New Cosmos Proposal Could Put An End To Infighting

Jae Kwon, the founder of Cosmos, is rallying community members to initiate a split in the network. On November 25th, Kwon called on his followers to unite and orchestrate a division in response to Cosmos governance approving a proposal to decrease inflation in the staking rewards of the ATOM token.

Dealing with inflation

Cosmos employs a dynamic inflation mechanism, which increases the overall supply of ATOM by 10% to 20%, depending on the amount of staked tokens. Presently, with 65.7% of ATOM staked, inflation is growing at a yearly rate of 0.45%. According to Proposal 848, ATOM inflation will be capped at 10%. Additionally, staking rewards will decrease to an APR (Annual Percentage Yield) of 13.4%.

The proposal argues that the historically higher inflation of ATOM compared to its peers has negatively affected its monetary premium and led to constant sell pressure, impacting its price performance. However, key players in the Cosmos ecosystem express dissatisfaction with the outcome. Kwon expressed the need to coordinate a split following the passage of Proposal 848.

Resolving conflict

The aforementioned move by Kwon to fork the network comes after prolonged internal conflicts within the Cosmos ecosystem. John Galt, a Cosmos focused crypto influencer, suggested that a chain split could potentially resolve years of political tension within the network.

Kwon proposes the creation of a new network, informally named AtomOne, which would fork the Cosmoshub4 code to run the latest Cosmos software. He advocates for support for the fork to benefit ATOM, emphasizing the improvement of tokenomics.

Galt speculates that a fork could lead to the most substantial airdrop for ATOM holders. It would end up distributing a majority of a new ATOM1 token to Cosmos stakers, but those wallets favoring Proposal 848 would receive a reduced allocation.

Cosmos utilizes a delegated PoS (Proof of Stake) consensus, allowing ATOM holders to delegate their tokens to a select pool of validators for staking. Galt also speculates that a chain split could potentially benefit the original chain by removing dissidents and unsavory entities. He references the failure of the infamous 2022 ATOM 2.0 proposal, and how Proposal 848 has to do better.