While gaining in popularity, the Cosmos ecosystem’s Cosmos Hub token; ATOM, has long been criticized for not accruing value. At Cosmoverse 2022, the ATOM 2.0 whitepaper was revealed, which includes plans to change the value structure of the token.
In episode 217 of the Blockcrunch podcast, host Jason Choi welcomes Cosmos contributors Zaki Manian and Sam Hart to discuss the history of Cosmos, ATOM 2.0, interchain security, and more upcoming features.
Read our notes below to learn more.
What is the Cosmos Vision?
A blockchain is like a community.
Value accrual was put to the side, building technology stack was prioritized.
Cosmos is like a language for describing how to build and interoperate an L1 into a network of blockchains.
Sam
Cosmos gives app designers much more control.
There will be a lot of differentiation between app-chains.
History of Cosmos
In 2019 Cosmos Hub launched: first PoS (Proof of stake) chain running tendermint (protocol which enables consistent creation of blockchains).
Binance builds BNB chain using Cosmos SDK (open source framework for building Cosmos app-chains).
Polygon launches MATIC chain.
Standalone dApps like Akash and Kava are launched as their own Cosmos chains.
At the end of 2020, IBC launched with the goal of connecting the app-chains.
In 2021 Osmosis launched, which provided liquidity to Cosmos ecosystem.
Original team behind Cosmos Hub left, key contributors began creating a value accrual system for ATOM.
Cosmos contributors were critical of Polkadot app-chain value accrual, as it involved apps paying for a slot.
They had been considering ideas like interchain security for a while.
Sam
Cosmos committed to horizontal scaling.
It wasn’t known what it would take to scale Cosmos, which is clarified with ATOM 2.0
Atom 2.0 Monetary Policy
Jason
Jason wanted to invest in the app-chain thesis but didn’t know how, as he was skeptical of the Polkadot vision, and ATOM value accrual, until ATOM 2.0
Sam
Under current model, if more than 2/3 of token holders are staked, token issuance will decrease, if less, than issuance will increase.
This model doesn’t make sense with the introduction of liquid staking.
New model will decrease issuance.
Initial capital is issued at first to fund the switch from exponential token issuance to sub-exponential.
Zaki
ATOM can’t generate revenue with the current small changes to issuance.
If a treasury exists then it can scale to represent significant amount of ATOM tokens, and continue to pay for itself.
Whitepaper will be changed to clarify that the treasury won’t cause dilution, among other ideas.
Many Cosmos liquid staking providers: consequences of slashing (feature in PoS chains that allows validators to agree to punish misbehaving validators) varies with protocol.
Pluralism is the way of Cosmos.
Atom 2.0 Interchain Security
Zaki
Interchain security solves some issues with rollups including bridging and using a decentralized sequencer.
Interchain security allows developers to add new features without worrying about changing core system and causing new bugs.
Many app-chains don’t want their own tokenomics, which is also solved with interchain security.
Atom 2.0 Interchain Scheduler
Sam
Scheduler enables ability to reserve blockspace and offer it in a shared market, effectively as an NFT.
Block builders and entities similar to Flashbots (protocol which aims to prevent MEV) might buy this product and resell it to their customers.
Blockspace futures will likely have different market structure vs blockspace spot market.
ATOM validators also validate “consumer chains”, which are similar to rollups.
ATOM validators have information on these chains, which opens up MEV (maximal extractable value) opportunities.
Scheduler allows app chains to internalize MEV within their own chain.
Osmosis is already doing this, scheduler can help make this process simpler and work with other chains.
Zaki
ABCI 1.0, the next tendermint release, allows programming of conditions under which validators accept a block.
Scheduler can deal with censorship by auctioning only certain parts of the block and separating the builder and block proposer.
Unified blockchains auction can be decentralized on IBC.
Atom 2.0 Interchain Allocator
Zak
Allocator allows Cosmos Hub to hold non-native assets in multiple ways.
This allows Cosmos Hub to receive profits, rebalance portfolio assets.
Sam
Allocator helps solve demand for economic integration and exchange.
Allocator allows ATOM holders and stakers to get exposure to different app chains.
Allocator borrows concepts from international trade and political alliances.
Mesh Security
Zak
Cosmos teams don’t approve of committee-based security, such as sharding, which the Polkadot and NEAR blockchains use.
Mesh security make interchain security more flexible.
People will either want Mesh or Interchain security.
What’s Next for Cosmos?
Liquid staking is ready to be implemented in Q1 2023.
Interchain security and scheduler could be live in January.
The allocator is still being built.
New governance features are also being built.