mint

Concepts

The Minting Mechanism

The minting mechanism was designed to:

  • allow for a flexible inflation rate determined by market demand targeting a particular bonded-stake ratio

  • effect a balance between market liquidity and staked supply

In order to best determine the appropriate market rate for inflation rewards, a moving change rate is used. The moving change rate mechanism ensures that if the % bonded is either over or under the goal %-bonded, the inflation rate will adjust to further incentivize or disincentivize being bonded, respectively. Setting the goal %-bonded at less than 100% encourages the network to maintain some non-staked tokens which should help provide some liquidity.

It can be broken down in the following way:

  • If the actual percentage of bonded tokens is below the goal %-bonded the inflation rate will increase until a maximum value is reached

  • If the goal % bonded (67% in Cosmos-Hub) is maintained, then the inflation rate will stay constant

  • If the actual percentage of bonded tokens is above the goal %-bonded the inflation rate will decrease until a minimum value is reached

State

Minter

The minter is a space for holding current inflation information.

  • Minter: 0x00 -> ProtocolBuffer(minter)

proto/cosmos/mint/v1beta1/mint.proto

// Minter represents the minting state.
message Minter {
  // current annual inflation rate
  string inflation = 1 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
  // current annual expected provisions
  string annual_provisions = 2 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
}

See full example on GitHub

Params

The mint module stores its params in state with the prefix of 0x01, it can be updated with governance or the address with authority.

  • Params: mint/params -> legacy_amino(params)

proto/cosmos/mint/v1beta1/mint.proto

// Params defines the parameters for the x/mint module.
message Params {
  option (gogoproto.goproto_stringer) = false;
  option (amino.name)                 = "cosmos-sdk/x/mint/Params";

  // type of coin to mint
  string mint_denom = 1;
  // maximum annual change in inflation rate
  string inflation_rate_change = 2 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
  // maximum inflation rate
  string inflation_max = 3 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
  // minimum inflation rate
  string inflation_min = 4 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
  // goal of percent bonded atoms
  string goal_bonded = 5 [
    (cosmos_proto.scalar)  = "cosmos.Dec",
    (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
    (gogoproto.nullable)   = false
  ];
  // expected blocks per year
  uint64 blocks_per_year = 6;
}

See full example on GitHub

Begin-Block

Minting parameters are recalculated and inflation paid at the beginning of each block.

Inflation rate calculation

Inflation rate is calculated using an "inflation calculation function" that's passed to the NewAppModule function. If no function is passed, then the SDK's default inflation function will be used (NextInflationRate). In case a custom inflation calculation logic is needed, this can be achieved by defining and passing a function that matches InflationCalculationFn's signature.

type InflationCalculationFn func(ctx sdk.Context, minter Minter, params Params, bondedRatio math.LegacyDec) math.LegacyDec

NextInflationRate

The target annual inflation rate is recalculated each block. The inflation is also subject to a rate change (positive or negative) depending on the distance from the desired ratio (67%). The maximum rate change possible is defined to be 13% per year, however, the annual inflation is capped as between 7% and 20%.

NextInflationRate(params Params, bondedRatio math.LegacyDec) (inflation math.LegacyDec) {
    inflationRateChangePerYear = (1 - bondedRatio/params.GoalBonded) * params.InflationRateChange
    inflationRateChange = inflationRateChangePerYear/blocksPerYr

    // increase the new annual inflation for this next block
    inflation += inflationRateChange
    if inflation > params.InflationMax {
        inflation = params.InflationMax
    }
    if inflation < params.InflationMin {
        inflation = params.InflationMin
    }

    return inflation
}

NextAnnualProvisions

Calculate the annual provisions based on current total supply and inflation rate. This parameter is calculated once per block.

NextAnnualProvisions(params Params, totalSupply math.LegacyDec) (provisions math.LegacyDec) {
    return Inflation * totalSupply

BlockProvision

Calculate the provisions generated for each block based on current annual provisions. The provisions are then minted by the mint module's ModuleMinterAccount and then transferred to the auth's FeeCollector ModuleAccount.

BlockProvision(params Params) sdk.Coin {
    provisionAmt = AnnualProvisions/ params.BlocksPerYear
    return sdk.NewCoin(params.MintDenom, provisionAmt.Truncate())

Parameters

The minting module contains the following parameters:

KeyTypeExample

MintDenom

string

"uatom"

InflationRateChange

string (dec)

"0.130000000000000000"

InflationMax

string (dec)

"0.200000000000000000"

InflationMin

string (dec)

"0.070000000000000000"

GoalBonded

string (dec)

"0.670000000000000000"

BlocksPerYear

string (uint64)

"6311520"

Events

The minting module emits the following events:

BeginBlocker

TypeAttribute KeyAttribute Value

mint

bonded_ratio

{bondedRatio}

mint

inflation

{inflation}

mint

annual_provisions

{annualProvisions}

mint

amount

{amount}

Client

CLI

A user can query and interact with the mint module using the CLI.

Query

The query commands allows users to query mint state.

simd query mint --help

annual-provisions

The annual-provisions command allows users to query the current minting annual provisions value

simd query mint annual-provisions [flags]

Example:

simd query mint annual-provisions

Example Output:

22268504368893.612100895088410693

inflation

The inflation command allows users to query the current minting inflation value

simd query mint inflation [flags]

Example:

simd query mint inflation

Example Output:

0.199200302563256955

params

The params command allows users to query the current minting parameters

simd query mint params [flags]

Example:

blocks_per_year: "4360000"
goal_bonded: "0.670000000000000000"
inflation_max: "0.200000000000000000"
inflation_min: "0.070000000000000000"
inflation_rate_change: "0.130000000000000000"
mint_denom: stake

gRPC

A user can query the mint module using gRPC endpoints.

AnnualProvisions

The AnnualProvisions endpoint allows users to query the current minting annual provisions value

/cosmos.mint.v1beta1.Query/AnnualProvisions

Example:

grpcurl -plaintext localhost:9090 cosmos.mint.v1beta1.Query/AnnualProvisions

Example Output:

{
  "annualProvisions": "1432452520532626265712995618"
}

Inflation

The Inflation endpoint allows users to query the current minting inflation value

/cosmos.mint.v1beta1.Query/Inflation

Example:

grpcurl -plaintext localhost:9090 cosmos.mint.v1beta1.Query/Inflation

Example Output:

{
  "inflation": "130197115720711261"
}

Params

The Params endpoint allows users to query the current minting parameters

/cosmos.mint.v1beta1.Query/Params

Example:

grpcurl -plaintext localhost:9090 cosmos.mint.v1beta1.Query/Params

Example Output:

{
  "params": {
    "mintDenom": "stake",
    "inflationRateChange": "130000000000000000",
    "inflationMax": "200000000000000000",
    "inflationMin": "70000000000000000",
    "goalBonded": "670000000000000000",
    "blocksPerYear": "6311520"
  }
}

REST

A user can query the mint module using REST endpoints.

annual-provisions

/cosmos/mint/v1beta1/annual_provisions

Example:

curl "localhost:1317/cosmos/mint/v1beta1/annual_provisions"

Example Output:

{
  "annualProvisions": "1432452520532626265712995618"
}

inflation

/cosmos/mint/v1beta1/inflation

Example:

curl "localhost:1317/cosmos/mint/v1beta1/inflation"

Example Output:

{
  "inflation": "130197115720711261"
}

params

/cosmos/mint/v1beta1/params

Example:

curl "localhost:1317/cosmos/mint/v1beta1/params"

Example Output:

{
  "params": {
    "mintDenom": "stake",
    "inflationRateChange": "130000000000000000",
    "inflationMax": "200000000000000000",
    "inflationMin": "70000000000000000",
    "goalBonded": "670000000000000000",
    "blocksPerYear": "6311520"
  }
}
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