Proposing a Shift: Lowering Inflation for a Sustainable Future

22 Dec 2023

2 min read

Proposing a Shift: Lowering Inflation for a Sustainable Future

In the dynamic world of decentralized networks, adaptability is key. Over the past months, discussions within the Secret community have revolved around a crucial topic: the inflation rate of Secret Network.

Proposal emerged from these conversations—a call for a vote to temporarily adjust our current inflation rate to reduce inflation from 15% to 9%. This is only the first step in a longer term discussion around adjusting Secret's tokenomics.

Current inflation rate stands at 15%, but the proposal suggests a reduction to 9%, a sentiment echoed by SCRT Labs, Secret Network Foundation, and many community members.

This proposition aligns with the prevailing discussions within the Cosmos ecosystem, including the recent proposal to lower inflation of ATOM. Notably, instances like the reduction in inflation leading to substantial value increases for assets like JUNO highlight the potential positive impacts of such adjustments.

Inflation and Value Preservation

Lowering inflation is a strategic move to preserve the value of SCRT. Historically, higher inflation rates have been associated with the depreciation of token value. By reducing inflation to 9%, this proposal aims to make SCRT more attractive for long-term holding, fostering a sense of value preservation within the community.

Balancing Rewards for Long-term Sustainability

A lower inflation rate safeguards against the risk of over-saturation in the market with tokens. This adjustment ensures that staking rewards remain attractive without compromising the intrinsic value of SCRT. The goal is to establish a sustainable equilibrium that benefits stakeholders over the long haul.

This graph shows the projected SCRT token supply with an inflation rate of 9% (red) compared to 15% (blue).

Network Security and Decentralization

Inflation serves as a mechanism to incentivize staking and, consequently, secure the network. Striking a delicate balance is crucial to prevent centralization issues. Excessive inflation may empower large validators disproportionately, posing risks to decentralization. Lowering inflation to 9% promotes a more equitable distribution of tokens, fortifying network security.

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