Significant developments continue to occur in the blockchain ecosystem. Especially the recent surge in the cryptocurrency market is leading to important advancements and momentum in the altcoin market. In this context, the governance body of the Cosmos Hub ecosystem has unanimously approved a proposal to reduce the maximum inflation rate of the native token of the Cosmos ecosystem, Atom, from 14% to 10%.
According to the proposal presented to DAO members, this significant step reduces Atom’s annual staking income from 19% to 13.4%. Cosmos Hub is the central blockchain of the Cosmos ecosystem, which consists of interconnected blockchains. The native token of Cosmos Hub, Atom, is used for staking rewards, governance participation, and transaction fees within the network.
The proposal received a narrow acceptance with 41.1% yes votes against 38.5% no votes, making it the most participatory voting result in the Cosmos ecosystem to date. Prior to the vote, there were discussions within the community about the possibility of the proposal failing. However, in the final hours, the votes shifted in favor of the proposal due to the increase in support and feedback from validators. As a result, the price of ATOM showed a 10% increase in a short period of time.
Regarding the proposal, the potential impact of a high inflation rate on ecosystem tokens like Atom, compared to Cosmos Hub, was discussed. Even under 10% inflation, it is still debated within the community whether validators would incur losses or make profits. The Zero Knowledge Validator, who voted in favor of the proposal, explained their support on their official X account as follows: “Double-digit inflation is not necessary for security. It weakens the Atom price in the long term and discourages its use in other parts of the Cosmos ecosystem and the Atom Economic Zone.”
The strongest opposition to the proposal came from the validator AllNodes, who explained that the change could harm small validators. AllNodes officials commented on the proposal as follows: “An abrupt, narrow-sighted, and poorly researched idea that could harm individual and institutional investors who build, invest, and validate Atom.”