This post is intended to update the community on how changes to staking, and specifically the Dynamic Allocation Pool (DAP), are shaping up. As part of that, we also want to put the various planned changes into a clearer time frame. Most of what is outlined here builds upon previous discussions and proposals, including Proposal: DAP, Roadmap for the Dynamic Allocation Pool, WFC DAP Phase 1, and Changes on Polkadot in March 2026. This post also proposes the initial allocation for Validator incentives and Nominators for the budget split update coming in the following months.
Generally, this is an ambitious endeavor and things are constantly evolving, so everything remains subject to change. Time frames in particular are difficult to commit to, but we are doing our best. Things are moving very quickly as Parity is laser-focused on launching Polkadot into a new era with Products for People. While we try to keep changes to the plan to a minimum, we still believe it is best to adjust things whenever a better option presents itself.
As usual, every proposed change needs to be ratified by OpenGov voters, our plan is a mere suggestion on how to move forward.
What Is Planned
As a brief summary, the proposed changes are essential for creating a sustainable economic model and reducing protocol costs without compromising economic security. On this path, Polkadot has already updated its issuance curve, and work has begun on implementing an issuance buffer to make more efficient use of the available resources, which also includes building a reserve for future use.
Allowing a dynamic adjustment of outflows through the issuance buffer, or DAP, two key stakeholders are most affected: nominators and validators.
Validators
Validators see the most structural changes, centered around separating their reward streams into dedicated budget components. This eventually allows us to better separate the costs of operation from compensating for security.
- Self-stake incentives: Validators will be encouraged to have more āskin-in-the-gameā through self-stake requirements, as outlined in the Incentive for Self-Stake proposal.
- Operational cost coverage: Validators will eventually receive a fixed stablecoin payment to cover their operational expenses, decoupling infrastructure costs from staking rewards.
Note: Since the budget split and self-stake incentives will arrive before stablecoins can be distributed through the DAP, validators receive unlocked DOT through the self-stake incentive mechanism.
Nominators
- Nominators will see a reduction in staking rewards, which are compensated by a removal of the slashing risk and an unbonding period of at most 2 days.
Under this new model, costs can be reduced significantly by drawing the economic security directly from the skin-in-the-game of validators. For more details, please refer to The relationship between Issuance and Economic Resilience.
Network Sizing:
Beyond these changes, we are also planning to scale the number of active validators based on demand for cores on the coretime market, smart-contract and other bandwidth requirements.
Timetable
The changes are currently planned to be enacted in the following order:
| Date | What | Description |
|---|---|---|
| April | Validator Min Commission 10% | Validators will be temporarily compensated through a minimum commission of 10%. This will continue until a budget split between validators and nominators is implemented. |
| End of May | Minimum Self-Stake for Validators enforced by the protocol | A minimum self bond of 10k DOT will be enforced to secure the network. Non-compliant validators will face significant risk of chilling. |
| End of May | Nominator Benefits | Once the network is secured by validator compliance with the minimum self-stake requirement, nominators will benefit from becoming unslashable and gaining a faster (2-day) unbonding period. |
| Mid June | Budget Split | Adding rewards in unlocked DOT for self-stake of validators to ensure their skin-in-the-game. Once the issuance buffer pays stablecoins, these DOT rewards will be vested for a year, while the stablecoins cover operational costs. With this change, the commission system will be removed as it is no longer needed. See Budget section for details about expected rewards for nominators and validators in the initial budget period. |
| EOY | Fixed Stablecoin Payment | Fixed stablecoin payment for validatorās operational costs in addition to vested DOT for self-stake. |
| EOY | Adjustment of the size of the active validator set based on market demand | This enables more efficient use of the available resources by scaling the number of validators based on the demand for cores, smart contract interactions, and product infrastructure demand. |
More details in the next section.
Timeline (Past)
March 14th
The annual issuance of DOT has decreased from 120 million to ~55.8 million DOT as part of the new issuance model with DOT supply capped at 2.1 Billion DOT. The issuance is now set on a trajectory to decrease further every two years (see https://dotless.xyz).
March 23rd
Runtime upgrade 2.1.1 has been enacted on Polkadot, introducing the first basic version of DAP, collecting staking slashes. Treasury burns have stopped too. The new runtime allows us to make nominators fast-unbondable and unslashable via future OpenGov calls.
April 1st
Minimum Validator Commission Enforcement: the minimum commission has been set via referendum to 10%. This is a fair change coupled with the decrease of annual issuance and aims to help validators to operate in a sustainable manner until we can provide a separate budget for validators covering operational costs and incentivizing self-stake via vested DOT.
In previous communications, this was tied to the enforcement of the minimum self-stake requirement, but following community feedback and delays in that enactment, it is being rolled out earlier.
Timeline (Future)
May 31st
Deadline for Minimum Stake Compliance
Minimum Self-Stake Enforcement: May 31st is the definitive deadline for validators to meet the 10,000 DOT minimum self-stake requirement. Any validator not complying by then is at risk to be chilled after this date. We kindly encourage every validator to be compliant by then.
Nominator Benefits: Nominators will be made non-slashable and receive a 2-day unbonding period. This change is intended to compensate for anticipated lower nominator rewards, targeted to occur in mid-June.
Runtime Upgrade Supporting Budget Split and Self-Stake Incentive for Validators
By end of May (best case scenario depending on having related code merged and audited in time), a new runtime upgrade will be deployed on Polkadot introducing the following changes around DAP:
OpenGov will have a way to configure budget separately for multiple recipients. The code is flexible enough to accommodate for any number of outflows at runtime level.
Payment of operational costs for validators in stablecoin is still not supported.
The code will be ready to specify budgets but will preserve the current budget until a referendum in mid-June.
Mid-June: The First Iteration of the New Budget Split Model
Enactment of the initial split of outflows as described in the section āInitial Budgetā below.
EOY
Stablecoin Issuance
A future runtime upgrade will make DAP multi-asset, allowing it to distribute stablecoins. This timeline is very tentative and depends strongly on other code upgrades and developments.
Additionally, a new referendum is planned to update the budget model. This update will introduce a fixed, flat payment to validators in stablecoin to cover their operational costs. This will also mean that the DOT-denominated self-stake incentives will be adjusted and be distributed vested.
After the DAP is able to pay out stablecoins, the process to cleanly separate validator rewards into a locked DOT component and liquid stablecoin part can be completed. The exact numbers will be part of a discussion with the community when the time comes and will be adjusted to current market conditions (referring to increased operational costs due to inflation of the USD). In general, the numbers can be tweaked via OpenGov.
Adjustments to the Active Set of Validators
To further improve how efficiently the network uses its available resources, we will explore ways to adjust the number of active validators based on actual bandwidth consumption. This includes the number of cores sold on the coretime market and potentially other metrics such as smart contract activity and broader infrastructure usage.
Polkadotās current setup has 120 cores supporting 600 active validators. Given the current market conditions and usage, and with products still being in early development, this is beyond the current capacity requirements. Therefore, there is significant room to reduce the number of active validators. Based on current conditions, this might result in around 64 cores and 250-300 active validators. Importantly, the size of the active set should also expand once demand increases.
These considerations are still early and influenced by different aspects that are taken into account. These influence both final numbers and the timeline itself. Most notably:
- Coretime market redesign: the implementation of RFC17 (currently in development, targeting deployment on Polkadot mid Q3) offers the possibility to dynamically scale the number of active validators based on the open market demand for coretime.
- Improvements such as elastic scaling could mean that system chains run with more cores, naturally increasing the demand for more active validators.
- Other developments around smart contract usage and product-related infrastructure might also increase the demand for active validators.
Initial Budget for Mid-June
As previously mentioned, the newly issued DOT is split across two separate buckets. The first is a dedicated incentive for validators to maintain self-stake. The second covers payouts for all stakers, which includes both nominators and validators, since validators also participate as stakers through their own self-staked DOT on their own validator.
In the absence of a stablecoin payment, the goal is to increase the self-stake incentive payment to capture both components and distribute these rewards unlocked. This will change once stablecoin payments are possible.
The proposed budget looks as follows:
Validator Self-Stake Incentive
The per-validator budget is calibrated to cover both the compensation for the self-stake and the operational costs. Note that the actual payout per validator depends on the distribution of self-stake within the active set, as well as the usual performance measures (captured by era points).
Incentive component and operational costs (~70% APR on 30,000 DOT self-stake):
Incentive per validator = 30,000 * 0.70 = 21,000 DOT/year
With the current number of 600 validators, this requires an annualized outflow of 12,600,000 DOT.
Staker Payouts
This bucket covers payouts for all stakers, nominators and validators alike. To calibrate it, we target ~3% APR at a staking rate of 50%, applied to the current total supply of ~1.68B DOT. Note that the APR naturally scales with the staking rate and cannot be fixed or predicted.
Yearly staker payout = 1.68 * 10^9 * 0.50 * 0.03 = 25,200,000 DOT
Reserve
This means, the issuance buffer retains ~55.8M - 12.6M - 25.2M = 18.0M DOT annualized. These DOT can be used to fund the Treasury, save for future expenses or potentially as backing of an upcoming stablecoin.
