Cyclical Inflation Instead of Fixed + Burning?

Economy and macro finances are something complicated, right? If they weren't, all economies would flourish all the time, while providing at least a decent life style for all people. Which is not the case, not even in the so-called civilized countries.

By applying the same logic to crypto, juggling with tokenomics to create the most sustainable or the most prosperous project cannot be an easy thing.

One thing that the crypto space has had pretty well defined both in time and in amplitude has been a cycle, where the bull follows the bear and the bear follows the bull.

While nothing is set in stone nor one can tell with certainty when one starts and the other ends, they have been quite reliable.

I don't pretend to be an expert in the tokenomics that exist in the crypto space, but from my own remarks, most if not all of them are thought out for a bull market and using burning mechanisms to attempt to get the project safely through a bear market until the next bull starts.

Thinking the tokenomics in terms of a bull market and then adjusting it through burning may not be the worst thing that happens, if the tokenomics isn't too optimistic for the actual results during the bull market too.

But what I don't think I've seen before is a cyclical tokenomics by design, that takes into consideration the fluctuations in demand from bull to bear.

Source

Thinking about Splinterlands now and how much they've been struggling during this bear market to bring DEC to peg in order to start the flywheel effect that would start the burning mechanism for SPS.

Much of what they've done in Splinterlands for the last year or so is focused in this direction. Which is ok, it is just a huge amount of work trying to fight the market, basically.

In a bull market, with all that's been done and announced, DEC should be at peg and SPS reaching for the skies. But during uncertain market conditions at best, it's almost like a sisyphean task. Even so, it's getting close to being accomplished, with all the concurring elements designed to help with this task (DEC burning, DEC staking needs, SPS staking for ranked battles rewards, etc.).

This may not be a solution for SPS, since changing its tokenomics might be a controversial issue, but I was wondering if having a cyclical inflation based on demand makes sense.

It could be hard coded to switch between a bull market and a bear market inflation based on preset parameters which can be directly linked to the token in question or may rely on information like the transaction fee for bitcoin or ethereum, in which case a dependency on an oracle is introduced too.

The alternative, for ecosystems that have a DAO, would be to vote on when to switch between the bull (high) and the bear (low) inflation.

On centralized projects, I suppose the project owner can switch too, but that opens up the project and its owner to criticism for disagreements on when this should be done.

Just some thoughts.

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