As I mentioned on the GitHub thread that I personally find this SIP interesting and want to explore it more. There are two main reasons:
a) Total security budget of the network: the security budget of Stacks depends on block rewards (currently 1000 STX), gas fees, and the respective market price of STX. Depending on how you count in 2021, the network had approx $60M-$70M total security budget. This number is an approximation because the STX/USD and BTC/USD price pairs fluctuates but we can use that approximation for now. Approx 1,907 BTC has been spent by miners since the launch of the network. In the long-term, if we get lots of developers and apps on the network, the total security budget might be in billions of dollars per year (Ethereum and some other smart contract platforms already have security budgets in billions).
In the initial years after launch, it’s typical for smart contract platforms to mostly rely on block rewards for the security budget and mining incentives. With increased network use, the gas fees can become more significant and with any appreciation of the gas asset the security budget / mining incentives can also increase over time.
The security budget has gone down recently with the market downturn (which was to be expected given this industry moves in bull/bear market cycles). The SIP proposes an interesting change where the total security budget can be increased by 60% in the coming years will some long-term increase in supply. Many people don’t know this but the first version of Stacks tokenomics had a 5B supply (2017), which was later reduced to approx 2B (2019) and then further reduced to 1.818B (2020). The proposed change adjusts the 2050 supply back up a little to the 1.9B range. Also, it’s important to keep in mind that Stacks is not hard money like Bitcoin. Stacks is a gas asset used to incentivize miners and to pay for smart contracts on the network. Unlike Bitcoin which doesn’t change, Stacks is expected to go through more rapid upgrades to find the right set of features and incentives for growth.
b) BTC rewards incentives during earlier years: the second thing that will result if the SIP is accepted and adopted by miners is that the Bitcoin yield in the coming years can increase for users. In the first two months after launch, the network had 2000 STX block rewards (instead of 1000 STX block rewards) and we saw significant interest from miners, developers, and users at that number. I think that increased rewards during the initial “bootstrapping stage” of the ecosystem are interesting. They give increased incentives for new miners to join, new developers to experiment with apps, and new users to explore the ecosystem and earn BTC rewards. Once the ecosystem reaches escape velocity then the gas fees will start having a significant impact on both the total security budget and the Bitcoin yield, and the increased incentives become less relevant.
This SIP proposes an important change. As a decentralized ecosystem I expect various community members to chime in with their input. The SIP process is very rigorous, it gives ample time for everyone in the community to give their input, there is an explicit voting and miner adoption phase. Voting is typically done by stackers i.e., community members and entities who are actively participating in the ecosystem. Miners are independent and they ultimately decide if the upgrade is accepted or not. Right now we’re at an early discussion phase of this SIP.