ATOM’s bonded rate of 67% has been running for a long time but has not exceeded. I think it should be lowered to 60-62% for a better start (67% is regarded as the peak value of ATOM)
Using high staking interest rates can attract some people, but at the same time it can also lose some people. I think this is abnormal. Atom makes it move towards low interest rates and it will not affect staking.
Nothing happened when the maximum parameter dropped from 20 to 10. The pledge was once positive but it still slowly fell back. I think it still plays a certain role.
The key that really affects staking is that the price of ATOM is unattractive. This is the curse of stablecoins among everyone. The airdrop did not retain early stakers.
The maximum inflation rate of ATOM is 10 and the minimum inflation rate is 7. I think the range of 7 8 9 10 is not enough to show the magnanimity of atoms.
I think the minimum inflation rate should also be lowered to 2, so that ATOM’s inflation rate can be between 2% and 10%
The bonded target is 60-62% and the minimum inflation rate is 2% (assuming that the minimum inflation rate is 2%, the actual interest rate will be 6.5%. Currently 10%, the actual interest rate is 14.5%). 6.5% and airdrops are still enough to attract staking.
It is quite necessary to reduce the weight of ATOM again! Of course, just reducing the weight is not enough! We must also move forward with the current favorable policies, and the atom will definitely become better and more eye-catching!
Unpopular opinion: I dont think that it makes sense for a working economy copy the model of an economy that was just born. The two have different targets in mind
Firstly, thank you for sharing your insights on inflation. It’s clear that inflation is a pressing concern for many in the Community. We believe it’s important to remind everyone that the Hub’s inflation isn’t akin to a tax. Rather, it represents a mechanism where liquid shares of ATOMs are effectively redistributed to stakers, serving as an inherent economic incentive to favor staking over holding liquid tokens and engaging in volatile trading activities. This dynamic is fundamental for maintaining stability within the protocol.
To foster meaningful discourse on inflation, we’ve consistently emphasized the importance of considering inflation parameters as a cohesive whole, rather than viewing them in isolation, given their interdependence. In pursuit of this goal, we’ve developed a comprehensive model to illustrate this concept, allowing users to manipulate parameters and observe their respective impacts:
We strongly encourage you to have a look at this model first before proposing adjustments to the inflation mechanism.
To conclude, regarding the proposed adjustment to lower the bonded rate to 60-62% we think this isn’t the right move to make. The motivation seems to be driven by the envy to lower the inflation rate, probably based on this repeated feeling that inflation is “too high” and depreciate prices. We need to remind everyone that inflation may depreciate the price if growth isn’t moving faster, but it is not diluting the value. By this we mean that the ATOM’s marketcap isn’t moving at all… you just receive new tokens to compensate the new inflation. You also receive more than these emissions as you also benefit from the dilution of those who don’t stake.
Most of the time this lack of understanding create confusion in the community, looking at ATOMUSD pairs may make you feel like the token it not “pumping enough” compared to others, but in reality you’ll see a totally different picture if you look at the ATOM’s marketcap chart.
We hope this post will help you better understand the inflation mechanism itself and its economical impact.
Govmos
Neither my description nor the parameters are the correct answer, it can only be taken as a signal
Thank you for the information you provided, in which the minimum inflation is set to 0. I think this important proposal is difficult to pass at once. Just like raising taxes on the people, there must be a buffer period and it must be gradually reduced before it can go smoothly.
Regarding the proposed adjustment to lower the bonded interest rate to 60-62%, the main reason is that after holding it for almost 2 years, it has not been maintained above 67% for a long time. People can sell the atom pledge interest to buy other ecological projects, and there are more Good growth. People don’t necessarily have to focus on atom because most ecological projects perform better than atom. This is also my current approach (it is a fact that the competitiveness of HUB ranking has dropped)
I think HUB has reached a critical period and is trying to change, so it needs to be stimulated more to make people full of hope!
You can adjust the parameters on the model as you wish to see the effects it would have.
Anyway, we understand the frustration caused by the relative lack of performance, both in fiat term and also in dominance term. As you rightly noted, ATOM has been falling off from the top20 crypto ranking, but it’s important to note that the competitors who climbed up above the Hub are all younger projects with far lower shares of circulating supply and therefore much more centralized. Using the instantaneous market-cap is a misleading indicator if you compare cats and dogs with it.
Finally it is also important to note that the Cosmos Hub is not having any dedicated marketing team, nor is it spending dozens of millions of dollars of incentives to create fake activity on the AEZ. The lackluster demand for ICS has been largely explained by the inherent high cost to entry it requires for consumer chains to be profitable for the whole 180 Hub’s validators. This is the reason why Informal has been allocated to the task of producing a crucial update to this protocol, the Partial Set Security (PSS).
More details on the matter and all the public informations are available here on the forum:
Also note that the public github repo for PSS is here if you want to keep track of the advancements:
To conclude, PSS is the real catalyst the Hub is needing at the moment. Inflation discussions definitely appears to be a distraction to us. The community should remain updated about the real matter at play. ATOM sells security, it doesn’t sell “tokens go up” narratives or anything like that!
All I have to say is the people who are buying ATOM and not staking it are complete idiots given the 10% inflation rate. No matter what your concerns are about ATOM’s value itself, not staking it compounds those concerns.
ATOM price has been flat so far this year with 14% rewards yield which makes it equivalent to a 1-month US treasury yielding 14%. For many yield seeking investors (and ATOM is a yield seeking investment) this is great.
I’d like to point out that yield seekers are the bigger group of ATOM investors judging by the 62% staking rate. I think there are 2 catalysts this year - Partial Set Security and Bitcoin staking - that will help improve performance. And in the meantime, people should be happy with 14% yield!
In fact, when your value is not high, you will keep staking. This is true for ordinary people. They have no other options and limited economics.
When you already own a lot of atoms, 10% is not what they value. For many people, what they care about is growth. They have better strategies and better choices.
There may be many idiots in your eyes, but they have not missed the bull market
The atom airdrop is so loud, but why is the competitiveness insufficient? That is because whales know the problems and shortcomings of atom.
I have always felt that the minimum and maximum change rates will somewhat rotate in the long run, but atoms don’t seem to change much, and they are used to receiving sales.
Maybe the proposed bonding is not very correct, but the problem with HUB is that it remains unchanged!
Staying unchanged for a long time is a degenerate problem! Becoming lazy! Unwilling to change! Be content with the status quo!
The adoption of CosmWasm also means that many people want to try to change rather than be content with the status quo! Although there will be some risk factors, if you are afraid of challenges, you will never make progress.
I think the ATOMs currently are being sold by former long-term holders to market makers like Binance. That 5% that is unstaked (from 67% to 62%) is held by somebody who wants the ATOM liquid. Overtime, the ATOM will end up in the hands of people who will stake it to get the airdrops and the rewards.
The other financial consideration here is that investors are not bonding their ATOM rewards because they want to have the option to convert it to USDC quickly. Or are selling it for USDC and the ATOM then is sitting in liquidity pools unbonded.
In any case, all of these issues will fix themselves after Partial Set Security is introduced. There were a lot of hopes for Full Set Security, that turned out to be a product without a good market fit and it didn’t get the usage people were hoping for (especially Neutron). PSS has a much better product market fit and I think it should be good enough to get ATOM price to go up. The other thing you should not forget that most investors look at measures like 2030FDV for ATOM which is at 7.5B which is almost double the market cap of 4.5B. ATOM is not nearly as cheap as it looks on the market cap charts.
