The developers behind the inter-blockchain communication (IBC) protocol, Cosmos, are seeking to further diminish the inflation of its native token, ATOM. StakeLab, a staking and relay hub within the Cosmos ecosystem, presented a proposal on January 9 to reduce ATOM's minimum inflation rate to 0%. Currently fluctuating between 7% and 20%, if the proposal is approved, the inflation rate would either drop to 0% or remain at 20%. The proposal requires a quorum of 40% of ATOM's circulating supply and sufficient favorable votes by January 23 to be accepted.
StakeLab justified the proposal by expressing concerns about the existing minimum interest rate, emphasizing that even with 100% of the token supply staked, the network would continue generating an additional 7% of tokens annually. StakeLab argued that this situation is at odds with other operational blockchain models.
Additionally, StakeLab suggested exploring the possibility of redirecting protocol revenue from the emerging Cosmos consumer chain to ATOM stakers instead of issuing new tokens directly. The company pointed out that if revenues from the consumption chain become significant, maintaining a 7% annual emissions rate may not be practical.
However, some community members voiced concerns about the 0% inflation proposal, suggesting it could dampen the enthusiasm of existing ATOM stakers and impact the token economics of the ecosystem, given that over 60% of ATOM is currently staked. The user cited examples of other Cosmos SDK-based chains, such as DYDX and Kava, which have implemented 0% inflation, noting that DYDX is in a transitional phase, while Kava has been in operation for a while with 0% inflation and holds 12% of its tokens.
