Cosmos Hub Approves Proposal to Decrease ATOM Inflation Rate
The governing body of Cosmos Hub has given its endorsement to a proposal that aims to decrease the maximum inflation rate of its native token, ATOM. The proposal suggests reducing Atom’s annualized staking yield from around 19% to approximately 13.4%. Atom is used for staking, governance, and transaction fees within the Cosmos network.
Narrow Passage for the Proposal
The proposal received 41.1% approval votes compared to 38.5% disapproval, making it the highest turnout vote in the Cosmos ecosystem. It narrowly passed due to a last-minute influx of votes and some reversals from validators.
Arguments Behind the Proposal
The proposal argues that Atom’s high inflation rate results in overspending for security and that validators can still achieve profitability with a reduced inflation rate of 10%. Zero Knowledge Validator, the entity with the most substantial vote in favor, believes that double-digit inflation undermines Atom’s price and discourages its use in DeFi and other areas.
Main Opposition Vote
AllNodes, a validator, voiced significant opposition to the proposal, stating that it could negatively impact small validators and harm retail businesses engaged in building, trading, and validating Atom.
Liquid Staking Module Upgrade
Cosmos Hub recently upgraded its platform with a liquid staking module that allows users to bypass the previous 21-day unbonding period when unstaking ATOM funds. This upgrade enables staked ATOM to be used in the Cosmos DeFi ecosystem without compromising staking yields.
Hot Take: Cosmos Hub Takes Steps Towards Decreasing Inflation Rate for ATOM
The governing body of Cosmos Hub has approved a proposal to reduce the maximum inflation rate of its native token, ATOM. This decision aims to address concerns about overspending for security and encourage the use of ATOM in various areas, including DeFi. While the proposal faced opposition from some validators, it ultimately received enough support to pass. With the recent upgrade to the liquid staking module, ATOM holders can now utilize their staked tokens in the Cosmos DeFi ecosystem without sacrificing yields. This move showcases Cosmos Hub’s commitment to adapt and improve its network for the benefit of its users.
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