In the L1 market, I consider the top competition to Ethereum to be Solana, Avalanche and Cosmos based on size of market cap and developer adoption. Solana and Avalanche have inflations of around 7% currently. Halving min/max inflation to 3.5-10% with equilibrium around 7% simply brings ATOM to what could be considered “industry standard” if you think of Solana and Avalanche that way. I personally think 7% is much better number for fiat pricing than 14% because global fiat aggregates increase about 4% per year (the official inflation target. US is 2-2.5% band (2.25% long term average), Europe is 1.80%. US is half the money supply, Europe, Japan and England is the other half and they print more than ECB). 14% inflation leads to instability of the fiat price of the ATOM token. 7% will go a long way to solve that problem.
While macro is indeed the main driver of crypto asset prices, there is also great dispersion of performance inside the crypto industry. The benchmark - Bitcoin is up 100% this year. Since Oct 19th when ATOM was 6.5, ATOM has increased about 50% (from 6.5 to 9.5). In that time frame, Solana has increased from 21 to 58 or 176%, Avalanche has gone from 9 to 18 or 100%. Cosmos is a clear laggard not only over the past month but over the past year. YTD Cosmos is negative while Avalanche is up 31% and Solana 450%.
The underperformance is entirely due to high inflation because the Cosmos Hub has had great chain specific drivers - introduction of interchain security, adding Neutron and Stride as consumer chains and now Noble. Cosmos Hub has had a ton of accomplishments this year, has a lot going for it, adoption is up.
There is only one clear reason for the underperformance of the token - the too high inflation relative to fiat monetary aggregates. Or as Effort Capital says “overpaying for security”.