The Cosmos Hub governing committee has approved a plan to lower the maximum inflation rate of Cosmos (ATOM $9.56), the company’s native token, from 14% to 10%.
The approved change, as proposed, would cause ATOM’s annualized staking yield to drop from about 19% to about 13.4%. Within the Cosmos network, a network of connected blockchains, the Cosmos Hub is the main blockchain.
The ATOM token handles transaction fees, governance, and staking. Voters barely approved the initiative, with 41.1% voting in favor and 38.5% voting against. It was predicted to fail shortly before the deadline, but a late surge of votes and a few reversals from validators just barely swung the balance in favor.
The proposal claimed that the Cosmos Hub overspent on security due to ATOM’s high rate of inflation. Furthermore, it contended that validators might still turn a profit or break even with inflation as low as 10%.
The group that supported the proposal with the most votes, Zero Knowledge Validator, provided an explanation for their support on X (previously Twitter). According to a post:
“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.”
A validator named AllNodes cast the largest opposition vote, outlining its opposition in a post on X. The plan was described as “an abrupt, short-sighted, and ill-researched idea that might wreak havoc on retail and businesses engaged in building, trading, and validating Atom” by AllNodes, who claimed that the change could have a negative effect on tiny validators.
Users can now unstake ATOM funds and avoid the previous 21-day unbonding period thanks to a recent update from Cosmos Hub that launched a liquid staking module.
Prior to the update, holders of ATOM had a 21-day window during which they could transfer their money after unstaking the token. Staked ATOM may now be utilized in Cosmos’ decentralized finance ecosystem without lowering stake rewards, thanks to the new module.
