I would think that the payouts from shared security tokens should still make it worth their while the closer we trend down to 0%.
Higher price of ATOM and lower levels of inflation will lead to some current holders to sell some of their ATOM stake to new buyers, thus decentralizing the network. Letâs use an example. If you have 1,000 ATOM x $10, you have $10,000. If ATOM gets to $100, then you can get that $10,000 with selling about 100 ATOM, while keeping 900. Your monetary objective is met and ATOM now has 2 holders - you and the guy you sold your ATOM to. ATOM is more decentralized.
If Bitcoin is any indication, higher prices lead to or come from more accounts in the network. The Metcalfeâs Law pricing model uses that relationship between price and active accounts. Today Bitcoin at these very high prices has 10x as many active accounts as it did when it was $500. So the answer is YES - at higher prices and less inflation, the ATOM network will be more popular and will have more active addresses and since it is a proof-of-stake network that will mean itâs governance will be substantially more decentralized if the new users self custody and participate in voting.
I mean what ATOM has done over the past 4 years (high and unpredictable inflation without redistributive fiscal policy) is the exact opposite of what you need to do to decentralize the network.
Just because you have more accounts doesnât mean the coins/tokens arenât controlled by a fewâŠ
We just agreed earlier that this is a bug/feature of blockchain governance without digital id. Additionally, Bitcoin I believe is a bad example. The orange gang doesnât vote with Bitcoins. Over the years, their governance has happen off-chain (i.e. the many forks of Bitcoin). Not that it matters, but not sure how those accounts are aggregated considering Bitcoin uses UTXO.
If people believe Bitcoin is this super decentralized blockchain, they are specifically speaking about a 51% attack. They arenât mentioning the fact that a few hold majority of the Bitcoins (and or will). If people believe once the BlackRocks, Fidelitys, and VanEcks of the world put skin in the game and they arenât going to be in the ear or pockets of the Bitcoin dev team, you guys are bugginâ.
I am not convinced that governance wonât become more centrally controlled (even more than it already is to your own admission) if the price of ATOM keeps going up.
I put a post a week ago about implementing quadratic voting for passive stakers in order to increase the power of active accounts vs validators. Currently validators use passive stake to vote on a 1:1 basis and that amplifies their voting power greatly far beyond their own economic contribution to the network. I think what I suggested in that post is a good, simple and practical way to decentralize voting to a level above the status quo today. Outside of that, I am not sure how you make passive stakers vote unless you implement penalties for non participation, which I am sure will be very unpopular. I donât feel like I have a qualified opinion on many proposals here - donât have the time to study them and deliver an opinion. Or I just donât have the expertise. On things like inflation and fiscal policy I feel like I have specialized knowledge about that I can contribute but on some technical matters, I would be clueless. A lot of times I let my validator vote for me assuming that he has a more qualified opinion.
As far as your opinion on how decentralized Bitcoin is, that is obviously your opinion, and I donât think it is particularly widely shared. Nobody knows who is what on the Bitcoin network, but I highly doubt 2 guys are shoveling $20 billion worth of Bitcoin from their left pocket to their right pocket every day for show.
As of this moment Cosmos hub most of the revenue comes from inflation. Fees from ICS are still very low.
That being said lowering it minimum inflation to 0% does not make sense at this moment. In the future we can reconsider these parameters, but right now i think minimum inflation should be set to lowest 1.5% or up to 3.5%.
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Lowering inflation to 0 can find synonyms in your nickname - it will be kamikaze =)
Agreed about revenue + this
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No need to complicate things
- Appropriate minimum and maximum economic ratio range, such as 4% - 10%
- The consumer chain sells the distributed rewards through DEX, buys ATOM and destroys it to resist inflation.
If the reward of the consumption chain is enough to destroy a large number of atoms, the price of atoms will be highly anticipated, and those who pledge will be more interested! Inflation will go towards 4%, and vice versa, it will go towards 10%
The purpose of staking is to obtain atoms, and price stability is positively related to staking. If atoms are unstable, it is meaningless to allocate rewards from the consumption chain to persuade people to pledge atoms!
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@StakeLab ready to put this on chain?
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Think it was a bug a now corrected
What percentage of stake is required to trigger 0%? If we are talking %100 , then it makes sense. There should not be anything left to reward staked assets and more Atom should not be produced to continue because Atom would become diluted.
Iâm suggesting that Cosmos should consider having a minimum inflation rate that is less than zero.
This is essentially like a fee for burning tokens.Reason for this Proposal: The main idea is to help maintain the tokenâs value, especially when thereâs an oversupply.
Itâs a method to encourage people to hold onto their tokens, similar to saving money in a bank.Benefits for the Future: Implementing this could strengthen Cosmos in the long run. Itâs important for the networkâs stability and growth.Learning from
Examples: We can look at other cryptocurrencies that have tried similar methods. This could give us insights into how to effectively implement this strategy in Cosmos.
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agree with this proposal,thanks!
Good morning,
Just like the first proposition, this one lacks a metric allowing us to have a prospective vision.
0% inflation means we no longer need new tokens. Isnât this giving up on the growth of the cosmos?
How, for example, can we finance new projects if we reach this stage?
Also, at what rate can we achieve this 0% inflation?
If 0% stacking generates 10% inflation, how much inflation for 66% stacking? 3;33%? Is the interpolation linear?
This proposal lacks depth, I will vote no.
Bonding above 67% is what triggers decline towards 0%. Presumably if yields are too low, people will just unstake ATOMs which will make inflation/yields go higher again. It is very unlikely that yields will actually hit 0% if stakers arenât getting properly compensated against alternatives. Many also may be happy with 0% yield so long as number goes up. I personally think the min inflation should be 1.5% (tail emission) but I donât see how setting it to 0% is a problem. If 1.5% is the right tail emission, the market will set it there. If there is a market failure, then I might be for a hard set at 1.5% (or some other number), but first we need to see market failure.
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It is a no for me on the prop 868. There is simply not enough evidence that 67% staked ATOM will be achived in case 0% inflation is in place.
For example 2 chains that have 0 inflation that are based on Cosmos SDK are DYDX and Kava. While DYDX is still in the transition phase Kava has been here for a while but has recently implemented 0% inflation. At the moment DYDX has around 7% staked and Kava has 12%.
And for example here DYDX gives % of fees from perps to the validators and stakers and at the moment staking APR is about 12% and I think i saw on twitter that 2 million USDC were given to the delegators.
And I just remembered Kujira has around 54% staked but I could not find how much is staking APR without airdrops.
What kind of reward system will there be for Cosmos hub if 0% is in place? Current ICS rewards are not significant and could not even parry DYDX in this example.
Until there is more reaserch on how will 0% inflation affect the security of the chain, validators and how much will users actually stake my vote stays no.
If I am mistaken please correct me but the only kujira has somewhat higher stake at almoust 54 %. How will Cosmos hub secure 67% bounded ATOM when/if 0% inflation is reached if there are no incentive for staking?
We are leaning towards Yes. but i have questions before voting.
With the new proposed parameters the inflation will be 0-10%, it will remain 10% if the bonded rate is less than 67% and it will start to reduce as soon as the bonded ratio (currently 64.3%) is achieved. Theoretically, by the time we reach 100% bonded ratio the inflation would be 0%.
Another, question is have we ever gone above 70% bonded ratio?
At the moment inflation change rate is 1% meaning with every 3.3% increase in the bonded ratio above 67%, there will be a 1% reduction in the inflation. right?
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hi! iâm curious (not opining)
assuming that thereâs a day when rewards drop to (nearly) zero, stakers stay staked, and validator operators are running at a loss. what do we think the possible outcomes may be? especially curious what @zaki_iqlusion thinks
the reason for these rewards is to attract sufficient stake to secure the chain. so part of me thinks that once weâve achieved our target, we should only care about efficiently retaining that amount of stake.
another part of me wonders how the set of operators will change as a result. who will be operating a Cosmos Hub validator at a loss and why? i start to think about things like exploiting outsized governance influence in various ways. but adjusting fundamentals like issuance to account for secondary effects like funding validators seems like an overcorrection, and there doesnât seem to be an elegant way to reward validators independently from stakers.
i imagine that setting the floor to 0% (or even a negative) issuance rate will be a forcing function that leads to updates in staker and operator behaviours
guessing that at 0%, gradually the active set will predominantly be validators controlled by a range of token-holder-operators competing for influence for various reasons, and that thereâll be many fewer validator service companies (except maybe white label services) involved.
i suppose that things may be headed this way anyway, even if the issuance floor wasnât 0, but i imagine the parameter change will accelerate things.
it should be a great experiment, and iâm excited to collect some new kinds of observations. quite the departure from the norm thus far!
I would rename to âSet Minimum inflation parameter to 0â. It would avoid confusion for voters/validators that donât understand or at least prompt them to read further. A graphic might help here to illustrate that minimum inflation would only happen after X% of tokens is staked, even as an example it would clear a lot of misconceptions that Im seeing in this thread.
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Throughout this discussion, weâve pinpointed various posts that appear to significantly misinterpret the operation of the inflation mechanism in the Cosmos Hub. To address this, weâve initiated a separate topic: The x/mint Module and understanding the Inflation Rate Calculation with the aim of promoting awareness about the actual inflation formula. Additionally, weâve shared a straightforward model weâve developed to illustrate how it would behave with different parameter adjustments in the upcoming years. We encourage everyone here to engage with it, as it can swiftly rectify some of the misconceptions weâve encountered.
Here is a link to the model: Cosmos Hub Inflation Projection - Google Sheets
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Good proposal . Keep Cosmos adaptable. Eager to hear further findings this week