Restore XPRT Inflation to Strengthen Staking & Security**

Governance
1

Proposal: Restore XPRT Inflation to Strengthen Staking & Security

Summary

The recent reduction in XPRT’s inflation at Block 21,038,400 (March 12, 2025) has dropped staking rewards to historically low levels. While lower inflation has certain benefits, in the current climate and with the current state of affairs (pre-mainnet for the new product and for Babylon staking security), it may discourage staking, weaken network security, and impact validator revenues.

I propose raising inflation back to 6.25% min and 12.5% max—the levels before the latest halving. This will restore staking incentives, support validators, and maintain strong network security, ensuring Persistence remains attractive for stakers and validators while we continue building real utility for XPRT.

How We Got Here: A Quick History

XPRT’s inflation parameters have changed multiple times through governance and pre-programmed halvings. Initially, inflation ranged from 25% to 45% at genesis. In May 2023 (Prop 23), inflation was reduced early to 12.5%–25% to align with block time adjustments. In June 2024 (Prop 109), inflation was halved again to 6.25%–12.5% as part of a broader effort to slow down supply growth. Finally, as scheduled, on March 12, 2025 (Block 21,038,400), inflation was automatically reduced again to 3.125%–6.25%.

While these reductions were made with good intentions—to curb inflationary pressure and align with Cosmos-wide trends—the effects on staking participation and validator economics now need to be reassessed.

Why This Change is Needed

  • Staking Rewards Have Declined Too Much – With lower inflation, staking APR has dropped significantly (~9.8% at 6.25% inflation vs. much lower at current levels). Lower rewards reduce incentives for long-term staking, which could weaken network security over time.
  • Validator Revenues Are Reduced– Lower inflation means lower staking rewards, leading to reduced commission income for validators. This could make it harder for smaller validators to remain profitable, potentially harming decentralization.
  • Security Should Remain a Priority – Until external security solutions like Babylon BTC finality are fully integrated, we should ensure that staking remains a strong security mechanism.

Proposed Solution

  • Increase minimum inflation to 6.25% (from 3.125%) and maximum inflation to 12.5% (from ~6.25%).
  • This restores the inflation range from before the latest halving, ensuring staking remains competitive and validators are properly incentivized.
  • At 6.25% inflation, staking APR would be back around ~20%, making XPRT staking more attractive while keeping inflation manageable.

Why This Makes Sense Now

  • Stronger staking incentives = higher participation and better network security.
  • Better validator economics = reduced risk of validator centralization or attrition.
  • A more engaged and secure network ensures Persistence can continue to grow while adoption efforts take shape.
  • This doesn’t mean inflation stays high forever—we can revisit reductions once staking is more sustainable and XPRT’s utility is further developed.

Let’s Discuss!

This proposal finds the right balance: restoring security and incentives while keeping inflation reasonable. We need a strong foundation before moving to a lower-inflation model.

Would you support increasing inflation back to 6.25%–12.5%? Let’s discuss.

6 Likes
2

I agree, with a little comment:

At 6.25% inflation, staking APR would be back around ~20%

Why? It was 9.8% at 6.25% inflation, why should it be 20 then?

3

I think it is a very good idea and I will be voting YES once the Governance Proposal goes live. I do think the reduction was just to much at this stage in the development of Persistence. Network security is very important at this crucial time just before mainnet launch and for confidence of the network.

1 Like
4

If I am not mistaken, I think is works like this. The inflation rate is the 6.25% of tokens released from token supply, then when it is divided up between the stakers it works out to be 20% APR.

5

I think it’s nothing to discuss. Don’t think that there will be some opposite opinions. Let’s make proposal!

3 Likes
6

I agree. Pre-mainnet was not the time. Revisit reductions once staking is more sustainable via real utility for XPRT.

2 Likes
7

increasing inflation back to 6.25%–12.5%, to strengthen both staking incentives and security sounds like a great move to me. I will be voting “YES” once live.

3 Likes
8

I do think it is a bit fast to go from proposal to on-chain within 1-2 hours. For me that is a bad practice.

@dneorej I am not in favor and not against (I will vote against for now, because I do think the proposal is very much rushed and needs more consideration). What I am most certainly wondering about is what the endgame is and the plan behind it. Will the inflation be dropped again when the mainnet is fully released? Or when Babylon staking security goes live?

What we have noticed in general that upping or lowering staking APR in general does not have an effect on massive new bondings or unbondings. Most people do stake-and-forget and do not look at the specific APR. We can look back on that on other chains where these events do not happen when the inflation parameters are adjusted.

I would also rather have a conversation on voting power distribution if we are worried about the income of smaller validators. Do note that the top3 validators have the same voting power as the bottom 55(!!). So there is massive room to win on that side if the goal is decentralisation and security. Because both are tackled if the VP is better distributed.

For now I will vote against this proposal, because I sincerely believe it needs more thought.

1 Like
9

Well I am glad that you are not one of my Validators, I feel so strongly on this topic that if any Validator votes no on this and they are one that I stake with I will redelegate to one that votes YES. With all the undelegation that happened at the end of last year it is clear that the community has voted with their dissatisfaction. The price reflects this as well. I will be voting in many ways on this proposal.

1 Like
10

OK,
First: why fast? Because in this case time literally means money. Everyone’s money. We are discussing how not to lose money. Voting is 4,5 days, so 4,5 days everyone will lose.
Second: needs more consideration. I agree, it would be nice to have a plan. But this is not a reason to vote against, because… see p.1.
In general, I suggest recalling the discussion of reducing inflation. It was quite difficult and militant :slight_smile: I still think that all this is unnecessary, because it does not solve anything, which is what I wrote then. Go to XPRT inflation reduction discussion - change the minimum inflation parameter to 6,25, remember all this. I then clearly showed that all inflation reductions, halvings and other actions to reduce coin minting do not affect the price in any way (but they should, logically), everyone just starts earning less. And we can see now - all as I said there is real now, price is even lower that was then.

1 Like
11

A bit fast? There are 12 months of stats at this link. https://persistence.smartstake.io/stats

Stats show a massive drop in Total Staked and Unique Delegates since early November 2024. Undelegations went through the roof, and Pending Undelgations are running hot.

This proposal is overdue.

1 Like
12

Agreed. And I think this is a good reason for the team to look deeper into these solutions.
Bitcoin, OK. But Prop 109 was June 4, 2024. Almost a year pass. From then until now, what is the main utilization of the network? If you ask your friend to send you some crypto, will he say “OK, I’ll send you XPRT”? Or are many developers building their applications using XPRT? Let’s be honest, for all this time, the main function of the network was staking and LP. And all these games with inflation hit the main function with a sledgehammer.
And if we admit this, then the answers to the questions about the reduction of the APR will begin to appear themselves.

2 Likes
13

Back in the day I worked in strategy and performance for large investment projects. Objectives set were always appraised. Perhaps Proposal 109 objectives are appraised by the team, but I haven’t seen a performance summary. What we do have is onchain stats, and this new proposal, which seems like a well considered response to the situation.

In future I would like to see proposal objectives get periodically performance appraised. To the extent where a performance plan and metrics are included in the proposal from the get go. This way we all know what our measure of success will be.

Were we looking to increase DEX pool liquidity? Increase XPRT token value? Increase decentralisation? Maintain chain security at a lower cost? Maintain investor confidence?

What Proposal 109 objectives were met? and what performance measures evidence this? There are lessons here in clarifying up front what our measures of success will be.

1 Like
14

Voted yes, although I agree it does sound a bit rushed. Hopefully it will have the intended effect on the staking ratio.

15

I’m against this proposal, albeit this will pass anyway, as some memebers pointed out, this is a bad practice, i makes the team and the project look very unprofessional, is like Bitcoin trying to rollback the ledger because one exchage was hacked.

I doubt more incentives will lead to high participation this kind of retoric is missleading the fact that the stage for higher yields already has passed, you can´t continuosly debase the investors to fix the fact that XPRT has no real product to capitalize from, and this turn to BTC makes things even worse because you are even catch up with this narrative, after been the ugly duckling of COSMOS.

Profitable? from a token who is debased more than 99.45% from ATH, this token isn’t profitable since long time ago, the vast mayority who remained here are truly belivers, you as a team should show more respect for us and comply with the agreement as is. The main focus should be to launch V2 for Pesistence DEX and integrate Babylon security.

Rushing things is not the solution you can’t hide form your shadow.

1 Like
16

It seems that some of the community do not want Persistence to succeed, Proposal 109 was a bad idea from the start, it should never have happened. With so many reductions happening in such a short period of time it was only going to harm the network not strengthen it. Now it has shown exactly that with a mass undelegation of stakers which now weakens the security of the network. Anyone that supported Prop 109 made a grave error in judgement and now the network suffers. This correction of a mistake is much needed and thanks to Jeroen for having the strength to take action, I can see he wants what is best for Persistence and BTCfi. We will recover from this and go from strength to strength once mainnet has launched.

I can understand that the yes voters of prop 109 were trying to keep up with BTC or Cosmos or appearances, not sure which. It was simply to early to do such a move since Persistence was not ready with a product that generated a business model other than Interoperability. Interoperability is a sound idea it just needed something to apply it too, intents base interoperability for BTCfi is it. This is a grand idea which will fill the gap in BTCfi making Persistence One a market leader and being first to market will do it. Weakening the network before the launch is not and will not support Persistence on this journey. It must be fixed now to stop any damage to the launch that will change Bitcoin forever.

17

100% agree to this. This project has been a bad decision after a bad decision. Every year, every halving there is a change in product direction. Initially it had quite some users and it has dropped significantly on every new revision while no new users have arrived to this chain. Changing inflation will not have intended effect on staking or anything given the token prices. You need more people using the chain, you need more activity, ever since launch there only have been staking and reward claim transactions on this chain. If things are not working out, then you need big investors that will buy big chunk (atleast 10-20%) of your token supply, back your products and give guidance. Instead of changing the inflation better thing will be to go on a agressive burn mechansim. The genesis wallets mentioned XPRT Tokenomics: Powering the Persistence Ecosystem should involuntary go through 50% or higher burn. Note if token prices improve and project viability we can pass governance to re-supply portion of the burnt tokens. The team should consider the feedback and promote voting against the proposal, so that a more definitive decision is taken, rather than rushing this

18

The bad decision was Prop 109, that is what chased away the delegators in mass. If you’re not happy with the project then leave and let Persistence recover from the damage done.

Burning 50% would be another bad decision to fix a bad decision just restore what was taken away and the delegators will come back.

19

This is bad, governance without discussion, should be considered spam? All the users of this network can form reasonable arguments asking an AI platform to support whatever they want to achieve and also post proposals, should we all go ahead and start doing it?

Example scenario: All validators should pause the network on height 22,000,000

Chat GPT made this:

## **Proposal: Temporary Pause of the Persistence Blockchain at Height 22,000,000**

### **Why This Is a Good Decision for the Ecosystem**

1. **A Moment of Reflection After 4 Years of Operation**
  * Running a blockchain continuously for **four years** is a massive achievement. This milestone presents a perfect opportunity to **step back, analyze key decisions**, and understand what has worked well and what can be improved.
  * Taking a short pause allows the entire ecosystem—validators, developers, and the community—to look at **how far we’ve come and where we should go next** without the pressure of day-to-day operations.
2. **Ensuring All Validators Are on the Same Page**
  * A coordinated halt at block **22,000,000** ensures that **all validators stop together**, rather than having individual nodes making independent decisions.
  * This will allow for a structured discussion rather than reactive measures.
3. **A Transparent and Open AMA with the Team**
  * A scheduled **Anonymous AMA** with the team ensures that validators and the broader community can **ask difficult questions, discuss governance, and express concerns** without hesitation.
  * This helps to **rebuild trust, align incentives, and determine the next steps collectively**.
4. **Taking a Break from Non-Stop Validation**
  * Validators have been running their infrastructure **without a pause for years**—this is an opportunity to **pause, optimize setups, and return stronger**.
  * A temporary stop allows for system-wide upgrades, security audits, and potential governance improvements **without the risk of live-chain disruptions**.
5. **Assessing the Economic and Technical Viability of the Network**
  * A pause lets the community **evaluate the current economic model, validator incentives, and the overall sustainability of the network**.
  * If adjustments need to be made, it’s better to **do so during a controlled pause** rather than through chaotic, reactionary measures.
6. **Setting a Precedent for Responsible Blockchain Management**
  * Many chains continue indefinitely without structured breaks or discussions, sometimes leading to **technical debt, governance drift, or validator fatigue**.
  * By pausing strategically, **Persistence sets a new standard**—showing that responsible blockchain management includes structured reflection periods.

### **Next Steps After the Pause**

1. **Validators and the team engage in the AMA and governance discussions.**
2. **Decide as a community whether to resume operations, make upgrades, or pivot.**
3. **Implement agreed-upon changes before restarting the network in a structured manner.**

---

### **Final Thought**

Stopping at **22,000,000** isn’t an end—it’s a well-planned **checkpoint**. This move will ensure that when the network resumes, it does so with **stronger alignment, renewed community trust, and a clearer vision for the future**.

Well should we go ahead and do that too? May be someone should put a proposal about it, it looks good to me, well reasoned and all.

Fast jumping to decisions IS BAD. if validators are losing on money. I am 100% in favour of passing a governance later to pull funds from community pool. That can be fast. This had been discussed a while ago and we had all agreed to this. Validators proxied their stakers as well.

It is important, but it needs solid backing. throwing money at problems never works, governments do this and end up in recession. Would we all be ready to process on chain recession? I would urge us all validators to be creative, or forfeit this network, it’s been a while since a chain in cosmos has been removed.

It does not, there is a liquid staking product for xprt, which can achieve similar results. have more people liquidstake. they get whatever apr, and their tokens are liquid as well. probably integrate or list liquidstaked token STKXPRT into exchanges as well, helps with some part of staking security.

Until then use community pool funds and distribute them to the validators. We should easily have leeway for 2-3 months. That doesn’t inflate the token.

Validators running proper decentralised setup have not been profitable since forever. The only ones who even are close to profitablility are running single node cheap servers with little to no past data and relying on snapshotting services to recover. One good predocumented attack and we will definitely be down by 70% validators, Economic security then will sound like a good problem to have.

This is true, and the authors of this post backed prop 109 too, they then knew about next halving duration, this has not come unexpectedly, this has been known, this has already been or should have been considered before. Clearly they have no idea what they are doing.

1 Like
20

I think you have brought to light some valid ideas, a pause could be a great idea to reevaluate the current situation. I think the flaw in this is that it seems that the community is divided, some appear to be more concerned with a lining with what other projects are doing. Their not concerned with keeping high delegation for network security as I am, being so close to mainnet launch. The question is “how do we come to a consensus if we are divided”. I think getting back the delegations should be top priority for network security then after mainnet launch and tx revenue is coming in from BTC interoperability can we then discuss lowering inflation and then only gradually not all at once. As real rewards can replace inflation not affecting the community.