Staking V5 and New Reward Buckets - v1.11.1

This release introduces a major upgrade to the MultiversX economic engine. Tail inflation replaces the genesis-based model, an annual decay mechanism is introduced, and two new reward buckets diversify long-term funding distribution. The goal is clear: ensure sustainability, reinforce long-term security, and expand the economic structure without breaking any existing block fields or external integrations.

The upgrade activates at epoch 1951, expected on December 2nd, ~17:00 UTC.

A full governance process was conducted and the vote passed successfully.
Governance proposal:
https://governance.multiversx.com/proposal/erd1qqqqqqqqqqqqqqqpqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqrlllsrujgla/1?type=GovernanceOnChainContract&status=Succeeded

Tail Inflation Model

The inflation mechanism now evolves in real time with the chain. Instead of calculating issuance against the genesis supply, the protocol adjusts inflation based on the current total supply, allowing issuance to naturally adapt to the real state of the economy.

Configuration snippet:

[tailInflation]
activationEpoch = ...
firstYearInflation = 0.08757 # 8.757%
decayPercentage = 0.0025     # 0.25%
minimumInflation = 0.02      # 2%


This enables:

• A predictable but decaying annual inflation rate
• A long-term floor to prevent reward starvation
• A dynamic issuance model capable of sustaining validator incentives even after many years of supply emissions.

Inflation Distribution Model

Under the new model, the first-year tail inflation (8.757%) is split into four buckets, each powering a different component of the ecosystem:

• 50% - Staking V5 - direct rewards for validators and delegators, maintaining long-term security and competitive APR.
• 20% - Growth Dividend - user incentives for active DeFi participation and productive strategies; turns usage into liquidity and volume.
• 20% - Ecosystem Growth Fund - DAO-governed builder pool for grants, infrastructure, and KPI-driven ecosystem expansion.
• 10% - Protocol Sustainability - core engineering, research, audits, and infrastructure.

In practice, only 60% of the theoretical annual emission (Staking + Sustainability) is guaranteed to be released.
The remaining 40% (Growth Dividend + Ecosystem Growth) is unlocked only if ecosystem growth KPIs are met.
Low growth → more emissions stay locked → higher scarcity.
High growth → more emissions unlocked → more fuel for acceleration.

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‍Inflation Calculation (economics.go)

The computeInflation function now governs both the old and new inflation logic and determines which one applies based on the current epoch.

Activation Logic

At the start of each epoch:

• If the epoch is before tailInflation.activationEpoch, the protocol continues using the genesis-based inflation model.
• If the epoch is greater or equal, the chain switches to the tail inflation model, which becomes the permanent calculation path.

Tail Inflation mechanics

Under the new model:

1. Inflation is calculated using currentTotalSupply, ensuring the issuance rate reflects real circulating supply instead of a fixed genesis number.
2. The protocol tracks the passage of “economics years” (full cycles of epochs). At the beginning of each economics year:

currentInflation = previousInflation - decayPercentage


After decay, the rate is bounded by configuration:

1. Cannot go below minimumInflation
2. Cannot exceed any maximum value defined in config

This adjusted inflation rate determines TotalToDistribute for the epoch, which becomes the foundation for reward allocation.

New Reward Buckets: EcosystemGrowth & GrowthDividend

Two new reward destinations are added to complement ProtocolSustainability:

• EcosystemGrowth (20%) - funds ecosystem expansion, grants, builders, and strategic programs
  
  • erd1qqqqqqqqqqqqqpgqa9unh4m4j3nyg3l7cvlw8wshumx58m6089pspt29xm
• GrowthDividend (20%) - supports long-term alignment and network contributors
  
  • erd1qqqqqqqqqqqqqpgqhh54y3z2srvvclhfgt6dmtrc6l4tua0fjmlskl58yg

These percentage splits operate directly on the computed TotalToDistribute for the epoch.

Upgrade Information

• Activation epoch: 1951 (December 2nd, ~17:00 UTC)
• Governance: Passed successfully
• Mandatory for validators and integrators: Yes
• Observers: Mandatory to upgrade on release

Resources

• Binary Release: https://github.com/multiversx/mx-chain-go/releases/tag/v1.11.1
• Mainnet Config: https://github.com/multiversx/mx-chain-mainnet-config/releases/tag/v1.11.0.0
• Tail Inflation & Reward Buckets PR: https://github.com/multiversx/mx-chain-go/pull/7386
• Extended Economics Model: https://github.com/multiversx/multiversx-improvement-documents

What’s Next

Supernova comes next, the most ambitious upgrade in the protocol’s history.

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Meanwhile, the team is finalizing the documentation and implementation for DAO Elections, expected to go live in ~2 weeks.

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Approximately one month after Supernova, the new fee structure will activate, introducing a Base Fee split between builders and burn (starting with 90/10 and transitioning towards 50/50 over eight years) and directing all Priority Fees to validators, while all non-contract and failed transactions burn entirely, tying EGLD scarcity directly to usage.

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