Temp Check: Eliminating new RING Issuance and Transition to a Deflationary Model

[hackfisher]

Summary

This proposal reflects RingDAO’s strategic shift, emphasizing RING as a governance token with a deflationary supply model. The changes aim to:

• Eliminate ongoing supply inflation
• Reduce long-term liquidity and market-making pressures
• Strengthen RING’s scarcity and supply-demand balance
• Alleviate Treasury deficit concerns

Additionally, a minor adjustment will be made to the Collator Staking and Kton Staking incentive model, ensuring that staking rewards remain sustainable under the new framework.

---

Part 1: Eliminating Future RING Issuance (Deflationary Model)

To transition RING into a deflationary asset, we propose to completely remove new token issuance by eliminating the following inflation mechanisms:

• RING Issuance and Inflation Logic
  • Code Reference
  • Code Reference

Key Impacts of This Change:

✅ RING becomes deflationary, as no new issuance will dilute existing holders.
✅ Treasury deficit pressure is alleviated, preventing uncontrolled inflation-driven expenses.
✅ Supply-demand dynamics stabilize, strengthening RING’s value and long-term sustainability.
✅ Long-term liquidity and market-making burdens decrease, as excess supply is no longer entering circulation.

Under the existing model, an estimated 200M RING (+-5%) would have been issued over the next few years. By canceling inflation, this supply expansion is completely removed, ensuring a scarcity-driven economic model for RING.

---

Part 2: Minor Adjustments to Collator Staking & Kton Staking

Since the previous staking incentives were tied to inflation, we propose a transition to a fixed Treasury-funded reward structure while maintaining the incentive model with minor modifications.

Key Adjustments:

• Future staking rewards will be directly funded from the existing Treasury, rather than through new token issuance.
• To ensure predictability, the staking incentive pool is set as:
  • 40M RING allocated to Collator Staking
  • 40M RING allocated to Kton Staking
• This fixed allocation is based on the previous model, where each category was expected to receive approximately 20% of the discontinued inflation supply.
• No additional inflation-based staking incentives will be introduced, ensuring a controlled and predictable reward structure.

Key Impacts of This Change:

✅ Collator and Kton Staking remain incentivized, ensuring network liveness and participation.
✅ Staking rewards are now fixed and predictable, avoiding uncertainty from inflationary issuance.
✅ The Treasury remains in control of fund distribution, balancing sustainability with incentivization.

---

Next Steps

If this Temp Check receives broad support, we will move forward with a formal runtime upgrade proposal to:

1. Implement the deflationary model by removing the inflation mechanisms.
2. Establish the Treasury-funded staking incentive pool with fixed allocations.

Do you support this transition to a deflationary model and a Treasury-funded staking incentive structure?
Please share your thoughts and feedback below.

References

https://github.com/orgs/ringecosystem/discussions/4

[SasoLithops]

Very interesting! This change idea is very welcome as inflation is a huge issue for Ring price,

I have a few questions:

• How will future development be funded(monthly developer salaries, incentives, dApps support...)? Also from existing treasury?
• Is there a calculation on how long the treasury ammount can last to fund it (with 80M per year going to stakers and development)?
• What happens once we run out of treasury funds? Do we decide to mint more Ring?
  "✅ The Treasury remains in control of fund distribution, balancing sustainability with incentivization." I don't understand well does incentivization mean mint new tokens?
• I am not a big fan of governance only tokens(with so many(over 2B) issued already). Will Ring still be used for fees and is it still goal to make it more usable in dApps?

[hackfisher]

How will future development be funded(monthly developer salaries, incentives, dApps support...)? Also from existing treasury?

Yes, from existing treasury. Only minting new RINGs if this project need more R&D cost and markets thinks it is good for the project and are willing to fund it.(Someone will buy the new minted RINGs)

What happens once we run out of treasury funds? Do we decide to mint more Ring?

The RING token holders or the RingDAO governance can choose to change the monetary policy or not in that case.

"✅ The Treasury remains in control of fund distribution, balancing sustainability with incentivization." I don't understand well does incentivization mean mint new tokens?

Incentive means pay tokens for collators or kton stakings for contribution working as collator or locking kton.

I am not a big fan of governance only tokens(with so many(over 2B) issued already). Will Ring still be used for fees and is it still goal to make it more usable in dApps?

Yes, governance is not the only utility of RING but one more, RING can still be used as gas or fee tokens.

[SasoLithops]

Yes, from existing treasury. Only minting new RINGs if this project need more R&D cost and markets thinks it is good for the project and are willing to fund it.(Someone will buy the new minted RINGs)

By someone you mean VCs?

The RING token holders or the RingDAO governance can choose to change the monetary policy or not in that case.

But isn't that for sure to happen we run out of funds in long run. I always adored Darwinia long term vision. Won't this staking rewards and R&D and payments to developers soon drain the treasury?
Have there been any calculations what an average yearly cost is to fund all? I am having doubts if maybe adjusting inflation or something else might be a better solution then just drain the treasury till 0 and deal with everything else when time comes.

Yes, governance is not the only utility of RING but one more, RING can still be used as gas or fee tokens.

I fear these changes might not affect Ring price as governance and fees will not increase demand.

[2xJDubs]

While I understand the end goal of this idea I am not sure I entirely like the execution of it from the level of a true runtime change. I think @SasoLithops brings some valid points around how long would the treasury last being the sole source of staking rewards and other expenditures on a monthly basis. Also where would funding for core time slots come from since parachains are going to be going away being replaced with coretime allocations.

I would be more in favor of setting up a smart contract that could have a changeable amount of burn for RING issuance that can be voted on my RING holders. This way inflation can be adjusted based on market conditions and needs of the Ecosystem. There is more I am pondering but not ready to put in writing so will add to my thoughts as I finalize them.

[hackfisher]

Ring Tokenomics or monetary policy primarily considers macro factors. The specific allocation and payment of expenses will be determined by governance proposals related to Treasury spending.

Yes, at the micro level, budgeting issues may arise, but that is not necessarily a bad thing. In fact, the very root of macro-level problems might be partially due to the inefficiency of fund allocation and spending.

[sonoferin2000]

a drastic move in my opinion. couldnt have started with a a periodic halving event or something first? and why even bother with the pretence of a vote, you can basically steamroll your proposals through all by yourself,

[hackfisher]

Thanks for your comment.

The idea of a “periodic halving event or something” was your suggestion, not mine. Personally, I place higher value on scarcity, especially in this current undervalued stage.

For anyone with a different opinion, the path is simple: buy tokens and vote. Considering the current low price, that’s not a difficult move and reflect "skin in the game".

[sonoferin2000]

Look, I get the whole scarcity thing, but it kind of feels like you're stacking the deck when the people with the most tokens can just push things through. It’s also worth mentioning that a chunk of your tokens came from a payment arrangement from the project, not from your own pocket. Not everyone bottomless pockets to continuously "buy the dip" but your bag gets fatter,regardless of how well the project does. Maybe we should find a better way to make sure everyone has a say, not just those who can afford to play the game. its over centralised.

[hackfisher]

There is a serious mistake here — do not present your assumptions or beliefs as facts.

All of my votes on RingDAO have been cast using my own tokens, or tokens delegated to me by others. Neither Itering nor any ecosystem tokens were involved in voting or delegation. The tokens I used were acquired through my personal purchases and are my private holdings, over which I have full rights and discretion to use.

Please get your facts straight before making baseless accusations.

[hackfisher]

https://www.tally.xyz/gov/ringdao/proposal/19987971950136790043207590211851376705511980572685821084545350344298598331186

[Laki389]

Hi @hackfisher Denny, I would like to comment on the allocations for Collator Staking and Kton Staking which are 40M RING each (annually?).

According to Genepaper_v4 https://darwinia.network/Genepaper_v4.pdf the annual inflation for 25/26, 26/27, 27/28, 28/29 and 29/30 is an annual average of 194,142,545 RING.

Therefore, 20% would be 38,828,509.

If, with this proposal that is already being voted on, inflation stops, the existing RING that is in the Treasury gains scarcity.
Therefore, IMHO, it is not logical to increase staking rewards, which, with the still existing inflation, would amount to an average of 38,828,509 RING per year for collator staking and KTON staking.

With this proposal, they increase to 40M each.

I did some research on PoS projects that do not have inflation.
From the Polkadot ecosystem, for example, Hydration.

They have Hydration DEX, which generates income because trading fees are from 0.2% and up. (dynamic trading fees, when there is no volatility they are 0.2%, when there is volatility the fees are higher).

50% of the income goes to HDX stakers, 50% goes to Omnipool LPs.

TLDR of my comment would be:

• this proposal does not offer a long-term solution

• collator stakers and KTON stakers rewards are higher with this new proposal, which is not logical

• in the future, there should be a discussion about reducing staking rewards

• for the RING ecosystem to have a future, there should be applications that generate revenue.
  The revenue would go, in a percentage that would be decided by governance, part to stakers, part to Treasury, and even part could be burned. With the burning, only then would RING be deflationary.

[hackfisher]

Thank you for your analysis. I agree with most of your conclusions. Regarding your point that the ongoing Staking Reward will be slightly higher than the original, I agree and have noted it in the proposal. I also agree with gradually reducing the Staking Reward through subsequent proposals, as the incentives in Liveness(collator staking) is not cost-effective.

This proposal reflects a shift in monetary policy—focusing on controlling token scarcity rather than issuing more tokens when there are no investments or buybacks. From a macro perspective, minting more tokens in such a situation does not make sense.

Besides, this proposal does not solve all problems, and it does not need to solve all the problems, only some important ones of them will make it a good move.

[hackfisher]

https://www.tally.xyz/gov/ringdao/proposal/19987971950136790043207590211851376705511980572685821084545350344298598331186

https://darwinia.subscan.io/referenda_v2/46