CMDX 2.0: A New Horizon in tokenomics

Introduction:

Dear Comdex Community,

We recently introduced our plans to consolidate our focus towards building ShipFi and continuing our journey towards bringing RWA financing on the chain. The full discussion thread can be found here.

This decision came after a careful evaluation of the evolving ecosystem landscape and recognising a growing openness towards the adoption of blockchain tech among institutions and enterprises. As we gear up to enter the next phase in our long journey towards democratising finance, we present to you a proposal for a revised CMDX tokenomics.

CMDX’s original tokenomics were designed to help bootstrap its ecosystem, whilst maintaining an adequate incentive for stakers and capturing value from the growth of the network.

As a part of our efforts to evolve along with the evolving landscape, we’ve designed a new tokenomics model with the following objectives in mind:

  • Improving sustainability in CMDX inflation while maintaining sufficient incentives for CMDX stakers
  • Higher value transfer to CMDX stakers
  • Seamless UX through gas abstraction
  • Seamless onboarding of new dApps
  • Bootstrapping the ecosystem for new dApps expected to launch this year
  • Capturing value from dApp adoption for CMDX stakers.
  • Making CMDX deflationary

The proposal below outlines a set of changes that are aimed to achieve the above-mentioned objectives and help align CMDX with the overall direction for the network moving forward.

TLDR:

  • Halvening of inflation in the current year, with a 25% reduction every subsequent year with 5% as the minimum inflation.
  • Increase gas fees by 25x
  • Introduce a burn for 50% of gas fees collected
  • Accept ATOM and USDC for gas. Half of the gas collected is auctioned for CMDX and burned
  • Burning ~11.7M unutilized CMDX from unclaimed airdrop.
  • Gas abstraction

Current Scenario:

Tokenomics is the crucial architecture underpinning financial systems. Our proposed updates stem from in-depth reflection and insights gained from key developments in Cosmos and beyond. Our team has performed extensive due diligence to identify and implement essential improvements, aiming to fortify the economics of CMDX as a primary Layer 1 token.

The tokenomics of CMDX have evolved according to the original inflationary schedule, designed to encourage participation and growth within the Comdex ecosystem. The total supply has gradually increased, consistent with the planned 30% inflation rate for the first year, followed by a 25% reduction in inflation each subsequent year. To date, a significant portion of CMDX has been allocated to stimulate ecosystem engagement, including airdrops, community development and liquidity rewards.

As of the current date, the circulating supply of CMDX is approximately 182 million tokens. Of this amount, a notable 67% is bonded, indicating a strong commitment by holders to the network’s security and governance. Following our original tokenomics model, the current inflation rate is approximately 20.25% annually.

Proposed Upgrades:

We propose the following enhancements to the CMDX tokenomics:

1. One-time Halvening:

We propose key enhancements to the CMDX tokenomics, centered around a strategic adjustment of the inflation rate. The proposed change involves a reduction in the inflation rate to 10.125%, half from the existing rate of 20.25%. This strategic move will see the inflation rate of CMDX cut by 50%. Following this initial halving, CMDX will then continue its original tokenomic plan and a consistent 25% reduction in its inflation rate each subsequent year.

Following this the rate will be further adjusted to ~7.5% inflation in the following year and will stabilize
at ~5% thereafter, continuing perpetually. Importantly, this 5% rate is designed as a minimum threshold
inflation until we reach a hard cap of 200 million CMDX. Once this cap is reached, the inflation rate will
be reduced to 0%.
Specifically, the ‘inflation_max’ parameter will be set to ‘0.101250000000000000’, and ‘inflation_min’ to ‘0’ for the current year.

Rationale:

The proposed emission rates for the Comdex ecosystem consider the time needed for the ecosystem to mature. Balancing expansionary economics with careful supply management is key during this period. As the ecosystem grows, transaction fees should sufficiently reward Comdex stakers.

In revising CMDX’s inflation schedule, we aim to minimize token dilution while ensuring stakers remain incentivized. Expected reductions in inflation-based rewards will be compensated by other measures in this proposal.

As the Comdex ecosystem approaches maturity, it is poised to become increasingly self-sufficient. We anticipate that transaction fees will alone provide sufficient returns for stakers. A key driver of this growth will be the introduction of consumer-facing dApps, that are inherently transaction-intensive, generating a high volume of on-chain activity. These developments are currently underway on our chain, signaling an expansion of our ecosystem’s capabilities. With these, we are projecting an increase in transaction volumes by several multiples over the next two years.

2. Transaction Fee Increase:

A proposed 25x increase in transaction fees is intended to strengthen the network’s value proposition and reinforce economic incentives

Rationale:

The proposed 25x increase in CMDX transaction fees is a response to the reduced inflation rate, aimed at ensuring the network’s sustainability. With a stable, revised inflationary model, transaction fees become the primary driver of economic value and, consequently, staking yield.

This increase is crucial not only for the network’s financial stability but also for maintaining and boosting staking yields over time. Higher transaction fees will play a significant role in the economic value generated on the chain, becoming a key element of the network’s overall economic strategy. These fees are vital for sustaining and rewarding CMDX stakers. Importantly, despite this increase, CMDX’s fees will remain competitive, aligning with those of its peers within the Cosmos ecosystem and beyond.

Additional Note:
Even with a 25-fold increase, CMDX transaction fees will remain much lower than those in other ecosystems. These fees may be subject to future revisions depending on market conditions. If gas fees become excessively high, the community can initiate a discussion/governance proposal to re-evaluate the fee structure and reduce it to a more sustainable and competitive level.

3. Transaction Fee Burn:

Enact a burn on 50% of the CMDX generated from transaction fees with the remaining 50% being distributed to CMDX stakers (after the Base proposer reward, Bonus proposer reward, and Community tax have been deducted).

Rationale:
Implementing a burn mechanism is key to balancing changes in inflation and enhancing the token’s long-term value. By burning 50% of CMDX transaction fees, we create gradual scarcity in CMDX as network adoption increases. Distributing the remaining 50% of all transaction fees to CMDX stakers aligns with our goal to reward and incentivize network participation, creating a balance between token utility and scarcity, and ensuring a sustainable economic model for the ecosystem’s growth.

4. Accept ATOM and USDC for gas fees:

Allows users and dApps to pay gas in ATOM and USDC. From the 50% of the gas collected in ATOM and USDC (after the Base proposer reward, Bonus proposer reward, and Community tax have been deducted), will be distributed to CMDX stakers while the remaining 50% will be auctioned every week for CMDX, the proceeds of which will be burned.

Rationale:

Expanding the set of acceptable currencies for gas fees helps in a smoother onboarding process for users and dApps into the Comdex network, where they may transact seamlessly. The added benefit is the opportunity for CMDX stakers to earn yields in ATOM and USDC. Incorporating the ability to pay fees in different tokens, combined with Web3Auth integration, greatly streamlines the user experience in the CMDX ecosystem. Users benefit from the ease of Web3Auth’s seamless login mechanisms, and the versatility in fee payments allows for more straightforward transactions. This approach enhances overall accessibility and convenience.

5. Unclaimed Airdrop Token Burn:

Burn ~11,708,400 unclaimed airdrop CMDX tokens (i.e ~6.42% of circulating supply) along with all staking rewards accumulated.

Rationale:
At Genesis, 12.5% of CMDX’s supply was allocated toward an airdrop. The unclaimed portion of these tokens had been staked as there was no foreseeable utilization of these tokens at the time. Burning the ~11.7M unclaimed airdrop CMDX would reduce the total CMDX supply from ~182M to ~170M (ATTOW).

6. Gas Fee Abstraction for New dApps:

Facilitate Seamless Onboarding and Growth for New dApps through Gas Fee Abstraction

Rationale:

In our pursuit to foster innovation and growth within the ecosystem, we introduce a significant initiative: Gas Fee Abstraction for new dApps. Under this initiative, new dApps looking to build on Comdex will be able to operate in a ‘gasless’ mode during their initial bootstrapping phase. The focus is on abstracting gas away from the interface layer for users by establishing a system where dApps must cover gas fees on behalf of its users. This move is aimed at enhancing UX and helping attract non-native users into the ecosystem. In the bootstrapping phases, dApps may apply for grants to the ecosystem development fund to obtain the CMDX necessary to cover users’ gas costs. The grant application process will be streamlined and transparent, ensuring fair access and support for promising projects, and will be governance-controlled.

Conclusion:

The revised CMDX tokenomics are set to profoundly transform the token’s value within the ecosystem. The introduction of gas fee abstraction in our CMDX tokenomics plays a crucial role in enhancing the bootstrapping phase for new dApps within the Comdex ecosystem. This initiative is particularly valuable for applications with high transaction volumes. These enhancements, coupled with deflationary mechanisms such as reduced inflation, transaction fee adjustments, and token burns, are aimed at ensuring more effective value capture as the network matures. Over time, as transaction volumes increase, these changes are expected to yield competitive returns for CMDX stakers.

With the anticipated launch of multiple consumer apps on the Comdex chain in the upcoming year, we expect a surge in transactional activity. This increase in transactions will continuously contribute to creating scarcity for CMDX.

In conclusion, we invite our valued community to engage in and discuss these proposed changes to the CMDX tokenomics. Your insights and feedback are crucial in shaping the future of our ecosystem. To ensure the best outcomes for the Comdex ecosystem, it’s vital that our community actively participates in discussing the upcoming changes before they are enacted on the chain.

4 Likes

Maybe it’s worth considering distributing the unclaimed tokens to the stakers?
Coz it seems what Celestia did impress a lot of consumers.

2 Likes

Maybe we should use unclaimed airdrops to make cmst whole again and redistribute the balance to current stakers or proceed with burn the remaining balance, but it’s time to move the needle again on comdex blockchain flagship stable coin.

1 Like

Good to see that multiple actions are now stacked (focus on RWA and revision of tokenomics) to bring back flow into the project.

  1. One-time halvening
    I think it is a good move. You see that the high inflation rates we saw during last bullrun are slowly becoming a thing of the past. Settling at 10% and aiming to go lower in the coming years is a good thing.

  2. Transaction fee increase
    25x might be a bit excessive I guess. Maybe better to take smaller steps so that it is not a big shocking experience? I noticed that currently we have transaction costs of 0.002 CMDX per transaction, so even if we go x25 we end up around 0.05 (for medium costs transactions), which is which the current prices still just $0.0025. So that won’t be a big deal maybe. I’ll leave this one to the team ^^

  3. Transaction fee burn
    With increased fees and burning everybody “wins”. People using the chain pay a little bit more, but the holders benefit from a potential price increase, while stakers benefit from a higher payout in terms of transaction fees. Staking will be incentivized not necessarily from the point of high inflation, but from yield coming from usage of the platform.

  4. Accept ATOM and USDC for gas fees
    Go!

  5. Unclaimed Airdrop Token Burn
    I can understand the idea to burn the funds. Just thinking out loud; are there enough funds in the grant fund?
    We have seen for example that the burn narrative works, but not enormously. Injective has a high burned amount, but mostly also from the initial burn the team did. That really doesn’t do much for the token price in general. So only do this when you want to bring the supply down to get more room for the prolonged inflation (because it will effectively buy roughly 2 years of inflation).

  6. Gas Fee Abstraction for New dApps
    Yes! Bootstrapping new projects to build on the platform to work with 0 fees will allow people to try out the tools for (nearly) free. Great move.

3 Likes

Distributing unclaimed tokens to stakers is a very good idea. Stride and Celestia also do this. It incentivice longterm staking

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Great moves! Finally seems like there is some positive momentum for CMDX after ages of silence. But I don’t agree with @FrauBelz & @corneliscrypto here. Giving 6% of CMDX liquid to people means a lot of them will see it as a free airdrop and probably sell it. Price impact might actually end up being negative (counterintuitive i guess).

I like @Leonoors_Cryptoman suggestion to maybe move some of it to grant fund. but idk burn would be nice too.

really looking forward to gasless apps. that should be nicee

3 Likes

Real power moves here, I believe a burn is necessary and think the airdrop tokens should be fully burnt but also believe @Star67 's Idea to use these tokens to make CMST whole, it is vital for Comdex to bring CMST up and working. I am not sure how this will work on paper but think it should be further discussed. Not in the favor to redistribute it to stakers as from what I understand the proposal intends to reduce sell pressure by reducing inflation and distributing this is just additional sell pressure.

4 Likes

Yeah, on a 2nd thought, if redistributing that unclaimed tokens will cause a sell-off then it is better to be burned.

2 Likes

Appreciating the CMDX 2.0 tokenomics revamp proposal, it’s refreshing to see a well-thought-out plan beyond just a token burn announcement.

Here are my thoughts on the suggestions and some areas I’d like to highlight:

  • Halving inflation to 10.125% is a strategic move, considering staker rewards and supply management. Given recent events, maintaining a certain level of inflation for a longer period than initially intended could be beneficial for building a more robust ecosystem.

  • A 50x increase in transaction fees seems more viable, as it would still amount to less than a cent. Coupled with a 50% burn, this could significantly enhance CMDX’s value.

  • Including ATOM and USDC for gas payments is commendable, undoubtedly enhancing accessibility and user experience.

  • Regarding the unclaimed tokens, I suggest a balanced approach.
    Burning 50% while reallocating the remainder to attract & support new projects to build & sustain on Comdex.

1 Like

We would not have to totally dump cmdx to make cmst whole, we just need to hold the cmdx in reserves on harbor protocol to honor collaterals that were use to mint the cmst. Currently there are 312,246 cmst in existence backed by $204,633 and rising at the time of writhing this. The team should Allocate 1.5 million cmdx from the airdrop clawback to prop up the stable coin collateral so you don’t have to make a run on the community pool in the future.

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Accepting other tokens for gasfees is a good move imo. Personally I would include USDT as well though.

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Possibly yes. I do understand the choice for USDC.

Volume for USDC is near 19 million dollar on Osmosis for example.
Volume for USDT doesn’t reach 2,5 million dollar.

So there is quite the gap.

2 Likes