This post is to discuss the CIP to reduce inflation.
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I’m curious to understand how this proposal helps align a more favorable balance between a healthy inflation rate and sufficient economic security.
I see the beginnings of that discussion in the alternatives section of the proposal, concluding that 5% is about ideal for a network in the maturation stage that Celestia finds itself in at the moment.
However, most of the discussion seems to be made relative to the current inflation schedule. It might be useful to discuss what a desired level of economic security, deemed sufficient to protect the network, would be and how the newly proposed inflation curve more closely aligns to it than the current curve does.
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My understanding is that this proposal cuts the inflation by 33% which is inline with the screenshot you shared.
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This is a hard thing to quantify as the data points across the space are arbitrary. It also is subjective to what contributes to security. I believe that tokens being locked, removed the market, contributes to security. This could take any number of forms. Staking, Lending, Community Pools, etc… I believe lowering the inflation rate from what is perceived as high to lower allows more opportunities for apps to build lockup mechanisms without having to dilute their token.
In the tables under the screenshotted one we can see that at 7.20% inflation rate and the rate of bonded tokens inflation sits at 11.08%. While this may be seen as low for a new application trying to find its footing and build a user base having to incentivise above 11% could mean over diluting their own token.
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Hi everyone!
I read about the proposed inflation reduction. While reducing inflation from 7.2% to 4.82% is a step in the right direction, I believe the main issue affecting TIA’s is not staking rewards, but the impact of VC token unlocks. Large unlocks create sustained sell pressure, leading to dilution and limiting long-term value growth.
I think the team should do something about this !
Brightlystake is in support of this reduction in inflation, its a net positive for the ecosystem
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