Cosmos developers propose to reduce ATOM inflation.
The developers of the Inter-Blockchain Communication (IBC) protocol Cosmos want to further reduce the price of its native ATOM.
According to a Jan. 9 proposal by StakeLab, a center of scale and transmission on the Cosmos ecosystem, developers want to reduce the minimum ATOM inflation rate to 0%. ATOM's current rate of inflation is between 7% and 20% and will drop to 0% or 20% if the proposal passes. A 40% quorum and enough yes votes are required from Atom Supply before January 23 for the proposal to be approved. In explaining the rationale for the proposal, StakeLabs wrote:
“This low rate implies that, in theory, even with a 100% share of the token supply, the network will continue to generate an additional 7% of tokens each year. This situation raises concerns and is inconsistent with any other working blockchain model (even out there) to my knowledge.”
StakeLab also explained that the community should consider the feasibility of transferring protocol revenue from Kosmos consumer chains to ATOM stakeholders instead of issuing tokens. If revenues from consumer chains are high, maintaining a 7% annual emission rate may not make sense, he wrote.
As a concerned user, the idea of 0% inflation may discourage existing ATOM stakeholders and affect the ecosystem's Tokenomics, where more than 60% of ATOM currently exists. “For example, 2 chains with 0 inflation based on Cosmos SDK are DYDX and Kava,” the user wrote. “Kava has been here for a while while DYDX is in transition but has recently implemented 0% inflation. Currently DYDX has around 7% and Kava 12%.”
Related: Cosmos Interchain Foundation to invest 26 million in ecosystem development by 2024
In the year On November 26, 2023, the Cosmos community voted to reduce the annual ATOM stock yield from 19% to 13.4%.
