NNS and ICP Token Metrics Monthly Report, Nov 2022
An installment of Network Nervous System metrics regarding ICP inflation and staking.
The Network Nervous System (NNS) is the permissionless on-chain DAO that allows the Internet Computer blockchain to be governed in an open, decentralized, and secure manner. The NNS has complete control over all aspects of the network, allowing it to be efficiently upgraded and expanded.
ICP utility token holders from around the world can stake their tokens within neurons in the NNS to engage in network governance and vote on whether to adopt or reject network proposals while earning voting rewards for their participation. Anyone who stakes a neuron within the NNS can also submit a proposal to suggest changes, giving the ICP community the power to guide the blockchain’s evolution and optimize it for developers, entrepreneurs, and users.
This post is an installment of a monthly review of NNS and ICP token economics from January 2022 through November 2022, reviewing metrics regarding inflation and NNS staking.
Inflation
ICP token inflation is caused by the minting of ICP to reward node providers and to reward NNS governance participants. The annualized inflation rate for ICP from January through November 2022 has been 3.7%, which is well below the targeted inflation rate for governance rewards of 8–9% annualized. Many NNS participants have been accumulating their rewards as “maturity” (i.e., the accrual of rewards in a neuron from voting on proposals) instead of converting them into ICP tokens.
The inflation rate of ICP can vary from month to month, driven mainly by whether NNS participants are converting maturity into ICP. The chart below shows the annualized inflation rate for each month so far in 2022. Note that the larger inflation rate for August was primarily due to the DFINITY Foundation “merging” some of its accumulated maturity, which has the effect of minting the neuron’s maturity and adding that minted amount back into the neuron’s stake.
NNS participants can choose to convert their rewards from maturity to ICP by either spawning a new neuron (which allows the owner to receive the ICP in 7 days) or merging the ICP back into their existing neuron (which keeps the ICP locked in the neuron). The following chart shows a breakdown of spawned neurons, merged ICP, and node rewards. (Note: heuristics are used to determine if a mint event was spawning or merging maturity.)
NNS Staking
NNS participants can stake their tokens for a minimum time, called a dissolve delay, with longer delays receiving more voting power and voting rewards. NNS participants can choose to keep their neuron locked, which keeps the dissolve delay fixed, or start dissolving the neuron which counts down the dissolve delay.
The chart below shows the current staking behavior of the NNS, displaying the number of tokens staked bucketed by dissolve delay and whether the tokens are dissolving (pink) or remain locked (purple).
Over the last month, the number of total dissolving tokens decreased by 3.6M ICP and the number of locked tokens increased by 1.8M ICP.
