Hey there! Really glad to see this proposal and the amount of thinking that went into it. From the perspective of a validator operator and active staker, this feels like a meaningful step forward for Fuel tokenomics: stopping structural pressure from inflation, moving to a capped + burn model, and making staking less inflation-based and more fee/value-driven, while encouraging users to use stFUEL for fees and DeFi.
I especially like the intent to realign the token with L2 usage and to give staked capital a clearer role in the system. At the same time, I understand that some later phase mechanics (Phase II / Phase III) are still intentionally high level, which makes it hard to fully evaluate their impact today. So in this post I will mostly focus on Phase I and the bridge from Phase I into the more fee-driven model later.
I will keep it brief and grouped by topic.
1. Validators vs delegators - who exactly receives what
Throughout the text Phase I mostly mentions “validators”, for example:
- “1k/day L2 ignition fee subsidy to validators from treasury”
- “validator infra credit program”
In practice there are two roles:
- validator operators, who run infra and earn commission
- delegators / stakers, who provide capital
It would really help if the proposal explicitly separated:
- flows meant for operators (infra credits, direct subsidies)
- flows that go into the general staking rewards pool that is shared with delegators, with validators taking a commission on top
Right now it is not fully clear if the 1k/day ignition subsidy is:
- injected into the staking module for all stakers (validators + delegators),
or
- intended as a direct stream to validator operators only.
That makes a big difference for both delegator APR and validator net economics, and getting this clarified would make it easier to communicate the model to stakers.
2. 1k/day ignition vs “1k in USDC + 1.5% of supply”
Phase I has two related but slightly different formulations:
- “Replace with: ~ 1k/day L2 ignition fee subsidy to validators from treasury”
- “validator infra credit program to reduce FUEL sell need (1k in USDC + 1.5% of token supply to be used to replace inflation based rewards for validators)”
It would be great to clarify:
-
Are these describing the same budget in two ways, or are they separate mechanisms?
-
Which parts are:
- going into staking rewards (shared with delegators),
- and which parts are purely infra credits or direct support to operators?
-
Over what time horizon is the 1.5% of supply expected to be distributed?
Even a short paragraph that ties 1k/day + 1.5% supply into a single coherent picture would remove a lot of ambiguity and help validators model the new economics.
3. FUEL vs stFUEL, locks and auto stake
Phase I introduces or leans on several mechanics:
- auto stake by default
- 3 month lock on rewards
- time weighted staking
- stFUEL as the “money” asset
At the same time, there are already two staking flows:
- staking FUEL via Ethereum / sequencer
- liquid staking and stFUEL on Ignition
It would help to spell out:
-
Does auto stake + 3m lock apply to rewards on:
- direct FUEL staking,
- stFUEL staking,
- or both?
-
How does time weighted staking treat:
- FUEL stakers,
- stFUEL holders?
-
Is stFUEL itself always liquid as a token, while only the underlying FUEL is locked, or can redeem / unstake from stFUEL also be gated by tranches and locks?
Since Phase I puts more emphasis on lock in and longer horizons, it would be good to understand exactly where that lock sits in a FUEL vs stFUEL world and how this is expected to influence user behavior.
4. APR ranges, slow usage today and the bridge to Phase II
The proposal mentions:
- “Approximate APY for stakers would be between 1.5 - 15% APY for staking FUEL.”
This is a wide range, and without assumptions it is hard to reason about the design or set expectations with delegators.
Given current reality that on chain activity and external user flow are still relatively low and a lot of usage is internal or testing, it feels like Phase I will be driven mostly by:
- 0% inflation,
- treasury based subsidies (1k/day, 1.5% supply),
- relatively modest fee revenue in the beginning.
I fully understand that the real fee driven flywheel is more a Phase II story, once there is more L2 usage and external demand. It would still be very helpful to see some simple, explicit scenarios for the transition, for example:
- for a few staking ratios (say 5% / 10% / 15% of supply staked),
- and a chosen distribution period for the 1.5% supply,
show:
- resulting APR for stakers if fee revenue stays low for a while,
- and how that APR is expected to evolve as fee sharing starts to matter more in Phase II.
Related to that, a rough indication of:
- how long the 1k/day ignition subsidy is budgeted for at current treasury levels,
- and what happens if TPS and fee volume grow more slowly than hoped,
would make the Phase I to Phase II bridge feel more predictable. Even if these are just high level ranges with clear assumptions, it would go a long way for validators and stakers trying to plan for the next 12 to 24 months.
5. Timelines for Phase I
Lastly, it would be useful to have a bit more structure on timing:
- From ratification, when do you expect to:
- switch inflation from 3% to 0,
- move from daily unlocks to semiannual tranches,
- start the 1k/day ignition subsidy,
- enable auto stake + 3m rewards lock,
- enable time weighted staking?
And more generally:
- over what period is Phase I considered “complete”
- roughly 3 months, 6 months, 1 year or more?
Having at least a rough timeline makes it easier for validators to plan infra and for stakers to understand how quickly the new model will actually be live.
Closing
In short, I really like the direction: cap and burn, ending inflation, tranches instead of daily unlocks, concentrating liquidity and giving staked capital a clearer role all feel like clear improvements over the current state. The main things I am still missing are:
- a cleaner split between operator vs delegator flows,
- how 1k/day and 1.5% supply fit together in practice,
- a bit more structure around APR scenarios,
- and a clearer view on timelines and the bridge into Phase II where fees start to dominate.
If you can clarify those points, I think it will make it much easier for validators and stakers to support the proposal and to explain it to their communities. Thank you!