The governing body of Cosmos Hub, the primary blockchain within the Cosmos network, has given its approval to a proposal aimed at reducing the maximum inflation rate of its native token.
The governing body of Cosmos Hub, the primary blockchain within the Cosmos network, has given its approval to a proposal aimed at reducing the maximum inflation rate of its native token, ATOM, from 14% to 10%. The objective of this decision is to make adjustments to the annualized staking yield of ATOM, bringing it down from around 19% to approximately 13.4%.
The proposal was able to pass by a narrow margin, with 41.1% of votes in favor and 38.5% against. Supporters of the proposal emphasized that the current inflation rate was resulting in excessive spending on security for the Cosmos Hub. They argued that even with the reduced inflation rate, validators would still be able to maintain profitability.
Zero Knowledge Validator, the entity that received the highest number of votes in favor, justified its support by asserting that a double-digit inflation rate was unnecessary for security and had a negative impact on the long-term price of ATOM. They also highlighted the adverse consequences for the utilization of ATOM in decentralized finance (DeFi) and other sectors within the Atom Economic Zone.
However, AllNodes, a validator, expressed significant opposition to the proposal, claiming that it could harm smaller validators. They criticized it as a hastily conceived and inadequately researched idea that could disrupt retail and businesses engaged in building, trading, and validating ATOM.
In recent developments, Cosmos Hub introduced a liquid staking module that enables users to bypass the previous 21-day unbonding period when unstaking their ATOM funds. This upgrade allows staked ATOM to be effectively utilized within the Cosmos DeFi ecosystem without compromising staking yields.
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