Leading Cosmos figures want to introduce new tokenomics, an on-chain MEV marketplace, a system to streamline economic coordination across Cosmos blockchains, and a new governance structure to the Cosmos Hub.
Cosmos Hub is getting a serious makeover.
The highly-anticipated whitepaper for ATOM 2.0 was released today following a series of speeches by Cosmos co-founder Ethan Buchman, Osmosis co-founder Sunny Aggrawal, and Iqlusion co-founder Zaki Manian at Cosmoverse. The Cosmos-centric event kicked off this morning in Medellín, Colombia, and will run through September 28.
The 27-page document, simply entitled ‘The Cosmos Hub,’ was penned by Buchman, Manian, and eight other leading figures of the Cosmos community. While it outlines new tokenomics for Cosmos Hub’s token, ATOM, the paper is most notable for suggesting the implementation of multiple new features to the broader Cosmos ecosystem.
New ATOM Tokenomics
Cosmos is a decentralized network of independent blockchains. Not to be confused with the broader Cosmos ecosystem, the Cosmos Hub is a specific blockchain designed to connect all of the other blockchains in the network. In its current form, ATOM’s main purpose is to provide security for the Cosmos Hub through a staking mechanism.
ATOM’s tokenomics have received criticism for their inflationary dynamics. ATOM issuance currently varies between 20% at worst and 7% at best depending on the percentage of total ATOM supply being staked. While total ATOM supply hovered at about 214 million in March 2019, data from CoinGecko indicate that over 292.5 million ATOM tokens are currently circulating—an increase of approximately 36.68%.
The whitepaper proposes a new monetary policy for ATOM, in two steps. A 36-month-long transitional phase would first be introduced, at the beginning of which 10 million ATOM would be issued per month (briefly bumping up the inflation rate to 41.03%, if it were to launch today). The issuance rate would then steadily decrease until reaching emissions of 300,000 ATOM per month, effectively bringing ATOM’s inflation rate down to 0.1%.
Long-term, ATOM issuance would therefore become linear instead of exponential.
A primary reason behind ATOM’s current monetary policy is to subsidize Cosmos Hub validators for providing security services. Under the new model, validators would instead be rewarded with the revenue generated by Interchain Security—a mechanism allowing Cosmos Hub to produce blocks for other blockchains in the Cosmos ecosystem.
Interchain Security is expected to make spinning up a Cosmos blockchain a faster, cheaper, and easier process: it would also enable the creation of scaling solutions and increase overall IBC connectivity. A safety mechanism would allow the original ATOM issuance model to be incrementally reinstated should Interchain Security revenue prove an insufficient replacement for validators.