Prop 1: SEDA Blockchain Inflation Proposal

Scope: The SEDA Blockchain is built utilizing the CosmosSDK, which includes default modules for staking, governance, and inflation. The SEDA team decided to launch the SEDA Chain Genesis with the parameters for inflation set to zero.

In the coming months, the SEDA Chain will undergo large upgrades, adding modules for Data Request execution called Oracle Programs, a phased Overlay Network responsible for fetching and posting data to the SEDA Chain, and a Solver Network tasked with forwarding data requests to and from the SEDA Chain to destination chains.

Proposal Description: This proposal seeks to adjust the base inflation rate of the SEDA Chain, to increase network security and stabilize the SEDA Chain infrastructure.

Known Variables:
- Validators: 94 / 100 active
- Current Staked Supply: ~174,090,005 SEDA
- Current Circulating Supply: ~334,385,000 SEDA
- Total Supply: 999,999,446 SEDA
- Current Staking Ratio: ~52.1% of Circulating Supply, ~17.4% of Total Supply

Proposal Parameters:
- Max Inflation Rate: 4%
- Min Inflation Rate: 2%
- Inflation Change Rate: 1%
- Target Staking Ratio: 50%

Rationale:
- The CosmosSDK provides an Inflation Module that aims to incentivize independent validators to join and secure the SEDA Network.
- Validators incur fixed costs to run the SEDA Node infrastructure required for participating in the Proof-of-Stake Blockchain Design.
- Network Inflation is a parameter that acts as a security budget that is distributed on a per-block basis to encourage good actors to participate in the SEDA Network.
- Network Inflation also encourages token holders in the SEDA Network to participate in delegated staking as a way to secure the SEDA Network against 51% attacks.
- Network Inflation requires upper and lower bounds, in which Dynamic Inflation can adjust, to incentivize or disincentivize staking activity to maintain an optimal threshold of SEDA tokens staked at any given period.

Discussion: For discussion relating to the proposal parameters, please use the Governance Discussion channel on the SEDA Discord.

Disclaimer: This proposal is for the technical configuration of the SEDA Network and does not constitute a legal document, offer, contract, agreement, or guarantee of any kind. It is not intended to constitute an investment opportunity, investment contract, or a financial offering of any kind. The inflation parameters and any proposed adjustments thereto are solely intended to support the decentralized functionality and security of the network.