Currently, there is no way to remove mana from circulation. This can cause manaflation, which would significantly reduce the value of mana. I propose two ways of removing mana:
1. Restart the charity program, at a much lower rate (2500:1, for example)
2. Do not return net loss into liquidity. For example, say someone bets 20 mana without any human counterparty. Today, the counterparty is the AMM, which will give the market creator 80 mana (assuming market subsidy is 100 mana) if the person is right, and 120 mana if wrong. Instead, the AMM should simply give the market creator 100 mana if wrong. This would make the 20 mana disappear, removing it from circulation.
If anybody wants to create a market about this, I'll pay you 50 mana. Only paid to first 2 markets.
(2) would remove extremely little mana from the system, FWIW. It requires a market to close and resolve such that the market price is worse than where it was initialized. This can happen, but it’s rare, and usually the amounts are quite small. The vast majority of markets are left open and resolve near 0/100%. The vast majority that close early still return only partial liquidity to creators.
(Also, it happens when markets close early to preserve liquidity. By removing the potential upside from the market being “wrong”, creators on the margin would be less likely to close some markets early. But that potential effect is small compared to the broader point—almost no mana would be drained from the system this way).
Significant amount of mana is effectively lost by people leaving the platform, it remains locked in the inactive accounts.
Having said that, I do not think it was a good move to price mana 100/USD, then switching to 1000/USD and then back again to 100/USD. The markets that people notice as serious start at 1000M, so it is quite expensive to ask a question and get noticed (10 USD per question).
@Irigi plus it resulted in shmucks like me with no prediction skills ending up with a net worth of 50k just by being in the right place at the right time
A little bit of inflation is a good thing, since it encourages investment. So the question is whether the current rate of inflation is just enough or too much.
@Interrobang Also, the main source of inflation were loans without cap. Now there is cap per market, which limits the accounts to go to negative numbers so much as before.