Major Changes in the Cosmos Ecosystem: Inflation Rate Adjustment Sparks Controversy, Founder Proposes Fork

Recently, the Cosmos ecosystem has witnessed a heated discussion regarding the adjustment of the inflation rate for ATOM. This proposal, aimed at reducing the maximum inflation rate from 20% to 10%, was ultimately passed, but the entire process was fraught with controversy, highlighting the differences between various interest groups within the community.

The original intention of the proposal is to enhance the valuation of ATOM. For a long time, the price performance of ATOM has been inferior to that of other projects developed based on the Cosmos SDK, such as the former Terra and the current Celestia and dYdX. However, this proposal, which seems beneficial to the price of ATOM, has sparked unexpected intense debate.

According to statistics from a certain data platform, the inflation rate of ATOM at 14.97% is almost the highest among the native tokens of major PoS public chains before the proposal is passed. Cosmos has set a target staking rate of 67%, and the inflation rate will dynamically adjust between 7% to 20% based on the actual staking rate. Nevertheless, the actual staking rate before the proposal is passed is still below the target value, reaching 65.4%.

An analysis by a research institution indicates that Cosmos may have paid excessively high costs in maintaining network security. The study found that even if the maximum inflation rate is reduced to 10%, the vast majority of validators can still achieve profitability or break even through commission income. Based on this research, a co-founder of a decentralized asset management protocol proposed this initiative to reduce the maximum inflation rate of ATOM.

The proposal voting ended on November 26, passing by a narrow margin. The total voter turnout reached 72.6%, with 41.1% in favor, 31.9% against, 6.6% vetoed, and 20.4% abstained. According to the conditions for the approval of Cosmos proposals, the final support rate was 51.63%, slightly above the minimum requirement of 50%.

Interestingly, although the voting weight support rate is not high, the support rate reaches 94.97% based on the number of accounts participating in the voting. This discrepancy also reflects the interests divergence between small holders and large holders.

Supporters believe that lowering the inflation rate will drive the adoption of the liquid staking module, increase ATOM liquidity, and promote the development of the Cosmos DeFi ecosystem. They also believe this will enhance the scarcity of ATOM, potentially increasing its market value.

Opponents are concerned that lowering the inflation rate may reduce the incentive to stake, affecting network security. They are also worried about the impact of this change on small holders and the potential market uncertainty it may bring.

It is worth noting that the co-founders of Cosmos and Tendermint expressed dissatisfaction with the proposal's passage and even suggested the idea of forking ATOM. This action further highlights the deep-seated divisions within the community.

The recent dispute over the inflation rate adjustment not only concerns the future development of ATOM but also reflects the challenge of balancing the interests of all parties in decentralized governance. Regardless of the final outcome, this controversy will have a profound impact on the future of the Cosmos ecosystem.