Background
Inflation of the OP token is set to a default % each year. This inflation takes place via the MintManager contract calling the mint() function on the OP token contract at 0x4200000000000000000000000000000000000042.
This inflation parameter can be adjusted by Optimism Collective Governance. While the Citizens’ House is still in early stages, inflation adjustment will be determined via vote from the Token House, as specified in the Operating Manual.
Note that this may not be the final governance process for inflation; the system may evolve as additional governance rights and capabilities come online.
Inflation accrues to the “Unallocated” portion of the OP token allocations. The Unallocated portion of the token supply is held in reserve for future programs. For now, the Collective is focused on building healthy processes around the existing active portions of the token supply.
How the Inflation Adjustment Vote works
In the Voting Cycle that ends closest to and before May 31st, the Token House may vote to set inflation to any value between 0% and 2%, inclusive. If no proposal passes, inflation will remain at the rate last approved by governance.
In 2024, an Inflation Adjustment Vote may take place in Special Voting Cycle #23a, which runs from May 23 - May 29, 2024. If more than one Inflation Adjustment Proposal is passed by governance, the proposal with the highest ratio of yes votes to total votes cast will pass.
Inflation Adjustment should follow the template provided below and will need 4 top 100 delegate approvals by May 22nd at 19:00 GMT to proceed to a vote in Special Voting Cycle #23a, as outlined in the Operating Manual.
Inflation Adjustment Proposal Template
Inflation Adjustment Proposals should follow the template below:
Summary
What is this inflation adjustment proposal?
Motivation
Why should the Collective adjust inflation?
Specification
This proposal would set an inflation rate for [YEAR] of [X%].
If approved, and if not superceeded by another Inflation Adjustment Proposal with higher approval, this proposal will result in a one-time mint of OP of [X]% of the current total supply (4,294,967,296 OP) equal to [Y] tokens. This inflation will occur on or shortly after May 31 and accrues to the “unallocated” portion of the token supply.
If not approved, and unless another Inflation Adjustment Proposal is approved, inflation will remain at the rate last approved by governance, which was 0%. Inflation will occur on or shortly after May 31 and accrues to the “unallocated” portion of the token supply.
Impact Summary
Expected effects resulting from inflation adjustment
Expected impact to key stakeholders in the Collective