Sorry, not padding, it's the margin.
Each post is in a container of it's own. You have a 60px margin set for the bottom of each post container. It gives the effect of a large gap between posts, while it's really a margin after the bottom of the post container.
The setting is at ATO->Post/Page Styling->POST Container.
Yours is 'margin: 0 0 60px 0;' - the four numbers are Top, Right, Bottom, and Left margins
To see the size of the post container, as an experiment, change the post container background to FF7F50, i.e. in ATO->Post/Page Styling->POST Container put
margin: 0 0 60px 0;
and you will see the margin you've set for the bottom of each post.
p.s. If you add a top margin, the gap will get even larger becase ou will have the top and bottom margins added together between posts.