Cosmos Hub DAO Holds Vote on ATOM Inflation Rate:
- The Cosmos community votes to change the inflation rate of Atom.
- The annual inflation rate of the ATOM token is now set at 10%.
- The staking annual yield is reduced from 19% to 13.4%.
A Change in Cosmos’ Strategy
The governance of Cosmos Hub has recently approved a cap on the annual inflation rate of its native currency, Atom, at 10%.
This change marks a notable reduction compared to the previous rate of approximately 14%. This decision, resulting from a close vote where 41.1% were in favor versus 38.5% against, represents the highest turnout ever recorded in the Cosmos ecosystem.
In total, less than 7,000 addresses voted against, compared to nearly 165,000 addresses for.
Additionally, this change will result in a decrease in Atom’s annual staking yield, going from around 19% to 13.4%.
The Biggest Voters Explain Their Decision
The proposal was motivated by the perception that Atom’s high inflation rate was an overcompensation by the Hub for security.
Zero Knowledge Validator, who cast the largest vote in favor of the proposal, emphasized that such high inflation rate was not necessary for network security.
Double-digit inflation is not necessary for security, weakens Atom’s long-term price, and discourages its use in decentralized finance (DeFi).
– Zero Knowledge Validator
On the other hand, AllNodes, the largest voter against, criticized the proposal as “abrupt and short-sighted,” explaining that such an initiative could potentially harm small validators and disrupt the market and businesses involved with Atom.
