Introducing the Lotus upgrade: native TIA interop and reduced issuance
Celestia’s v4 mainnet upgrade, Lotus, is on the horizon.
Lotus integrates Hyperlane as a Cosmos SDK module. Hyperlane enables direct TIA interop for new Celestia rollups and non-Celestia chains with Hyperlane deployments, such as Ethereum Mainnet, Base, Arbitrum One, and more.
Lotus also makes several changes to Celestia in terms of inflation and staking. CIP-29 drops TIA’s inflation schedule by 33%, lowering emissions while keeping staking incentives competitive for network security. It also includes changes to the handling and management of staking rewards, locking staking rewards for locked tokens (CIP-31) and disabling auto-claims (CIP-30).
Lotus is now live on Arabica testnet and will be activated on Mocha testnet shortly, and is expected on Mainnet Beta in June.
Lotus changes coming to Celestia
The CIPs included in the Lotus upgrade are specified in CIP-33. These include:
- CIP-29 Decrease inflation and disinflation
- CIP-30 Disable auto-claim of staking rewards
- CIP-31 Incorporate staking rewards into vesting account schedules
- CIP-32 Add Hyperlane to Celestia (specifically the hyperlane-cosmos module)
Decrease inflation and disinflation
CIP-29 reduces both Celestia’s inflation and disinflation by 33%. The change aims to immediately reduce inflation in a simple and economically sustainable way such that staking rewards remain competitive.
For example, the inflation rate for year 1.5 will drop from 7.2% to ~5.0% – and subsequent years will follow a similarly reduced trajectory. The annual disinflation rate (the rate at which inflation decreases over time) will also be reduced by 33%. This adjusts the pace at which inflation decreases, ensuring a smooth transition to lower rates.
Disable auto-claim of staking rewards
CIP-30 removes mandatory auto-claiming of staking rewards. The change aims to give users more control over when TIA staking rewards are realized, which could improve tax outcomes in some jurisdictions. Instead of being automatically claimed on certain actions, accrued rewards will remain stored in the distribution module until explicitly claimed by the user via a `MsgWithdrawDelegatorReward` transaction.
Incorporate staking rewards into vesting account schedules
CIP-31 integrates staking rewards directly into lockup accounts. The change will lock any staking rewards earned proportionally to the account's lockup schedule. This ensures that staking rewards earned by a lockup account can’t be transferred independently of its lockup schedule, while also preserving incentives for users to lock tokens and secure the network.
Staking rewards earned by a lockup account will update their daily unlock rate via a recalculation based on the updated lockup balance and remaining lockup period for that lockup account. As a result, both the initial tranche of locked tokens in the lockup account and the staking rewards accrued by that account will follow the same lockup schedule.
After the implementation of CIP-31, accrued and claimed staking rewards will remain unaffected, though accrued but unclaimed rewards will be subject to the new rules in the proposal.
A 25% cap on validator commissions is also introduced. The purpose of the cap is to prevent large token holders from circumventing the lockup by creating a validator with 100% commission, which would pay commission in unlocked tokens.
Add Hyperlane to Celestia
CIP-32 integrates the Hyperlane interoperability protocol into Celestia as a Cosmos SDK module. This makes TIA directly interoperable to new rollups and Hyperlane’s 100+ network connections. Hyperlane is fully open source, permissionless, and designed especially with the needs of new rollups in mind.
The integration adds two new SDK modules (`x/core` and `x/warp`) to facilitate token transfers – initially restricting non-native tokens. The protocol will initially bootstrap via a multisig interchain security module (ISM) for cross-chain communication and may later upgrade to a ZK-based ISM module that uses the Celestia PoS validator set.
Lotus node upgrade
See the Lotus upgrade docs for more details on timing and how to update your Celestia consensus node to run the Lotus upgrade.