The inflation of the EOS network has been voted by the community to be reduced from 5% to 1%, announced Brendan Blumer, the Chief executive Officer of Block.One, the company behind EOS on Feb 25.
“Wow! 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,” said Blumer.
With this 80% reduction, the inflation rate of EOS has beaten that of Bitcoin and Ethereum. Blumer shared that while it takes $40 million to maintain EOS’s current prices, the much higher inflation rate of Bitcoin 3.6% means new $6.14 billion are required to maintain the digital asset’s current prices.
EOS competitor Ethereum meanwhile has even higher inflation of 5%, which would further require $750 million to keep its current prices. Blumer further points out, “ETH miners increased their rewards this January. Token holders had no say in the matter.”
“This is Decentralization at its Best”
New tokens in most of the public blockchains are created and issued to those who operate the network. These tokens are typically sold to pay for network operation which adds to downward sell pressure on the token’s price, said Blumer while announcing that they have also burned $100 million worth of EOS tokens.
The inflation of the EOS network is “effectively further reduced with voter rewards.” When the network Block Producers’ (BP) offers the token holders revenue for their vote, it further lowers the cost of network operation by passing value back to the holders.
Blumer said this is identical to mining pools in the proof-of-work blockchains but the value here unlike those goes to those who “deserve” it.
“If EOS isn’t decentralized then nothing is”
According to the CEO of the record ICO, this approval of the proposal to reduce the inflation rate significantly is the “power of decentralized governance, and networks designed to operate in the best interest of their holders.”
But not everyone agrees with this. “I think the words overnight and decentralized are juxtapositioned a bit too closely,” commented Su Zhu, CEO of Three Arrows Capital.
But Blumer believes, “If EOS isn’t decentralized, nothing is. And if nothing is decentralized, EOS is still aligned.”
He further goes on to say that in comparison to EOS which is a delegated proof-of-stake (DPoS) network, the proof-of-work (PoW) networks like Bitcoin can’t lower inflation or upgrade to PoS without division which highlights their “crippling upgrade dynamics.”
Meanwhile, EOS is currently trading at $3.50, down 13.88% in the past 24 hours, just like the rest of the market.