🌱1.3. Inflation and deflation
Last updated
Last updated
Deposited CDP can never be claimed back. It is therefore burnt, reducing the circulating supply. An inflation of 4.32% per annum on the circulating plus historic supply is printed daily and claimable by shareholders.
To calculate the inflation rate, the following formula can be used:
To find the daily inflation rate, we must divide this number by the number of days in a year. As the days at Carpe Diem lasts 20 hours, this would be 438 days.
The daily inflation rate is:
The formula for calculating the daily inflation is:
Where P = daily inflation, A = circulating supply, H = historic supply, Pr = daily inflation rate.
The circulating supply deflates when CDP is burnt. However, since the inflation rate also applies to the historic supply, the rate compared to the circulating supply grows when more CDP is burnt and shrinks when shares are destroyed.
The inflation rate compared to the historic supply shrinks when more CDP is burnt and grows when shares are destroyed. This relates to the number of rewards for burners and is further explained in 1.5. Rewards.
If a user hasn’t interacted with the system for over 1111 days, their shares can be destroyed by anyone. The system has an extra function with the sole purpose for renewing the last time of interaction. This could be useful for those who don’t want to use any of the other functions but remain eligible for rewards. When shares of a user are destroyed, their rewards are minted to them.
People or systems can use the burn function to directly burn CDP, skipping the creation of shares. This function is mainly for systems, as those are often not able to claim rewards or don’t have intention to gain rewards at the first place. The function can be used by communicating directly with the smart contract or by using a block explorer that displays all the functions. Carpe Diem doesn’t implement this function in its main user interface, as it might lead to confusion.