The Cosmos Hub community is currently engaged in a pivotal vote on a proposal aimed at instigating a significant shift in the network’s economic policy. The proposal seeks to reduce the minimum inflation parameter from its existing 7% to 0% in an effort to enhance economic security and stability within the Cosmos ecosystem.

Overview of the Proposal

The new proposal, designated as 868, entails the reduction of the InflationMin parameter to 0%. If ratified and the total bonded ATOM surpasses two-thirds of the supply, the inflation is anticipated to gradually diminish to zero. Stakelab, the entity behind the proposal, is striving to alleviate inflationary pressures on ATOM, particularly in scenarios where a majority of coins are bonded, with the ultimate aim of establishing a sustainable inflation rate.

Context and Previous Changes

This proposal is a direct consequence of the recent acceptance of proposal 848, which focused on regulating the maximum inflation rate for ATOM. Proposal 848 set a cap on the maximum inflation rate at 10%, down from the previous 20%, in a bid to manage token emissions.

Proposal 868 aligns with this initiative by aiming to progressively reduce the inflation rate towards zero if over 67% of ATOM is staked with validators.

Potential Challenges

The potential ramifications of this proposed alteration are substantial. Currently, the bonding ratio stands just over 64%. Should the ratio reach 67% post-approval of the proposal, rewards for validators could experience a significant decrease, impacting both validator revenue and the overall security of the hub.

Jacob Gadikian, CEO of Notional, has articulated concerns regarding the potential impact on the network's economic security if inflation were to reach zero

Counterarguments and Considerations

Conversely, the proposal underscores that the Cosmos Hub is exploring alternative revenue streams from servicing "consumer chains" linked to the hub, which could potentially be utilized to compensate stakers in the event of the hub reaching a state of zero inflation.

Current Status of the Vote

As of the current moment, 54% of community votes are in favor of the proposal, while 40% are against it. However, a quorum has not been reached yet. The voting process is set to conclude on January 23

The ongoing discussions and decision-making surrounding this proposal are crucial for the future economic landscape of the Cosmos Hub. By analyzing the varied perspectives and potential outcomes, the community aims to make an informed and strategic choice that aligns with the broader goals of the Cosmos Hub.