The Cosmos Hub approves a reduction in ATOM inflation to boost security

A narrow 41.1% majority supported the proposal, while 38.5% opposed it. In a proposal endorsed by Cosmos Hub’s governing body, the maximum inflation rate of Cosmos has been reduced from 14% to 10%.

The permitted amendment, according to the proposal, would cut ATOM’s annualized staking yield from nearly 19% to around 13.4%. The Cosmos Hub is the major blockchain in the Cosmos network, which is a network of interconnected blockchains. ATOM is used for staking, governance, and transaction fees. The idea was narrowly approved, with 41.1% in favour and 38.5% opposed. It was predicted to fail shortly before the deadline, but a late surge of votes and several validator reversals tipped the scales in favor.

According to the idea, the Cosmos Hub overspent on security due to ATOM’s high inflation rate. It further claimed that with inflation decreased to 10%, validators may still achieve breakeven or profitability. The entity with the most votes in favour of the proposition, Zero Knowledge Validator, justified their support on X (previously Twitter). In a tweet, it said, “Double-digit inflation is unnecessary for security, undermines Atom price in the long run, and discourages the use of ATOM in DeFi and other areas within the Atom Economic Zone.”

AllNodes, a validator, cast the most substantial opposing vote and explained its opinion in a post on X. AllNodes stated that the change would have a bad impact on tiny validators, calling the plan “an abrupt, short-sighted, and ill-researched idea that might wreak havoc on retail and businesses engaged in building, trading, and validating Atom.”

Cosmos Hub been upgraded to include a liquid staking module, allowing users to unstake ATOM funds and avoid the previous 21-day unbonding period. Prior to the upgrade, ATOM holders had a 21-day time after unstaking the token to relocate their cash. Staked ATOM can now be used in the Cosmos decentralised finance ecosystem without sacrificing staking rewards thanks to the new module.

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