In this Chjango Unchained video, the host Chjango, is joined by Jae Kwon, Founder of Cosmos and Co-Founder of Tendermint, to discuss why he opposed ATOM 2.0, the ATOM token model, governance, liquid staking, and more.
Read our notes below to learn more.
Jae Kwon’s Background
Blockchain software architect.
Founder of Cosmos and Co-Founder of Tendermint.
President of the Interchain Foundation.
Opposal of Atom 2.0 Proposal
(Learn more about the Atom 2.0 proposal situation)
Problem with whitepaper and how the proposal was pushed.
Proponents are deaf to the criticism.
If there are flaws to the proposal, it should not be passed.
40 million to 500 million ATOM going in treasury not controlled by the cosmos hub governance.
The reason for this inflation was to turn ATOM into money.
Same thing can be achieved with Cosmos by removing the minimum bound of inflation of 7 percent.
As interchain security is adopted and more revenue is earned, inflation will go down.
If cash is needed on Cosmos Hub, increasing the existing tax mechanism can be considered.
The revenue will then go into the community pool to be spent.
ATOM Token Model
Partially solved the problem with federated sidechains.
One more step required is ICS (Interchain Security).
Enables the same validator set to run more blockchains in parallel.
Transaction fee revenue is super profitable.
Validator Fees Reward
People will pay for convenience
Don't want to limit supply and create artificial scarcity.
Cosmos hub validator set should ideally be permissionless in the long run.
Governance on New Chains
Hub validators can decide whether a new chain is worthy of being secured.
Once ICS is running, anyone who bonds or pays enough of a deposit, it’ll just happen automatically.
Current governance group is not transparent.
Minting transaction features should be removed as inflating through governance was a huge mistake.
Liquid Staking
Liquid staking has its issues (e.g. governance risk, hostile takeovers, liquidity crunch, validators compounding representation).
One of the solutions was to limit liquid staking (e.g. taxing over-staking from certain accounts).
Price can be manipulated when a validator gets slashed, which results in the amount of ATOM being unbonded from the liquid staking going down.
Liquid staking can be stopped by limiting interchain account staking.
Chjango
The way liquid staking is currently proposed has great intention but is a naive design
Bad for security and trades off decentralization.
PHOTON (secondary fee token)
PHOTON seems like liquid staking but it's not.
Cosmo Hub does not need PHOTON to work .
Latest version will rename it to deflationary ATOM.
There is a maximum number of deflationary ATOM that can exist.
If you take all the free ATOM and bond them, you’ll get 1 billion deflationary ATOM.
You can choose to turn the deflationary ATOM into inflationary ATOM to participate in the Cosmos hub staking
Essentially, every deflationary ATOM is backed by an inflationary ATOM.
ATOM 0
An attempt to even the playing field between ATOM 1 and 2.
A flaw was pointed out and it wasn’t supported as a result.
Intent was to raise the bar for new proposals to be accepted.