The governing body of Cosmos Hub has approved a proposal to reduce the maximum inflation rate of its native token Cosmos (ATOM) from 14% to 10%.
according to According to the proposal, the authorized modification will reduce the annualized staking yield of ATOM from approximately 19% to approximately 13.4%. Cosmos Hub is the main blockchain in the Cosmos network and is an interconnected blockchain system. ATOM tokens are used for staking, governance, and transaction fees.
The proposal narrowly passed with 41.1% in favor and 38.5% against. It was expected to fail shortly before the deadline, but a flood of last-minute votes and some reversals by validators narrowly swayed the result.
The proposal states that rising ATOM inflation has caused the Cosmos Hub to overspend on security. It also believes that validators can still break even or make a profit if the inflation rate drops to 10%.
The zero-knowledge validator is the entity with the most upvotes, justifying its support for X (formerly Twitter).a post assertive”, “Double-digit inflation is unnecessary for security, will harm Atom prices in the long run, and hinder the use of ATOM in DeFi and other areas within the Atom economic zone. “
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The most important dissenting vote is cast by the validator AllNodes, which Overview AllNodes objected in a post on X . AllNodes believes the change could negatively impact small validators, labeling the proposal “a sudden, short-sighted, and unstudied idea that could impact the retail industry and those engaged in building, trading, and validating Atoms.”
Cosmos Hub has recently upgraded and launched a liquid staking module. Users can bypass the previous 21-day unbundling period by unstaking ATOM funds. Prior to the upgrade, ATOM holders had a 21-day lockup period to transfer funds after unstaking their tokens. Through the new module, staked ATOMs can be used in the Cosmos decentralized financial ecosystem without affecting staking returns.
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