After a Successful Vote, Fantom (FTM) will Lower Validator/Staking Rewards

Fantom, a fast and scalable next-gen Layer 1 platform, recently announced that its recent proposal to reduce staking and validator rewards has passed. The changes were implemented yesterday, October 6th, and are now live, according to the Fantom Foundation’s announcement.

Fantom also noted that, with data providing strong network adoption and dApp activity, the success of this proposal would align staking rewards to better resemble the currently available market rates.

The results of the vote

The voting process was completed on October 5th, and the decision was implemented only a day later. In order for the vote to be successful, 67% of community members who participated in the project’s governance had to agree to go through with it. A total of 86.6% voted, with 68.6% agreeing to a change that will last for the next 4.7 years, while 32.1% voted that there should be no change for at least the next two years.

Update: The successfully passed staking rewards adjustment has been implemented and is now live!⚡ https://t.co/PFRkUkRSWP

— Fantom Foundation (@FantomFDN) October 6, 2022

The Foundation noted that, in addition to reducing the rewards, passing the 6% p.a. Option will also increase the emission duration of rewards to FTM stakers. With this, the Fantom ecosystem will be able to prepare for the next stage of growth, which will include things such as major upgrades around FVM, flat storage deployment, node improvements for increased performance, and lower validator opening costs.

Will the voting actually impact the project?

As mentioned, the main purpose of the vote was to lower rewards in order to keep in line with the market rate and increase the emission run rate. In January 2021, validators accrued approximately 1,579 FTM in fees. Fast forward a year later, and the number has skyrocketed to 1,912,780 in January 2022. The community noted that the trend signals the growing strength of the dAp community and as a result, network activity.

However, others were also alarmed as the inflation rate of the project is way above other coins. Fantom’s inflation rate, according to one Reddit post, sits at 13.91%, while Ethereum’s is at approximately 4.08, Solana’s is 5.36%, BNB’s is at 4.92%, and even Avalanche, which has nearly doubled compared to previously mentioned projects, still pales in comparison to FTM, as it only has 8.6%.

The same Reddit post argues that this might not change anything and that Fantom will hit its maximum supply in about 22 months and become deflationary with no more staking rewards. There will only be fees, with one-third still being burned immediately.

To learn more about Fantom, visit our Investing in Fantom guide.