Build Out OSMO "Tail Emissions"

Proposal Discussion
1

Given all the changes and discussions around sustainability, I’d like to explore the viability of crafting a “pseudo” tail emissions strategy for Osmosis.

What I mean by this is that, to extend staking/validator rewards indefinitely, a Tail Emissions Pool be created to begin distributing rewards once the minting cap has been reached. This pool would be filled by:

  • Excess token minting created by recent tokenomics changes that is currently routed to the Community Pool
  • Reallocating/rerouting fees that are currently being burned

A placeholder emissions rate would be used during the setup of the Tail Emissions Pool, with a final rate to be determined by governance once the protocol is ~6-12 months out from exhausting new token minting.

This strategy would actively remove OSMO from circulation long-term without permanently burning it, while building a tokenomic foundation for indefinite protocol sustainability.

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2

It is an important issue you raise, but it has been addressed previously. Stakers already receive a share of taker fees paid out in OSMO. This is a sustainable source of reward for stakers and their validators so that in the future when inflation ends, rewards will still be paid.

If I recall correctly, validators receive their 5% share of their staker’s rewards. There are also other ways to provide sustainable revenue for validators such as a subsidy from top of block auctions.

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