As the staking rewards for validators in Oasis blockchain are projected to reach zero in the next year, according to the official Oasis documentation (Token Metrics and Distribution | Oasis Network Documentation), it is crucial that we explore and implement alternative reward mechanisms to maintain the participation and security of the network. During the Oasis Community Town Hall (Oasis Network Community Town Hall — 2023, Q2 (June) - YouTube) Oasis explained that at the end of the current staking rewards schedule, there will be a significant amount of tokens remaining in the Common Pool account (Staking | Oasis Network Documentation).
Staking rewards are subject to be changed by network governance. So here we would like to propose and discuss possible alternative mechanisms such as:
- Extending the rewards schedule using the remaining tokens from the Common Pool. When rewards drop to 2%, they stay at this level until the Common Pool is exhausted.
- Transaction fees rewards
- Providing rewards from the project’s own funds for a specified period or as a combination of them.
This proposal is intended as a starting point for discussion and should be adapted and refined based on the specific requirements, circumstances, and governance structure of the blockchain project. We invite the community and Oasis Foundation team members to join the discussion, share opinions about the proposed changes and/or add other suggestions.
Extending the rewards schedule
By extending the rewards schedule utilizing the remaining tokens from the Common Pool, we can ensure continuity. Once the rewards decrease to 2%, they will be maintained at this level until the Common Pool is entirely depleted. A 2% staking reward is sustainable for a while.
Transaction Fee Rewards:
Validators will be rewarded with a portion of the transaction fees collected on the network. This incentivizes validators to process transactions and ensures their continued participation in securing the network. The transaction fee rewards will be distributed proportionally based on each validator’s stake or contribution to the network.
a) Rewards from Project Funds:
To bridge the transition from staking rewards to transaction fee rewards, the project will allocate a portion of its own funds to provide rewards to validators for a defined period. These rewards will be distributed to validators based on their stake or contribution, similar to the staking rewards mechanism.
b) Time-Limited Reward Period:
The rewards from the project’s funds will be provided for a predetermined period, such as six months or a year. This allows the network to adjust and adapt to the new reward mechanism while ensuring the sustainability of validator participation.
Community Proposal and Input:
The community is encouraged to actively participate in shaping the alternative reward mechanism. This proposal serves as a starting point for discussion, and community members are invited to provide their own ideas, suggestions, and improvements to enhance the reward system. The community’s input will be considered in the final design and implementation of the alternative rewards mechanism.
Governance and Voting Process:
Once the alternative rewards mechanism is refined, a governance and voting process will be conducted to determine its implementation. Validators, token holders, and other network participants will have the opportunity to vote on the proposal, ensuring decentralized decision-making and community consensus.
Transitioning from staking rewards to alternative reward mechanisms is a critical step in maintaining the participation and security of the network. By combining transaction fees, providing rewards from the project’s own funds for a specified period, and incorporating community input, we aim to create a sustainable and fair reward system that aligns with the goals of our blockchain project.
Community members are encouraged to provide their feedback, suggestions, and additional ideas to further enhance the proposal and contribute to the design of the alternative rewards mechanism.