# Inflation Adjustment Proposal Template

**URL:** <https://gov.optimism.io/t/inflation-adjustment-proposal-template/5923>\
**Category:** Policies  and Templates 📌\
**Created:** [April 25, 2023, 9:45pm UTC](https://gov.optimism.io/t/inflation-adjustment-proposal-template/5923 "2023-04-25T21:45:37Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![system](https://europe1.discourse-cdn.com/bc41dd/original/2X/3/399c2cdab1be9e0c1ae7481c939f977574c28f5e.svg) [@system](https://gov.optimism.io/u/system)\
**Post date:** [April 25, 2023, 9:45pm UTC](https://gov.optimism.io/t/inflation-adjustment-proposal-template/5923/1 "2023-04-25T21:45:37Z")

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## 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](https://github.com/ethereum-optimism/OPerating-manual/blob/main/manual.md).

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 2025, an Inflation Adjustment Vote may take place in **Voting Cycle 37** , which runs from May 15 - May 21, 2025. 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 16th at 19:00 GMT to proceed to a vote in Voting Cycle #37, as outlined in the [Operating Manual](https://github.com/ethereum-optimism/OPerating-manual/blob/main/manual.md).

## 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_

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**Author:** ![lavande](https://avatars.discourse-cdn.com/v4/letter/l/6f9a4e/32.png) [@lavande](https://gov.optimism.io/u/lavande)\
**Post date:** [June 16, 2023, 10:04am UTC](https://gov.optimism.io/t/inflation-adjustment-proposal-template/5923/2 "2023-06-16T10:04:14Z")

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Pinned on June 16, 2023, 10:04am UTC



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**Author:** ![system](https://europe1.discourse-cdn.com/bc41dd/original/2X/3/399c2cdab1be9e0c1ae7481c939f977574c28f5e.svg) [@system](https://gov.optimism.io/u/system)\
**Post date:** [May 9, 2024, 10:34am UTC](https://gov.optimism.io/t/inflation-adjustment-proposal-template/5923/3 "2024-05-09T10:34:04Z")

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- Updated to reflect 2025 dates

- Updated to reflect inflation will remain at the rate last approved by governance, unless another proposal is put forward, rather than returning to the original 2% default.