Cosmos Hub Green Lights ATOM Inflation Cut to Increase Safety
Cosmos Hub's governing body, Cosmos (ATOM), has approved a proposal to lower the maximum inflation rate from 14 percent to 10 percent.
Under the proposal, the approved amendment would reduce ATOM's annual dividend yield from 19 percent to 13.4 percent. Cosmos Hub is the primary blockchain in the Cosmos Network, a system of interconnected blockchains. The ATOM token is used for stock, management and transaction fees.
The proposal narrowly passed with 41.1% voting and 38.5% opposed. It was expected to fall just before the deadline, but a last-minute surge in votes and reversals by some of the stalwarts overturned the result.
The proposal states that ATOM's high inflation cost the Cosmos Hub beyond security. He argued that with inflation down to 10 percent, insurers could still break even or break even.
Zero Knowledge Verifier, the most upvoted entity in support of the proposal, confirmed its support on X (formerly Twitter). One post said, “Double-digit inflation is not necessary for security, will devalue Atom in the long run, and will keep ATOM from being used by DeFi and others in the Atom Economic Zone.
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The most important voice of opposition came from AllNodes, a validator, in a post on X. AllNodes argued that the change could have a negative impact on smaller validators, describing the proposal as “sudden, short-sighted and unresearched. An idea that could wreak havoc on businesses.
Cosmos Hub recently upgraded to a liquid staking module, which allows users to bypass the previous 21-day holding period by unloading ATOM funds. Before the update, ATOM holders had a 21-day lock-in period to move their funds after withdrawing the token. With the new module, stored ATOM can be used in Kosmos' decentralized financial ecosystem without reducing the yield from shares.
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