Inflation Rate Change Modification #4
Conversation
Proposal to change the variable "inflation rate change"
|
My proposed edits to the text are in bold/italics. :) Fantastic work @JoeDirtay |
|
Love the energy on this repo |
|
|
||
| **How to select “inflation rate change” AKA Maximum Slope of the inflation curve** | ||
|
|
||
| The purpose of changing the networks inflation rate is to protect it from unbonding shocks that can sacrifice the security of the network. When the bonded ratio gets below the goal bonded ratio (66% on the hub currently) the inflation rate & effective yield of staked atoms goes up to try and incentive new atoms to bond and secure the network. Inversely, if we regain a proper amount of staked tokens, the yield will drop and thusly decrease effective yields for all delegators. Ideally the inflation rate starts changing fast, optimizing network security over monetary hardness. To figure out what an appropriate selection for the cosmos hub would be, I created excel sheets to run through all the different scenarios to find what value made the inflation rate react in an optimal manner. **I came to the conclusion that 1 (AKA 100% per year is the maximum slope of the inflation curve) gave the most ideal characteristics, with the added benefit of simplifying the equation**. I’ll give some examples on how it would react. Since unbonding is what we are protecting against, I will look at flash unbonds while the inflation rate is at the floor due to that being the #1 time of vulnerability. |
There was a problem hiding this comment.
Can we model this like so?
%-bonded-of-goal = numAtomsBonded / goalAtomsBonded
yearlyChange = (1 - %-bonded-of-goal) * InflationRateChange
yearsToMax = (max - min) / yearlyChange
Where yearsToMax is the number of years to get from the min to max inflation.
Might be nice to include the formula in here
|
|
||
| #2 Cosmos hub Bonded ratio flash crashes to 50%, starting to get a little scary, but only 25% below the 66% target. With our current variable of .13, it would take aprox. 4 years to make it to the ceiling rate of 20%. On the other hand, if this variable was 1, the hub would reach it ceiling 6.4 months after the unbond. | ||
|
|
||
| #3 Cosmos hub Bonded ratio flash crashes to 35%, NOT GOOD!!!! We need to get more atoms staked ASAP! With our current variable of .13, it would take aprox 25 months to reach the ceiling rate of 20%. On the other hand, if this variable was 1, the hub would reach its ceiling 3.3 months after the unbond and the inflation rate would be increasing at a rate of 3.91% per month. |
There was a problem hiding this comment.
These are great little descriptions but would also be great to just get a small summary table directly in here or in the spreadsheet. Ie for current (0.13) and proposed (1.0) values, show how many years it takes to get from min to max if stake drops to say 60%, 50%, 34%, or 0%. The current spreadsheet is pretty dense.
|
I moved this into a 2020-11-inflation-rate-change folder and changed the filename so it's easier to view on github. Also I pushed a proposal.json file but haven't tested it yet |
|
|
|
|
|
|
|
The other pic doesn’t seem to be posting right....... the data for .13 & 1 can be found in: https://docs.google.com/spreadsheets/d/1ZJWNzkNB7HUG3fsom9UO8bXODao8cJfFHkgdZ12IOnA/edit |
Co-authored-by: Johnnie <71050153+johnniecosmos@users.noreply.github.com>
|
This can be merged, correct? |
Proposal to change the variable "inflation rate change"