Cosmos community votes to lower minimum ATOM inflation rate to 0

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The Cosmos community recently approved a proposal to reduce the ATOM inflation rate by 10%. To monitor this development, the network recommends setting a minimum inflation rate of 0%. Inflation is when the value of an underlying asset decreases as its circulating supply increases.

The community is currently voting on the proposal and has until January 23 to decide for or against it.

If approved, ATOM stakers and holders could benefit from lower inflation because even if all tokens were staked at some point, the network would surely generate 7% more tokens each year. This ATOM emission issue can be solved by changing the minimum inflation parameter and setting it to 0.

The Cosmos community votes in favor of Proposition 868

According to an official tweet on X (Twitter), the Cosmos Hub Board of Directors has announced that Proposition 868 is ready for a vote. The plan is to reduce the minimum inflation rate from the current 7% to zero.

1/ ⚛️ Cosmos Hub Government ⚛️

The voting period for Proposition 868 is open

”Reduce the InflationMin parameter to 0%”

This prop is designed to reduce the minimum inflation parameter from 7% to 0%.

If the proposal passes, once the bonded ATOM target of 67% is reached, the inflation rate will tend to 0% pic.twitter.com/xKwXooHGXF

— Cosmos Hub ⚛️ (@cosmoshub) January 9, 2024

Voting is currently underway and will end on January 23rd. The proposal was proposed as a follow-up to Proposition 848 and aims to limit the ATOM inflation rate to 10% so that holders and stakeholders can benefit from the limited supply of circulating assets. Once Proposition 868 is passed, inflation will trend towards 0%.

The network believes that setting minimum and maximum inflation levels for ATOM is important to address the ecosystem’s security and staking incentive issues. Based on the proposed minimum inflation rate, the network expects the consumption chain’s revenue to become substantial.

ATOM price is at $9.8 at the time of writing, down 12% over the past week.