EDIT: PLEASE STOP MAKING RELATION BETWEEN THIS POST AND JAE VISION
THE CURRENT PROPOSAL IS BASED ON NATURAL ECONOMIC NEED TO REDUCE THE EMISSION
AS PROPOSAL 848 PASSED, WE ARE PRETTY SURE THERE WILL BE A NEED TO UPDATE THE MAX INFLATION IN FEW MONTHS TO ADJUST AGAIN
Regarding the proposals discussed in the Cosmos community forum [PROPOSAL] Set Max Inflation at 10% and the current proposal found on Mintscan, it’s essential to address a specific concern. While setting a maximum inflation rate is a valuable parameter for encouraging staking and ensuring network security, the primary issue lies in the proposed minimum inflation rate of 7%. This minimum rate implies that, theoretically, even if 100% of the token supply were staked, the network would continue to produce an additional 7% of tokens annually. This situation raises concerns and, to my knowledge, doesn’t align with any other functioning blockchain model (even outside).
The rationale behind setting the maximum inflation rate at 20% is to generously reward those who contribute to the chain’s security, especially in scenarios where a significant number of participants decide to leave the network. This encourages new participants to join and incentivises existing stakers to either increase their stake or remain actively engaged.
Additionally, we must consider the introduction of consumer chains and the potential revenue they could bring to ATOM token stakers. This introduces a new variable that we should take into account. It may not make sense to maintain a 7% annual emission rate (assuming 100% bonding, which is unlikely) if the revenue from consumer chains becomes substantial.
One potential solution is to adjust the minimum inflation rate to 0%. This adjustment offers flexibility and allows stakers and investors to fine-tune the total percentage of bonded tokens based on the incentives provided by the emission rate in the absence of specific revenue from consumer chains. Alternatively, stakeholders can choose to allocate a higher weight to staking if consumer chain revenue turns out to be significant.
Cosmos has a strong and dedicated community of believers. While some might no longer align with the project’s initial vision, it’s worth noting that Cosmos is designed to accommodate such scenarios. If individuals find themselves diverging from the core narrative, they have the option to explore other blockchain projects, such as Bitcoin Cash or Bitcoin forks that have undergone similar plan changes (lol).
The positive aspect of Cosmos is its adaptability, allowing users to easily generate their forks or chains and pursue their unique visions. I’m open to further discussions on this topic over the next week, after which we can proceed with deploying the proposal on the chain.