On Polkadot’s Token Supply: is it broken?

Written By mango c

Gavin Wood, PhD (Chief Architect @ Parity, Co-Founder of Polkadot & Ethereum) recently gave a keynote presentation at Polkadot’s sub0 2024 conference in Bangkok, Thailand. In it, he laid out his vision for JAM chain, a new industry-leading general-purpose blockchain. There is a lot to unpack and speculate on with regards to JAM, but I’ll limit the scope of this article to exploring Gav’s comments regarding DOT token parameters.

Around the 58 minute mark of the presentation, Gavin briefly covers how JAM chain would provide an “interesting opportunity” to “credibly” fix the DOT token’s parameters, without really getting into ‘why?’. This has generated some interesting (and long overdue IMO) discussions within the Polkadot community, prompting questions like:

  • Is inflation too high?

  • Can coretime sales offset the need for inflation?

  • Does DOT’s ‘infinite’ supply turn off investors?

  • Will lowering inflation introduce security concerns?

Before we address the merits and/or pitfalls of changing any particular economic parameter, let’s briefly review the current economic model of Polkadot’s native token so that we have a working list of parameters - or ‘dials’ - to form a discussion around.

DOT Token Parameters

Polkadot uses Nominated Proof-of-Stake (NPoS) as a means to secure the Relay Chain, and by extension the entire ecosystem. I’ve linked to the Polkadot Wiki for those interested in diving deeper into NPoS and how it differs from Proof-of-Work (PoW) and traditional Proof-of-Stake (PoS) systems, but those details aren’t really needed for this discussion. What matters is this:

  • block producers assume capital risk and in return expect a reward

  • the risk/reward profile determines participation rate (no reward = no block producers)

  • higher participation = more decentralized

  • security of network ≤ value of capital at risk

Put another way:

Polkadot’s ledger is produced by validators + nominators. We can trust that the ledger is correct because a consensus is formed within a large group (decentralized) and there is a cost to being wrong and/or malicious (slashing). The cost + slashing risk for participants is justified by the staking reward.

From the framework above one can begin to see that there are several parameters that we as a community can consider adjusting. Let’s call the parameters that we can adjust independent variables, and the parameters that change as a result of those independent variables we’ll call dependent variables.

Independent Variables



mango c