Cosmos’ proposal is to end ATOM inflation by 10%

The Cosmos Hub community has approved a proposal to cover ATOM's peak inflation by 10%. According to the proposal, validators can still break even or change profits at 10% inflation.

The latest Cosmos news is that the community has approved a proposal to reduce the maximum ATOM inflation rate to 10%. The Cosmos Hub X account shared the results of the vote that ended on November 26.

Proposition 848, titled “ATOM Production Cuts: A Proposal to Set the Maximum Inflation Rate to 10%,” passed with 41.1 percent in favor and 31.9 percent against. Voter turnout was over 72%, the highest in Cosmos Hub history.

ATOM's high inflation rate will be reduced from 20% to 10%

Approval means the cryptocurrency's maximum inflation benchmark will be reduced from 20% to 10%, bringing the current rate of inflation down from 14% to 10%. Cosmos Hub's annual dividend yield will drop from 19 percent to 13.4 percent.

Proposal #848 approved

Maximum inflation will be reduced from 20% to 10%, bringing ATOM's inflation to 10%.

This decision comes with the highest turnout in Cosmos Hub history: 72.7% pic.twitter.com/03MPSsUsmx

— Cosmos Hub ⚛️ (@cosmoshub) November 25, 2023

According to the proposal, curbing inflation is crucial as Cosmos (ATOM) seeks to attract more consumer chains to maintain its value proposition in the market.

High inflation means Cosmos Defy's production is dwarfed by competing chains, affecting consumer growth. The proposal to reduce inflation not only has the potential to accelerate the adoption of IBC DeFi protocols, but also see ATOM gain better traction as a container and liquidity gateway.

Another argument is that at the current rate of inflation, Cosmos Hub is overpaying for security relative to its peers, which hurts ATOM's cash premium. Management had signaled under constant selling pressure that hurt price performance.

Under the proposal, almost all insurers would still break even or be profitable at 10% high inflation. Verifiers can choose increased commission rates to cover operating costs or profit.

ATOM's price rose nearly 9% on Sunday morning, changing hands at $9.64.