FRC02 Proposal: Introducing Fee Burn, and Transitioning to a Deflationary Model - [UPDATE]
Author: Fuse Team
24th June, 2024
Dear Fuse Community,
We are grateful for your continued engagement and feedback on the FRC02 proposal. This proposal is a significant step towards enhancing the economic model of the Fuse network by introducing a fee burn mechanism, and transitioning to a deflationary model.
In this post, we provide updated simulation data and clarify the changes to the inflation rates and their impact on the FUSE token supply. We aim to ensure transparency and accuracy as we proceed with this proposal.
Overview of FRC02 Proposal
The FRC02 proposal aims to achieve the following objectives:
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Introduce Fee Burn Mechanism: A portion of transaction fees will be burned, reducing the total supply over time and contributing to the deflationary model.
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Transition to a Deflationary Model: By gradually reducing the inflation rate, the supply growth of FUSE tokens will slow down, increasing scarcity and potentially enhancing the value of each token.
Corrected Simulation Data
Based on community feedback and further analysis, we have updated the simulation data to reflect the proposed changes accurately. Below is the corrected data showing the total supply at the start of each period and the number of minted tokens within the period:
| Period | Inflation | Total Supply at Start | Minted Tokens |
|---|---|---|---|
| August 2019 → August 2020 | 5% | 300,000,000 | 15,000,000 |
| August 2020 → August 2021 | 5% | 315,000,000 | 15,750,000 |
| August 2021 → August 2022 | 5% | 330,750,000 | 16,537,500 |
| August 2022 → August 2023 | 5% | 347,287,500 | 17,364,375 |
| August 2023 → August 2024 | 5% | 364,651,875 | 18,232,594 |
| August 2024 → August 2025 | 3% | 382,884,469 | 11,486,534 |
| August 2025 → August 2026 | 1.50% | 394,371,003 | 5,915,565 |
| August 2026 → August 2027 | 1% | 400,286,568 | 4,002,866 |
| August 2027 → August 2028 | 0.75% | 404,289,434 | 3,032,171 |
| August 2028 → August 2029 | 0.50% | 407,321,604 | 2,036,608 |
| August 2029 → August 2030 | 0.50% | 409,358,212 | 2,046,791 |
| August 2030 → August 2031 | 0.50% | 411,405,003 | 2,057,025 |
| August 2031 → August 2032 | 0.50% | 413,462,028 | 2,067,310 |
| August 2032 → August 2033 | 0.50% | 415,529,339 | 2,077,647 |
Graphical Representation
Where y-axis = 100 millions
Key Insights from the Simulation:
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Initial High Inflation (2019 - 2024):
- The inflation rate is set at 5% during these initial years. This phase supports rapid network growth and rewards early participants by increasing the token supply yearly.
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Controlled Reduction (2024 - 2026):
- Starting from August 2024, the inflation rate decreases to 3% and 1.5% in the following year. This reduction aims to moderate supply growth while ensuring sufficient incentives for network contributors.
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Transition to Stability (2026 - 2033):
- From August 2026, the inflation rate gradually lowered, reaching 1% and stabilizing at 0.5% from August 2028 onwards. This marks the transition towards a deflationary model, enhancing the scarcity and potential value of FUSE tokens.
Moving Forward
The corrected simulation data aligns with our vision of creating a sustainable and economically sound ecosystem for the Fuse network. By progressively reducing the inflation rate, we aim to support a deflationary model that will increase the scarcity of FUSE tokens, potentially driving their value up and benefiting long-term holders and network participants.
We encourage all community members to review the updated simulation data and continue participating in the discussion. Your feedback is invaluable as we refine and implement these changes.
How to Participate
For more detailed information and to join the ongoing conversation, please visit the full discussion on the Fuse Forum: FRC02 - Setting a Max Supply, Introducing Fee Burn, and Transitioning to a Deflationary Model.
Feel free to share your thoughts and questions in the comments below. Your active participation is crucial to shaping the future of the Fuse network.
Thank you for your continued support and engagement.
Best regards,
The Fuse Team
Community Engagement:
If you have further questions or wish to discuss this proposal in more detail, please join our next community call or visit our Discord channel and Telegram channel.