how are investors being charged inflation? they collect inflation, not pay it.
comparing one fruit to any other fruit would be a valid comparison then?
the same way comparing apples to oranges is a poor comparison…
Our take home profit last month was only $1300 and that’s only because we soft opted out of running consumer chain infrastructure for now. If we ran machines for Stride and Neutron we would barely be profitable.
The other 3 chains we validate are money losers currently (KAVA, MATIC, HDX). We devote many hours to running the nodes and being visible for delegators and this propsal could definitely cause the chain to become even further centralized by putting small validators out of business.
If you all care about decentralization, stake with us. If you’re reading this and don’t understand please check out this article: Why It's Important to Stake With Small Validators - Blocks United
The only time I stake my personal tokens with validators in the top half of any active set is when it’s an airdrop that looks questionable, I don’t recognize a lot of the validators, and have a friendly relationship with the validators I do recognize in the top half of the set.
Jae Kwon (Cosmos co-founder) is against this proposal and his opinion has merit. You can read his comments on the Cosmos forum here: [PROPOSAL] Set Max Inflation at 10% - #28 by jaekwon
Jae argues to remove the lower bound so that the ATOM token can become deflationary, but to leave the upper bound alone or even raise it to incentivize staking. Without 2/3 of supply staked IBC’s security is questionable and right now it’s only 65.5% Mintscan
High inflation attracts delegators, thus raising the bonded ratio and securing IBC.
This propsal is more nuanced than just, “high inflation bad.” What happens to the whole Cosmos narrative of IBC if lower inflation spurs unbonding and even fewer people are staking to secure the chain?
DeFi is unattractive because the returns are on par with or lower than the current ATOM staking APY, with substantially more risk. Does it make sense to risk Hub and IBC security to bolster DeFi? Or is it DeFi’s job to innovate and get creative to attract users? I don’t know, but we’re going to give this propsal more thought before just voting, yes, because “high inflation bad.”
The ideal scenario is that staking rewards are paid from fees generated on-chain from transaction volume, not inflation. We are all in agreement probably there. But there’s no Cosmwasm on the Hub for developers to build (it was voted down) and the ATOM Economic Zone thesis with consumer chains has yet to generate enough revenue to even come close to paying for itself. It’s not even close.
“Yeah, but lower inflation will attract institutional capital!” Hopefully, yes, but what if it doesn’t? And what if it does but takes long enough to play out that small validators bleed out and have to shut down? Is that just survival of the fittest? Is the further centralization that causes, making the “validator cartel” people talk about even more powerful, the right move?
I truly don’t know, but these questions must be considered before voting, yes, simply because “high inflation bad.”
Maybe it makes more sense to get the AEZ and consumer chains firing on all cylinders first and generating enough revenue to cover a reduction in inflation? Then, revamp tokenomics.
I don’t know what’s the right move. Nobody does. Blockworks who submitted the proposal is taking an educated guess that it’s what’s best for ATOM.
I don’t disagree with anything Blockworks says, but do question the timing.
If my response resonates with you, please support us by redelegating some of your ATOM to our validator node.
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We have operated with the current 7-20% settings mode for 2 years. Inflation has increased from 7% to 14% over this period of time. We have clear evidence that 7-20% min-max inflation range does NOT work in getting people to bond their tokens and achieve 66.66% bonding and does not help to attract investment capital. Blockworks points out many other protocols of similar size and abilities that have achieved their bonding targets with lower levels of inflation.
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If Neutron doesn’t get you the fee revenue expected, why do you think that WASM on the Hub would get you the revenue? Technically it is the same thing. Neutron is secured by the Hub so lack of activity in Neutron is not due to lower security since the security is the same as the Hub.
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Jae Kwon’s argument has no merit. Neither the 20% max inflation value was set using proper justification nor the 7% min inflation value. He “thinks” 20% will attract stakers because 20% yields on US treasuries sound attractive to him. It is ridiculous logic to compare the US dollar to ATOM. To this day Jae has not shared the economic justification for his 20% max inflation setting outside of redistributing tokens to stakes who are economically insensitive. Sorry to break it to you, but Jae wants you to subsidize his vision (ie you lose US dollars) of the Hub. Apart from “trust me, I am the prophet”, I haven’t heard any proper economic argument from him.
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Elephant in the room: Bitcoin has $700 billion in market cap with only one argument that its community is selling - fixed supply. Cosmos Hub has 14% inflation and only $2 billion market cap. Clearly the people who price the market cap of the Cosmos Hub and Bitcoin care about the supply picture and they are not happy the one they see in the Cosmos Hub. ATOM is the worst performing Top 10-Top 20 coin out there (excluding stablecoins and wrapped tokens) with negative returns in what is fairly positive year for crypto (industry benchmark Bitcoin has 125% returns)
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Unless the inflation picture gets fixed, I think Jae Kwon needs to start visiting courtrooms and explaining to judges the economics behind the 7-20% inflation settings of the ATOM token. Maybe he would be more convincing than Do Kwon. We’ll see. I have not heard a single economic argument from him so far.
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Thanks for sharing your views and feedback as a validator.
What I have noticed about proposals that seem to cause a lot of drama is they are rather “heavy handed”.
Instead of taking an approach that would happen over a duration of time, these proposals tend to “shoot first, ask questions later”. We never want to make minor adjustments to see what are the repercussions of said adjustments over time. Not a fan.
I am on the fence as to how I will vote, but I need everyone’s help explaining to me the current voting of the validators that have already voted. To BlocksUnited’s point, small validators should be against this? Per Mintscan, it looks like the smaller validators are for it and the larger validators are against it.
Am I missing something or reading something backwards/wrong?
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because inflation isnt why people stick with a chain. you dont have evidence that 7-20% dont help attract investment, you have evidence that the chain hasnt attracted significant investment and are just arbitrarily attributing fault to the inflation rate.
Before you continue to pollute the thread with your stupid one liners, read the paragraphs I have written above. But I have a feeling that would be too much work for you.
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your position is pretty repetitive and incoherent. it is just saying that bitcoin has a lower inflation and is doing well so to do well a chain has to have lower inflation.
the problem with atom isnt its inflation, its because there is no value prop. The only research being done is how to frame diluting/stealing from stakers sound less like a scam.
This is my last answer to you. This is YTD ranking of all crypto tokens I track. Of all these chains, ATOM has the highest inflation at 14%. And is at the bottom of the list by performance. The ATOM token now provides interchain security which it didn’t last year. As such lack of additional utility of the token is not a reason for its underperformance. That leaves only one factor: the inflation.
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lol, your argument is hilariously fallacious.
so, if atom still has no value proposition and staking is made more risky because you get made liquid slower with lower inflation, how will lowering inflation change atom’s poor performance and encourage people to risk their capital, in a chain with validators that consistently change the rules in their favor to dilute and steal from its stakers?
otherwise let collective intelligence decide and come back after the vote. or leave.
Can you explain your “No with veto” vote on Prop 848?
In what way is a proposal to change a specific blockchain setting spam? This is also the first time since the beginning that a proposal to change the max_inflation parameter has been entered.
I would understand a “no with veto” vote if this is a duplicate proposal or the 10th attempt to change the inflation setting. This is the first time we are voting on something like this.
I understand that you disagree and for that you need to vote “No”.
“No with Veto” is not an appropriate vote here.
I thought NWV is a softer NO because it doesnt count toward the tally unless it reaches 1/3?
My understanding is that it is a HARD NO and when it reaches 33.33% it vetoes the proposal even if it has 50%+ YES vote.
BTW whoever redid Mintscan. Absolutely an amazing job. The UI is great.
NWV is not only for spam proposals, please get informed and read the definition of NWV. This proposal contains several misleading and false facts and it may put the security of the Cosmos hub at risk:
-Governance proposals should contain links to the forum discussion so people can make informed decisions. The authors of this proposal intentionally didn’t include the link to this forum discussion in an attempt that people only have their version of this proposal, this can be considered malicious. Even worse, the only forum link included in the proposal is not to this thread but to a different thread that also benefits the version presented in the on-chain proposal, which makes it even more malicious
-Zaki tried to give the false impression of a general approval of this proposal by quickly voting yes after the proposal went on-chain and asking several other validators to also vote yes, this can also be considered as malicious and trying to manipulate voters
-The proposal contains misleading information, they try to mislead and confuse the max inflation parameter with the actual inflation, by saying the inflation reduction would be just from the current ~14% value to 10%. But given the same bonded ratio, if the new dynamic inflation range is 3.5%-10%, why would inflation stay at the max rate of 10% rather than at the new equivalent equilibrium of around 7%? Trying to mislead voters with false information can also be considered as malicious
-Strong harassment is being done on twitter to influence the decisions of validators. For example, SG-1 voted No, they then were savagely attacked in all fronts with harassment on twitter, undelegations and more and they didn’t stop until they changed their vote to abstain. They also did this harassment and are still doing this to us on twitter or even here on the forum. If this proposal is so good and everyone agrees why all this malicious harrassment and manipulation? Stop attacking validators and respect the individual freedom of everyone to vote as they wish!
-Furthermore, in the proposal it is claimed that even with this halving in revenues most validators would still be fine and in profit. Apart from being a total lie, it is audacious to come to Cosmos hub governance in a tough bear market, with raising consumer chain costs, and struggling validators and tell us that if our revenues are cut by half it is fine. The authors of the proposal are also misleading regarding the validator costs, because the infra costs they estimate is just a small part of the costs, there are teams of engineers, people in charge of governace, of marketing, validators are businesses, and you say that these businesses have monthly costs of $600?
I understand where you are coming from, although I’d challenge some of these notions.
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Yes, you are correct, but not enough for VETO in my opinion
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This is overanalyzing people’s behavior. It’s pretty normal for the initiators of a proposal to vote for it right after the proposal.
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I don’t think the information is misleading. The immediate effect would be to cut inflation from 14% to 10%. Whether enough validators will now bond for inflation to go down and start averaging 7% is speculation. The only evidence we have so far is inflation INCREASING from 7% to 14% over 2 years despite rewards being very high. You are making the case that lower rewards will cause more people to unbond their stake. If that is the case then staking ratio will remain below 66% and thus inflation will be INCREASING. But in this case we have limited inflation to 10% so it will remain at 10%. You keep contradicting yourself. You can’t say that lowering max inflation to 10% will result in bonding target not being reached and then simultaneously expect inflation to decline to 7%.
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Fair point. I would suggest giving us your estimate of what the average monthly costs are if $600 is not the right number.
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Based. And this is just one side of the against argument, not to mention the lack of any numbers proposed along with this. Any economics changes should carry some A/B testing / in depth calculus analysis of possible outcomes, etc.
There is absolutely 0 evidence that this proposal will have any effect whatsoever, and even more important, there is 0 way to measure it directly. The only direct result this proposal has is damaging small actors of the economical and social structure that is Cosmos hub. Therefore, reducing the current Nakamoto efficient.
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As a modest investor with enough skin in the staking game to care, here are my two cents:
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The very first priority should be to raise the price of ATOM. From this, all other things precipitate. Go back and review what led to ATOM’s $44 ATH and DO THAT AGAIN. If that means waiting for the next bull market to gear up, then wait. Do nothing else. Don’t touch a thing. Price is all that matters at this vulnerable point. We are like a premature-born infant on life support right now, coming out of this bear market. The slightest wrong move and we could lose the baby. Let’s heal first, get strong, and then consider what we are going to be when we grow up.
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ATOM needs to be more than just a staking/security game. IMO, devs missed out on monetizing the best aspect of the ecosystem. Every IBC should be taxed (ever slightly), in ATOM, and pooled for distribution to ATOM stakers. ATOM itself should be immune to taxation through IBC, making it the preferred medium of exchange. This would create buying pressure as every entity would need to have ATOM to operate. I may be missing some nuances of IBC mechanics but seems to me that it is the greatest feature of the ecosystem with the most wasted potential to feed ATOM value.
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Speaking only for myself, my not-insubstantial staking decision was based on high yield. If you take that down by half I will be forced to consider other options, ESPECIALLY with ATOM price performance against BTC, ETH, etc. Again, see #1. If you fix price movement and my yield has the same value at a lower rate, that may offset my desire to pull chocks and leave.
Proceed very carefully with this move. I recommend against it, as it is essentially changing parameters and just “hoping for the best” based on anyone’s guess at outcomes.
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Exactly, more people will unbond, we have already ATOM holders here in this thread warning that they will unbond with a halving of rewards. So, the bonding ratio will greatly decrease below the 67% target increasingly putting at risk the Cosmos Hub. In this emergency scenario, the dynamic inflation would kick in, start to raise inflation and then bring back the security by stabilizing the bonding ratio around 67% again. Oh, but this wouldn’t happen if we already have a new max inflation of 10%, it cannot go above this value. So the bonding ratio will continue to decrease since there wouldn’t be any mechanism to encourage more staking. As the security of the Cosmos Hub decreases, the value of ATOM, which similarly to BTC is largerly based on its security (ie. how secure data is against tampering or how trustless the network is), will decrease accelerating even more the reduction of security. By then, when the situation is out of control what are all the ‘ATOM halving’ geniuses going to do? Better reflect about this in advance, before you actually create this situation. Some people we actually care about the long-term success of the Cosmos Hub, many proponents of the ATOM halving if the situation mentioned above happens, probably they just switch to another ecosystem, but some people really care about the Cosmos Hub, have been here for years since the beginning and don’t like these gamblings because it is what it is, as others mentioned there is no mathematical models, analysis or any data at all proving any potential outcome:
Very easy, most validator businesses have around 5-10 people, some more and some less. Assuming even basic or standard salaries for all these people, plus all the infra costs, which now it is not just the Cosmos Hub, but Neutron, Stride, soon Noble and many other new consumer chains, you can clearly see the real costs are much higher than the $600 estimation
Very much agreed on every point.
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another prop is coming soon enable the possibility to change the slope slider to reach target inflation more or less quickly depending on the staking ratio.
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