Summary
The governing council has approved a proposal to reduce the maximum inflation rate of Cosmos (ATOM) from 14% to 10%. This change will cut ATOM’s annualized stake income from around 19% to about 13%. The proposal was narrowly approved, with 41.1% voting in favor and 38.5% voting against.
Introduction
The governing council has given the green light to a proposal to lower the maximum inflation rate of Cosmos (ATOM) from 14% to 10%. This decision comes after a close vote, with a slim majority in favor of the change. ATOM’s annualized stake income is expected to decrease from approximately 19% to around 13% as a result.
Main Points
The proposal to reduce ATOM’s inflation rate aimed to address concerns about overpaying for security on the Cosmos Hub. Supporters argue that a lower inflation rate is sufficient for maintaining security and that it will also benefit the long-term value of ATOM. The proposal’s main proponent, Zero Knowledge Validator, emphasized the negative impact of double-digit inflation on the Atom price and its use in decentralized finance (DeFi) and other areas within the Atom Economic Zone.
In addition to the inflation rate change, the recent update also introduced a significant improvement for ATOM holders. Previously, staking an ATOM token resulted in a 21-day lock on the token’s value. However, users can now avoid this lock-in period by unstaking their ATOM funds. This change provides greater flexibility for ATOM holders in managing their assets.
The approved change also ensures that staking profits will remain unaffected when using staked ATOM within the Cosmos decentralized financial ecosystem, thanks to a new module.
Conclusion
By approving the proposal to reduce the maximum inflation rate of Cosmos (ATOM), the governing council aims to strike a balance between security and economic considerations. While the change will result in a decrease in ATOM’s annualized stake income, it is expected to have a positive long-term impact on the value of ATOM and its usage in various applications within the Atom Economic Zone.