Effects of a rise in the inflation rate and price impact

Hello,

regarding the futures proposals

Increase the rate that inflation changes from 13% to 52%
Reasoning : Cryptium thinks that this will enable quicker reactions by the Hub to maintain security in the face of ATOM price changes.
Potential impacts (as per Christopher Goes):
– we don’t know, and would like to collect data points about user behaviours that result

From risk mgnt general perspective :

Effect on economic growth

The effect on economic growth is uncertain. Sometimes inflation is caused by a rapid rate of economic growth. However, if growth is above the long-run trend rate – this may not be sustainable – especially if interest rates rise. Therefore, higher inflation may be a sign the economic cycle is getting close to the end of the boom period and may be followed by a bust.

Therefore.

Checks can be performed are based on widely accepted and tested investment criteria, and used by demonstrably successful investors and investment firms and org.

They can divided into few assessment criteria:

Area Assessment Criteria
Value The fair value of atom, and how that value compares with the current share price,
Future performance Anticipated future financial performance based on analyst forecasts
Past performance The historical financial performance
Health The financial strength of the ecosystem.

Paid and private analysts models by officials risk mgnt internal or external teams is maybe an interesting path to validators and atom holders.

Best regards

Mark Smith.

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To be clear - the change proposed in that thread is not to increase the inflation rate, but rather to increase the rate at which the inflation rate changes in response to the fraction of supply which is bonded. With the current fraction of bonded stake (which is greater than 2/3), the inflation rate would remain constant at 7%.

Increases to the inflation rate floor/ceiling are also worth considering, but that’s a separate question.

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Hey Chris, @i-debug, this confusion appears to have stemmed from my recent article found here.

This particular parameter tends to inspire confusion, so I’ve added a note to the article to make this parameter more clear. Thanks to both for engaging :slight_smile:

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