[PROPOSAL #48][ACCEPTED] Inflation Rate Change Correction

• Moderator edit to add link to on-chain proposal: Mintscan - Chain explorer by COSMOSTATION Cosmos Hub Inflation variable modification: Inflation Rate Change Quick Summary of issue There are 6 main variables that control the maximum, minimum, & change of the atom inflation rate for the cosmos hub. These variables can be found inside the mint module via the attached hyperlink: CosmosParametersWiki/Mint.md at master · gavinly/CosmosParametersWiki · GitHub In this proposal we will be looking at adjusting the inflation rate change variable. • When the cosmos hub inflation dynamics were originally designed, the goal was for the hub to go from the minimum rate (7%) to the maximum rate (20%) in roughly one year after a shock unbond had occurred. Thus, for the variable “inflation rate change” a value of .13 was chosen. Unfortunately, in practice the variable didn’t work as intended due to the fact the change in the inflation rate for the hub is proportional to the Target Bonded / current bonded ratio. How to select “inflation rate change” AKA Maximum Slope of the inflation curve The purpose of changing the network’s inflation rate is to protect it from unbonding…

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I support this proposal and think it is long overdue for these variables to be checked over and updated. I agree that the current Inflation Rate Change is too low and support raising it to 1.

I also support this proposal. Seems to be a no-brainer to protect network and allow quicker adjustments to staking rewards to incentivize new/current stakers.

I also support this and vote yes. From what I read it will definitely incentivize current stakers to keep their ATOMs bonded and also encourage new investors to stake their Atoms. I plan on buying more ATOMs each month and of course staking them. Thank you for this proposal.

Supporting this one. But, I think to help on this subject, there is a need to add more validators to join the chain. Currently, it’s not possible for newcomers to take place.

I mean, I guess I’m not against it, but it feels like that level of shock might not be fixed even by slowly increasing the rate of minting new atoms over 3 months. I would imagine just the “shock” even at minimum rate (7%) would be enough to get more atom minted quickly (because at that point, a 7% inflation rate of new atoms would be split between only about a third of all atom, which would make the APR for the ones still holding on over 20% which would be extremely attractive alone. While of course at max (20%) split between a third of the atom, giving the stakes a 60% APR is obviously even more attractive, I’m not sure that I buy that it would naturally get to that point… people would start jumping on naturally far before it reaches that, no matter the speed, unless there is some more nefarious manipulation at play, and I’m not sure this proposal would be able to defend against whatever that particular issue might be, either.

I’d vote for it, if only because it means I’d get a big ATOM windfall if some rich guy decides to buy two-thirds of all ATOM and not stake it… but I just think I don’t foresee a viable example of what this specifically would counter.

With both Gravity DeX and Osmosis coming soon, I definitely think this needs to be addressed. I am in support.

I have updated the github draft with @JoeDirtay 's latest and will go on chain tomorrow.

Nice to see this finally on chain! Definitely important to address.

I would imagine just the “shock” even at minimum rate (7%) would be enough to get more atom minted quickly (because at that point, a 7% inflation rate of new atoms would be split between only about a third of all atom, which would make the APR for the ones still holding on over 20% which would be extremely attractive alone. While of course at max (20%) split between a third of the atom, giving the stakes a 60% APR is obviously even more attractive, I’m not sure that I buy that it would naturally get to that point

This is a good point, and we’d benefit from more analysis of the dynamics here - if the stake drops to 35% and APR is rising fast, stake is unlikely to be at 35% for long. But given the possibility for other opportunities to yield ~20% for some time, we probably do want the hub to be more responsive regardless. I can also imagine in the future we may want something more sophisticated here like a PID controller, but this adjustment is a good start.

ebuchman:

I can also imagine in the future we may want something more sophisticated here like a PID controller, but this adjustment is a good start.

Slightly related, Delphi team recently proposed a PID controller for money markets (https://www.delphidigital.io/reports/dynamic-interest-rate-model-based-on-control-theory/)

I’m sure these are good projects, because Dev and the team made everything look convincing and promising, good job!!