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Preamble

CAP: 0026
Title: Disable Inflation Mechanism
Author: OrbitLens <orbit.lens@gmail.com>
Status: Final
Created: 2019-07-10
Updated: 2019-09-24
Discussion: https://groups.google.com/forum/#!topic/stellar-dev/LIFvbMi9jPo
Protocol version: 12

Simple Summary

This CAP disables the inflation mechanism.

Motivation

Inflation mechanism was originally planned as a simple way for users to support important ecosystem projects and keep the overall XLM supply slightly inflationary.

  • Currently, it doesn’t serve its original purpose, as users mostly prefer to claim the inflation payouts through the inflation pools instead of sponsoring ecosystem projects. As a result, inflation micropayouts from XLM pools generate a significant validators load and clog the network.
  • Payouts get more and more resource consuming for validators over time due to the total lumens circulation supply increase.
  • Once the validators vote for the significant base fee increase, such payouts became much less profitable for most lumen holders, and XLM pools will be forced to raise the minimum required account balance to more than 1000XLM to cover transaction fee loses.
  • Inflation payouts may lead to additional complications in some edge-cases when programming smart contracts.
  • Inflation deprecation opens new possibilities for the more effective targeted reward distributions that require complex logic, like stimulating DEX liquidity providers.

Abstract

Turning off inflation requires a minor change in Stellar Core, namely Inflation operation behavior. At the same time, it can be implemented without XDR changes and breaking protocol changes.

Specification

This proposal requires a single Core behavior change. Transaction containing Inflation operation should always return opNOT_SUPPORTED result code.

Design Rationale

The proposed approach does not require breaking protocol changes and allows turning on the inflation mechanism in the future if needed. Due to the simplicity of proposed changes, the implementation potentially requires minimum efforts.

Security Concerns

None.

Backwards Incompatibilities

This CAP contains no breaking changes and is fully backward compatible.