Cosmos community begins voting on ATOM’s 0% minimum inflation proposal

Minimum inflation adjustment

The crypto asset (virtual currency) Cosmos (ATOM) community is considering a proposal to lower the minimum inflation rate of ATOM tokens from the current 7% to 0%. Voting on Proposition 868 will begin on January 9th and close on the 23rd.

1/ Cosmos Hub Gov

Voting period is open for Prop #868

”Decrease InflationMin parameter to 0%”

This prop aims to reduce the min inflation param from 7% to 0%.

If the proposal passes, once the 67% goal of bonded ATOM is reached, the inflation rate will trend towards 0% pic.twitter.com/xKwXooHGXF

— Cosmos Hub (@cosmoshub) January 9, 2024

Proposition 868 is in response to Proposition 848, which was approved on November 26 of last year and sets a cap on the inflation rate at 10%. , it is expected to trend towards 0%. (Currently set rate of change in inflation is in units of 1%)

ATOM uses a dynamic inflation model, and the inflation rate is set to fluctuate between 7% and 20%. When the staking ratio decreases, the system increases the inflation rate to increase the incentive to encourage staking, and at the time of writing, the staking ratio is 64.84% and the inflation rate is 10.65%.

connection:Cosmos community approves ATOM proposal to reduce inflation rate to 10%

Basis of proposal

If this proposal is approved, ATOM holders are likely to benefit from reduced token supply.

According to StakeLab, which made the proposal, a 7% inflation rate would mean that even if 100% of the token supply were staked, an additional 7% of tokens would be generated on the Cosmos network each year. It is said to be causing concern in the community.

In addition, it is necessary to consider the income (fees to validators) from the “Consumer Chain,” which shares security with Cosmos’ core blockchain “Cosmos Hub.” “It may no longer make sense to maintain an annual inflation rate of 7%,” he added.

StakeLab claims that setting the minimum inflation rate to 0% provides flexibility in adjusting the inflation rate. He explained that in response to increases and decreases in revenue from Consumer Chain, ATOM holders will be able to fine-tune their staking percentage in response to fluctuating incentives.

Proposition 868 is being discussed on the Cosmos community forum, and as of this writing, 84% are in favor, 7.6% are against it, and 2% are refusing to vote.

Proposition 848 (reducing the maximum inflation rate from 20% to 10%) was expected to fail just before the voting deadline, but was ultimately approved by a narrow margin of 2.6%. It became a thing.

What is cosmos?

Cosmos is a project that realizes interoperability between different blockchains. Cosmos aims to build an “Internet of Blockchains”, a network where different blockchains can communicate with each other.

The Cosmos ecosystem consists of independent and interoperable blockchains. The largest and core blockchain in the ecosystem is Cosmos Hub, maintained by validators who stake ATOM.

In May 2023, Cosmos introduced “Replicated Security,” a mechanism in which the blockchain “Consumer Chain” that participates in the network shares security with Cosmos Hub.

In exchange for Cosmos Hub’s validators being responsible for verifying transactions for Consumer Chain, Consumer Chain will share the revenue with Cosmos Hub. The shared revenue will be distributed to ATOM token validators and delegators.

connection:Cosmos begins security sharing to expand the utility of ATOM token

connection:What is Cosmos (ATOM) that even beginners can understand? Explanation of noteworthy points and future prospects

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