This is a data report on the effects of the initial UMA Emission Reduction which lowered staking rates from 26.3% APR to 22.6% APR and went into effect on March 11, 2025. For full context, please read the original UMA Emissions Reduction post.
The first emission reduction had no discernable impact on the amount of UMA staked as evidenced by the Voting Power chart below.
The number of total voters (see chart below) initially spiked after the emission reduction and has been trending downward since. This recent downward trend is not seen in the voting power graph which suggests the voter decline is likely due to small voters leaving after the gas rebate change which required a minimum stake of 500 UMA to be eligible for gas rebates. This change took effect on February 1st, but the first rebate under the new requirements was not paid out until March 13th. So many small voters may not have been aware of the change until mid March.
A better measure of the effect of the UMA Emission Reduction is to look at the number of addresses voting with over 500 UMA (see chart below). This removes the effect of the gas rebate minimum and only takes into account addresses that have enough stake to meaningfully contribute to UMA’s staking decentralization. Below is a chart of voters with over 500 UMA staked:
Based on the above data we recommend continuing with the UMA emission plans as laid out in the original proposal.
Snapshot Voting
Proposal Duration: 5 days
Quorum Requirement: 3,310,413
Approval Threshold: Majority
A yes vote means that you would like to decrease the emissions rate from 0.155 UMA/s to 0.130 UMA/s. This would lower the staking rewards APR from the current 20% to an estimated 16.8%.
A no vote means that you would like to keep the emissions rate at 0.155 UMA/s
DVM vote to follow if Snapshot vote is successful.
I’m not sure if this has already been proposed in the past, but perhaps it could be worth considering a variable interest rate based on the amount of tokens held.
From my personal experience as a UMA holder, the likelihood of large holders losing UMA due to incorrect votes is lower compared to smaller holders.
Since some large holders can even vote incorrectly and still trigger a reroll, they end up not losing anything. On the other hand, smallholders do lose if they vote wrong, because they don’t have the same decision-making power or influence.
Moreover, encouraging broader distribution among many smaller holders could contribute to a healthier and more balanced ecosystem. While concentration of tokens can bring efficiency, a wider base of participants often leads to more resilient and representative governance. It would make sense to consider mechanisms that reward or incentivize this kind of decentralized participation.
Thanks for the comment Nemo. This is an interesting idea I’ve not seen proposed before. Couldn’t large holders would work around it by dividing up their stake amongst multiple wallets though? It could also lead to less UMA being staked.
That’s true, there are still loopholes. But again, if APY drops too much, in my view, small holders will eventually leave.
Objectively, it may no longer seem like a good investment, especially considering that when small holders make a mistake, they get penalized. When large holders make a mistake, and this has happened in the past two months, nothing really happens due to rerolls. There’s no majority, and on the next round everyone votes correctly. So small holders make a mistake and lose money, while the only real way for a whale to lose tokens is by failing to reveal their vote.
