- Cosmos ecosystem is proposing reducing ATOM token inflation rate from minimum 7% to 0% annually.
- Supporters argue current minimum 7% inflation rate is unnecessary and not aligned with other blockchain models. With new revenue sources, stakers could be rewarded without minting new tokens.
- Proposal requires 40% of outstanding supply to vote in favor by Jan 23rd. If passed, this would significantly change Cosmos’ tokenomics and staking incentives.
The Cosmos ecosystem is proposing a reduction in inflation for its native token, ATOM. This would lower the minimum annual inflation rate from 7% to 0%.
Background on Cosmos and ATOM
Cosmos is a decentralized network of independent blockchains, powered by its IBC protocol. ATOM is the native token of the Cosmos ecosystem.
Current ATOM Inflation Rate
The current annual inflation rate for ATOM is between 7% and 20%. This rate will be lowered to either 0% or 20% if the proposal passes.
Rationale for Reducing Inflation
Proponents argue that the current minimum 7% inflation rate is unnecessary, even if 100% of tokens are staked. This doesn’t align with other blockchain models. With revenue from emerging consumer chains, stakers could be rewarded without minting new tokens.
Community Feedback on Proposal
Some are concerned 0% inflation will discourage staking. For example, similar protocols like DYDX and Kava have implemented 0% inflation but have low staking participation. However, their circumstances differ from Cosmos.
Next Steps
The proposal requires 40% of the outstanding supply to vote in favor before Jan 23rd. If passed, this would be a significant change to Cosmos’ tokenomics and staking incentives.
