Tezos Governance Milestone: Quebec Proposal Approved

Tezos governance has been very active lately. In June 2024, the Paris upgrade introduced important changes, including a new locked staking model and adaptive issuance that ties rewards to the ratio of staked XTZ. Now, just a few months later, another significant governance milestone was reached with the approval of the Quebec proposal during Proposal Period 135 on November 24, 2024.

‍

A Vote Between Two Proposals

Two proposals were up for consideration:

1. Quebec – Proposed by Nomadic Labs, TriliTech, and Functori, with backing from the Tezos Foundation.
2. Q3NA – A community proposal by Tez Capital.

Both proposals built upon the Paris changes but had no differences in approach besides in the adaptive issuance schedule. Ultimately, Quebec won with 187 million votes to 104 million, with a 33% participation rate among bakers.

‍

Changes Introduced by Quebec

Lower Block Times

The reduction of block times from 10 seconds to 8 seconds will enhance performance and improve UX by offering faster finality.

Increased Delegation Limit

Bakers can now accept delegations up to 9x their own stake, up from 5x. This benefits bakers, allowing them to earn higher rewards by accommodating more delegated stake.

Reduction in Voting Power for Delegators

Paris introduced locked staking, incentivizing users to stake rather than delegate their XTZ, reducing delegated voting power by 50%. Quebec takes this further, reducing the voting weight of delegated XTZ to 33% of staked XTZ.

This adjustment encourages delegators to transition to staking for full voting power and rewards.

If you're currently delegating your XTZ to a Chorus One baker, visit this website to learn how to start staking and maximize your rewards!

Adaptive Issuance

Quebec implements a more aggressive reduction in baking rewards to address sell pressure on XTZ. Under Quebec, if 50% of XTZ is staked, the yield is reduced to 1%, compared to 3% in the Q3NA proposal as depicted on the graph below.

Some validators and community members raised valid concerns:

• Can the network thrive with a 1% issuance rate if only 50% of XTZ is staked?
• Smaller validators may face challenges as rewards decrease, potentially consolidating stake with larger validators.
• Lower yields might drive some stakers to explore alternative networks with higher returns.

‍

Supporting Quebec: A Long-Term Vision

While these concerns are noteworthy, the focus remains on the network's long-term health and the community has clearly showed their preferred choice.

Despite some reservations about the steep reduction in issuance, Chorus One and other supporters voted for Quebec. This decision reflects confidence in the Tezos Foundation’s long-term vision and its alignment with the ecosystem's core contributors.