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The recent decision by the Cosmos Hub to approve a pivotal proposal targeting the reduction of its native cryptocurrency, ATOM’s maximum inflation rate, is a significant development in the ongoing evolution of the Cosmos network.
The approved proposal seeks to make a key adjustment by reducing the maximum inflation parameter from 20% to 10%, a move that will have a tangible impact on ATOM’s current inflation rate, which is approximately 14%.
This adjustment will also translate into a decrease in the Annual Percentage Rate (APR) for staking, lowering it from around 19% to approximately 13.4%.
The decision came after a closely contested vote, with the proposal securing a 41.1% approval, narrowly exceeding the 38.5% opposition. This outcome was not without its share of drama, as a last-minute surge in votes and the reversal of stances by some validators played a crucial role in tipping the balance in favor of the proposal.
The primary motivation behind this adjustment lies in the ongoing community discussions about fine-tuning ATOM’s inflation schedule. The current dynamic inflation model, ranging from 7% to 20% and tied to the bonded or staked ratio of ATOMs, has raised concerns related to the sustainability and predictability of ATOM’s future supply.
By addressing these concerns, the proposal aims to create a more stable and balanced ecosystem for ATOM.
