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Home»ADOPTION NEWS»Cosmos Hub Vote to Reduce ATOM Inflation Rate to 10%
ADOPTION NEWS

Cosmos Hub Vote to Reduce ATOM Inflation Rate to 10%

By Crypto FlexsNovember 27, 20232 Mins Read
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Cosmos Hub Vote to Reduce ATOM Inflation Rate to 10%
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Recently, the governing body of Cosmos Hub approved significant changes to the blockchain economic model. The community has decided to lower the maximum inflation rate for ATOM, the native token of the Cosmos Hub, from the current approximately 14% to a new upper limit of 10%. This change is expected to reduce the Annual Percentage Rate (APR) on staking from approximately 19% to approximately 13.4%.

ATOM plays a central role in the Cosmos Hub ecosystem and supports staking, governance, transaction fee. The inflation rate adjustment plan received mixed reactions, with 41.1% in favor and 38.5% opposed. The decision remained on a knife’s edge until the final moments of the voting period. Then a late surge in votes and some reversals from the validators tipped the balance in favor of the proposal.

Supporters of the change argued that existing high inflation rates had led Cosmos Hub to overspend on network security. The proposal also suggested that validators could still break even or remain profitable even if inflation rates decline. Zero Knowledge Validator, a prominent validator in the Cosmos ecosystem, expressed support for the proposal on

On the other hand, this proposal faced significant opposition, especially from AllNodes, another key validator. AllNodes expressed concerns about They warned that lower inflation could have a negative impact on smaller validators, as well as retail participants and businesses involved in building, trading, and validating ATOM.

In a related development, Cosmos Hub recently implemented the Liquid Staking module, a significant update that provides greater flexibility in the use of staked ATOM. This module allows users to utilize staked ATOM within the Cosmos decentralized finance (DeFi) ecosystem without compromising staking returns, bypassing the previous 21-day unbonding period. This innovation is considered a step forward in improving the liquidity and utility of assets staked on the Cosmos network.

This decision to adjust the inflation rate is a pivotal moment for Cosmos Hub, reflecting the community’s ongoing efforts to balance economic incentives with network security and validator profitability. As the Cosmos ecosystem continues to evolve, these changes highlight the dynamic and participatory nature of blockchain governance.

Image source: Shutterstock

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