Cosmos Hub Rejects Proposal to Reduce Inflation on ATOM Crypto
The proposal to reduce the minimum inflation parameter for the Cosmos ATOM cryptocurrency from 7% to 0% has been rejected on the Cosmos Hub. Voting on Proposal 868 ended today, with 48% voting against it and only 25% voting in favor, while the rest abstained.
Cosmos: Zero Inflation on ATOM Crypto
ATOM is the native cryptocurrency of the Cosmos ecosystem. Currently, the minimum inflation parameter for ATOM is set at 7% if two-thirds of the tokens are staked on the network. Proposal 868 aimed to bring this parameter down to 0%, but it was rejected. This proposal was made in November after another proposal set the maximum inflation rate of ATOM at 10%. Some have raised concerns about the minimum inflation rate of 7%, as it implies a continuous production of additional tokens even if all tokens are staked.
The Price of ATOM
In the last year, the supply of ATOM has increased by 17%, with the maximum inflation rate previously at 20%. The price of ATOM has dropped by 33% during this period, reaching less than $9. The high annual inflation rate may have contributed to this decline in price, despite a significant amount of ATOM being staked. Reducing the maximum inflation rate to 10% may improve this trend, but the minimum inflation rate of 7% may still hinder a price recovery.
The Cosmos Ecosystem
The Cosmos project aims to create a connected blockchain ecosystem with an inter-blockchain communication protocol. However, it has not yet achieved widespread adoption or successful communication between major blockchains. Its main competitor is Polkadot, which has also struggled to emerge as a successful ecosystem. The difficulty in creating an effective inter-blockchain protocol and the rise of alternative cross-chain solutions have posed challenges for both projects.
Hot Take: ATOM Inflation Proposal Rejected on Cosmos Hub
The proposal to reduce the minimum inflation parameter for ATOM on the Cosmos Hub has been rejected. This decision means that the minimum inflation rate will remain at 7%. While some have expressed concerns about this rate, it serves to reward those who contribute to the security of the chain and incentivize participation. However, the high inflation rate and lack of successful inter-blockchain communication have impacted the price of ATOM. Despite efforts to reduce the maximum inflation rate, it remains to be seen whether this will be enough to reverse the downward trend. The Cosmos project continues to face challenges in establishing itself as a prominent blockchain ecosystem.
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