The Cosmos community has engaged in intense debate over the adjustment of the ATOM inflation rate.

Recently, the Cosmos community has engaged in heated discussions around a proposal to adjust the inflation rate of the ATOM token. The proposal aims to reduce the maximum inflation rate from 20% to 10%, thereby adjusting the annual staking yield from approximately 19% to about 13.4%. This proposal has sparked unexpectedly intense controversy and was ultimately passed by a very narrow margin, highlighting the divisions among different interest groups within the community.

After the proposal was passed, Jae Kwon, co-founder of Cosmos and Tendermint, expressed dissatisfaction on social media and proposed the idea of forking ATOM. He believes that the current governance mechanism may not fully represent the opinions of all token holders. The conflict between Kwon and other team members has a long history, as he previously resigned due to differences in governance and project development direction.

Data shows that before the proposal was passed, ATOM's inflation rate of 14.97% was almost the highest among major PoS public chain native tokens. Research from Blockworks indicates that Cosmos may have paid too much in costs for maintaining network security. The study found that even with a maximum inflation rate of 10%, the vast majority of validators can still break even or profit through commission income.

The proposal was ultimately passed by a narrow margin. 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 noteworthy that 94.97% of the voting accounts chose to support, but due to the nature of the PoS mechanism, the final result was more influenced by the validators.

Supporters believe that lowering the inflation rate will promote the adoption of the Liquidity Staking Module (LSM), increasing the liquidity of ATOM and bringing more funds to DeFi applications on Cosmos. They also point out that this could enhance the market value of ATOM, benefiting long-term investors.

Opponents are concerned that lowering the inflation rate may reduce staking incentives and affect network security. Some believe this could lead to a further concentration of ATOM holdings, while others question the positive impact of this change on LSM adoption and the development of the DeFi ecosystem.

From the voting results, it seems that small holders are more inclined to support proposals to reduce the inflation rate, while some validators and large holders tend to oppose. This reflects the differences in interest considerations among different groups.

The recent dispute over the adjustment of the inflation rate highlights the challenges faced by the Cosmos community in balancing different interests in decentralized governance. It also reminds us that when engaging in delegated staking, in addition to considering factors such as yield, one should also consider whether the validator's interests align with their own, and when necessary, choose to vote independently to express their position.