Staking Letter #9: A Simple Guide to Understanding FIS Burn and Treasury

September 26th, 2024

StaFi Chain has recently activated and launched its FIS burn mechanism. While we will see the specific amount of the first FIS burn in about thirty days, the community's focus has primarily been on the results rather than understanding the mechanism itself, leading to many misconceptions. This letter aims to briefly explain the FIS burn mechanism and treasury FIS operations based on the burn proposal mechanism.

FIS Burn Proposal: proposals.stafi.io/proposal/sip11/
StaFi Node v0.6.3: github.com/stafiprotocol/stafi-node/releases/tag/v0.6.3

FIS Burn Simple Explanation

StaFi Chain is a PoS (Proof of Stake) blockchain built on Substrate, with FIS as its native token. Currently, FIS operates on an inflationary model, specifically:

Approximately 7% inflation rate rewards staking participants and validators.
About 3% inflation rate is allocated to Substrate's Treasury module.

Both parts of this inflationary FIS are accounted for in the total supply (max supply) and circulation. However, the FIS in the Treasury module often remains unused in most cases.

The newly implemented burn mechanism will periodically (every 30 days) destroy the FIS allocated to the Substrate Treasury module. This operation will directly reduce both the total supply and circulation of FIS.

To increase the amount of FIS burned, the following methods can be employed:

Since the current mechanism maintains a fixed sum of 10% for both inflation parts, lowering the reward inflation rate will automatically increase the allocation to the Treasury module.
Adjust the amount of staked FIS, particularly by reducing the amount of DAO treasury FIS staked.

These adjustments will increase the amount of FIS allocated to the Substrate Treasury module, thereby increasing the amount burned each cycle.

FIS Burn Subscan: stafi.subscan.io/event?page=1&time_dimension=date&module=treasury&event_id=burnt
FIS CoinGecko: www.coingecko.com/en/coins/stafi
Staking Inflation: apps.stafi.io/#/staking

Binance relies on data provided by CoinMarketCap (CMC). However, there are ongoing issues with CMC's token statistics for FIS. Despite multiple reports to CMC, these issues remain unresolved.Therefore, we strongly recommend referring to CoinGecko for the most accurate FIS statistical information.

DAO Treasury FIS

DAO Treasury FIS includes reserved FIS and the FIS in the aforementioned Treasury module. Currently, these funds are stored in StaFi Chain's multisig addresses. It's worth noting that the bridged addresses on Ethereum are not multisig at present.

StaFi Chain's multisig addresses use a 3/5 signature mechanism. If you want to view transaction records, you can click on the relevant addresses for transparent access to all information.

FAQ

Why does it take thirty days to see the burn quantity?

The burn execution occurs once every thirty days. It burns the FIS allocated to the Treasury Module during this thirty-day period.

Will the pre-existing FIS in the Treasury module be burned?

Currently, this portion is recorded in the DAO Treasury FIS and is not being burned at the moment.

Will the burn quantity be increased in the future?

We are currently preparing plans and proposals to increase the burn quantity. We expect to implement these changes in Q4.

About StaFi

StaFi is a leading Liquid Staking infrastructure provider and protocol for PoS chains. Its Liquid Staking as a Service (LSaaS) framework enables developers to create Liquid Staking Tokens (LSTs) and Liquid Re-staking Tokens (LRTs) across ecosystems like ETH, EVM, BTC, CosmWasm, and SOL. By issuing rTokens (e.g., rETH, rMATIC, rBNB), StaFi unlocks the liquidity of staked assets, allowing users to earn staking rewards while retaining the flexibility to engage in DeFi. With support for major blockchains such as Ethereum, Solana, Polygon, BNB Chain, and Cosmos, StaFi bridges liquidity and security in Proof-of-Stake networks.