Written by yay.oi
What’s deflatin’, armchair economists? As another week passes us by, change still hangs in the air, with voices inside the DAO calling for precipitous change. Moments like this prompt deeper questions about how Web3 is built. Gavin Wood, in a recent documentary, compared designing crypto-economic systems to designing enjoyable board games.
Rules, he explained, aren’t made for their own sake, but for the emergent effects they create. Politicians, on the other hand, tend to craft rules as quick fixes to perceived problems, often without regard for those emergent effects. This can result in some wildly inconsistent outcomes.
Meanwhile, Polkadot continues its journey to build a user-sovereign internet, embracing a multichain vision. Interestingly, Ethereum’s 10-year birthday marks its embrace of a similar path, though at a different pace. This evolving landscape sets the stage for the Polkadot DAO’s current focus with crypto-economic reform.
The real test will be whether it becomes a carefully crafted game or gradually tests the resilience of the network’s economic foundation. Jay Chrawwna’s RFP-1 on a DOT cap and stepped inflation wrapped up this week, producing three proposed models now open for a nonbinding off-chain vote.
Each model features an emission reduction every two years, similar but more frequent than Bitcoin’s halving. The Soft Pressure model applies a gentle 13.14% cut with a cap of 3.14B, while Medium Pressure increases the downward force to 33.33% with a 2.5B cap.
The Hard Pressure model is much more drastic, with 50% emission reductions every two years and a hard cap of 2.1B DOT. In the Gray Paper interview, Gavin Wood spoke about the psychological effects of a step-curve inflation model, where each step becomes a milestone prompting collective action and market activity.
He described a nice shallow curve gently transitioning away from the current reward model. The Hard Pressure model, however, is a much steeper path, and judging by early sentiment, it’s the front-runner among voters.
With this model, maintaining current spending of ~$450M per year without an increase in revenue would require DOT to achieve a market cap of $489.8B by 2036. With spending reduced to $90M, it would still require a market cap of $91.8B.
In a market as volatile and unpredictable as crypto, a safer bet for sustaining the network would be a significant boost in revenue streams. Income from fees and Coretime sales is currently falling short. That massive gap may need to be filled by a combination of economic adjustments and future revenues from products still in development.
It’s a big ask, but many see Polkadot Hub as a catalyst for the next chapter. By bringing EVM compatibility to Polkadot and concentrating activity, liquidity, and tooling, it could attract builders and capital from the Ethereum ecosystem while unlocking new revenue opportunities.
While it was targeting a launch in September, a strategic change of direction this week has pushed it back to mid-December. With the priority of attracting leading third-party dApps and service providers to the Hub, it became clear that the PVM framework would pose hurdles for existing projects.
Many of these projects depend on unmodified Solidity contracts, meaning 100% EVM compatibility is essential. The PVM resolc compiler also only works with Solidity versions greater than v0.8, leaving no path for legacy support.
Critical contracts such as Circle’s Cross Chain Transfer Protocol (CCTP), key to unlocking seamless, large-scale cross-chain liquidity, use older versions of Solidity. This issue wouldn’t just block legacy deployments, with effects rippling into newer projects that rely on them.
With those constraints in mind, it’s now all hands on deck at Parity to ship a 100% EVM compatible Polkadot Hub by mid-December. The chosen path is REVM, a fast, well-maintained, and production-proven EVM implementation trusted by major players such as Foundry, Hardhat, and Optimism.
Together with pallet-revive and ETH-RPC, REVM will enable a shared stack that supports both EVM and PVM. Crucially, this setup will allow seamless cross-calling between contracts in either environment while also providing access to XCM precompiles.
While this EVM-compatible approach is essential for onboarding today’s leading dApps and service providers, the PVM remains a vital part of Polkadot’s long-term vision. Its ability to run code in multiple languages, combined with more powerful and less costly on-chain computation, could unlock entirely new use cases that aren’t possible today.
So, as Polkadot powers forward with its near-term multichain vision, the real test will be if potential future revenues can support the DAO’s bold crypto-economic intentions. This is a game of high stakes, albeit through a vote focused on tightening the pot. As such, if emergent effects aren’t considered, the outcome may not be so enjoyable.
In a world that Gavin Wood identifies as having entered a post-trust phase, the stakes are even higher. He sees AI as a further threat, built on the premise of more trust, less truth. Its inner workings often lack transparency, and we are expected to trust the outcome without being able to verify the process.
Web3, Polkadot, and its future with JAM, provide a counterbalance. They are built on the foundation of less trust, more truth, with the resilient infrastructure necessary to build solutions that combat deception and begin the long process of building a world where we may begin to trust again.
We might be on a long journey to realise the Web3 vision, so the decisions made by the Polkadot DAO today must be carefully considered. Since it’s a path we’ll be walking for years to come, let’s make sure we take the right steps.