Removing Lower Bound of Dynamic Issuance

One of the most common sentiments among the community since i’ve been in Cosmos has been to address Atom’s tokenomics as the exponential inflation is often seen as unsustainable over the long term.

One temporary “fix” while we figure out a sustainable long term update to the hub’s economic model that seems to have some support is removing the lower bound of 7% from the dynamic issuance model. This idea would further scale the issuance model so that it’s theoretically possible for Atom issuance to be 0%.

To those unaware how the current system works: Atom issuance scales with the % of staked Atom on the hub with a minimum issuance of 7% and a maximum of 20%. The higher % of Atom supply that is staked, the lower the issuance rate, and vice versa. This is to incentivize people to stake for economic security.

There are a few upcoming catalysts that are likely to entice people to stake their Atom again, and get hub issuance back to the 7% level:

  1. The release of Interchain Security will incentivize Atom stakers by rewarding them with fees and emissions from consumer chains that the hub secures.
  2. The release of the Liquid Staking module, which will allow stakers to remain staked and receive an Atom derivative token that can be used elsewhere in Cosmos.
  3. The Interchain Foundation is in the process of updating their validator delegations policy. When that’s rolled out, their large Atom allocation will be staked with validators who applied to the program.

So, I wanted to more formally kick off this discussion to see what others are thinking about this idea, and see if this is something we should pursue.

Is this the right time? Is this even a good idea? What do you think more generally about the hub’s economic model with the upcoming features?


depends on the success of ics. If ics is successful I will be in favor of reduction of inflation.

Could we come up with a format where the issuance is linked to the revenue created by ICS?
Because then you can create some kind of bottom level of ROI for stakers, being either ICS-tokens or ATOM.

And with a low revenue from ICS, the minimum would be mainly consisting of ATOM
With high revenue from ICS, the minimum would be mainly consisting of ICS-tokens.