Monetary Policy

DYM asset details

Property	Details
Token	$\text{DYM}$
Initial Total Supply	$\text{1,000,000,000 DYM}$
Decimals	$\text{18}$
Conversion	$\text{1 aDYM} = \text{DYM} \times 10^{-18}$

DYM Issuance

The issuance of DYM tokens is a dynamic process based on the proportion of DYM tokens staked relative to the total supply. The Dymension protocol algorithmically operates on a set of predefined parameters.

Parameter	Value
Min Annual Issuance*	$2\%$
Max Annual Issuance*	$8\%$
Target DYM staked**	$50\%$
Inflation rate of change*	$100\%$

* These parameters can be adjusted through onchain governance.
** RollApp bonds do not contribute to this staking calculation.

Algorithmic Issuance

The Dymension protocol adjusts the DYM issuance rate based on the actual staking ratio relative to the target:

• Below Target Staking: If the percentage of staked DYM is less than the target of 50%, the issuance rate will incrementally increase. This adjustment continues until it reaches the maximum rate of 8% or until the staking target is met.
• At Target Staking: When the staking ratio aligns with the 50% target, the current issuance rate remains unchanged.
• Above Target Staking: If the percentage of staked DYM is greater than the target of 50%, the issuance rate will incrementally decrease. This adjustment continues until it reaches the minimum rate of 2% or until the staking target is met.

Rate of Change Formula

The rate at which the DYM issuance adapts over the year is quantified by the following formula:

$[ 1 - (\frac{\text{current staked ratio}}{\text{Staking target}}) ] \times \text{Inflation Rate Change}$

Example

For actual data please visit the Portal

• Current Inflation Rate: 21%
• Current Staked Ratio: 55% (i.e., total supply of DYM is staked)
• Staking Target: 50%
• Inflation Rate Change: 100%

$[ 1 - (\frac{55\%}{50\%}) ] \times 100\% = -10\%$

The result of 55% staked DYM is a -10% absolute reduction in the inflation rate over the year resulting in an inflation rate 11%.