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The Cosmos Hub has undergone an upgrade to introduce a liquid staking module. This enhancement allows users to utilize their staked ATOM within the Cosmos decentralized finance (DeFi) ecosystem without the necessity of unstaking their tokens.
One significant consequence of this upgrade relates to the inflation rate of ATOM, as explained by KOL Cryptocitos. Currently, the bonded ratio for ATOM stands at 67.8%. As long as it remains above 66.67%, the inflation rate will gradually decrease to a minimum of 7%—at present, it stands at 14.26%. The higher the bonded ratio climbs, the faster the inflation rate diminishes.
Furthermore, ATOM holders will be subject to a 25% cap on the total ATOM that can be used for liquid staking. Additionally, Cosmos Hub has revealed measures to mitigate risks associated with liquid staking.
“LSM introduces governance-controlled parameters, and as an additional security feature, validators who want to receive delegations from liquid staking providers would be required to self-bond a certain amount of ATOM.”
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