Currently on mainnet blocks are produced usually at between 1.2 and 1.3 per second, which is great. However, when we calculate inflation per epoch, we use the following formula (note: this excludes the tokens burnt in transaction fees):
inflation = total_supply * yearly_inflate_rate * epoch_length / expected_num_blocks_per_year
expected_num_blocks_per_year is a genesis parameter currently set to
31536000, i.e, a block every second. Since blocks are produced faster that,
expected_num_blocks_per_year is smaller than the actual value, which means that, at the current rate, we will have ~20% more inflation than expected.
Calculating the inflation based on blocks isn’t the most reliably way to begin with. Even though currently epochs are shorter than expected, they could, in some cases, be longer than expected if there are a few validators offline for the entire duration of the epoch. To address this, I propose that we change the inflation calculation based on time elapsed instead of number of blocks. More specifically, this proposal only requires changing the inflation calculation to
inflation = total_supply * yearly_inflation_rate * duration_of_epoch_in_seconds / num_seconds_in_a_year
This is essentially still a first-order Taylor approximation of the target inflation rate, in the similar vein as the original calculation. However, it is more accurate and is less subject to the perturbation of the epoch time.