Cosmos’ ATOM Inflation Rate Reduction Proposal Receives Green Signal

  • The Cosmos community has passed the proposal to reduce ATOM’s inflation rate to 10%.
  • The proposal boasts 41.1% of supporting votes and 31.9% of opposing votes.
  • By reducing ATOM’s inflation rate from 14% to 10%, the community envisions reducing the annual interest rate for stakers.

According to recent reports, the Cosmos community has agreed with the proposal to reduce ATOM’s inflation rate to 10%, with a majority of 41.1% supporting the scheme. The proposal intends to limit the inflation rate of ATOM from 14% to 10%, which in turn brings the Staking APR from 19% to 13.4%.

Source: mintscan

Chinese crypto reporter Colin Wu, shedding light on the Cosmos community’s positive response to the proposal entitled “ATOM Production Reduction: Proposal to Set the Maximum Inflation Rate to 10%”, shared a post on Wu Blockchain X page. While the community’s support is evidenced by 41.1% votes, the opposition rate lies just behind, with 31.9% votes.

The community envisions reducing the annual interest rate for stakers by reducing the inflation level. In addition, the proposal also targets long-term profitability and price growth in Cosmos’ native token ATOM.

In a recent X post, Zero Knowledge Validator, a significant supporter of the proposal, shared their positive approach to the reduction of the inflation rate. They cited, “Double digit inflation is not necessary for security, weakens Atom price long term, and disincentivizes use of ATOM n DeFi and elsewhere in the Atom Economic Zone.”

However, AllNodes, one of the validators that opposed the proposal, argued that the proposal might adversely impact small validators, AllNodes described the proposal as “an abrupt, short-sighted, and ill-researched idea that might wreak havoc on retail and businesses engaged in building, trading, and validating Atom.”

The proposal is mainly driven by speculations that ATOM is paying heavily for security. Last month, Sommelier co-founder Zaki Manian initiated the proposal to change Cosmos’ maximum inflation parameter, alleging that the bear market hasn’t affected the high ATOM rewards for stakers. Previous reports anticipated the rejection of the proposal as the opposing validators overpowered the supporters.

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