Rob, co-founder of Polkadot: Polkadot may adjust its inflation rate to support long-term development

Polkadot co-founder Robert recently joined the 100th episode of Space Monkeys' podcast, where he shared key insights on Polkadot’s development and strategy, covering topics such as blockspace, treasury management, open governance, and community building. He emphasized the importance of community and called for more innovative ideas and experimentation. Below are some highlights compiled by PolkaWorld.

Throughout the interview, Robert highlighted the following key points:

1. Changes in Treasury Management: Polkadot is launching OpenGov, transitioning treasury management to a more open and transparent model where all decisions require community voting. This is a significant shift, as it empowers every community member to participate in decision-making, making the system fairer and more transparent.

2. Recognition of Bitcoin: Robert gave positive remarks about Bitcoin. While noting its limitations in usability and functionality, he acknowledged Bitcoin's unique value.

3. Focus on Practical Product Development: Robert cautioned against over-focusing on current trends like DeFi and NFTs, urging instead to develop more practical products that can attract mainstream users into Web3. He stressed this is crucial—blockchain technology only realizes its true value when adopted by everyday users. This requires building user-friendly, useful products that enhance overall ecosystem experience and appeal.

4. Blockspace: As the fundamental product of blockchain, its quality, flexibility, and availability determine what can be built on top. Over-provisioning blockspace is common in the industry, often leaving validators at a loss, which makes this a challenging market.

5. Polkadot Gaining Market Attention: Other ecosystems are now evolving features that Polkadot already has! Polkadot’s interoperability and scalability enable it to connect and support multiple blockchain networks—an objective many other ecosystems are striving to achieve. Although Polkadot has gained recognition and achieved success, it remains in early stages and still requires substantial effort and development.

6. Ongoing Passion for Working on Polkadot: Robert said his work might never end, but he remains passionate and committed to working on and building Polkadot until others are ready to take over.

7. Inflation Rate Adjustments: Looking ahead, Robert indicated that Polkadot may adjust certain parameters such as inflation rate to support long-term sustainability.

Polkadot is a multi-chain network supporting cross-chain interactions, aiming to become a unified framework for blockchain technology. A core goal of Polkadot is achieving seamless interoperability between chains. This goal guides all of Polkadot’s technological and strategic decisions.

Regarding Polkadot’s progress, Robert noted significant advancements in inter-chain interaction, communication, and interoperability. In discussions around “parachains,” he pointed out that while technical optimization and scaling are ongoing, parachains already play a critical role in the network by enabling different blockchains to exist and operate as part of the Polkadot ecosystem.

On further expanding the Polkadot ecosystem, Robert emphasized that Polkadot’s strength lies in the collective power and collaboration of its community. He mentioned numerous developers and teams actively building on Polkadot, including Parity Technologies (the primary developer behind Polkadot). However, Parity is just one participant in the ecosystem; engineers collaborate with Parity to build and maintain an open, transparent, and efficient network.

When discussing Polkadot’s governance and treasury management, Robert underscored the importance of community autonomy. Previously, treasury funds were managed through council votes, but this mechanism is being replaced by OpenGov, shifting all decision-making to the broader community, allowing anyone to vote and increasing transparency. However, this also introduces challenges, such as lack of forward planning in budget spending, limited accountability, and unclear responsibility for project delivery.

To optimally manage this new treasury system, Robert proposed a more proactive approach with stronger accountability. He envisions a future where the community defines clear spending priorities and areas of interest—such as specific projects or domains—which would encourage individuals to initiate efforts in those fields. Additionally, to ensure responsible use of funds, he emphasized establishing strict accountability mechanisms so that funding aligns with project milestones and outcomes, ensuring resources aren’t spent before value is created.

One model Robert is advocating is "retroactive funding," particularly for small-scale, innovative projects. This model encourages individuals or teams to experiment with their ideas, receiving compensation from the community only after demonstrating success. For example, if someone creates a YouTube channel that attracts a large audience, the community could recognize the contribution and reward them accordingly. This represents a shift from passive fund allocation toward fostering proactive innovation.

During the interview, Robert also shared thoughts on blockspace. In blockchain, blockspace refers to the number of transactions each block can hold—a critical constraint since block size is limited. Validators are nodes responsible for packaging transactions into new blocks, but over-provisioning blockspace may result in validator income failing to cover operational costs, leading to losses. To address this, blockchain networks may adopt strategies such as market-based pricing of blockspace to incentivize efficient resource usage.

In Polkadot, blockspace supply may be constrained by limiting the number of internal slots or cores to sustain network value. This means Polkadot won’t infinitely expand blockspace but will use market mechanisms to price it, encouraging holders to use the resource efficiently. Polkadot cannot offer free services, as doing so would undermine internal incentive structures—for instance, validators need compensation. If blockspace were priced at zero, oversupply could destabilize the network. Managing blockspace supply to preserve network value remains a complex challenge.

He also stressed that Polkadot needs to maintain steady growth to keep pace with inflation. Comparing to major global economies like China and India, which have historically achieved annual GDP growth rates around 20%, Robert believes Polkadot should aim for similar or higher growth annually. This growth imperative is closely tied to blockspace management—over-supplying blockspace could hinder Polkadot’s stable expansion.

The 20% annual growth Robert mentioned likely refers to growth in network value and user base—including usage levels, quantity and quality of applications, and overall ecosystem development. He did not specify any single metric like token price, but rather advocated for a holistic view of Polkadot’s comprehensive growth. This target emerged during a discussion on inflation.

Typically, cryptocurrency value depends on supply and demand, with supply largely determined by inflation rate. For Polkadot to maintain stable value, network growth (i.e., demand) must match or exceed inflation. This implies more users, transactions, and applications running on Polkadot to absorb newly issued tokens.

This 20% figure isn't a fixed target but a reference point derived from high-growth economies, intended to emphasize Polkadot’s need for rapid, sustained expansion. Actual growth will depend on various factors including market conditions, technological advances, and community engagement.

Blockspace and Polkadot’s growth are closely linked. Limited blockspace constrains network capacity. Therefore, achieving continuous growth requires effective management and optimization of blockspace, improving network efficiency, attracting more developers to build applications on Polkadot, and thereby driving ecosystem expansion. Overall, managing blockspace effectively is a vital component of Polkadot’s sustainable growth.

Looking ahead, Robert stated that Polkadot may adjust parameters such as inflation rate to support long-term sustainability. He hopes the community will generate more innovative and constructive ideas, with healthy debate and diverse thinking bringing greater value to Polkadot’s evolution.

Polkadot is an evolving Web3 ecosystem whose success hinges on community participation and innovation. Going forward, Polkadot will continue refining its technology and providing developers with accessible tools and environments to build outstanding applications on its platform.