Discussion: The Benefits of Lowering the Inflation Rate in the Odin Protocol

Hello fellow forum members,

I wanted to start a discussion about the potential benefits of lowering the inflation rate within the Odin protocol. As many of you may have noticed, the current inflation rate is quite high, and with the recent increase in price, it seems like an opportune time to consider taking action to address this issue.

Here are some advantages of lowering the inflation rate within the Odin protocol:

  1. Price Stability: By lowering the inflation rate, we can aim to achieve greater price stability within the protocol. This can benefit both users and investors by reducing uncertainty and creating a more predictable environment for transactions and investments.
  2. Increased Value: Lowering the inflation rate can contribute to the increased value of the protocol’s native token. As the inflation rate decreases, the scarcity of the token may rise, potentially leading to a positive impact on its value over time.
  3. Long-Term Sustainability: A lower inflation rate can contribute to the long-term sustainability of the protocol. It can help prevent rapid devaluation of the native token, which is crucial for maintaining the protocol’s viability and attractiveness to users and investors.

In my opinion, considering the possible benefits of reducing the inflation rate in the Odin protocol can help create a stronger and more sustainable ecosystem for everyone involved.

Please share your thoughts on this, let me know if you think this is a good idea

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Hello mark.

While I agree with your take, can you help with some numbers?
Which inflation rate should be optimal for current state of the project and how can it be compared with other case studies for other project at similar milestones?

Myself, I don’t have much experience in economics [that why I am asking about numbers] but I like data and I checked out the inflation model for a couple of DAO driven crypto projects. I, personally don’t see a problem with the current inflation if we plan to lower it by year 5 (or year 4 if adoption increases a lot in the next year).

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To be fair, I don’t think I am smart enough to give you a specific number. For now, it might be too soon to lower the inflation rate, since validators need to be able to make some profit as well.
With the current inflation rate, in 5 years time there will already be a little under 350.000.000 Odin tokens (if my math is correct). I don’t think that is healthy for the Odin Protocol.

But I don’t know about any specific inflation rate, that is why I created this post, so that hopefully smarter people than me can share their ideas about that

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I came to the conclusion that the current inflation rate is healthy.

a): We have to work on decentralization. Lots of ODIN is held in team controlled wallets. So there has to be a better voting power distribution or on chain governance won´t work out as intended, if the core team decides to participate.

b): We need deeper liquidity. This is mostly subject to community governance on whether funds from the community pool will be utilized (according to Anants recent post we have "around 28kk ODIN in the community pool and treasury). Speaking of governance there´s a discrepancy and we look back at point a).
The core team decides to add lp. But this is unlikely atm.
So it´s a matter of every individual Odin staker/ holder to contribute by adding sufficient Odin that can only be distributed to them with the help of the current rate of inflation.