Inflation Rate Parameters

Will the inflation rate decrease over time? For example, similar to Bitcoin’s block reward halving every 4 years. Not exactly to those specifications but I guess something similar to what Ethereum is thinking about - decreasing inflation and maybe fee burning over a predefined timeline?

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The short answer is no, rewards will not half.

You posted this prior to the Monetary policy being published. This document is available
https://forum.aion.network/c/economics/monetary-policy
https://aion.network/whitepapers.html

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Thanks for the reply :slight_smile:

I posted this after reading the monetary policy paper and just wanted to ask about inflation parameters because I assumed that not everything was set in stone just yet :slight_smile:

We are looking for feedback, especially if you have opinions in counter to, or that support our thoughts.

A significant factor is to think about how to align incentives across, not only multiple Aion blockchains, but distinct consensus models as well (PoW, Hybrid).

The model for PoW is established, and more PoS systems are gaining traction too.

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I definitely support the 1% inflation rate as it is very low compared to other PoW chains.

I’m looking forward to diving in deeper once the details are released of how the supply will dynamically adjust across different Aion compatible chains!

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Fantastic news, I am very happy to invest in this project.

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If my math is right, a 1% inflation rate means that it’ll take about ~90 years for all coins to be distributed?

Progressively each year, more coins would be released into the system since the base number is bigger?

What happens towards the end though?

I think that the 1% inflation is in addition to the current total supply. As quoted in the monetary paper below:

rewards will be based on a fixed inflationary model, representing an
annual 1% inflation of total Aion

This, I assume, means the 1% inflation per year lasts forever.

So the math would be 1% of 465,934,587 (current total Aion) for the first year and then 1% of the new total for the second year and so on and so forth.

Oh okay I misunderstand, that makes sense.

So that means that the block rewards would be increasing ever so slowly, by about 1% a year?

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That’s how I understand it!

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:+1:

1% based on total supply on the network, so overall block rewards increase slightly every year.

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Year 1= 1% of 465,934,587 = 4,659,346
Year 2= 1% of 470,593,933 = 4,705,939
Year 3= 1% of 475,299,873 = 4,752,999… etc

Correct?

That’s my current understanding.

have you considered a variable rate of inflation?

if there is a surge in transactions one day, then instead of the rewards being reduced per block…….rewards available could expand with the increase in demand for the technology/coin

i.e = the underlying currency supply could be expansionary or ‘prosperity based’, i.e. you expand liquidity in line with the demand for the technology

so there is enough incentive to lubricate/support the network

then you would have a variable rate of inflation (in line with demand for the tech so it could range from 0%+) — which could be calculated daily, or with every block…

this could also be extended to interest earned by stakers and rewards to other consensus mechanisms

1- 3 % inflation, was provided by gold mining and worked well, because of the rate at which it was mined matched the pace of tech/ideas at the time

however, maybe a higher rate of inflation is probably needed now, because ideas/tech are growing so fast

do you have any details on how block difficulty will be calculated?

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I’m with Jules on this one, a variable rate based on usage would be preferable and the likening to gold mining is interesting, ofcourse being an anarchist I would prefer the market to organise this themselves and not have a top down central bank approach. Now the algorithm for making a variable rate would require extensive research I’m sure, but worth while. We don’t want a situation where team Aion decides to try and steer the economy such as the central bankers do wit QE and negative interest rates though…

Very complex issues which lend some credence to a set inflationary number so that the market knows with certainty and for years ahead what to expect, investors are the first to flee a economy that is inconsistent and unreliable, ie changes in taxes, regulations and so on, a wealth tax means the wealth leaves and so on.

Still I prefer a variable rate but I think this need research and discussions.

Economic policy and incentive systems should be given just as much thought as the tech imo.

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