Cosmos supply is inflationary (supply does increase based on amount of staked ATOM). Currently the demand for ATOM is mainly driven by stakers and validators, both of which buy ATOM in order to earn more than they spend, so I personally don't see a sustainable economic model there. In sep 2022 they announced a revamp of their tokenomics, as I suspect they realized the weakness.
Comparison of their old and new issuance schedule (fig below)
This means, this incentive model create FOMO for early participants, but it makes it worse with a negative network effect in the long run.
Meanwhile, the new whitepaper says that value will come from revenue generation. However, I had to read multiple times how this revenue is generated and it is still not clear to me, meaning only a handful of hardcore techies may take advantage of this revenue generation scheme, which limit its widespread appeal.
Here's an excerpt of the section related to revenue generation: "The ATOM 2.0 whitepaper adds an Interchain Scheduler, a “secure block space market to avoid off-chain cartelization and [provide] more options for chains seeking to optimize the use of block space.” In a nutshell, the Scheduler will sell the right to front-run transactions, thereby accruing value to the protocol.
Some of the revenue from these block space auctions will go to an ‘Interchain Allocator’ tasked with funding various initiatives to grow the Cosmos ecosystem. The whitepaper calls it a “platform for delegated parties to grow and align ATOM-based markets, facilitating multi-chain trust and coordination.”"
Here's a full copy of the whitepaper: https://gateway.pinata.cloud/ipfs/QmWXkzM74FCiERdZ1WrU33cqdStUK9dz1A8oEvYcnBAHeo
Overall, I'm really not sold on their tokenomic model, I think it is pretty weak. The good thing is all the token have completed vesting, so large selling volume at specific time point is unlikely outside of normal market pressure. With that said, that means ATOM is very likely to remain highly correlated to the rest of the industry (i.e. BTC), so the price is likely to continue following BTC lead for the foreseeable future. Show Less