If you may permit me to express one more dilema

Question

If you may permit me to express one more dilema

that I have. I read a few arguments on this telegram about 14% annual token inflation being either good or bad etc. IMO, 14% inflation is exactly as it sounds... it's a 14% inflation which is in ANY normal economic environment a really bad signal. Now, I don't claim to know the nature of POLYX economic environment in detail (although I know the basics about the project and I know something about economy as such), but can anybody actually JUSTIFY these 14% inflation as being a "good inflation", please?

#blockchain #cryptocurrency #english #matic

0

30.11.2021

8 ответов

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o o Автор вопроса

I'm sorry to say that this is economically incorrect. By staking, you will only be somewhat OFFSETTING the inflation (by earning additional tokens) and NOT escaping the inflation (e.g. tokens will be "worth" less). Let's put it this way, exaggerated inflation is in NO scenario a desired economic effect, and 14% is by all standard economic definitions a very very very high inflation no matter what excuses we're trying to express here. What I'm really interested in is a JUSTIFIABLE argument that would explain 14% inflation as a "good inflation", because I can't find one (but I'm not an expert in POLYX, obviously).

0

30.11.2021

o o Автор вопроса

Pressorus
Max 14% (variable) inflation is just before 1 bill...

Thank you, yes, I read this, but I already feel like 14% (or 140 mio new tokens annually, whatever that might be in percentage terms later on) is substantially unjustifiable (unless somebody finds a good justification). If no good argument is put forth, we should not wait for the proposal to change the inflation rate, but do so immediately. What's actually even more concerning that this high inflation rate is that there is actually no max token supply left. Although that might not be problematic per se, it feels quite problematic under current POLYX tokenomic conditions.

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30.11.2021

FOB

o o
I'm sorry to say that this is economically incorre...

The purpose of the new tokens minted which causes inflation is to pay operators and those staking on the network. for a NPoS blockchain there needs to be an incentive for operators to provide a service and cover their expenses. As Pressorus mentioned the inflation rate is variable and 14% is the max. Currently it is at 8.4% and staking rewards are averaging at 23.4% as a result based on % of total supply staked. So their is still an economic incentive for token holder and operators to stake tokens.

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30.11.2021

K.

o o
I'm sorry to say that this is economically incorre...

"Not be impacted" were my words and that's a correct statement capital wise. You're the one talking about "offsetting" or "escaping". This is a Proof of Stake chain so you better have a substantial inflation rate to incentivize staking and make sure the % of staked tokens stay high.

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30.11.2021

FOB

o o
Thank you, yes, I read this, but I already feel li...

What is your alternate tokenomics proposal and how does that correlate with incentivizing staking and operating of nodes on the network?

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30.11.2021

FOB

I'd argue that an inflation rate that low would make it impractical to operate a node and would not incentivize staking as higher rewards are available from competing PoS blockchains further reducing the demand for tokens and devaluing the token price. Maybe in time a burn mechanism could get added so a % of transaction fees is removed from circulation to offset inflation. inflation will also decrease over time when newly minted tokens becomes a fixed value. At the moment the high reward potential is needed to attract people to stake on the blockchain.

0

30.11.2021

o o Автор вопроса

FOB
I'd argue that an inflation rate that low would ma...

Yes, burning mechanism would go a long way. Higher rewards on competing PoS are usually capped with max supply so one should be determined with POLYX as well (to be reached in e.g. 5 years with 14% inflation), whereas transaction fees should compensate node operators and stakers afterwards. IMO, of course.

0

30.11.2021

Pressorus · Accepted Answer

Max 14% (variable) inflation is just before 1 billion polyx of total supply. After 1 billion polyx, it's a fixed inflation of 140M polyx by year so the inflation rate will decrease over years. In my opinion it's good to have higher inflation rate at the beginning and a slow decrease of inflation while adoption take of over years. If there is a problem with the inflation rate or tokenomic, we can submit a proposal to change it through the polymesh governance process.

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If you may permit me to express one more dilema

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