I am not initiating the WFC myself, because I am not personally supporting a cut in inflation so drastically. My main concern remains the complex interplay between validators, nominators and the economic security of Polkadot. I talked about that in more detail here, and it was mentioned above by @burdges).
If we want to aim for low inflation by reducing token issuance (note, that with burning tokens we could achieve lower net inflation without reducing issuance, but that is arguably a bit in the future), we should move gradually and be able to observe and monitor the ecosystem. In my mind, this is covered by the third WFC.
If you still believe that this is not sufficient, feel free to start your own WFC.
An 8% inflation rate is still very high, and the resulting staking rewards would exceed 10%+, which is still too high and would severely impact the development of ecosystem projects.
Network security is indeed important, but if we focus too much on the profitability and security of validators while neglecting the sustainability of the tokenomics and ecosystem development, it could backfire. While high staking rewards and inflation rates may maintain network security in the short term, they could harm the networkâs healthy development in the long run.
The number of validators should match actual demandâhaving too many validators is, in a sense, âover-protection,â which does not significantly enhance network security. Instead, high inflation rates may undermine the confidence of token holders and negatively affect user growth, developer participation, and overall market activity.
For Polkadot right now, development is more important than security, because the current level of decentralization and the number of validators are already overly high. We cannot focus solely on further enhancing Polkadotâs security while neglecting its urgent need for development. Polkadotâs ecosystem development is closely tied to Polkadot itself, but when I see discussions about adjusting the inflation rate, thereâs never any mention of how these parameters will impact the development of the ecosystemâonly how they affect Polkadotâs security.
As participants in the Polkadot ecosystem, we donât want an overly secure but empty house of steel and concrete; we want a moderately secure skyscraper with a thriving commercial ecosystem.
We do not add secureity by adding more validators. Instead, a sharded chain like polkadot adds more capacity, in the form of more parachain cores, whenever it adds more validators or increases existing validators perforamnce. Just fyi, there do exist other sharded chains like dFinity but afaik the others are not secure in any decentralized threat model.
Instead security and performance considerations limit how many validators operate, but weâre continually working on supporting more. We even have a secure protocol for multiple relay chains, with 1000-ish validators per relay chain, so thatâs several thousand validators.
We lack the real usage for all this capacity of course, but weâll do synthetic usage via glutton which should prove polkadotâs capacity, and attract real usage.
Weâve no idea what inflation does really, but adoption benefits from proving polkadotâs capacity.
I suppose our strongest play maybe: finish elastic scaling, ship Cryillâs solidity-polkavm compiler, ship polkavm contracts running nomt storage, and launch a solidity parachain based upon a single fat collator. A single fat collator has centralized liveness, so like solana and with solana problems, but we could feed this beast with some synthetic solidity glutton, and elastic scaling permits giving it as many cores as we like. Around 40 cores itâll beat solana I guess, but 100, 200, or 300 cores on a single collator parachain makes sense. Itâd attract projectsâ attention if done using solidiy on polkavm.
Afaik JAM is the obstacle delaying doing this, because JAM takes resources away form the solidity-polkavm compiler and from polkavm contracts work.
All this demand considerable engeneering of course, but capacity spending sounds more profitable than screwing around with inflation or worse stupid tresury spending on advertising.
I fully recognize Polkadotâs technical and performance advantages, but we need to calmly consider: why have so many projects with better technology and performance than Ethereum and Solana still not achieved good development?
Itâs because technical and performance advantages are not the top priorities for many projects. What they value more is the network effect of a chain â the projects, users, and capital that being on these chains brings, which significantly increases their chances of success.
Moreover, Polkadotâs ecosystem also suffers from a poor business environment. Many teams have stated that their business models cannot compete with staking rewards, making it difficult to attract enough users to join the Polkadot ecosystem. This is a critical issue that Polkadot urgently needs to address, as failure to do so will hinder ecosystem development. At the same time, the price pressure caused by DOTâs high inflation rate exacerbates this situation.
Itâs like trying to run a business in a country where your business profits canât even match the interest rates offered by the banks, causing much of the capital to avoid participating in commercial activities. And even the little profit you manage to make is further eroded by the depreciation of the local currency. This is the current state of Polkadot.
Therefore, adjusting the inflation rate is highly necessary. Polkadotâs technology and performance are already much better than Ethereum and Solana, and this is something that many teams or developers who once built on Polkadot but have since moved to the Ethereum or Solana ecosystems can attest to.
However, technology alone is not what determines whether a project can grow. If we donât focus on Polkadotâs economic model and ecosystem development, Polkadot will be reduced to a blockchain with excellent infrastructure but limited adoption. While some highly independent application chains may be willing to use Polkadotâs infrastructure, most projects, capital, and users will prefer to go to ecosystems like Ethereum or Solana, which may have inferior technology but offer a better business environment and stronger ecosystem growth. This is the last thing I want to see.