Proposal to reduce Cosmos (ATOM) inflation rate to zero is rejected by node operators

Discussion over ATOM inflation rate

Proposal 868, which was submitted earlier this month and would have lowered the minimum inflation rate of the crypto asset (virtual currency) Cosmos (ATOM) from the current 7% to 0%, was rejected in a community vote on the Cosmos network that ended on the 23rd. Ta.

On the Cosmos network, validators participate in voting, and ATOM voters can delegate their shares to validators. Proposition 868, submitted by Stakelab, did not receive support from the community as concerns were raised about the impact of zeroing out inflation, particularly the potential risks to the security of Cosmos Hub.

Cosmos Hub will play a central role in the Cosmos ecosystem, facilitating communication and interoperability between different blockchains. ATOM is the hub’s native token and is used for staking, transaction fees, security, and governance.

Source: MINTSCAN

According to the voting results, 48.6% of voters were against the bill, 25% were in favor, and the remaining 25.9% abstained. Major validators who voted against it include major staking agencies Everstake, Cosmostation, and Chorus One.

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

Impact on token value and reward rate

Recently, ATOM’s inflation rate has been a topic of discussion within the community, with some contributors wanting to minimize the emission of new tokens. By restricting the release of new tokens, it is expected that the amount of tokens circulating in the market will be limited, increasing their scarcity and increasing their value.

Source: CoinGecko

connection:Cosmos (ATOM) | Investment information/real-time price chart

In 2023, while Bitcoin rose by about 160% and Solana rose by 700%, ATOM’s value declined by 27%, causing frustration for investors.

On the other hand, a decline in reward rates will be a blow to validators, creating a conflict in the ecosystem. On November 25, 2023, Proposition 848 was approved, regulating token emissions and lowering the inflation cap from 20% to 10%. Due to this change, the staking APR (Annualized Yield) of ATOM token also decreased from approximately 19% to approximately 13%.

Note that even if the inflation rate goes to zero, validator rewards will not go to zero, as network transaction fees will remain an important source of validator rewards.

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

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