Controversy Arises Over ATOM Inflation Rate Cut, Cosmos Ecosystem Faces Governance Challenges

Recently, a proposal regarding the adjustment of the ATOM inflation rate within the Cosmos ecosystem has sparked widespread discussion. The proposal suggests reducing the maximum inflation rate from 20% to 10%, which means that the annual staking yield will decrease from about 19% to approximately 13.4%. Although this proposal aims to enhance the valuation of ATOM, it unexpectedly ignited intense controversy and ultimately passed by a very narrow margin.

This process reveals the divergence between different interest groups within the Cosmos ecosystem. After the proposal was passed, Cosmos and Tendermint co-founder Jae Kwon expressed dissatisfaction on social media, even suggesting the idea of forking ATOM. Kwon believes that the current governance mechanism may not adequately represent the opinions of all token holders.

It is worth noting that Kwon has had long-standing conflicts with other team members. He resigned due to disagreements with other members on issues such as governance and project development direction, and later split Ignite (the renamed Tendermint) into two independent entities. Kwon's fork proposal sparked widespread discussion within the community, and many expressed concerns about this possibility and its impact on the Cosmos ecosystem.

Research indicates that Cosmos may have paid too high a cost in maintaining network security. A co-founder of a certain asset management protocol proposed this measure to reduce the maximum inflation rate of ATOM. The proposal voting ended on November 26, passing with a narrow margin. Based on the number of participating ATOMs, the voter turnout reached 72.6%, with a support ratio of 41.1%, an opposition ratio of 31.9%, a veto ratio of 6.6%, and an abstention ratio of 20.4%.

It is worth noting that although the proportion of supportive votes is not high, 94.97% of the 173,000 accounts that participated in the voting chose to support. This discrepancy reflects the impact of the amount of tokens held on the voting results. The votes of validators significantly influence the outcome, with 70.43 million of the total 73.16 million supportive votes coming from validators.

Supporters believe that lowering the inflation rate will promote the adoption of the liquid staking module, increase the liquidity of ATOM, and foster the development of the Cosmos DeFi ecosystem. They also believe this will enhance the scarcity of ATOM, potentially boosting its market value. Opponents worry that this may reduce users' motivation to stake ATOM, affect network security, and possibly lead to further concentration of ATOM holdings.

From the voting results, it seems that small holders are more inclined to support the proposal to reduce the inflation rate, possibly in the hope of having a positive impact on the ATOM price. Meanwhile, some validators and large holders may oppose this due to their own interests in maintaining a higher inflation rate.

This controversy highlights the challenges faced by the Cosmos ecosystem in balancing different interests in decentralized governance. It also reminds us that when participating in delegated staking, in addition to considering factors such as yield, one should also consider whether the interests of the validator align with their own. If they do not align, users can choose to vote themselves to override the validator's voting results.