Network Inflation & Tax

In Short

SCRT is inflationary, meaning that over time SCRT is minted and brought into circulation. The inflation rate ranges between the inflation upper and lower limit. The inflation can go up and down depending on the bonded rate of SCRT. The inflation is distributed to all stakers on the network as an incentive to help secure the network . A percentage of the inflation is routed to the Secret Foundation and the Community Pool. These are the Foundation Tax and the Community Pool tax.

Network Inflation

SCRT is inflationary, meaning that over time SCRT is minted and brought into circulation. To ensure a secure & decentralized network, ideally, a large portion of the SCRT is staked. To incentivize staking, stakers receive rewards in the form of paid network fees and network inflation.

The inflation rate is dynamic, it can change over time. These changes to the inflation rate happen automatically based on 4 parameters in the network.

1) The bonded rate goal. This is the ideal amount of SCRT currently staked expressed as a percentage of the circulating supply. It is currently set at 67%.
2) The inflation rate change. This is the maximum change of the inflation rate expressed as a percentage per year. It is currently set at 8%.
3) The minimum inflation rate. This is the lowest the inflation rate can become. It is currently set at 7%.
4) The maximum inflation rate. This is the highest the inflation rate can become. It is currently set at 15%.

When the bonded rate of SCRT is below the bonded rate goal, the inflation will increase to the maximum inflation rate.
When the bonded rate of SCRT is above the bonded rate goal, the inflation will decrease to the minimum inflation rate.

The speed with which the inflation rate changes is a function of the difference between the bonded rate and bonded rate goal, and is capped at the inflation rate change. In other words, the bigger the difference, the faster the inflation rate changes.

Note: all 4 parameters can be changed through parameter governance proposals.

Network Tax

Of the SCRT that is minted through inflation, two fixed percentages are routed to the Secret Foundation and the Community Pool.

The Foundation uses these funds to pay for human resources, event participation, marketing, SNACs, and more. They provide a quarterly transparency report that shows how the funds have been used.

The Foundation tax is currently set at 15%.

The Community Pool is a public fund of the network that is accessible to anyone. The current size of the Community Pool can be found on the main dashboard on https://secretnodes.com. Community members can access these funds through spend governance proposals.

The Community Pool tax is currently set at 2%.

Note: both tax parameters can be changed through parameter governance proposals.

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