# Reducing Inflation
Some time has passed since our wild cousin Polkadot successfully reduced its annual inflation to 8%(with gradual reduction), as a KSM token holder I believe our loved bird is due an adjustment of its inflation parameters as well. Instead of copy-pasting Polkadot's model, Kusama can try something different, some DOT holders were left wondering if inflation could be lower, I propose we reduce it to 5%. The high initial inflation was good for early bootstrapping and incentivizing participation, the ecosystem has matured enough to aim for long-term sustainability.

## Changed parameters
- Setting `MaxInflation`: From `10%` to `5%`
- `UseAuctionSlots`: From `true` to `false`.  
  From the [docs](https://github.com/polkadot-fellows/runtimes/blob/v1.4.2/relay/kusama/src/lib.rs#L687): 
  > With the move to agile-coretime, this parameter does not make much sense and should generally be set to false.

**NOTE:** As `IdealStake` is "75%", `UseAuctionSlots = true` had the effect of making the *real* target around 45%, this is intentional as it would increase the treasury income to around 10% with current staking levels.

![inflation.png](https://subsquare.infura-ipfs.io/ipfs/QmPLVu1AjKvG9eekJets2BxHLn6bK5kfYP3KWJ7hsQbucK)


# Reducing ideal bulk coretime sales
The reduction of inflation should be balanced with an increased demand for the KSM, the main utility of KSM is to pay for coretime(which gets burned) but current prices are virtually 0 making it hard for the system to benefit from its main product offering. Elastic scaling will help grow demand for coretime and thus KSM, there might also be new sources of KSM demand like [Kreivo's memberships](https://forum.polkadot.network/t/sustainability-model-of-a-tokenless-protocol/8683) but we need to adjust the core business model.

A while back I [proposed setting a minimum price](https://kusama.subsquare.io/referenda/469) but it was pointed out by @seadanda that a better approach is to change the parameter that controls the ideal target for sales to a value that better reflects the expected demand of the Kusama cores to stop the price from further being driven to 0 and quite the opposite drive its price up to a more realistic value.

Note that this number is not set in stone, it's a starting point that can help us better discover coretime's true value.

## Changed parameters
- Setting `ideal_builk_proportion`: From `100%` to `40%`

>The proportion of cores available for sale which should be sold.
If more cores are sold than this, then further sales will no longer be considered in determining the sellout price. In other words the sellout price will be the last price paid, without going over this limit.

---
As self-proclaimed Kusama enthusiast#1, not only as KSM-only holder but as full-time exclusive builder on this network for several years, I hope this proposal well received and not seen as malicious as I only have the best intentions for this ecosystem :)

- **Problem Statement:** Adjusting Kusama's inflation parameters to reduce annual inflation from 10% to 5% to promote long-term sustainability.
- **Significance:** Balancing inflation reduction with increased demand for KSM by adjusting coretime sales to prevent prices from dropping to zero and drive its value up.
- **Proposed Solution:** Change `MaxInflation` from 10% to 5% and `ideal_bulk_proportion` from 100% to 40% to adjust coretime sales.
- **Expected Outcomes:** Enhanced sustainability and increased demand for KSM, leading to a more realistic value for coretime sales.

#507 Reducing inflation and setting a realistic target for coretime sales

No Active Proposals