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The Radix Foundation currently provides a subsidy to node runners to offset infrastructure costs and ensure a diverse validator set. This system was designed for the early network phase.
As we execute the 2026 Strategy and transition to a community-led model, we must reconsider how this subsidy is managed. We need a system that reduces dependency on the Foundation, extends the runway for the community treasury, and prepares validators for a sustainable, fee-driven future.
Following a community initiated RFC (Request for Comments) and polling in validator channels, we are bringing a revised proposal to a formal token holder vote.
The Problem
The current subsidy pays ~$500/month (in XRD) to eligible validators.
- Sustainability: Indefinite subsidies are not viable for a decentralized network.
- Dependency: The current system relies on the Foundation to administer payments and calculate amounts due to uptime.
- Community Sentiment: 42% of community respondents want to end the subsidy immediately, while 41% of validators indicate they might shut down without it.
We need a middle ground: a tapered exit that gives validators time to adjust their fee models without draining the treasury or shocking the network.
The Proposal: A Tapered Transition
The proposal aims to balance treasury preservation with network stability. It consists of two phases designed to hand over control to a new community entity while gradually reducing payments.
Phase 1: Foundation Administered
- Timeline: Feb – March (Final payment in early April).
- Amount:
- February: 400k XRD or $350 of XRD (lesser used)
- March: 400k XRD or $200 of XRD (lesser used)
- Goal: Provide existing validators stability to start to adjust their fees, set-up, and if necessary to orderly unregister from the validator set. This tapering also protects the Foundation’s treasury (and therefore what can be transferred to a community entity) while maintaining stability during the immediate transition. Lastly, it also limits the amount of time the foundation needs to administer the subsidy that would prevent transfer of assets to a community structure.
Phase 2: Community Administered (Tapering)
- Timeline: April – May (Payments in May/June).
- Amount: Reduced to $100 USD value (paid in XRD).
- Mechanism: The community entity will take over the administration of these payments, using funds provided by the Foundation.
- Backstop: If no community entity is in place by the start of this phase, it is proposed that funds be backpaid until the sooner of : (i) the formation of a new entity and mechanism to administer the subsidy, or (ii) a vote by further community consultation to end the subsidy entirely
The Rationale
1. Why Taper? An abrupt "hard stop" risks a sudden drop in active validators, which could impact network performance. A taper gives node runners a clear runway to communicate with their delegators and introduce reasonable validator fees to replace the subsidy.
2. Why Cap at 400k XRD? This protects the ecosystem from excessive inflation. If the price of XRD fluctuates, the outflow is capped, ensuring the subsidy remains a contribution to costs, not a guaranteed profit margin at the expense of token holders.
3. The Path to Jailing The long-term solution for network quality is protocol-enforced "Jailing" (removing underperforming nodes). This is a complex upgrade. This proposal bridges the gap, buying time for the community to design and implement robust performance incentives without rushing a protocol upgrade.
Consultation
We are asking token holders to approve or reject this transition plan.
The Question: Do you approve the proposed Validator Subsidy Tapering Plan (Phase 1 & 2), ending in June 2026?
Option 1: Yes, Approve the Plan
- The subsidy continues at ~$350-$200 (capped) until March, then drops to $100 for April/May.
- Administration hands over to the Community Entity.
- Subsidy ends in June (pending future community proposals).
Option 2: No, maintain the current subsidy ($500/mo) until Community Handover
- These payments will continue at the current rate until either the Foundation transitions activity to a Community Entity, or the community accepts an alternative proposal.
Consultation Mechanism
- Platform: https://consultation.radixdlt.com/consultation/validator-subsidy
- Participation Threshold: For this result to be considered fair representation of token holder opinion, a minimum of 500M XRD voting weight must participate.
- Format: Single Choice (Winner takes all).
- Start date: Immediately
- End Date: Feb 12, 2026 at 23:59 UTC