Tron community considers Bitcoin halving-style block reward cuts to boost TRX tokenomics

Tron Network founder Justin Sun has called on community members to engage with a new proposal seeking to reduce block rewards on the network. In a post on X, Sun said TRX entering a halving cycle similar to Bitcoin would be great for the network.

According to Sun, who shared his thoughts on the proposal, it is worth paying attention as it could have a significant impact. He claimed that TRX is already deflationary with the supply rate falling 1% per year and added that it is the only major cap token that is deflationary.

Tron may benefit from reward reduction – Justin Sun

Justin Sun believes a moderate reduction could be necessary because the rise in TRX value has attracted more validators to the network.

Sun said:

“Due to TRX’s rising price, the rewards for block-producing nodes across the network have increased significantly, so a moderate reduction could be considered.”

He compared this to what happened to the Bitcoin network, where rewards were reduced as the network grew, and the price of BTC soared. Sun noted that the halving of Bitcoin played a crucial role in making Bitcoin sustainable.

Although the crypto entrepreneur emphasized that the TRX community would decide on the way forward, he did highlight some of the advantages of block reward reduction on the TRX token, particularly how this would increase the network’s deflation rate.

He said:

“If (daily block rewards are) reduced by 2 million TRX, the deflation rate would rise to 2% per year, effectively doubling the deflation rate, with an impact on TRX cycles comparable to Bitcoin’s halving.”

Interestingly, Solana recently concluded a failed attempt to reduce its block rewards to lower the inflation rate.

The SIMD 0228 proposal on Solana could not get the supermajority needed for its approval, as many small validators were concerned about its impact. Perhaps in reference to this, Sun noted that reducing block rewards will not significantly affect Tron validators because the incentives remain highly attractive.

Proposal to reduce TRX block rewards under discussion

Meanwhile, the proposal Sun is referring to was submitted three days ago by one Jamestepforward and advocates for reducing the amount of TRX validators get to boost TRX value through an increased deflation rate. The proposal added that this could also incentivize staking.

Two parameters determine how much Super Representatives (SRs) get for producing blocks on the Tron network. Parameter No. 5 says Tron rewards participants involved in block production with 16 TRX for each block, while Parameter No. 31 stipulates 160 TRX as rewards.

The new proposal seeks to adjust the two parameters so that TRX production will also be reduced. However, it did not specify the amount to reduce the TRX tokens to and instead called on the community to suggest reasonable values.

It said:

“It is proposed to adjust these two network parameters to reduce the TRX production rates. Everyone is welcome to make specific suggestions and participate in discussion on the setting of reasonable parameter values.”

So far, users have been submitting recommendations. Some users proposed a 50% reduction, noting that this would make the impact more obvious. However, others have called for a gradual reduction starting with 10% or 20%.

Still, some believe that reducing the rewards could have an immediate negative impact on the validators, while the positive benefits might take a while before participants feel them. It is too early to determine which direction the community will go, and the discussion is still in its early stages.

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