Hi all, Andrew from Shtuka Research here. I’ll be leading the research effort to evaluate possible actions on inflation.
Who are we? Shtuka Research provides quantitative consulting services to DAOs in economic modelling and market design. It’s been operating since 2023. I’ll be leading this project, with quant research support from @eager1999.
Our approach. Our approach to addressing this issue will be to draw a clear line between goals and mechanism. At the risk of stating the obvious, goals are where the community wants to get to, and mechanism is how we get there. We need to avoid getting those conversations jumbled together.
The survey. In this thread, we’re talking about goals. That’s where we need input from the community: you are best placed to know your own interests and vision for where you want Livepeer to be in the future. The intention behind our survey is to elicit those interests in the form of objectives for issuance, staking yield, and participation. We’ve included questions about picking out target ranges for participation, dilution, and yield over the next six months, as well as open-ended questions about vision for the medium to long term. For the yield question, we included some information on yields available across the industry to ground the conversation in the broader market context.
Over the coming fortnight, I’ll also be arranging calls with community members to hear their input and answer questions about our approach. If you want to talk, book a call with me here within the next two weeks:
https://calendar.app.google/MbzkXGP1tDTR5xrL8
Mechanism. Once we’ve got a more complete understanding of where the community wants to be, we move on to optimising the mechanism that gets us there. I’ll share more information about our approach next week, but to summarise briefly:
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We’re trying to get something passed on quite a short timescale, so simplicity is key. We think there’s more work that can be done to overhaul the adjustment mechanism over the coming year, but for now we’re only looking at tweaking things within the existing framework.
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By construction, issuance/yield is controlled by participation rate. But participation can also react to yield — indeed, that’s the principle behind the design of the issuance system. We’ll be doing statistical modelling and simulations to forecast how the Livepeer economy will react to our parameter choices and rule out settings that, according to our models, run too high a risk of missing the goals.
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Forecasts lose predictive power the further we try to look ahead. That’s why we need to (a) revisit things in mid-2026 to update our priors, and (b) don’t try to change anything too quickly, so that even if something unexpected happen the system state can’t get too far off course.