A decentralized network of interoperable blockchains cosmosrejected a proposal from ATOM aimed at reducing the minimum inflation rate to zero.
“Proposal 868” submitted by Shakelab aimed to break the inflationary pressure on the token by reducing the current inflation rate.
Bonding is the process of locking ATOM tokens in exchange for staking rewards and governance rights. According to the proposal, if more than two-thirds of the total ATOM supply is connected, the inflation rate will drop to zero, effectively creating a deflationary scenario for the token.
However, the proposal did not receive sufficient support from the Cosmos community, which expressed concerns about the negative impact of reducing the inflation rate to zero on the security and sustainability of the network.
Hub, the central blockchain of the Cosmos ecosystem, uses ATOM for transaction fees, security and governance. Reducing the inflation rate to zero with the proposal ultimately means reducing incentives. This poses risks that could compromise the functionality and flexibility of the Hub.
The proposal was rejected by 48.6% of validators, who had 67.8% of the total voting power. Only 25% of the approvers, with 18.4% of the voting power, supported the proposal, while 25.9% of the approvers, with 13.8% of the voting power, abstained.
The previous proposal 848, which proposed a similar change, was adopted by the Cosmos community in December 2023 and introduced a limit on the maximum inflation rate to 10%, from the previous 20%.