Does anyone know why Cosmos have no max coins supply?

Question

Cosmos Network ~ $ATOM

Soul Ra

Does anyone know why Cosmos have no max coins supply?

#atom #blockchain #cryptocurrency #english

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18.09.2022

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Johnny B

some inflation is always necessary in order to create an additional, non-transaction reward for validators and to maintain strong security. With the Proof of Stake model, there can be potential consensus instability issues if the entire reward for validators is based on transaction rewards and not the overall block reward. Because of this, Proof of Stake is generally not designed to have a maximum supply, which necessitates inflation eventually going to zero once that supply is reached.

0

18.09.2022

Johnny B · Accepted Answer

Because in a POS (Proof of Stake) model, staking secures the network. So, by implementing inflation, new tokens are created and distributed to the network participants who participate by securing the network and voting on new governance. Keep in mind, inflation is very useful in the early stages of a network’s growth, and as alternative incentives to staking arise, inflation can be slowly phased down after the network is healthy and robust. For now, ATOM employs the following model: The inflation has a floor of 7% and a ceiling of 20%. The target percentage of total supply coins staked is 66%. The network uses an algorithm to maintain this level. When the staked percentage of total supply is above 66%, the inflation heads down to the floor of 7%. When the staked rate is below 66%, the inflation starts heading up towards the ceiling, 20%. The rate at which the inflation changes is proportional to how far you are away from 66%. The further the staked ATOM percentage is away from the target of 66%, the faster the inflation changes to help encourage the amount of ATOMs staked to go back above the target by rewarding extra atoms for staking.

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Does anyone know why Cosmos have no max coins supply?

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