Shaurya Malwa · 3 days ago · 2 min read
The EOS community recently proposed and approved a change in the protocol that significantly reduces the network’s inflation rate.
The power of true decentralization
Brendan Blumer, the co-founder and CEO of Block.one, announced that on Feb. 25 that the EOS community quietly voted to approve the reduction of the network’s inflation from 5 percent to 1 percent. The approval of this proposal caught Blumer by surprise. However, he welcomed the news by stating that it serves as proof of the high levels of decentralization of this blockchain.
“I woke up today to find that a proposal to reduce EOS network inflation from 5% to 1% had been proposed and passed by the community overnight. This speaks to the power of decentralized governance, and networks designed to operate in the best interest of their holders.”
Over the years, EOS holders have pursued the reduction of the annual inflation, but failed to gain enough supporters.
This inflation system was coded into the EOS protocol since it was launched into mainnet. The problem with it was that 4 percent of it was being accumulated in the eosio.saving account. Meanwhile, only 1 percent was distributed among Block Producers (BP) in exchange for network maintenance.
Even though the accumulated funds were supposed to be used to fund different projects that help improve the network, it had never been used due to disagreements between BPs.
Nevertheless, the approved proposal eliminated the balance in the eosio.saving account, which had an excess of 34 million EOS tokens. All tokens were burned and removed from total supply. Additionally, it reduced the annual inflation to 1 percent. All the inflation will now be shared among the BPs of the EOS network.
This event marks an important milestone for the entire EOS community since BPs were able effectively vote to reduce their own pay among other things. Blumer believes that the alignment between EOS network operators and token holders “threatens the entities that profit from controlling token holders who have no vote.”
Following the announcement, the price of EOS appears to be holding steady above the $4 support level despite the nosedive that most cryptocurrencies in the market took today. Now, it remains to be seen whether investors will prevent it from a steeper decline.