Inflation on EOS
Inflation on EOS
May 3, 2019
By Colin Talks Crypto
Most block producers and community members support a reduction of the 4% annual inflation on EOS.
Per the recent article by Greymass there is an element of ever-increasing BP centralization if BPs are the only ones receiving inflation as funding. This is a very important point to the long-term survival of EOS, and Greymass articulated this well.
Read their article here if you haven't already.
Normally I am completely against inflation. It has destroyed every fiat in every government to date. But there is a right way and a wrong way to use inflation. If inflation can generate more growth than it dilutes, then can it be argued to be a net positive for the system.
Most importantly, DPOS is based on inflation. It is inherent in the system. Therefore we must balance it correctly. Otherwise the BPs currently getting paid 1% annually, not being offset by anything else, results in a centralization over time.
Greymass referred to this phenomenon as "Asymptotic Consensus Convergence" in their
article.
Because of this, I believe we do need to counter-balance the 1% BP inflation with another source of inflation that specifically goes to non-BP community development & creators.
The thing is: We need to see a good proposal on this before it is something we can act upon and vote for.
Since a good proposal for this does not currently exist, removing the 4% inflation would seem wise, otherwise it just continues to accumulate as before, and BPs have an incentive to not remove it because it makes their pay a little higher (their 1% pay is calculated on the total supply).
I understand that once the 4% inflation is turned off then it may be hard to turn back on again. But this 4% is creating a large honeypot and it will just repeat once the savings fund is burned, unless we have a solution.
A Solution
Ideally this is the solution I'd like to see:
We create a DAC-governed system for managing an additional 1% annual inflation toward community development/creators (BPs are not allowed to receive this fund) which is able to be given to accounts with a "Unique ID", so they are verifiably not a BP. Otherwise BPs may just try to take some of this inflation as well, and then it makes the entire plan backfire (it exacerbates the centralization effect that Greymass observed). I am making an assumption here and hoping that block.one has solved the Unique ID problem to make this solution possible.
I'd prefer this system to have only 0.5% inflation annually, but I believe it must exactly offset BP pay for it to work, long-term.
This DAC-based 1% development funding system would have to be coded and written. This proposal could also include newly burning the tokens in the eosio.saving account. This way the fund starts from zero again.
This is what I currently believe is the ideal answer. If it is well thought out, and laid-out as above, then I would approve it.
I look forward to a bright, long-term future for EOS. We ensure this by tackling those problems now.