feat(inflation)!: make inflation follow a polynomial distribution (#1670

)

* feat: make inflation follow a polynomial distribution

* chore: changelog

* fix: fix inflation test

* fix: fix epoch/period confusion

CHANGELOG.md

@@ -47,6 +47,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 * [#1620](https://github.com/NibiruChain/nibiru/pull/1620) - Token factory transaction messages for Mint and Burn
 * [#1573](https://github.com/NibiruChain/nibiru/pull/1573) - feat(perp): Close markets and compute settlement price
 * [#1632](https://github.com/NibiruChain/nibiru/pull/1632) - feat(perp): Add settle position transaction
+* [#1670](https://github.com/NibiruChain/nibiru/pull/1670) - feat(inflation): Make inflation polynomial
 
 ### State Machine Breaking 
 

proto/nibiru/inflation/v1/genesis.proto

@@ -23,14 +23,23 @@ message Params {
   // inflation_enabled is the parameter that enables inflation and halts
   // increasing the skipped_epochs
   bool inflation_enabled = 1;
-  // exponential_calculation takes in the variables to calculate exponential
+  // polynomial_factors takes in the variables to calculate polynomial
   // inflation
-  ExponentialCalculation exponential_calculation = 2
-      [ (gogoproto.nullable) = false ];
+  repeated string polynomial_factors = 2[
+    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
+    (gogoproto.nullable) = false
+  ];
   // inflation_distribution of the minted denom
   InflationDistribution inflation_distribution = 3
       [ (gogoproto.nullable) = false ];
   // epochs_per_period is the number of epochs that must pass before a new
   // period is created
   uint64 epochs_per_period = 4;
+
+  // periods_per_year is the number of periods that occur in a year
+  uint64 periods_per_year = 5;
+
+  // max_period is the maximum number of periods that have inflation being 
+  // paid off. After this period, inflation will be disabled.
+  uint64 max_period = 6;
 }

proto/nibiru/inflation/v1/inflation.proto

@@ -28,25 +28,3 @@ message InflationDistribution {
     (gogoproto.nullable) = false
   ];
 }
-
-// ExponentialCalculation holds factors to calculate exponential inflation on
-// each period. Calculation reference:
-// periodProvision = exponentialDecay
-// f(x)            = a * (1 - r) ^ x + c
-message ExponentialCalculation {
-  // a defines the initial value
-  string a = 1 [
-    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
-    (gogoproto.nullable) = false
-  ];
-  // r defines the reduction factor
-  string r = 2 [
-    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
-    (gogoproto.nullable) = false
-  ];
-  // c defines the parameter for long term inflation
-  string c = 3 [
-    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
-    (gogoproto.nullable) = false
-  ];
-}

x/inflation/keeper/hooks_test.go

@@ -74,13 +74,13 @@ func TestPeriodChangesSkippedEpochsAfterEpochEnd(t *testing.T) {
 			false,
 		},
 		{
-			"[Period 0] period changes once enough epochs have passed",
-			0,
-			currentEpochPeriod + 1,
-			epochstypes.DayEpochID,
-			0,
-			true,
-			true,
+			name:             "[Period 0] period changes once enough epochs have passed",
+			currentPeriod:    0,
+			height:           currentEpochPeriod + 1,
+			epochIdentifier:  epochstypes.DayEpochID,
+			skippedEpochs:    0,
+			InflationEnabled: true,
+			periodChanges:    true,
 		},
 		{
 			"[Period 1] period stays the same under the epoch per period",
@@ -161,21 +161,30 @@ func TestPeriodChangesSkippedEpochsAfterEpochEnd(t *testing.T) {
 
 			// Perform Epoch Hooks
 			futureCtx := ctx.WithBlockTime(time.Now().Add(time.Minute))
+			fmt.Println("tc.height", tc.height)
 			nibiruApp.EpochsKeeper.BeforeEpochStart(futureCtx, tc.epochIdentifier, tc.height)
 			nibiruApp.EpochsKeeper.AfterEpochEnd(futureCtx, tc.epochIdentifier, tc.height)
 
 			skippedEpochs := nibiruApp.InflationKeeper.NumSkippedEpochs.Peek(ctx)
 			period := nibiruApp.InflationKeeper.CurrentPeriod.Peek(ctx)
 
 			if tc.periodChanges {
+				fmt.Println("periodChanges", tc.periodChanges)
 				newProvision := nibiruApp.InflationKeeper.GetEpochMintProvision(ctx)
+
 				expectedProvision := types.CalculateEpochMintProvision(
 					nibiruApp.InflationKeeper.GetParams(ctx),
 					period,
 				)
+
+				fmt.Println("periodChanges", tc.periodChanges)
+				fmt.Println("newProvision", newProvision)
+				fmt.Println("expectedProvision", expectedProvision)
+				fmt.Println("originalProvision", originalProvision)
+
 				require.Equal(t, expectedProvision, newProvision)
 				// mint provisions will change
-				require.NotEqual(t, newProvision.BigInt().Uint64(), originalProvision.BigInt().Uint64())
+				require.NotEqual(t, newProvision, originalProvision)
 				require.Equal(t, currentSkippedEpochs, skippedEpochs)
 				require.Equal(t, currentPeriod+1, period)
 			} else {

x/inflation/keeper/inflation.go

@@ -28,7 +28,7 @@ func (k Keeper) MintAndAllocateInflation(
 	}
 
 	// Allocate minted coins according to allocation proportions (staking, strategic, community pool)
-	return k.AllocateExponentialInflation(ctx, coins, params)
+	return k.AllocatePolynomialInflation(ctx, coins, params)
 }
 
 // MintCoins implements an alias call to the underlying supply keeper's
@@ -38,12 +38,12 @@ func (k Keeper) MintCoins(ctx sdk.Context, coin sdk.Coin) error {
 	return k.bankKeeper.MintCoins(ctx, types.ModuleName, coins)
 }
 
-// AllocateExponentialInflation allocates coins from the inflation to external
+// AllocatePolynomialInflation allocates coins from the inflation to external
 // modules according to allocation proportions:
 //   - staking rewards -> sdk `auth` module fee collector
 //   - strategic reserves -> root account of x/sudo module
 //   - community pool -> `sdk `distr` module community pool
-func (k Keeper) AllocateExponentialInflation(
+func (k Keeper) AllocatePolynomialInflation(
 	ctx sdk.Context,
 	mintedCoin sdk.Coin,
 	params types.Params,
@@ -125,7 +125,11 @@ func (k Keeper) GetInflationRate(ctx sdk.Context, mintDenom string) sdk.Dec {
 
 	// EpochMintProvision * 365 / circulatingSupply * 100
 	circulatingSupplyToDec := sdk.NewDecFromInt(circulatingSupply)
-	return epochMintProvision.MulInt64(int64(k.EpochsPerPeriod(ctx))).Quo(circulatingSupplyToDec).Mul(sdk.NewDec(100))
+	return epochMintProvision.
+		MulInt64(int64(k.EpochsPerPeriod(ctx))).
+		MulInt64(int64(k.PeriodsPerYear(ctx))).
+		Quo(circulatingSupplyToDec).
+		Mul(sdk.NewDec(100))
 }
 
 // GetEpochMintProvision retrieves necessary params KV storage

x/inflation/keeper/inflation_test.go

@@ -129,10 +129,10 @@ func TestGetCirculatingSupplyAndInflationRate(t *testing.T) {
 			sdk.TokensFromConsensusPower(400_000_000, sdk.DefaultPowerReduction),
 			func(nibiruApp *app.NibiruApp, ctx sdk.Context) {
 				nibiruApp.InflationKeeper.SetParams(ctx, types.Params{
-					EpochsPerPeriod:        0,
-					InflationEnabled:       true,
-					ExponentialCalculation: types.DefaultExponentialCalculation,
-					InflationDistribution:  types.DefaultInflationDistribution,
+					EpochsPerPeriod:       0,
+					InflationEnabled:      true,
+					PolynomialFactors:     types.DefaultPolynomialFactors,
+					InflationDistribution: types.DefaultInflationDistribution,
 				})
 			},
 			sdk.ZeroDec(),
@@ -141,13 +141,13 @@ func TestGetCirculatingSupplyAndInflationRate(t *testing.T) {
 			"high supply",
 			sdk.TokensFromConsensusPower(800_000_000, sdk.DefaultPowerReduction),
 			func(nibiruApp *app.NibiruApp, ctx sdk.Context) {},
-			sdk.MustNewDecFromStr("50.674438476562500000"),
+			sdk.MustNewDecFromStr("27.095518287362700000"),
 		},
 		{
 			"low supply",
 			sdk.TokensFromConsensusPower(400_000_000, sdk.DefaultPowerReduction),
 			func(nibiruApp *app.NibiruApp, ctx sdk.Context) {},
-			sdk.MustNewDecFromStr("101.348876953125000000"),
+			sdk.MustNewDecFromStr("54.191036574725400000"),
 		},
 	}
 	for _, tc := range testCases {
@@ -177,7 +177,8 @@ func TestGetters(t *testing.T) {
 	nibiruApp, ctx := testapp.NewNibiruTestAppAndContext()
 	k := nibiruApp.InflationKeeper
 	require.NotPanics(t, func() {
-		_ = k.ExponentialCalculation(ctx)
+		_ = k.PolynomialFactors(ctx)
+		_ = k.PeriodsPerYear(ctx)
 		_ = k.InflationDistribution(ctx)
 		_ = k.InflationEnabled(ctx)
 		_ = k.EpochsPerPeriod(ctx)

x/inflation/keeper/params.go

@@ -18,8 +18,8 @@ func (k Keeper) SetParams(ctx sdk.Context, params types.Params) {
 }
 
 // VotePeriod returns the number of blocks during which voting takes place.
-func (k Keeper) ExponentialCalculation(ctx sdk.Context) (res types.ExponentialCalculation) {
-	k.paramSpace.Get(ctx, types.KeyExponentialCalculation, &res)
+func (k Keeper) PolynomialFactors(ctx sdk.Context) (res []sdk.Dec) {
+	k.paramSpace.Get(ctx, types.KeyPolynomialFactors, &res)
 	return
 }
 
@@ -39,3 +39,8 @@ func (k Keeper) EpochsPerPeriod(ctx sdk.Context) (res uint64) {
 	k.paramSpace.Get(ctx, types.KeyEpochsPerPeriod, &res)
 	return
 }
+
+func (k Keeper) PeriodsPerYear(ctx sdk.Context) (res uint64) {
+	k.paramSpace.Get(ctx, types.KeyPeriodsPerYear, &res)
+	return
+}