The proposal narrowly passed with 41.1% of votes in favour and 38.5% against, the highest voter turnout in the Cosmos ecosystem.
The Cosmos Hub governing body has approved a plan to lower the maximum rate of inflation for its native token, ATOM, from about 14% to 10%.
According to the proposal, Atom’s annualised staking yield would drop from about 19% to about 13.4% with the approved modification. Within the Cosmos network, a network of connected blockchains, the Cosmos Hub is the main blockchain. Atom, the Hub’s native token, is used for transaction fees, governance, and staking.
With 41.1% of votes in favour and 38.5% against, the proposal narrowly passed and saw the highest voter turnout in the Cosmos ecosystem. Though it was first predicted to fail soon before the deadline, a late surge of votes and a few validator reversals made the difference, just.
The proposal argued that the Cosmos Hub overspent on security because Atom had a higher rate of inflation than other tokens. Additionally, it contended that validators could still turn a profit or break even with a 10% inflation rate.
The organisation that voted in favour of the proposal with the largest majority, Zero Knowledge Validator, provided justification for its support on X. According to a post, “Double-digit inflation discourages the use of ATOM in DeFi and other areas within the Atom Economic Zone, undermines Atom price in the long run, and is unnecessary for security.”
A validator named AllNodes cast the largest opposition vote, as detailed in a post on X. The proposal was described as “…an abrupt, short-sighted, and ill-researched idea that might wreak havoc on retail and businesses engaged in building, trading, and validating Atom” by AllNodes, who claimed that the change could have a negative effect on small validators.
Users can now unstake ATOM funds and avoid the previous 21-day unbonding period thanks to a recent update from Cosmos Hub that launched a liquid staking module. Prior to the update, holders of ATOM had a 21-day window during which they could transfer their money after unstaking the token. Staked ATOM can now be utilised in the Cosmos decentralised finance (DeFi) ecosystem without lowering staking yields thanks to the new module.