BAL token is about to undergo the first installment of its emissions drop
BAL token is about to undergo the first-ever emissions drop. What does this mean for the Balancer Protocol ecosystem’s future?
BAL’s original emissions schedule, unveiled along with the token itself in June 2020, proposed a cap of 100M BAL that would be observed through governance votes.
Balancer Labs described the process in the June 2020 announcement article by saying:
How much of these will actually be distributed — in what schedule, under which rules — is ultimately a decision to be made by BAL holders. Governance can decide to speed up the distribution of BAL if governors see fit. They can also reduce and even prematurely stop it altogether — effectively decreasing the expected final supply…
This meant that the final emissions cap would be worked out by the Balancer DAO. In February 2022, Balancer Labs presented the veBAL tokenomics proposal that also touched upon BAL’s weekly emissions and introduced the current inflation schedule:
Since the launch of BAL, the inflation has been a constant 145,000 BAL per week. To change that and make the Balancer ecosystem more sustainable, a new inflation schedule is proposed. Every 4 years, the inflation should be halved, with gradual steps every year starting one year after the launch of the new tokenomics system.
This proposal later passed through governance, which meant that BAL moved towards a well-defined immutable emissions model that capped the final supply at slightly over 94M BAL, thus reducing it by around 6% compared to the initial $100m figure.
New proposed BAL inflation schedule
According to BAL’s inflation schedule introduced with the migration to veBAL tokenomics, every four years, the inflation of BAL should be halved. Starting one year after the launch of the tokenomics model, there are gradual steps every year for reducing the BAL inflation. A detailed schedule can be seen in the following figure.
This brings us to the imminent first step of the first halving installment. Scheduled for 28th of March 2023, it will bring about the first annual 15.9% emissions drop, lowering the number of BAL issued weekly to around 122,000.
The transition to the veModel initiated and approved through governance one year ago has proven effective and sustainable. The Balancer ecosystem continues to grow and thrive, and the halvings that defined BAL’s final supply schedule and made it immutable are an essential pillar of stability, bootstrapping the growth.
A special thank you to Balancer Ecosystem Contributors Cosme Fulanito and Gleb Shumakov for conducting the research and writing this piece.
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This article is for informational and educational purposes only. It should not be construed as investment or trading advice or a solicitation or recommendation to buy, sell, or hold any digital assets. Transactions on the blockchain are speculative. Carefully consider and accept all risks before taking action.