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.
CMDXâs 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, weâve 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 networkâs 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 âinflation_maxâ parameter will be set to â0.101250000000000000â, and âinflation_minâ to â0â 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 CMDXâs 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 ecosystemâs 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 networkâs 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 networkâs 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 networkâs 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 networkâs overall economic strategy. These fees are vital for sustaining and rewarding CMDX stakers. Importantly, despite this increase, CMDXâs 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 tokenâs 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 ecosystemâs 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 Web3Authâs 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 CMDXâs 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 âgaslessâ 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 usersâ 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 tokenâs 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, itâs vital that our community actively participates in discussing the upcoming changes before they are enacted on the chain.