Osmosis Stops OSMO Inflation and Shifts Staking to Protocol Revenues

Osmosis, a decentralized exchange within the Cosmos ecosystem, halted the issuance of new OSMO on October 26: the daily emission was reduced from approximately 91,324 tokens to zero, and staking rewards are now fully funded by protocol revenues.

For stakers, this removes the subsidy, which, according to proposal 1053, added about two percentage points to the annual yield. Taker fees and transaction charges continue to fund rewards, tying payouts to protocol activity rather than new tokens.

Proposal 1053 passed with 91.07% of votes in favor and a turnout of 65.43%, above the quorum of 30%. The first daily epoch after adoption created no new OSMO. Emission parameters are now deferred until epoch 100,000,000, and epoch records show that on October 26, the cycle reached only 1,956. "OSMO inflation is turned off," stated Osmosis. "Today's epoch has passed, and 0 new OSMO were created instead of 91,324 per day."

Fees replace the remaining subsidy

The halt completes a transition that began earlier. Before the change, the emission mechanism distributed approximately 121,766 OSMO per day, according to the proposal: about 9,740 for staking rewards, 81,580 to the community pool, and 30,440 for unlocking developer tokens created at genesis. The latter was an unlocking, not new issuance.

A separate already adopted proposal 1052 increased the stakers' share of taker fees collected in non-OSMO assets from 22.5% to 47.5%, redistributing the community pool's share. The authors estimated that this would add about 1.7 percentage points to staking yield, based on trading volumes over the previous 30 days and the OSMO price at that time. This estimate is not a guaranteed future yield.

For validators and their delegators, the cessation of emission means that the reward stream no longer contains this token subsidy. The redistribution of fees compensates for most of the estimated loss, but payouts from revenues depend on the fees generated by the protocol.

The change in fees did not affect burning. Current network parameters direct 52.5% of taker fees in non-OSMO assets to burning; for fees in OSMO, the burn share remains 70%.

With the halt in emission, burning reduces the supply without compensation from new OSMO. On October 20, Osmosis estimated that the current burn rate is equivalent to about 2% of the supply per year: this is an estimate of the rate, not a fixed annual reduction. CoinGecko indicated a total supply of about 955.6 million OSMO as of October 26.