AZERO to Get a Maximum Supply Cap: What You Need to Know About Phase 2 Voting

The Aleph Zero community is once again taking charge of the future of AZERO, its native coin, by launching the second phase of governance voting. 

In the previous phase, the community voted in favor of introducing a maximum supply cap for AZERO. Now, the community will decide how AZERO’s inflation should be managed to reach this maximum supply, with two proposals on the table.

The second phase of voting on AZERO economy will start 24 hours from now, to leave room for community feedback on the vote.

This decision will also have significant implications for validators, who are essential to the network’s security and functionality. The chosen inflation model will directly impact how rewards are distributed over time, ensuring a healthy ecosystem while maintaining adequate validator compensation.

Proposals in the second phase of voting

AIP01: Maximum Supply with Constant Annual Minting

AIP01 presents a straightforward approach, proposing a maximum supply cap (MAX) for AZERO alongside a fixed annual minting amount (MINT). Under this model, a consistent number of new tokens would be minted each year until the cap is reached.

For validators, this model offers predictable and stable rewards distributed in AZERO. The annual minting rate ensures a steady flow of newly minted tokens, which translates into consistent staking rewards. Validators can expect a similar rate of compensation each year until the maximum supply is reached, as at that point they would not be further incentivized.

AIP02: Maximum Supply with Exponential Decrease

AIP02 introduces a more dynamic approach. It combines a maximum supply cap with an exponentially decreasing minting schedule. Instead of minting a fixed number of tokens each year, the amount minted would gradually decrease over time, governed by a parameter called LAMBDA, which will be set by the community.

With AIP02 the rewards for validators–in AZERO terms–will diminish gradually over time. As minting decreases, the pool of new tokens for staking rewards will shrink. However, this model is designed to provide enough time for further ecosystem development before the cap is reached, ensuring validators receive sufficient compensation while promoting sustainable growth.

In both cases, validators will continue to play a crucial role in securing the network, but the decision will shape how long-term incentives are managed and how quickly the supply cap is reached.

What’s Next?

Once a proposal is chosen, the next phase of governance voting will focus on setting the parameters determining the inflation rate and maximum supply cap.

Why This Matters

This vote is crucial for the long-term sustainability of both the AZERO economy and the validator community. The chosen inflation model will directly impact how staking rewards are distributed and how validators are incentivized to continue securing the network. Whether the community opts for stable rewards with AIP01 or diminishing rewards under AIP02, the decision will affect the economic dynamics of the entire Aleph Zero ecosystem.

Now it’s your turn!

Validators and all AZERO holders are encouraged to make their voices heard in this pivotal decision. Participate in shaping the future of AZERO’s economy by casting your vote on gov.alephzero.org.

Don’t miss the opportunity to influence Aleph Zero’s economic model and secure the future of validator rewards—every vote counts!