How can we solve ICPs hidden inflation?

Governance NNS Governance
1

I’ll jump straight in: it seems to me there are at least two forms of “hidden” inflation in the current ICP ecosystem.

  1. SNS Tokens as Inflationary Mechanism
    SNS tokens are created in exchange for ICP. The ICP used in the swap is retained by the teams, but an equivalent amount of SNS tokens is minted simultaneously. This effectively creates inflation. Although the total ICP supply remains unchanged, the overall ecosystem inflates by the total amount of SNS tokens created.

  2. Cycles Pegged to the SDR Price
    Cycles are pegged to the Special Drawing Rights (SDR) price, which is only adjusted for goods and services inflation every few years, up to a maximum of five. However, SDR does not account for asset inflation. Over the past five years, the U.S. dollar has inflated by about 22%, excluding asset inflation. Since cycles follow SDR, we may not be burning enough ICP to offset external inflationary pressures, reducing its deflationary impact.

Perhaps I’ve misunderstood parts of these processes? Or maybe these issues are already being addressed—I’m not entirely sure.

Two potential solutions that stand out to me are that ICP should be burnt in exchange for SNS token in the sales. If not all at least some proportion.

Cycles cost should be more regularly updated and should take into account inflation.

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