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 ā€œinflation modelā€ 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 ā€“ 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 ā€œweirdā€ 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 ā€œthe marketā€ looked for this return but (obviously) didnā€™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

Iā€™m thinking of making a treasury proposal for a bounty to work out if people should be compensated from treasury for this ā€˜lossā€™ā€¦

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 ā€˜beggar-thy-neighborā€™ affair so thereā€™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 Iā€™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.

Weā€™ll see if they can fund it - they have lots high priority work flowing in and right now the staking ā€˜worksā€™.

10

The ideal staking rate is dynamically adjusted with the number of active parachains. On Kusama, there was some time where it wasnā€™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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