The Cosmos Hub, the central hub of the interchain blockchain ecosystem, has rejected a proposal seeking to dynamically adjust the minimum inflation rate for its native token, ATOM. Proposal 868 aimed to reduce the minimum inflation parameter from the current 7% to 0% if over two-thirds of the ATOM supply was bonded on the network.
Everstake, Cosmostation, Chorus One, Allnodes, Stake.fish, Swish Staking, Forbole, Provalidator, Keplr, and several others were among the validators who voted against the proposal. On the other hand, validators such as Game, Informal, Stakecito, P2P, Polkachu, Pryzm, IrisNet, Leap, and more supported the proposal.
Proponents of the proposal, like prominent validators such as Stakecito, envisioned a scenario where high staking demand (exceeding 67% of bonded ATOM) could trigger reduced inflation. This, they argued, would further optimize token emissions based on actual network dynamics and align with the recent halving of the maximum inflation rate from 20% to 10%.
Stakecito believed such a move would lead the network to potentially decrease inflationary rewards without compromising security, which is currently funded primarily through inflation. They also highlighted the potential for Cosmos Hub to generate income from securing other blockchains in the ecosystem, creating “non-ATOM denominated revenue.” In such a scenario, reducing inflation could be beneficial for stakers in the long run.
However, opponents voiced concerns regarding the proposal’s potential downsides such as security vulnerabilities at zero inflation and lack of immediate benefit. They pointed out the negligible current volume of “non-ATOM denominated revenue” and raised doubts about its ability to fully replace inflationary rewards in the near future.
The vote on Proposal 868 reflected a divided Cosmos Hub community. With a turnout of over 63%, the final result revealed 48.62% rejecting the proposal, 25.10% supporting it, and 25.91% abstaining. While a significant portion of the community sees merit in exploring more flexible inflation models, concerns about potential security risks and lack of immediate advantage ultimately swayed the vote.
This proposal is a continuation of Proposal 848, which established a maximum cap of 10% for inflation rates, down from the previous 20%. This was done in order to regulate token emissions. Cosmos co-founder Jae Kwon took a firm stance against the decision to reduce the production rate of ATOM
