Cosmos founders fork chain AtomOne analysis: vision, mechanism and impact

Author: Ignas, DeFi Researcher, Translator: Golden Finance 0xjs

The most exciting development in the crypto space right now is Cosmos.

Jaekwon, the founder of Cosmos, proposed a fork of ATOM and made it clear that “ATOM must not be considered a currency”.

As a result, a new chain, AtomOne, will be launched in response to the Cosmos community’s differing views on tasks, token economics, and security.

Those who voted against reducing the ATOM staking inflation rate to 10% may receive the new token, ATOM1.

Cosmos voted to approve Proposition 848, which would reduce the ATOM inflation rate from about 14% to 10% and the staking APR from about 19% to about 13.4%.

While the vote passed, the results of the “halving” vote showed a clear split in the community.

Lowering inflation sounds intuitive because lower inflation -> less supply -> higher prices. It may make ATOM more attractive to use in DeFi, as DeFi’s yield will now compensate for inflation, and ATOM’s liquidity will increase.

It makes ATOM a “currency”. But Jae and the opposition disagree, claiming that ATOM should continue to be a core component of staking tokens that protect security, sustainability, and decentralization. You see, reducing inflation sounds intuitive, but staking numbers can be deceptive.

ATOM is currently designed to penalize non-stakers to ensure network participation and prevent hostile takeovers. With an annual inflation rate of 20%, Stake ostensibly has a return of 30%, but the actual gain is around 8.33%.

Therefore, when ATOM becomes a currency, ATOM will be at risk of being attacked as the staking rate decreases.

AtomOne’s vision

Become the smallest fork of Gaia (formerly Cosmos) and work side by side with it.

It’s not just a technical solution; It is the political foundation that drives innovation and diversity in the Cosmos ecosystem. The ATOM1 token will be the staking token of the AtomOne Hub, with a focus on maintaining 2/3 of the ATOM1 staking at all times to ensure security and stability.

But AtomOne hasn’t given up on Gaia

This is where things get more interesting.

AtomOne will launch phATOM, a liquid staking token for ATOM. It will compete with stATOM to influence Gaia’s decision-making (Jae claims that Stride is an attack on central governance). In addition to Gaia’s phATOM, AtomOne’s ATOM1 token can also be pegged to phATOM1 tokens.

But the beauty of this new tokenomics is that phATOM1 becomes the only fee token!ATOM1 retains the staking token, maintaining security, while phATOM1 becomes… It is a more deflationary version of ATOM and ATOM1.

What’s more, AtomOne will use native LST, with no voting rights. This is aimed at users who are interested in DeFi and avoiding inflation, ensuring that network governance is the responsibility of active participants.

Overall, AtomOne maintains its status as the original CosmosHub with phATOM and will incentivize mutual success and allow Gaia to safely transition to a more experimental hub than the more immutable and conservative AtomOne.

The proposal is not final and therefore subject to change. However, I’m currently more excited than ever about the future of ATOM.

Actually, there’s a lot more that I didn’t cover in this post:

• phATOM1 conversion rewards for staking to phATOM
• Fixed validator incentives so that each validator gets paid to run the ICS Consumer Chain and Hub sharding
• 10% pre-mined ATOM1 (Interchain Foundation + those who voted “no” on Proposition 848)