Dear Bitruers,
Today, we are excited to share a new article about Cosmos!. Be sure to follow Bitrue's Official Twitter and Telegram to stay updated!
Introduction
The governance body of Cosmos Hub recently greenlit a proposal to cap the maximum annual inflation rate of its native token, Atom, at 10%. This reduction from its previous rate of around 14% aims to curtail inflation while balancing staking yields for participants within the Cosmos ecosystem.
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Impact on Staking Yield
The approved adjustment is expected to bring down Atom's annualized staking yield from approximately 19% to roughly 13.4%, aligning it with the revised inflation rate outlined in the proposal.
Tight Voting and Outcome
The proposal encountered a tight vote within the Cosmos community. Ultimately, it narrowly passed with 41.1% of votes in favor and 38.5% against. This marked the highest turnout vote in the Cosmos ecosystem, showcasing significant engagement in the decision-making process.
Rationale Behind the Decision
Supporters of the proposal argued that Atom's high inflation rate, compared to its counterparts, led to an excessive payment for security within the Hub. They reasoned that even with a 10% inflation rate, validators would remain profitable, maintaining the network's integrity.
Zero Knowledge Validator, casting the largest vote in favor, emphasized that double-digit inflation wasn't essential for security, and a high inflation rate could hinder Atom's long-term value and adoption within DeFi and the Atom Economic Zone.
Dissenting Voices
The dissent against the proposal, notably from AllNodes, highlighted concerns that smaller validators might bear the brunt of this change. AllNodes criticized the proposal, labeling it abrupt, short-sighted, and potentially detrimental to retail users and businesses engaged in Atom-related activities.
The close vote and contrasting viewpoints underscore the diverse perspectives within the Cosmos community regarding the delicate balance between inflation, security, and the broader ecosystem's growth.
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