Note: start by reading the Capped & Stepped Inflation General Info Overview!
Below lies an example of a Capped & Stepped inflation model that exerts Medium Pressure on DOT holders to replace inflation with revenue, reduce expenses & maintain Market Cap valuations on an expedited timeline!
You can produce your own Capped & Stepped models with the Polkadot Inflation Tool Calculator!
(Hard Pressure) Wud’s Two-thirdening - 2 year periods, 33.33% Steps - 2.5B Cap
This model produces a fairly strong psychologically resonant framework with a quirky “two-thirdening” step to a satisfying 2.5B DOT Cap.
Let’s explore:
→ The Green line shows Total Supply under this model.
→ The Blue line shows Inflation by year under this model.
→ The Grey line shows Supply under current model.
→ The Yellow line shows fixed inflation of 120M DOT (current model).
This model in fact never reaches the psychological 2.5B Cap target with inflation falling below 10,000 DOT/year by 2072! If this is deemed unsatisfying, this can be solved by stepping down a % of remaining supply to be minted or by picking a less-memorable Cap.
Now let’s look at the impact on staking reward APR when reducing inflation without increasing revenue by introducing a Red line:
Staking APR by year:
2025 ~14%
2026 ~8.3%
2028 ~5.3%
2030 ~3.3%
2032 ~2.2%
2034 ~1.4%
2036 ~0.9%
2038 ~0.6%
2040 ~0.4%
Let’s see what sort of Market Cap we would need maintain maintain the USD value of current expenses ($450M) by switching to a Logarithmic Scale and adding a purple line.
The New Red Line (sorry for the colour confusion 
) Shows maintenance of expenses reduced to $90M.
This chart (The Network Revenue Pessimist’s view) reflects the above the MC Goals by year with approximate MC of other industry projects for reference:
When setting a new Capped & Stepped inflation schedule we must consider realistic expectations on the network to reduce expenses, increase revenues, and maintain Market Cap valuations.
What now?
→ Return to the Capped & Stepped Inflation General Info Overview!
→ Explore a Hard Pressure Capped & Stepped Model!
→ Explore a Soft Pressure Capped & Stepped Model!
→ Signal on-chain by voting for your favourites with your DOT!
Otherwise we request that you please engage in respectful discourse regarding this model below.