Committee Proposal 102
Committee proposal 102 is a voting request for modifying the № 5 and № 31 chain parameters on TRON network, adjusting the block reward from 16 TRX to 8 TRX, and the voting reward from 160 TRX to 128 TRX. Please refer to here for the origin discussion. The № 102 committee proposal is already in effect, please refer to here for the voting details, this post is dedicated to provide more details.
Why does the TRON network need this proposal at this time?
The implementation of a series of proposals within TRON’s tokenomics model has significantly impacted the TRX supply, resulting in a transition from inflation to deflation, but with a potential rebound trend showing recently. Especially after increasing the total energy limit from August to October 2024, the net increase of TRX supply shows a gradual increasing trend in recent months, indicating a potential resurgence of inflation.
The feasibility and reasonability of this proposal
The community has widely and deeply discussed this proposal on Github and during multiple core devs community calls, and finally made consensus on enabling this proposal.
The previous TRX block rewards effectively stimulated network staking and transaction volume growth in the early stages. However, as the TRON network develops, the relatively high production rates of TRX may dilute the token’s value over time and reduce the incentive for long-term staking.
By reducing the TRX reward from 176 TRX to 136 TRX in total, the expected annual deflation rate will become about 1.29%, which better adapts the transaction volume and activities on the TRON network.
Diving into other mainstream public chains, most have designed mechanism to control the inflation rate:
- BTC is well-known for halving every 4 years to cut the supply.
- ETH implemented EIP-1599 introducing base fee to accelerate burning in 2021, and significantly reduced ETH supply rate after the merge in 2022, bringing the inflation rate drop from about 4% to 0.3% at the moment, reduced by about 90%.
- SOL supply rate is pre-set, currently about 5.1%, and is designed to decrease by about 15% each year.
The current supply rate of TRX has remained for more than 5 years, as the total energy limitation has been enlarged a lot and many chain parameters have been adjusted, it’s time to consider the proper TRX supply rate.
The biggest question during the discussion is that reducing TRX reward will decrease the benefit of staking holders. However, taking the advantage of energy renting into consideration, the expected comprehensive APR will change from about 9.15% to 7.08%, which is still attractive and competitive.
What’s the benefit brought by this proposal?
Enabling this calculation performance optimization brings several benefits:
- Enhance Deflation: Lowering the TRX block rewards will enhance the network’s deflation rate, potentially increasing its value.
- Incentivize Staking: Leveraging the advantage of TRON’s staking model, the increase in TRX value can encourage more users to stake TRX to obtain the resources for transactions.
- Strengthen Network Security: Increased staking participation strengthens the network’s security by locking up more TRX.
- Improve Economic Incentives: Align token distribution with the maturity of the network, ensuring that incentives remain robust and meaningful for both new participants and long-term holders.
Summary
After the proposal of reducing TRX reward takes effect, the annualized deflation rate of TRX is expected to increase from the previous 0.85% to 1.29%, which will further accelerate the deflation process of TRX, optimize TRON’s economic model, and enhance the long-term sustainability of the network.
