This is a discussion to address the current CRV inflation schedule, and to decide if and how any changes to the inflation schedule should be made.
Inflation can’t be changed directly. In my previous discussion on the nature and effectiveness of the gauge weight voting mechanism, we learned that there are ways to use gauges in interesting ways. The method of inflation adjustment proposed here deals with additions to the gauge weight system.
People have been asking in the TG chat about reductions to CRV inflation. The rationale in all cases seems to be that inflation is unsustainably high, and has resulted in too much selling pressure/depressed token price.
As of 9/22/20, the CRV circulating supply is 67,200,000. There are about 2,000,000 tokens introduced into circulation daily. Of that 2M, about 760,000 is new inflation to LPs, and 1,240,000 are founder/investor/employee/early user vested tokens released into circulation. Only the former (760,000 new inflation) is being addressed with this proposal.
Inflation decreases annually until the total supply of 3,030,000,000 CRV is in circulation some 300 years from now. You can see from the graph above that the inflation slowly shifts the supply from core team dominance to community dominance. This team/community flippening occurs in about 4 years.
The gauge weight system currently allocates inflation to LPs in specific Curve pools. Gauges can also be made to serve other interesting functions like weighting inflation based on pool performance, or to give pools insurance coverage. Or, in this case, a gauge to simply burn new inflation.
Although a gauge could be made to burn inflation, it requires veCRV holders to regularly support this initiative. veCRV holders would need to vote to boost the burn rate rather than boost distribution to their favorite pools. It’s unclear whether voters would be inclined to burn rather than allocate to themselves, but a true democratic system that empowers veCRV holders requires that we give them the option to burn if they want to burn.
veCRV holders have the right to decide where inflation goes, including back to the fiery depths from whence it came.
Burning may not be in the interest of the community, which would effectively be handing control of the protocol back to the team (who we all appreciate very much, btw).
The signal vote is up at https://signal.curve.fi/#/curve/proposal/QmSTNah12jSXmYvWLAWGVXL4g2VJwJGDNmJnNXRtnKUTD4
(Fixed with active poll now!)