Written by KomoDeFi Editorial Team on March 23, 2023

Komodo Community Vote - Tokenomics Update - Rewards Reduction & Inflation Reduction

The komodo team has proposed to update the tokenomics of the project by presenting a set of changes to create more value for $KMD holder. The plan to make KMD issuance more deflationary consists of two parts:
- Part 1 - Reduce the active user reward from 5.1% to 0.01% APR (mid-2023 and around the Notary Node upgrade)
- Part 2 - Reduce the block reward from 3 KMD to 1 KMD (mid-2024).

Visual representation of $KMD coin minting with projected changes to tokenomics

One week to go in Part-1 voting...

The worldwide community vote announcement goes into the details of how to vote. With 8 days to go, there is a majority vote towards the reduction of the active user rewards of more than 2:1.

Taking a look at an early voter across chains

One of the earliest votes cast for the reduction of the AUR has a balance on the KMD main chain, and looking at the behaviour of this voter, they do collect their active-user reward - since voting, collecting twice a total of approximately 73 KMD.

The question must be asked, why? When this voter collects additional KMD.

Founder jl777 commentary on voting

Before we look at what jl777 says about the vote, let us consider the above user behaviour requires "work" to open a wallet and collect the rewards - consistently. Back in the origins of KMD, one of the bonuses of getting an AUR was to be able to spend this reward on new upcoming projects in the ecosystem without spending any principal amount of KMD.

Times have changed and the amount of ecosystem development has grown to a halt with the biggest projects currently being PIRATE and Verus with quite established user bases and more than 50% of the coin supply mined.

Demand creation of $KMD would be more powerful without the 5% AUR

Controversy & Community Concern

There is always concern from community on how a project is run - real world, online, government, private, familial or open source. The komodo project is not immune from community outcry for closer collaboration.

The user xJoe_McBeanus in the screenshot above challenged this article, which led me to find more information about governance & voting system alternatives to stake-based one - which I'm grateful for. To be aligned with community balance, here are some concerns xJoe has raised since the original publishing of this article.

Point #3 highlights one of the problems with a stake-based voting system. I have not verified the voting behaviour of the top wallets for the vote - but its easy to see that someone highly invested in the project would want to maximize their investment in this way - and; we can only hope that it benefits the whole community as well.

An unofficial community poll was conducted on discord where the vote was dead-locked in the time of polling. It must be noted several votes for the AUR reduction came from within the team.

If a high value stakeholder is voting in a way that dictates the outcome, then in a stake-based voting system, I would imagine it is to their benefit they would do this. it's not like the whales get more advantage by the reduction of the AUR compared to the minnows - so this falls in-line with one of the advantages of a stake-based system, that the higher stake voter is aiming to steer the project that benefits everyone.

Time will tell if the reduction in emission does win the vote in 8 days time, and futhermore whether it will create upward price movement when there is demand for the KMD coin.

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