955 13785630 2023-01-13 15:36:18.000Z 1271486839.99384 573044318.155648 243755.624294332 104305.686592826 0.450688359588861 0.04% 0.167922917318027
956 13800022 2023-01-14 15:36:18.000Z 1271699083.56033 572342422.127065 289895.211408026 58236.9003696131 0.450061205143515 0.05% 0.203011628023186
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2

It appears this may be the change in the “inflation model” related to the introduction of Parachains?
However, Parachains landed sometime ago. Was this really that update - just delayed?

Update 1
Bill(W3F) comments in Matrix:

that was the era when the runtime was upgraded to v9340

Update 2
The v9340 highlights and the v9340 Release Notes appear to be silent about a fairly material shift in the rewards program.

Update 3
It does appear this is a change in the inflation model related to Parachains:

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3

I am still a bit surprised – the change you mentioned should actually reduce the inflation by a margin, because it now takes the parachains into account. A bump is rather unexpected. How are you calculating the 16 and 20%?

4

Reading the % staked values off the model charts I thought 16% and 20% were roughly expected from that change - I had expected the reward changes to land with the Parachains, so that was the source of the doubt I expressed.

Also some otherwise “weird” behavior now makes sense, or at least fits some rational behavior - it appears people were searching for this additional return earlier. Specifically, starting around 2022-10-19 to 2022-11-11, it appears “the market” looked for this return but (obviously) didn’t find it :frowning:

Referring to the data posted above:

era_return = era_reward/era_staked

When annualized the return is approx.:

pa_return = ((1+era_return)^365)-1
5

I’m thinking of making a treasury proposal for a bounty to work out if people should be compensated from treasury for this ‘loss’…

Say a bounty of 15% of the losses identified - that should also establish an on-going incentive.

Thoughts on how likely the fellowship/council are to support something like that?

Right now the Treasury seems a ‘beggar-thy-neighbor’ affair so there’d have to be a fairly clear show of support to justify the effort.

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6

@kianenigma have you been able to verify the data I provided?

What still has me puzzled is the latest Messari report shows a staking % below 50%. Yet, the staking yield is around 16%.

If you are able to confirm the data I extracted I’d appreciate that.

7

Is there any update on this? Still confused and trying to figure out if the ideal staking rate was ever changed not to be hardcoded to 75%. There are lots of trails to follow and no concrete answers as far as I can see.

8

The ideal staking rate has indeed changed as of the PR merged above, but in the meantime I have not explored this further.

9

Appreciate your uncertainty. It is what led me down the path that brought me here. There is a proposal queued at the W3F to develop a workbook to allow a user to verify their understand of things at any particular point in time.

We’ll see if they can fund it - they have lots high priority work flowing in and right now the staking ‘works’.

10

The ideal staking rate is dynamically adjusted with the number of active parachains. On Kusama, there was some time where it wasn’t properly calculated (because it equated the number of active parachains with the auction counter, which worked until the first slots expired). I shared this once: Treasury Dynamics of Polkadot and Kusama that gives a bit more information below. Mid-Jan 2023 a runtime upgrade on Polkadot has the ideal staking rate dynamically adjust (with the correct calculation).

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