[Democracy] Public proposal #13: Update to the Litentry Token Economics

Abstract

This proposal marks the beginning of an essential transformation in Litentry's token economics. The first step in this journey involves discontinuing the fixed rewards for collator staking participants, as currently outlined in the Litentry documentation. Instead, we propose a new reward mechanism where 30% of the network's gas fees will be allocated as rewards to collator staking participants.

This change aligns with our long-term vision for Litentry’s future as outlined in the Litentry Medium article. The primary goal of this initiative is to gradually decentralize governance and reduce the project's dependency on token holdings by the Litentry team.

Motivation

The current fixed staking rewards model has served us well, but it does not align with our evolving vision for the network's sustainability and community empowerment. By shifting to a gas fee-based reward system, we aim to:

• Enhance Sustainability: Tie collator rewards directly to network activity, promoting a healthier and more balanced economy.
• Decentralize Governance: Gradually dilute the Litentry team's token holdings and empower community-driven decision-making.
• Encourage Adoption: Align the network's incentives with user growth and real utility.

Proposed Changes

1. Discontinuation of Fixed Rewards for Collator Staking:
   Effective immediately, participants in collator staking will no longer receive fixed rewards as outlined in our documentation.

2. Implementation of Gas Fee-Based Rewards:

   • 30% of the network's gas fees will be allocated as rewards for collator staking participants.
   • This dynamic reward model ensures that rewards scale with network usage, incentivizing active participation and growth.

3. Future Economic Model Adjustments:

   • This is the first step in a broader roadmap to update the Litentry economic model.
   • We will launch subsequent proposals to further decentralize governance and distribute token holdings equitably among community members.

Expected Outcomes

• A more sustainable and scalable reward system.
• Increased alignment of incentives between network participants and the Litentry community.
• Gradual decentralization of governance, with a target to fully transition token management to the community within the next 1-2 years.

Next Steps

1. Seek community feedback on this proposal to ensure alignment with stakeholder interests.
2. Implement the proposed changes upon approval through a community vote.
3. Monitor the impact of this change and use the insights to guide subsequent economic model updates.

Voting Details

This proposal is subject to a community vote. We encourage all stakeholders to review and provide feedback before the voting process begins. Let us collaborate to shape Litentry’s future together!