The Osmosis community has passed a proposal to halt OSMO inflation issuance and shift to protocol revenue distribution.

On October 27, according to the Osmosis governance page, Proposal No. 1053 "Termination of OSMO Inflation Minting" was approved via voting on October 26, with a support rate of 91.07% and a voting participation rate of 65.38%.

Following the proposal's passage, Osmosis will halt the issuance of new OSMO through inflation, stopping the allocation of newly minted tokens to staking rewards and the community fund pool. Staking returns will now rely entirely on protocol revenue, including trading fees. Meanwhile, the daily unlock and release of approximately 30,440 OSMO for developers will be paused, leaving the remaining ~51.9 million OSMO in the developer vesting module account, which can only be released in the future subject to separate governance decisions.

The proposal states that halting inflation will eliminate dilution caused by new supply issuance and enable direct reduction of token supply through burns generated from trading fees and ProtoRev revenue. While the ~2 percentage points of staking APR contributed by inflation will vanish, the proposal anticipates that part of this yield loss may be offset by the ~1.7 percentage points of additional APR brought about by Proposal No. 1052's increase in the trading fee allocation ratio.