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Notable developments continue to emerge in the blockchain ecosystem. Particularly, the recent rise in the cryptocurrency market is driving significant progress and momentum in the altcoin market. Accordingly, the governing body of the Cosmos Hub ecosystem unanimously approved a proposal to reduce the maximum inflation rate of Atom, the native token of the Cosmos ecosystem, from 14% to 10%.
Important Step from DAO Members
According to the proposal presented to DAO members, this important step reduces Atom’s annual staking yield from 19% to 13.4%. Cosmos Hub is the central blockchain network of the Cosmos ecosystem, which consists of interconnected blockchain networks. Atom, the native token of Cosmos Hub, is used for staking rewards, governance participation, and transaction fees within the network.
With the proposal presented to members, the highest participation vote in the Cosmos ecosystem to date resulted in a narrow acceptance with 41.1% yes votes against 38.5% no votes. It was being discussed in the community that this proposal would fail shortly before the vote. However, with the increase in votes and feedback from validators in the final hours, the proposal quickly turned in its favor. As a result, the ATOM price gained 10% in a short period of time.
Notable Comments Regarding the Proposal
The proposal argued that a high inflation rate compared to ecosystem tokens like Atom resulted in excessive payments for security by Cosmos Hub. Even under 10% inflation, it is still being discussed within the community that validators can break even or make a profit. Zero Knowledge Validator, which gave the most votes in favor of the proposal, explained their support in a post on their official X account:
“Double-digit inflation is not necessary for security. It weakens the Atom price in the long run and discourages its use in other parts of the Cosmos ecosystem and the Atom Economic Zone.”
The largest opposition to the proposal came from validator AllNodes, who explained in a post on X that smaller validators could be harmed by the change. AllNodes officials commented on the proposal as follows:
“An abrupt, narrow-minded, and poorly researched idea that could harm individual and institutional investors who build, invest, and validate Atom.”
