Cosmos developers suggest a decrease in the ATOM inflation rate

The developers behind Cosmos’ inter-blockchain communications (IBC) protocol are proposing a further reduction in the inflation of their native token, ATOM, which is currently trading at $9.60.

Cosmos developers suggest a decrease in the ATOM inflation rate

According to a proposal by StakeLab, a staking and relaying hub within the Cosmos ecosystem, the developers aim to bring the minimum inflation of ATOM down to 0%. The current inflation rate for ATOM ranges between 7% and 20%, and if the proposal is accepted, it could be reduced to either 0% or 20%. The proposal requires a quorum of 40% of ATOM’s outstanding supply and sufficient yes votes before Jan. 23 for approval.

StakeLab justified the proposal by highlighting concerns related to the current minimum inflation rate, stating that even if 100% of the token supply were staked, the network would still produce an additional 7% of tokens annually. The firm argued that this situation is uncommon in other blockchain models. StakeLab suggested the community should explore redirecting protocol revenue from emerging Cosmos consumer chains to ATOM stakers instead of issuing new tokens. The firm emphasized that maintaining a 7% annual emission rate might not be logical if revenue from consumer chains becomes substantial.

However, some users expressed concern that the 0% inflation proposal could discourage current ATOM stakers and impact the ecosystem’s tokenomics, where over 60% of ATOM is currently staked. One user pointed out examples like DYDX and Kava, two chains based on Cosmos SDK, which have already implemented 0% inflation.