Cosmos Hub Votes to Reduce ATOM Inflation, Enhance Security

Cosmos Hub has greenlit a proposal aimed at reducing the maximum inflation level of its token, ATOM, from 14% to 10%. This proposal, once implemented, is set to decrease the annual staking yield of ATOM from approximately 19% to around 13.4%. Cosmos Hub serves as a primary blockchain within the interconnected Cosmos network. The ATOM token is instrumental for staking, governance, and transaction fee payments. The proposal saw a narrow approval with 41.1% of votes in favor and 38.5% against. Initially anticipated to fail shortly before the deadline, a last-minute influx of votes and some validator cancellations marginally tipped the scales in favor of acceptance.

The proposal highlighted that the heightened ATOM inflation was straining Cosmos Hub's resources concerning security. It also claimed that even with the inflation reduced to 10%, validators could still achieve profitability without incurring losses. Notably, a significant dissenting vote came from the validator AllNodes, expressing disagreement in a message on X. AllNodes argued that the proposed change might adversely impact smaller validators, labeling it abrupt, shortsighted, and poorly researched, potentially harming retail traders and enterprises engaged in ATOM's development, trading, and validation.

Cosmos Hub recently underwent an upgrade, launching a liquid staking module. Previously, ATOM holders faced a 21-day lockup period to move their funds after tokens were unlocked. With the new module, staked ATOM can be utilized within the Cosmos decentralized finance ecosystem without compromising staking rewards. According to CoinDesk, at the time of writing, ATOM was trading approximately 3.5% lower at $9.59. Over the weekend, the cryptocurrency breached the $10 mark but failed to sustain levels above three-week resistance.