Quicksilver v2.0: Evolving Tokenomics for a More Sustainable Future
Since its inception, Quicksilver has sought to create a sustainable and user-driven liquid staking ecosystem. Our mission is to unlock liquidity while maintaining security and decentralization across the Cosmos ecosystem and beyond.
To achieve this, we designed a Participation Rewards (PR) model that incentivizes real engagement rather than speculative activity. This model was a conscious departure from the 2021 bull market’s airdrop-driven approach, which often led to token dumping rather than meaningful adoption.
As we prepare for Quicksilver v2.0, we are refining our tokenomics to better align with the current crypto-economic landscape, ensuring that incentives drive actual usage, increase liquidity, and reward those who contribute to the protocol’s long-term success.
Why We Abandoned Airdrops in Favor of Participation Rewards
Airdrops were once the go-to method for bootstrapping network activity, and our original intent mirrored this. However, we observed that many recipients simply sold their tokens immediately, leading to short-term price volatility without lasting engagement.
Instead of rewarding speculation, Quicksilver introduced Participation Rewards (PR) — a mechanism that continually distributes QCK to users who actively hold or utilize qAssets. This approach ensures that those who provide value to the network are the ones who benefit the most.
With Quicksilver v2.0, we are refining this model to make it more effective, sustainable, and rewarding for active participants.
Key Upgrades to Quicksilver’s Tokenomics
1. Weighted Rewards: Prioritizing Usage Over Passive Holding
One of the primary criticisms of our current PR model is that holding qAssets in a wallet earns the same rewards as actively using them in DeFi protocols. This dilutes the incentive to engage with the ecosystem.
To address this, we are introducing weighted rewards based on how qAssets are utilized:
- Holding qAssets in a wallet will still earn rewards but at a lower rate.
- Depositing qAssets into an Osmosis liquidity pool will earn twice the rewards compared to simple holding.
- Other DeFi activities, such as lending, collateralizing stablecoins, and restaking, will also receive higher reward multipliers.
This shift ensures that those who actively contribute liquidity and engagement receive the most benefits while maintaining some level of rewards for passive holders.
2. Doubling Participation Rewards to Drive Adoption
To accelerate adoption and incentivize deeper integration of qAssets across Cosmos DeFi, we are doubling the allocation for Participation Rewards.
- As we onboard new zones to the protocol, PR distributions will scale.
- This will ensure a steady supply of incentives to support liquidity growth and ecosystem expansion.
By increasing the reward pool, we aim to attract more users, deepen liquidity, and drive greater adoption of Quicksilver’s liquid staking model.
3. Burning Unclaimed Rewards for a Deflationary Model
Currently, unclaimed Participation Rewards roll over into the next epoch, increasing the rewards available for future claimers. While this benefits active participants, it does not benefit all QCK holders equally.
In Quicksilver v2.0, unclaimed rewards will be burned instead of rolled over.
This introduces deflationary pressure on the QCK supply:
- Every epoch, unclaimed QCK will be permanently removed from circulation.
- This benefits all QCK holders by reducing overall token supply over time.
- It also ensures that rewards are fairly distributed without disproportionately favoring those who claim more frequently.
By implementing deflationary mechanics, Quicksilver enhances long-term value retention and creates a more scarce and valuable asset.
Ending Inflation: A More Sustainable Token Model
At Quicksilver’s genesis, we followed the industry standard of launching with an inflationary token model to compensate validators and bootstrap network security.
However, as the network has matured, it has become clear that inflationary dilution is not the optimal approach.
Meanwhile, the Quicksilver Incentives Pool, initially allocated for airdrops and liquidity incentives, has grown significantly due to staking rewards accrued through the Foundation Delegation Program. This pool now holds ~140M QCK (~50% of the total supply).
What’s Changing?
- Inflation will be set to 0% permanently.
- Participation Rewards and staking incentives will now be fully funded from the existing incentives pool.
- This will fix the total QCK supply at ~280M* and, combined with the unclaimed reward burn, makes QCK a truly deflationary token.
This change eliminates dilution while ensuring validators, stakers, and active participants continue to receive rewards through a more sustainable model.
Adjusting Fees to Align with Market Standards
In addition to the above changes, we have consulted the community and will be adjusting our protocol fee from 3.5% to 5%.
This remains significantly lower than other liquid staking protocols such as:
- Milky Way (10%)
- Drop (10%)
- Stride (10%)
Even with this increase, Quicksilver remains one of the most cost-effective liquid staking solutions, ensuring users retain more of their staking rewards while the protocol continues to operate sustainably.
Conclusion: The Future of Quicksilver Tokenomics
Quicksilver v2.0 represents a significant evolution in our tokenomics, ensuring that incentives drive real adoption, liquidity, and long-term value retention.
Key Takeaways:
✅ Weighted rewards encourage DeFi participation over passive holding.
✅ Doubling PR emissions drives deeper liquidity and adoption.
✅ Burning unclaimed rewards makes QCK deflationary.
✅ Zero inflation protects token value while leveraging the incentives pool.
✅ Increased fees align with sustainable protocol growth while remaining competitive.
With these changes, Quicksilver is positioned to lead the next phase of liquid staking innovation — offering a model that is sustainable, deflationary, and optimized for real adoption.
We look forward to your feedback and governance participation as we roll out these changes. Stay tuned for upcoming proposal discussions and implementation timelines!
* The proposal will set the inflation rate to 0%. This will ensure no further $QCK tokens are minted, limiting the supply as of the date of the update. However, no hard supply cap will be set, and should the parameters be reversed by governance in the future, token minting would resume. However, assuming a continuation of the existing staking rewards schedule, it is not anticipated this will be required.
