Celestia's token, which has been attracting attention among standard blockchain projects, has been on the agenda after its recent significant loss in value.

With the drop in the value of

With a 93% drop, a radical change proposal has emerged within the cryptocurrency community. John Adler, co-founder of Celestia, proposed completely removing the current proof-of-stake (PoS) mechanism and replacing it with a new experimental proof-of-governance (PoG) system.

According to Adler's statement at the Celestia governance forum, the proof-of-governance (PoG) system will reduce the annual supply of the token by 20 times. This means that the annual staking reward of about $127 million will drop to only $4 million. In the new system, token holders will be able to select network operators directly without needing to lock their tokens.

Adler argues that this structure will eliminate unnecessary complexity, reduce costs, and maintain network security as effectively as the proof-of-stake (PoS) system, and that it is a more sustainable model for creating value that directly increases the network's revenues from data access services.

The current proof-of-stake system of Celestia has long been criticized, with the focus on the idea that high staking rewards disrupt the economic balance of the network by increasing inflation. Currently, Celestia distributes about 8% of its circulating coins as annual staking rewards, which leads to a decrease in the value of the circulating coins.

Additionally, some investors, especially large funds and early-stage investors, earn rewards by staking their locked investments and selling these rewards in the market, which is considered one of the factors undermining trust in the project.

Adler argues that staking is simply a system that punishes those who do not stake their tokens, and actually creates an economically unnecessary step in the process of determining network operators.

In the new PoG model:

Staking and staking rewards will be completely eliminated.

Network operators will only be rewarded for good performance, making punitive measures like reductions unnecessary.

The threat of token holders to oust operators will be the most important element in ensuring the security of the system.

Governance votes will be conducted off-chain, as Celestia's chain does not support this voting.

While some blockchain technology enthusiasts criticize off-chain systems, Adler says they are no different from on-chain systems in terms of security, and that Celestia already has similar infrastructure for managing off-chain.

Adler's proposal has received positive feedback from the community so far, and discussions are ongoing, but this move could lead to a radical shift in the value generation model in Celestia.

*This is not investment advice.