The Hamal Release
Later today (2/18/22, ~07:00-10:00 PM UTC), the Hamal release will begin. There will be no downtime on L1/L2. Here's what’s included in this release:
- SIP-202: Target Staking Ratio: Introduce a target staking ratio incentivized through inflation.
- SCCP-164: Extend Burn Lock to 7 Days: Adjust Burn Lock from 24 hours to 7 days (168 hours).
SIP-202 and SCCP-164 introduces a substantial change to how staking inflation is calculated and rewarded on a system-wide scale; we recommend reading this document and then reading through SIP-202 for more details.
The purpose of the initial inflation rate (SIP-23) was to encourage a high staking ratio while the network was growing. Initially, this worked well, with the staking ratio peaking at 90%+. The staking ratio subsequently has fallen to below 70% as inflation has declined based on the curve specified in SIP-23.
SIP-202 sets a base level of inflation (800,000 SNX initially) and then tracks the staking ratio within the network to modify the inflation rate weekly to ensure this target ratio is achieved. The staking ratio will be measured as the percentage of SNX collateral in staked addresses divided by the total SNX collateral.
For reference: The inflation in the prior week across L1 and L2 was 357K SNX
Due to this substantial increase in SNX inflationary rewards, SCCP-164 has been implemented to deter snapshotters. Instead of a 24 hour burn lock, staking will now be subject to a 7 day burn lock. Once you stake for the week, you will be unable to burn until the end of a 7 day period.
This change introduces a target ratio for staking of 85%. It then adjusts the inflation weekly up or down by 10% depending on whether the staking ratio is below or above the target ratio to incentivize stakers to hit this target.
The introduction of decay of 5% if the target ratio is within +/- 5% is designed to ensure that as fee yield from the protocol increases inflation is reduced, provided the target ratio is maintained.
This should ensure that overtime the proportion of rewards derived from inflation decreases as fee yield increases.
Here’s an example to more easily understand this change:
- Take a snapshot of the staking ratio across L1 and Optimism at fee period block number
- Determine inflation based on staking ratio
If below 80% increase inflation by 10%
Ex: 800,000 (Base) x .1 (Adjustment) = 880,000 SNX Inflation
If above 90% decrease inflation by 10%
If between 80-90% decrease inflation 5%
3. Distribute inflation rewards alongside trading rewards on both L1 and L2
Release Phases
There is currently no method to measure the staking ratio on-chain, so the implementation of this SIP will be split into two phases.
The first phase will rely on an off-chain calculation and SCCP each week to modify the inflation rate.
Phase two will use a new Chainlink oracle to read the staking ratio at the end of each epoch and push this on-chain to allow the target ratio to be calculated and the inflation change determined.
Configurable Values (Via SCCP)
The below are configurable values set by this SIP and release and can be changed by SCCP proposal and Spartan Council vote.
Base Inflation: 800,000 SNX
Buffer rate: 5%
Positive adjustment: 10%
Negative adjustment: 5%
Any Questions?
This release is called Hamal, which like all releases, is named after a star (in order of visual magnitude). If you've got any comments or questions about the release, please join the conversation in Discord.