# Adaptive Inflation Overview --- ## Why? - Increase security deposits - currently 7.5% - goal 20 to 40% - Decrease inflation - currently 4.5% - goal 0 to 1% --- ### Why decrease inflation? - Pooled tez should not lose value - reduce opportunity cost for not staking - Make lending tez more appealing - current rates take inflation into account - Tax efficiency --- ## How? - Inflation curve - Make inflation depend on stake at risk - Staking edge - Delegation weighs less than baking for baking rights - Co-staking - To avoid off-chain lending --- ## Inflation curve Inflation = f(frozen stake)  - Incentivize staking - Changes at each cycle --- ## Co-staking In addition to delegation, implicit accounts can put tokens on the security deposit balance of bakers. Automatic rewards through a pseudo-token. --- ## Activation Once the EMA of a per-block vote reaches 80%. --- ## Other changes - Freezing tokens as a manual operation - No automatic transfer from spendable balance to frozen deposits - Rewards paid on the frozen balance - Double-signing denunciation rewards reduced to prevent self-slashing attacks --- ## UX Staking/unstaking done through entrypoints of the baker address. --- # Questions?