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Tokenomics Updates

In the previously announced Token distribution for KMA, 10% of KMA issuance was reserved to incentivize the future Calamari crowdloan. The Manta team managed to secure a second slot for Calamari in July 2022 without the need to run a crowdloan and the swap to this new slot was completed in August with no downtime or impact to users. Since this parachain slot was self-funded, the 9% KMA reserve can be repurposed for staking initiatives that help increase the decentralization of Calamari Network, 1% goes to the development fund.

Calamari Network originally launched without a staking model. With great support from a community of early collator runners joining the collator program the network is operated by more than 30 collators today. These collators incur costs running the node infrastructure and are currently compensated only with transaction fees, which don’t suffice to cover costs while utilization is low during the infancy of the network.

To make it possible to sustainably run high-quality nodes keeping the network performant and censorship resistant, we will change to a Delegated-Proof-of-Stake (DPoS) model, where collators become entitled to a flat KMA reward for every block they produce. In DPoS, users can stake KMA tokens either on their own collator node, or delegate them to another collator runner they think is doing a good job and share in the rewards this collator collects.

As collator slots eligible for rewards are initially limited to 63, this will lead to selection of the best block producers through economic competition.

It will also allow non-technical users to support network stability by voting with their KMA delegation.

KMA started initially as a deflationary token and will stay strictly deflationary throughout the first 3 years through

  1. Burning of 3% of the initial issuance from treasury each year, fully negating the 9% inflation over 3 years from staking rewards
  2. Burning of 45% of all collected transaction fees
  3. (If requested by governance) Burning of a privacy premium collected by the network

After 3 years, the community will decide on future rewards structures for KMA.