Increase Staking Rewards Smoothing Factor to 14

This proposal increases the smoothing factor for staking rewards from 7 to 14 days, providing a more stable staking APR once the distribution wallet completes its initial accumulation period.

Current Status

Osmosis staking rewards are distributed using a smoothing mechanism that averages staking reward distributions over a fixed number of days.

At implementation in v31, this parameter was set to 7 days, resulting in short-term fluctuations in rewards to stakers, but with less volatility than not having a smoothing factor.

As the APR display is an indicator of the yearly return for stakers, this should be incrementally smoothed further as the accumulation of the distributing wallet increases.

Proposed Change

When the smoothing factor increases from 7 to 14 days: The distribution wallet will need to accumulate an additional 7 days of staking rewards for staking rewards to return to the normal level. During this accumulation period, the displayed APR will appear lower as the wallet builds its balance. Once equilibrium is reached, the APR will stabilize and fluctuate less sharply each day.

This change does not affect the total staking rewards distributed to delegators, only the timing and smoothness of displayed updates.

Chart: Impact of 7 day and 14 day smoothing on historical Staking APR volatility with projection for 14 day accumulation period

Parameter Change

DailyStakingRewardsSmoothingFactor Increased from 7 to 14

Forum Post: https://forum.osmosis.zone/t/increase-staking-rewards-smoothing-factor-to-14/3914