Totally supporting this. Thanks for bringing up this topic 
Hi Noam, thanks for your support!
Proposal will go on-chain in three days once the mandatory deliberation period ends.
Will be submitted by me or possibly, AADAO. Recently, an AADAO contributor expressed interest in sponsoring the proposal. If there’s internal alignment at AADAO to proceed such way, imo it’d be a constructive gesture, in light of the circumstances that led to the increase of tax rate to 10%.
Been informally gauging sentiment across various channels. While anecdotal, the greatest consensus appears to still converge around reversion to the previous 2% tax rate. I agree – we can revisit the parameter and adjust downward as conditions evolve.
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Support that idea ! Good for stakers 
Let’s build
Reason to Reform Rather than Remove
The CP serves as a structural safeguard against centralization. From a regulatory standpoint, the ability to allocate resources independently of our founding entities ICF/AIB is critical to objectively demonstrating the network’s sovereignty and autonomy.
Attempts to eliminate the pool, regardless of intent, including under the pretext of “preventing misuse”—risk weakening the Hub’s regulatory posture.
This consideration is often overlooked in governance discussions and deserves more attention.
Bottom line: we need clear limits and controls on community spending proposals (caps for instance), and we urgently need to develop more functional and accountable DAO structures to ensure governance based allocations and delegated authority are both defensible and sustainable. More on this stuff in the forthcoming AADAO transparency report.
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Amazing news. Please let me know if there’s anything we can do to support on the ICL side 
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We believe the proposed 2% rate represents a reasonable and pragmatic compromise.
While we do not support eliminating the rate entirely — as this could limit future opportunities for meaningful community spending — we also acknowledge that the current 10% rate is disproportionate, especially when the accrued funds are left idle in the community pool without a defined purpose.
In the absence of clear proposals for immediate allocation, we intend to initiate a new proposal aimed at creating a staking program. The goal is to delegate to high-performing operators, thereby generating yield for the community pool and mitigating the effects of inflation dilution during this interim period.
We encourage others to consider this path as a constructive way to preserve and grow community assets until more comprehensive initiatives are brought forward.
Thank you for reading,
Govmos
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Theres millions in the community pool already.
Please remind me, when was the last time we spent millions of dollars from the community pool in a meaningful way?
Not to mention that the ICF got hundreds of million dollars.
Update
AADAO would like to sponsor the “Revert Community Pool Tax Rate to 2%”.
Proposal will be on chain tomorrow or Friday (at latest).
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Hi!
What exactly do you mean? Are you suggesting we no longer need a Community Pool?
You’re right, CP funds should definitely be allocated to real projects that actually contribute to ATOM’s value. But that doesn’t mean all the funds should be spent or used for the same purpose. Keeping part of it decentralized still seems like a healthy approach.
Exactly — that’s precisely why maintaining a decentralized portion of the CP is important.
Where do I say we should get rid of the Community pool?
The comment by govmos was about not eliminating the rate to 0, but keep it at 2. Not eliminating the entire CP.
My argument is that since the cp already has millions of dollar, and it wasn’t really used for meaningful spending in the past (hence my question), we can just bring the tax rate down to 0. @Eru-Era
It’s much clearer now, thanks for clarifying!
I think the idea behind keeping the tax at 2% is to maintain a steady inflow in addition to staking rewards. ATOM, as a commodity, needs to be strong in that regard.
This setup also leaves room to create new opportunities.
That said, the key question remains: how is the Community Pool governed, and how can we ensure it truly brings value back to ATOM?
The idea to go back to 2% is just to reverse the proposal. I don’t think the number 2 is chosen for any other reason than that.
A follow up proposal to go to 0% is totally imaginable, because there’s millions in the CP. So why keep filling up the pool?
A fund called AAA that manages the CP is in the work afaik, consisting of ICL / specialists / community members.
2% is the default value for the community_tax parameter.
Cosmos SDK documentation says the community tax must be positive (non zero value) BUT it appears the code can be implemented in a way that allows for zero values. For the Cosmos Hub, we have historically maintained non-zero values – originally 2% (until Proposal 88), and now 10%.
Due to these reasons, would be unwise to set it to 0.
I’ll also update the text of the prop to clarify that 2% is the default value for community_tax
Thank you AADAO & CosmosNanny for this proposal.
Great to see.
However, still firmly believe that raising the community tax and lowering the inflation rate would help strictly solve ATOM’s value.
Although I could understand the logic, the amount currently in the CP should not influence community tax rate, no?
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The community tax rate determines how much flows into the CP.
Generally, the tax rate is adjusted through governance based on strategic considerations about funding needed. When the rate was increased from 2% to 10% via proposal 88, it was argued that the Hub had a small pool compared to it’s market cap, and needed more funding for initiatives such as AADAO.
AADAO didn’t exist at the time of 88, but 88 needed to pass in order to make their inaugural funding request of 588k possible (proposal 95}.
Please let me know if I can do better in clarifying any of these points in the final copy of on chain text (above).
To be clear, AADAO had no involvement in bringing this proposal to the forum. I shared the idea bc the tax rate adjustment keeps getting snared into broader treasury deliberations. And we can separate these issues.
Upon observing the community response, AADAO expressed interest in sponsoring the proposal. They felt it would be a good gesture.
I’ve already provided markdown and json file for them to put it on chain.
If there’s no action by Monday, I’ll just put it up myself as planned.
3 Likes
But removing CP == setting the rate to 0%? If for regulatory reasons 0% is unwise, could set it to 0.1%
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Appreciate your time and responses, as always. Would reverting the tax rate to 2% affect APR and if so, by how much?
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Current Staking APR is 15.33%
Inflation = 10.00%
Staking APR = (Inflation × (1 - Community Tax)) ÷ Bonded Ratio
= (.10 × 0.98) ÷ Bonded Ratio
= 0.098 ÷ Bonded Ratio
Staking APR with 2% Community Tax (Inflation = 10%)
| Bonded Ratio | Staking APR (with 2% Tax) |
|---|---|
| 55% | 17.82% |
| 53% | 18.49% |
| 58.7% (current) | 16.69% |
| 60% | 16.33% |
| 65% | 15.08% |
| 67% | 14.63% |
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Thank you for the breakdown. Although reverting back to 2% increases APR, the Hub’s CP remains relatively small compared to its market cap. Why stop the growth and value generation for ATOM, when this rate adjustment easily enables more potential selling?
Fully agreed and this also serves as a reminder the need for us to have a constitution.
Keep the tax rate.