Cosmos Community Approved Capping Atom Inflation At 10%

It has been just revealed that the Cosmos community approves capping Atom inflation at 10%. Check out the latest reports about the matter below.

The governance body of Cosmos Hub has decisively approved a proposal to reduce the maximum inflation rate of its native token, Atom, from approximately 14% to 10%. The change would cause the annualized staking yield of Atom to decrease from approximately 19% to 13.4%.

Cosmos Hub serves as the central blockchain of the Cosmos network, which comprises interconnected blockchains. Atom, the native token of Hub, is utilized for staking, governance, and transaction fees.

The proposal was passed by a narrow margin, with 41.1% of votes in favor and 38.5% votes against, in the highest-ever turnout vote in the Cosmos ecosystem. The proposal was predicted to fail just before the deadline, but a last-minute surge of votes and some reversals from validators swung the outcome narrowly in favor.

The proposal stated that Atom’s high inflation rate, in comparison to its peers, meant that the Hub was overpaying for security. It also argued that validators would still be able to break even or earn a profit even if the inflation rate was kept below 10%.

Zero Knowledge Validator, which had the largest vote in favor of the proposal, explained its support in a post on X. “Double-digit inflation is not necessary for security, weakens Atom price long term, and disincentivizes the use of ATOM in DeFi and elsewhere in the Atom Economic Zone,” it said.

On the other hand, validator AllNodes had the most significant vote against the proposal, and it explained in a post on X that small validators could be negatively affected by the change.

AllNodes called the proposal “an abrupt, short-sighted, and poorly researched idea that might wreak havoc on retail and businesses involved in building, trading, and validating Atom.”