Avalanche Foundation economists propose zero-inflation model for validators

Avalanche validators currently earn around 6-7% annually, paid out through the continuous minting of new AVAX tokens. The Avalanche Foundation’s economists want to change that math entirely, proposing a shift toward rewarding validators from value the network actually generates rather than from freshly created supply. The core idea is to break the link between network security and inflation, a model that most proof-of-stake blockchains still depend on and that becomes harder to defend as token supplies approach their caps. How the current model works, and why it creates problems AVAX has a hard supply cap of 720 million tokens. Today’s validator rewards come straight from new issuance, meaning every staking reward dilutes existing holders slightly, similar to how a company issuing new shares to pay employees reduces the stake of existing shareholders over time. The complicating factor is what happens to transaction fees. On Avalanche’s C-Chain, fees are burned rather than distributed to validators. That burning mechanic is deflationary on paper, but it creates a structural gap: validators do more work as network activity increases, yet they see none of the fee revenue that activity...