A Proposal to Reduce ATOM’s Inflation Rate
A Cosmos Hub proposal, known as ‘868’, aims to decrease the minimum inflation rate of ATOM from 7% to 0%. If approved, inflation could gradually diminish to zero, alleviating inflationary pressures on ATOM.
The Cosmos Hub community is currently voting on proposal 868, which seeks to radically change the network’s economic policy. Specifically, the proposal suggests reducing the minimum inflation rate of ATOM from its current 7% to 0%. The voting period for the proposal ends on January 23.
If the proposal passes, the inflation rate of ATOM could theoretically decrease to 0%. This initiative, proposed by Stakelab, aims to minimize inflationary pressures on ATOM, especially when the majority of tokens are staked.
Currently, the proposal has gathered 54.3% of favorable community votes, representing over 13 million ATOM. Conversely, 40.5% of the votes are unfavorable, accounting for 9.8 million ATOM.
A Controversial Proposal in the Cosmos Ecosystem
However, proposal 868 has raised concerns within the Cosmos community. Presently, approximately 64% of ATOM tokens are staked on the network. If the proposal is approved and the percentage of staked tokens exceeds 67%, a significant reduction in rewards for validators could occur.
Jacob Gadikian, CEO of Notional, a Cosmos-based infrastructure provider, emphasizes that if inflation reaches zero, it could impact the network’s economic security. Nonetheless, the proposal mentions that the Cosmos Hub anticipates other revenue sources from ‘consumer chains’ associated with the hub, which could compensate stakers in the event of non-inflation.
