Q Protocol Voting in Context
Let’s Put The Q Vote Into Context
Key Points:
- Long-term impacts of lower issuance: Quebec A/B proposals aim to reduce Tezos issuance, but the impact on price won’t be immediate and could take months or longer to materialize.
- Misleading campaigns: Current campaigns to attract stakers focus on high APY without clear communication about the significant drops in returns that will occur when the Quebec proposals are activated.
- Responsibility of bakers: Bakers hold the responsibility to communicate the real impact of these proposals to their delegators and stakers, ensuring transparency and trust.
- Potential backlash: If stakers feel misled, they may withdraw from staking and the network, creating sell pressure and further price declines.
- Educating stakers: It is crucial for bakers to inform their stakers about upcoming changes to avoid trust issues and long-term damage to the ecosystem.
Key Points Discussion
Let me clarify one thing upfront: I do not intend to spread FUD. My goal is to raise serious concerns about where this may lead.
So far, the Q proposals have been judged as isolated possibilities, without being discussed in the broader context of current events. That’s what concerns me.
There are assumptions that the Quebec A/B proposals, which lower issuance rates, will limit the supply of new Tezos and eventually create a scenario where demand outpaces supply. However, low issuance is a long-term play. It’s not going to significantly push the price up in the span of days, weeks, or even months. And this is where I see the problem.
Right now, there’s a heavy push to attract stakers with promises of high APYs, but there has been little communication in the context of what comes next. For example, people are being encouraged to stake with the allure of high returns, yet there’s been no mention of how these returns will plummet once the Quebec proposals are activated. Depending on the situation, APYs could drop to half, a third, or even a quarter of what they are now. In case of the Quebec B even more for delegators.
There’s even competition, encouraging bakers to gather more stake. This level of encouragement, while effective in the short term, lacks transparency regarding the eventual reduction in rewards. It feels inherently misleading to me, which is why I’ve changed my stance on the Quebec proposals. Even if we claim to follow the guidance of the core team, it is ultimately our responsibility to make the decision. The responsibility for potentially misleading stakers and delegators rests on our shoulders.
Some argue that once we attract stakers, they’ll be unlikely to leave. While I believe there’s some truth in that, I don’t think this approach fosters good will. Personally, I don’t want to be part of something that feels disingenuous.
To clarify, I still believe there is time to make the Quebec proposals fair, if that’s your preference. Please ensure your delegators and stakers fully understand the potential consequences. If you’re seeking to attract stakers, be upfront and communicate the situation clearly and precisely.
To put this into a more personal perspective: If my bank were to change interest rates without informing me, I would immediately move my funds elsewhere and never return. It’s never a good idea to leave your money with institutions you can’t trust.
This leads us to the potential mess that could unfold. If we consider the low engagement rates we currently see and project that into a future where Q is activated without proper awareness, people may feel betrayed — by their bakers, by Tezos. They could leave, and never come back. This could create additional sell pressure from individuals pulling out of both staking and the network entirely. They wouldn’t just lose the money they expected from staking returns but potentially more due to a downward price trend. This positions us in a dangerous situation.
I’m not suggesting that this is guaranteed, but it’s a possibility that hasn’t been sufficiently discussed. In my opinion, changing core economic principles simply because they “sound right” without a full analysis is playing god. And I prefer not to be part of something that could negatively affect people’s financial well-being.
In closing, I encourage you to choose the proposal you feel is most viable and aligned with your vision. But let’s also ensure we’re taking the time to educate our delegators and inform our stakers about the changes ahead. Supporting our community responsibly is essential for the journey we’re on together.
The drop in rewards will range from the orange line to the blue line, depending on the amount staked immediately after Quebec activation. The orange line is intentionally fixed at the current issuance to highlight the dramatic decline, as we cannot predict how total staking will behave in the coming months.
Thank you,
V
Tez Capital
Helpful Links
Read more about Qena and Quebec A/B here: https://tezcapital.medium.com/qena-protocol-proposal-a-response-to-quebecs-adaptive-issuance-change-ac66a315efcc
Qena Source Code > https://github.com/tez-capital/tezos/tree/Qena
Tez Capital Website > https://tez.capital
Tez Capital Discord > https://dsc.gg/tzc
Tez Capital Telegram > https://t.me/tezcapital
Tez Capital Documentation > https://docs.tez.capital (find out more about our tools here)
