I want to leave a couple remarks about inflation parameters.
Shielded set rewards
For shielded set rewards, I think @Gavin’s example involving a 0.2% inflation rate for ATOM and OSMO locked shielded tokens accidentally gave the impression that this is around the rate that the Namada team thinks the inflation should be. At one point we did also discuss the possibility of trying to ensure that shielded set rewards in total (for all incentivized shielded assets) be larger than the inflation for Proof-of-Stake and PGF. As a member of the community and interested user of Namada, this would be my personal preference and something I think we should aim to do through governance. In this case, I imagine something like 7-8% total inflation over all incentivized tokens. For example, if we offer rewards for shielding ATOM and OSMO only, then maybe 3-4% inflation for each of them.
I would like to encourage everyone here to participate in further conversations on shielded set rewards in this dedicated thread.
PGF inflation
I’ve also noticed some comments regarding the final 10% inflation for PGF that @Gavin mentioned being high. As a member of the community, I think it is less important to discuss this number now and more important to discuss what the initial non-zero PGF inflation will be. It is suggested that 5% be this initial number, and I think that works.
But beyond the possible initial 5% inflation (which would be enacted in transitioning to Phase 2), I think it is more important to gauge how well the PGF tokens are being allocated in the first several months of mainnet and then determine if the inflation rate should be changed rather than make some kind of a priori commitment to some next number. If there are lots of public goods that the community wants to fund and it feels that there is not enough inflation to go around, then it might be nice to increase the inflation. On the flipside, if for some reason that funds were not being allocated efficiently and tokens are just sitting in the PGF account, then maybe it could be wise to do nothing or even decrease the inflation.