Cosmos Hub’s governing body has approved a proposal to lower the maximum inflation rate for its token, Cosmos (ATOM), from 14% to 10%.
According to the proposal, the approved modifications would reduce ATOM’s annual staking yield from approximately 19% to approximately 13.4%. Cosmos Hub is the main blockchain within the Cosmos Network, a system of interconnected blockchains. ATOM tokens are used for staking, governance and transaction fees.
This proposal narrowly passed with 41.1% in favor and 38.5% against. It was expected to fail just before the deadline, but a large influx of votes at the last minute and some twists from the validators managed to tip the results in their favor.
The proposal states that ATOM’s high inflation rate has caused Cosmos Hub to overspend on security. The verifier also claimed that even if inflation were reduced to 10%, breakeven or profitability could still be achieved.
The organization that received the most votes for the proposal, Zero Knowledge Validator, justified its support for X (formerly Twitter). post assert“Double-digit inflation is unnecessary for security reasons, undermines the price of Atom in the long term, and hinders the use of ATOM in DeFi and other areas within the Atom economic zone.”
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The most significant downvote came from the validator AllNodes. explanation I expressed my disapproval in my post about X. AllNodes argued that the changes could negatively impact smaller validators, calling the proposal “a sudden, short-sighted and poorly researched idea that could have a major impact on businesses in retail and construction, trading and business.” It was displayed. And we verify Atom.”
Cosmos Hub was recently upgraded to launch a liquid staking module, allowing users to unstake their ATOM funds, bypassing the previous 21-day debonding period. Before the upgrade, ATOM holders had a 21-day lock-up period to move their funds after unstaking their tokens. ATOM staked through the new module can be used in the Cosmos decentralized finance ecosystem without diminishing returns due to staking.
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