ATOM Tokenomics Research Kickoff

Update: The tokenomics RFP is live now for review. See the full RFP here: Request for Proposals: ATOM Tokenomics Research The next phase of ATOM’s evolution is officially underway. Starting soon, the Cosmos community will begin the formal research process to design a new, data-driven tokenomics model for ATOM. As previously discussed, the goal is simple: build a sustainable, long-term utility proposition for ATOM that reflects its central role in the Cosmos ecosystem and positions the Hub for growth in the enterprise era. TL;DR • This research process will focus on building a fundamental, revenue-based tokenomics model for ATOM, rather than jumping straight into individual mechanisms or flywheel ideas. • The initiative follows a five-step process: Request for Proposals → Research Team Selection → Information Gathering → Research Results & Analysis → Governance. • Core research goals include understanding ATOM’s current dynamics, simulating alternative models, identifying sustainable demand and supply drivers, and designing a long-term transition plan. • Early community discussions surfaced many mechanism ideas, but also made clear the need to separate…

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Great to see this initiative. My gut instinct says the questions being asked (to be answered by research) are incredibly important. There is nearly an infinite amount of granular data mining that can be done from multiple vectors (sentiment, onchain, user interviews) but the data being gathered is only as useful as the questions attempting to be answered. Some fundamental questions that could be asked (and I want to re-iterate this should probably be narrowed down to like, 5 of the most important questions). 1. What is ATOM supposed to do ? 2. How does the Cosmos Hub actually make money today? 3. How should ATOM holders get paid from that money? More staking rewards? Burns? Treasury? Something else? 4. How much inflation do we really need to keep the chain secure? If security fails, everything fails. 5. When Cosmos gets more real revenue, how do we safely reduce inflation? 6. How are people actually using ATOM today? Not theories. Actual user behavior. 7. What would make people want to use ATOM more? 8. Does this new token model survive bad markets, crashes, and low fees? 9. How do we know if the new tokenomics is working? We need simple…

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This is extremely exciting, and the most important upcoming proposal likely of the next decade for ATOM. I invite everyone to take this seriously, and help us - for the love of god - turn ATOM into the top-10 asset it was born to be. One thing to call out specifically is flexibility. The truth is, Cosmos does not struggle for adoption. We have over 200 chains building on our stack, and some of the largest chains use our technology under the hood. Like Linux, we have won the “adoption war” so far. But also like Linux, we haven’t figured out how to monetize. There are many paths to doing so - and we do NOT definitively know which path is the right one yet. The reason we’re going for institutions is because, unlike many of the long-tail of chains today, they can pay us for Cosmos software and solutions. It’s as simple as that - we have the opportunity to talk to customers with budgets they can spend with us, which is something Cosmos has never done before. How we monetize - and what we monetize - we’re actively exploring and experimenting with. We don’t know if they want to pay for the stack itself (licensed), specific modules, relaying, liquidity, or just consulting services.…

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Bad idea to acept proposal of ICF after Proposal #952 in Cosmos

We already voted that we don’t trust ICF, and all their proposals are. not in the interests of Cosmos Hub, but in own private interests

Good thing our private interest is to make ATOM go up and become a sustainable ATOM-funded foundation

Hi everyone,

I’m wondering whether a global, “bubble-style” diagram of the Cosmos Hub economic flows already exists.

I’m looking for a high-level visual map that includes all current mechanisms, such as:

• fee pool
• distribution pool
• inflation
• ICS revenue
• community tax
• staking rewards (validators / delegators)
• community pool
• feemarket collector (burn)
• etc…

and the percentage allocations / value flows between these components.

In short, a complete overview of how value moves through the Cosmos Hub.

If something like this already exists, I’d be grateful for a link or reference.

If not, I’d like to propose that we research and design such a diagram as part of the ongoing work around the current + new ATOM tokenomics.

It could also be very valuable to eventually include this type of visual schema in the official Cosmos Hub documentation, to help users, contributors, and developers better understand the system’s economic flows.

Thanks in advance for any insights or interest in collaborating on this!

You mean something like what @JohnnyWyles have done for osmosis ?

I also support to include such representations, it really does help to visualized and comprehend shared ideas

Capture d’écran 2025-11-26 à 14.08.431506×1080 170 KB

Any visual is fine, as long as it’s clear enough for anyone to understand. But yes that is the idea

We need a model of the current Cosmos Hub and ATOM tokenomics to better understand all the different mechanisms at play. Once we have this baseline model, we can experiment by rearranging the “bubbles” and exploring whether improved interactions between modules, applications, and economic flows emerge.

Very excited for this to move forward, great thanks @RoboMcGobo for the work on pushing this and the people in the community that are driving positive discussion in the working group. @Guinch_Roze’s data and dashboard idea is a great addition.

There is a dashboard in development and we can ensure the research workstream outputs the data needed for it.

Also aligned with @Carter_Lee_Woetzel - asking the right questions is goal number one. The more we know about where we stand today, the more we can reform the asset in ways that make an impact.

Any other questions we’d like answered drop them here please for consideration in research or as we produce reports with preliminary findings.

On behalf of Govmos, we would like to express our strong support for this structured and community-driven initiative to research and refine ATOM tokenomics. A data-driven approach is precisely what the Cosmos Hub needs to solidify its long-term strategic positioning. We commend the organizers for creating this collaborative framework. While we believe this process is vital, we see the most effective role for Govmos not as direct participants within the research working groups, but as dedicated, constructive reviewers of the subsequent outputs. Our commitment is to provide in-depth analysis and advice to the various proposers, ensuring the complex and interconnected nature of the Hub’s economy is thoroughly considered. To that end, we wish to highlight several key areas we believe are critical for the research to address. These pillars are essential for enhancing ATOM’s utility and securing the Hub’s future as the Schelling point of the Interchain. Key Areas for Consideration • Incentivizing Long-Term Alignment: The Hub’s security and stability are predicated on the commitment of its stakeholders. We strongly encourage research into mechanisms that reward long-term…

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I’d like to share a suggestion regarding the ongoing tokenomics research. After reviewing the current model, I wonder if exploring an alternative structure might offer better long term sustainability for ATOM and the Cosmos Hub economy. Specifically, the idea is to organize the Hub’s revenue and treasury flow into a more modular, transparent framework. Instead of a single, undifferentiated treasury, the model separates operations into three dedicated units: • Treasury Core for operational stability • Treasury Growth Fund for ecosystem expansion, grants, and partnerships • Treasury Market Operations Unit for buybacks, burn mechanisms, and liquidity management This structure might help align the Hub’s incentives with real on-chain and off-chain revenue streams, while also providing clearer governance, better capital allocation, and healthier long term token value dynamics. It also allows new sources of income (enterprise partnerships, services, IBC-related fees, MEV redistribution, etc.) to plug into the Hub without complicating the economic design. This is just a suggestion that this kind of multi-layer treasury and revenue system could potentially offer a more flexible…

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Hello, and thank you for initiating this important discussion! We fully support this initiative and would be glad to contribute to its development and implementation. The Need to Reduce Inflation In our view, the Cosmos Hub requires a meaningful reduction in the current inflation rate. The existing inflationary model imposes continuous dilution on long-term holders and weakens the macroeconomic positioning of $ATOM within the broader interchain ecosystem. A more conservative and sustainable issuance model would help strengthen the token’s economic foundation. Introducing Active Burning / Buyback Mechanisms We also believe that Cosmos should explore and implement active token-burning or buyback mechanisms. Such tools could: • Offset inflationary pressures • Create consistent value accrual for $ATOM • Better align long-term incentives for validators, stakers, and ecosystem builders Mechanisms of this kind have proven effective in improving token economics across multiple networks and could significantly reinforce $ATOM’s competitiveness. Expanding Utility for $ATOM It is essential for the Hub to continue developing new and meaningful use cases for the…

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No offense, but historically I have rarely seen a tokenomics research actually deliver meaningful impact. Cosmos (via AADAO and others) has previously funded similar research projects that have not led to meaningful impact, and there’s meaningful reason to believe “this time it’ll be different”, I’d be curious on why.

This is a plan to make a plan, and the work of making the plan is outsourced to an external team with little to no skin-in-the-game.

This feels like the equivalent of hiring a deloitte or a PWC to fix a company.

In the words of Steve Jobs:
”Coming in and making recommendations and not owning the results and not owning the implementation, I think, is a fraction of the value and a fraction of the opportunity to learn and get better.”

While Osmosis has its own set of struggles, the Osmosis tokenomics mechanisms revolve around the product, not the other way around. I’d imagine that’d be the same for the Hub as well.

dogemos: Cosmos (via AADAO and others) has previously funded similar research projects that have not led to meaningful impact, and there’s meaningful reason to believe “this time it’ll be different”, I’d be curious on why. This is a good point. @effortcapital and others received massive funding from the AADAO already for extensive tokenomics research, the only good idea that came out of that, the VP tax was promised to be implemented but then as usual nothing happened. Instead of paying so much again for new research, much better to just talk with EffortCapital to actually get something from the huge amount already paid and implement the VP tax. Moreover, there was a huge tokenomics change recently with the max inflation parameter reduced by 50% from 20% to 10% with the promise as usual to ‘pump’ ATOM, and the opposite actually happened, before that proposal to halve max inflation ATOM was around $10 and staking ratio close to 70%, and now price around $2 and staking ratio below 60%, maybe the best research is actually fixing previous tokenomics changes mistakes? dogemos: ”Coming in and making recommendations and not owning the results and not owning the…

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It wouldn’t hurt to review it, but VP tax was in discussion before aadao. It was around prop 69 or def after prop 82. just ask Jacob (don’t)

Also remember that the AADAO tokenomics research was for a different kind of hub (roadmap/gameplan).

StunZeed: VP tax was in discussion before aadao No, if you check the forum history the first mention of VP tax was a post by @effortcapital because of the AADAO funding to blockworks research where effortcapital worked. I tried to follow up several times with effortcapital who promised several times that the proposal would be put on-chain and implemented, but it never happened. I don’t have to ask anyone because I was one of the main reviewers of that proposal and other research proposals funded by AADAO. In fact, I was one of the main reasons why the AADAO scam was finally discovered and the AADAO dismantled saving millions of $ for the hub. When the AADAO was first announced, I was one of the few against it and warned the community. After two years wasting millions of the hub treasury, I managed to convince youssef to allow community members to apply to join for some positions as well rather than all hand picked by him, he allowed it finally and then some community members including grace (cosmos nanny) joined, and then grace showed all the corruption that then led to the dismantling of the AADAO, and it is in fact grace for the last months the one doing the…

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It feels like there are two questions here, namely (1) do we need to commission research to carry this initiative forward, and (2) what level of ownership should Cosmos Labs and other Hub contributors take over the research and the ultimate direction the new tokenomics is headed. For the first question, imo the answer is an unequivocal yes. There are components of this initiative that Labs (and the Hub community more broadly) simply doesn’t have the capacity or resources to handle well / in a timely manner. Particularly: • Quantitative financial modeling of the flows for ATOM today. E.g., of tokens that are sold today, which user groups (stakers, long-term holders, traders, etc) do those tokens come from and in what proportion? How much ATOM inflation is actually sold vs held (for 3,6,12 months) or re-staked? How does the price of ATOM react to individual sales of X tokens? X*2? X*10? Where does most of the purchaser activity come from today? If you need a reference point for how we’re thinking about this, it’s very similar to what Osmosis originally retained Numia to do a couple of years ago before starting its most significant tokenomics changes • Evaluating historical…

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Honestly, at this point we should just cut inflation to 6%, for example, or at least act based on the data we already have, and have the ICF delegate its tokens to the validators who actually show up and contribute. That doesn’t need months of research. It is a straightforward change and should be done asap.

If you want to bring in tokenomics nerds to build fancy models and long-term frameworks on top of that, go for it. Whatever we do now can always be adjusted later.

But we can’t stay stuck in “planning the plan” forever. It’s time to act, and to act quickly. We don’t need to understand the atomic structure of a chair before we sit on it.

This, agree with your opinion

darkyadoo:

at this point we should just cut inflation to 6%

Why? It is interesting how in most projects people suggest to cut inflation arbitrarily as a quick solution to ‘pump’ the token price. There are countless examples where the opposite actually happened, the price dropped after a large inflation cut. There are very complex dynamics, people stake because the risk-reward makes sense to them, if you cut the inflation/APR so much, then many will no longer find the risk-reward interesting, risk I mean for locking the tokens for several weeks and the volatility of the token. Then, all those stakers for which the new risk-reward is no longer interesting, will unstake, sell the ATOM, driving the price lower and move to better yield opportunities. Moreover, given the lower yield, most users won’t find it interesting and won’t buy ATOM to stake. If we act on the data we already have, then we should change back max inflation parameter from 10% to 20%

Cosmic_Validator: Why? It is interesting how in most projects people suggest to cut inflation arbitrarily as a quick solution to ‘pump’ the token price. There are countless examples where the opposite actually happened, the price dropped after a large inflation cut. There are very complex dynamics, people stake because the risk-reward makes sense to them, if you cut the inflation/APR so much, then many will no longer find the risk-reward interesting, risk I mean for locking the tokens for several weeks and the volatility of the token. Then, all those stakers for which the new risk-reward is no longer interesting, will unstake, sell the ATOM, driving the price lower and move to better yield opportunities. Moreover, given the lower yield, most users won’t find it interesting and won’t buy ATOM to stake. If we act on the data we already have, then we should change back max inflation parameter from 10% to 20% Higher rewards often get dumped or rotated into BTC/ETH, adding sell pressure. It also heavily dilutes people who stay liquid, forcing them to stake just to keep up. Low inflation doesn’t penalize holders. It actually respects both sides: people who want their ATOM…

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Also, I would like to add that 10% of $1B is $100M a year in rewards. That is way too much !!!

Tokenomics designed 4–5 years ago have inevitably become outdated. In crypto, six months or a year is already a full era , and not every project even survives that long. Looking at the current market meta, it becomes clear that buybacks and burns have become standard practice and a well-established trend. Market liquidity is not sufficient to absorb the high inflation built into older models. Cosmos tokenomics has long required an update. Old-school community members remember the attempt to gradually reduce ATOM’s inflation: three proposals aimed at step-by-step decreasing the dynamic inflation. The first proposal barely passed, and even then one large institutional validator tried to intervene during the vote and change the outcome. Today $ATOM has high inflation, especially when compared to other fundamental projects like Solana or Ethereum. Historically, Cosmos lacked smart contracts, a DEX, and liquid staking - for a long time $ATOM simply had no clear value narrative, aside from experimental attempts to reinforce it via Interchain Security, which turned out to be ineffective and economically unviable. After Cosmos shifted its paradigm toward B2B and institutional…

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darkyadoo: Higher rewards often get dumped or rotated into BTC/ETH, adding sell pressure. It also heavily dilutes people who stay liquid, forcing them to stake just to keep up. Low inflation doesn’t penalize holders. It actually respects both sides: people who want their ATOM liquid and long-term believers in the project. You are not forced to stake just to avoid dilution, and you can hold or trade without getting wrecked by high inflation. Today, with ATOM at $2.5, 10% inflation and a 5% commission, we are looking at roughly $6M per year in commissions paid to validators that are automatically sold. I’m not even talking about all stakers. akomartin: ensuring a smooth transition and increasing the token’s value at every stage. akomartin: It’s also important to consider that lower inflation can stimulate upward price action, providing stakers (investors) with better feedback and reinforcing the incentive to stake. akomartin: 4. Increasing Token Value Price appreciation can partially compensate for lower inflation. Inflation is low given the higher risk of staking ATOM, just APR is higher because the inflation is…

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Cosmic_Validator:

dYdX:
-Buybacks started earlier in 2025 cutting rewards for stakers, after around 6 months the price dropped around 50%

You should talk about Hyperliquid and the others

Cosmic_Validator:

Celestia:
-In July 2025 inflation was reduced by over 30%, since then the price dropped from around $3 to below $0.8

In July, the price was already about $1.5, and it had dropped from $20 to $1.5 before that.

Inflation doesn’t make a token pump by itself. High inflation just amplifies the existing trend. If the token is already in a downtrend, it makes the decline worse. If it is in an uptrend, high inflation makes the move even sharper, and in that case, it starts to look very close to a ponzi.
Based on the fundamentals of the Cosmos Hub itself, it doesn’t really make sense to distribute rewards by taking value from non-stakers, in particular LP providers…

$5M to validate mostly empty blocks, you have to admit that is a bit too expensive…

We need a cost-killer !!

darkyadoo:

$5M to validate mostly empty blocks, you have to admit that is a bit too expensive…

You should check the PoG idea at Celestia, validators do much more. First of all, some validators participate actively in governance and help drive research and decisions. Some validators also run relayers and other infra which is expensive. Validators need to be ready and quickly do emergency updates and fixes. Compared to all this what do stakers do? Nothing really, most don’t even vote and leave that governance decision to validators. So Celestia is suggesting PoG, basically the current staking rewards received by validators split it equally amongst all the validators and entirely remove the rewards for stakers, maybe you should study these ideas from Celestia: Proof-of-Governance as the Endgame for LSTs - Research - Celestia Forum

I am speaking about the Hub not about Celestia. And I’m not criticizing validators at all, I know many of them do a lot more than just run a node. What I’m questioning is the cost of validating on the Hub. That is a different issue.

Cosmic_Validator:

So Celestia is suggesting PoG, basically the current staking rewards received by validators split it equally amongst all the validators and entirely remove the rewards for stakers, maybe you should study these ideas from Celestia: Proof-of-Governance as the Endgame for LSTs - Research - Celestia Forum

So you are finally admitting that high inflation is a problem….

Agree here.

There is no concrete proof that reducing inflation is necessarily better.

Take a look at OSMO and NEAR. Both of them have reduced inflation but when markets are down, everyone is dumped almost the same.

By reducing inflation, price will increase but market cap (price*vol) remains same in either case. By staking, people choose to retain the same value of tokens. Whether they sell the rewards or not is totally up to them.

There is no guarantee that just because you reduce inflation, someone is not getting to sell.

In fact, the number of stakers is going to come down if you reduce inflation.

Someone make a comment saying staking ratio is down - you never considering people like Jae or ICF who are constantly dumping tokens.

darkyadoo:

I am speaking about the Hub not about Celestia.

It seems you didn’t read the research, Cosmos hub and Celestia are based on the same PoS design, so those ideas presented by Celestia are totally applicable to the Cosmos hub

darkyadoo:

And I’m not criticizing validators at all, I know many of them do a lot more than just run a node. What I’m questioning is the cost of validating on the Hub. That is a different issue.

You complain about the costs of validating while admitting that validators do a lot more than just run a node. However, you don’t complain about a much larger cost which is the cost of rewarding stakers while they do mostly nothing? I recommend that you take some time to read the Celestia research so that we can have proper discussions here

darkyadoo:

So you are finally admitting that high inflation is a problem….

I didn’t admit that ‘high inflation is a problem’, I just shared a research from Celestia that focuses on rewarding more validators who do a lot of work for the network while rewarding less passive stakers who mostly do nothing

I’m not against cutting inflation to 5%, and I’d be totally fine with validators doubling their commission to keep their revenue

This is not what the Celestia research says, but I will explain it here in simple terms for you and others to understand.

Celestia, based on previous research linked at the beginning of that forum post for reading, claims that the security in PoS comes actually from fees paid to validators and not by staking/slashing because most stake is delegated and not self staked.

Celestia then says that with LSTs and when the bonding rate is 100% ‘then the staking APY isn’t actually the issuance rate; it’s actually zero, since new issuance is paid to all stake proportionally!’ While net issuance to token-holders is zero, validators are paid real issuance from their commission on delegations. Reducing the issuance to stakers to zero. Issuance would then only and solely go to validators, for the service they provide to the network.’

The research then shows an example that with 5% inflation at Celestia, and assuming 5% fees of validators and 100% bonding ratio, the inflation could be reduced to 0.25% by a factor of 20 if only going to validators and validators would still maintain the same revenue and they call this Proof of Governance

This research is a very good initiative . Initially, the most obvious strategy would be for the foundation to offer buybacks! With Atom at $2.50, it’s clear the foundation must be buying Atom through its secret deals! Otherwise, there’s a real problem with the team’s economic expertise?
@Mag ??

I support the research initiative. I think it will bring in incredible value.

However, I do think the outcomes of this research, rather the implementation should be split into multiple proposals: so that voters get to decide which ones to pass or not.

For example: please do not mix up changes in usage/utility of ATOM with changes in inflation rates.

Hi everyone, I just wanted to share a thought about ATOM’s tokenomics; I hope it makes sense (I’m not a crypto professional). My idea is quite simple: what if, when a client requests support from Cosmos Labs for the design and maintenance of a new Cosmos blockchain, they could obtain a discount on Cosmos Labs’ fees if part of their IBC fees are paid in ATOM? For example, let’s say client A receives a Y% discount from Cosmos Labs in exchange for agreeing that X1% of the IBC transfers on its blockchain will be paid in ATOM for a period of X2 months. I don’t want to interfere with Cosmos Labs’ commercial strategy though; this is just an idea. I see several advantages: • From a marketing perspective, each time a new blockchain agrees to use ATOM for part of its IBC transfers, a communication could be released to promote ATOM’s growing utility without needing complex explanations. • As I understand it, Cosmos Labs could recover part of the discount through a potential increase in ATOM’s value, in addition to treating this as a normal commercial incentive during negotiations. • I don’t think this goes against Cosmos’ original philosophy, since any other company…

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Atom is the governance coin of the cosmos ecosystem. It has value for that reason. We do not need to invent value or become something we are not. We value the whole ecosystem and it’s technology and the decentralized nature of it. You can converse with AI and the answer is simple. We need to reduce inflation. Now is the time we are near all time lows. With the nature of ATOM being a PoS chain we will always need inflation. Inflation to secure the network. I propose we reduce dynamic inflation by half but we set a date in the future. If it is 20 to 7% then it would be 10 to 3 1/2%. If the max inflation is already at 10% then it would go to 7% the low end could be 2%. I do not believe we need to be deflationary to succeed. I do not believe we need a maximum supply to succeed. The other thing we can do is propose to require all cosmos chains to allow the option to pay fees in ATOM. I believe that we need to make ATOM an institutional investment. We want people to buy every month as part of there retirement. Now is the time to announce and pass a proposal that reduces inflation . Set around 1 year in the future to allow a rush of investors trying to get the highest interest while they…

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Also we can burn on chain fees to help keep inflation low

Also at this point there will not be a sell off if we lower the inflation rate. Anyone still holding ATOM benefits from being an early adopter. ATOM at a reasonable inflation rate and with on chain fees being burned and the inflation being a yield for the stakers and it being decentralized is a powerful asset. I would rather have than fiat. We need to act. There is too much good news coming in the next 6 months not to be excited for defi. Now is the time

I have trouble seeing how this is different from simply having a single treasury and deciding on set allocations for Growth, Core, Market Ops. as described. It seems simpler to have a single treasury and then allocate in a transparent way.

A single treasury with intended allocations sounds simpler, but in practice it creates three problems:

1. Allocations can be changed easily through governance.

If everything sits in one pool, future proposals can reshuffle funds with minimal friction.

Three separate treasuries make allocations structural, not aspirational.

2. Clear separation reduces conflicts of interest.

Operational spending, growth funding, and market operations each have different mandates, risks, and time horizons.

Separating the treasuries ensures each has its own rules, oversight, and accountability.

3. Better auditability and predictability.

With one treasury, it’s hard for the community to track how much is truly available for each purpose.

Three treasuries give transparent balances, predictable budgets, and cleaner financial reporting.

So it’s not about complexity, it’s about stronger guarantees, clearer governance, and reducing the chance of opportunistic reallocations.

ATOM is NOT the governance coin for the Cosmos Ecosystem. That’s part of the issue.

ATOM is the Governance token for CosmosHub (in my understanding), which is just the hub and not the spoke (any of the 200 chains using the Cosmos stack).

IMO, ATOM should be linked to the stack and NOT only the Hub.

I look forward to ATOM being great again! Great to see this initiative. Cosmos represents one third of the blockchain trilemma and so remains a fundamental and super necessary part of crypto tech. But as we’ve seen: ATOM number go down, things bad. [EDIT:] The process has to have strong community process but consultants are likely necessary to do the hardcore number crunching that is unlikely to be possible without a skilled team getting paid for their time. The deal should be well-structured with payouts in chunks, linked to specified incremental deliverables. Also that token buy-backs and lower inflation are key primitives that are proving themselves throughout crypto and should be implemented for ATOM. I advocate buy-backs go to an ecosystem development fund rather than be burned. However, this all actually seems relatively simple compared to the issue that seems to be missing from this discussion so far: UI/UX This is the place where Cosmos has always lagged other major protocols and paid the price for it. This is partly due to the extra layer of complexity that a modular system inevitably has but it also has to do with - not meant to be trash talk - an over-focus…

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Drooo:

lso that token buy-backs and lower inflation are key primitives that are proving themselves throughout crypto and should be implemented for ATOM. I advocate buy-backs go to an ecosystem development fund rather than be burned.

I completely agree……

Actually it is the governance coin of the cosmos ecosystem. I understand if we imposed a fee to transact through the hub that it can just be side stepped by other chains. I understand that ATOM didn’t benefit from the ecosystems adoption. Why can’t that be fixed with the power we have. We can simply pass a proposal requiring all cosmos chains to provide an option for fees to be paid in ATOM. This would make it the mother of the ecosystem like it was supposed to be and the most sound money as it was meant to be.

Ok I stand corrected. Here is what googleAI says about it… A Cosmos Hub governance proposal cannot force independent Cosmos chains to accept ATOM as a fee payment option. Each chain in the Cosmos ecosystem is sovereign and retains its own governance mechanism, meaning it can decide which tokens to accept for transaction fees. However, the Cosmos Hub governance can implement incentive mechanisms to encourage other chains (called “zones” or “consumer chains”) to accept ATOM for fees. Here’s how such an outcome can be achieved through cooperation and incentive design: Incentives, not mandates: The Hub can create systems that make it economically beneficial for other chains to accept ATOM. Interchain Security (ICS): Chains that use the Cosmos Hub’s shared security (Interchain Security) agree to specific terms approved by Hub governance. These terms often involve sharing a portion of their fees or their native tokens with the Hub validators/stakers. Fee Abstraction Module: Proposals have been discussed and implemented (e.g., on Osmosis) that allow users to pay fees in any token, which is then automatically swapped for the chain’s native gas token (like ATOM on the Hub) on a…

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In essence, while the Hub doesn’t enforce rules on other chains’ internal operations, its governance decisions shape the shared environment, infrastructure, and security models that the entire ecosystem relies upon.

As you’ve said Cosmos chains can’t be forced to allow ATOM to be used for gas but I like the idea generally. Maybe it could be accomplished through incentives or some mechanism where the other chains native token gets bought when ATOM is used as gas.

Beside adding value to ATOM it simplifies UI/UX which is one of the biggest issues Cosmos faces.

I believe it is urgent that we act quickly to pass a proposal to lower the dynamic inflation to something like 7 to 2%. I do not like burning on chain revenues. It is best to give it to the stakers to keep the yield high on ATOM. I believe setting a date in the future is best for this reduction to occur. Maybe a year or two to give everyone time to adjust to the idea. Having passed the proposal is enough to revitalize interest in cosmos. I believe that the Clarity act will pass soon or be on the schedule to pass soon leading the markets to pump. This is the AI explanation of how it can affect defi…..The Digital Asset Market Clarity Act of 2025 (CLARITY Act) primarily helps decentralized finance (DeFi) by providing much-needed legal certainty and exempting non-custodial activities from many existing securities and commodities regulations, while still ensuring essential anti-fraud and anti-manipulation rules apply. Key Benefits for DeFi The Act helps the DeFi industry in several specific ways: Exclusion of Non-Custodial Activities: The Act explicitly states that persons performing certain decentralized activities are not subject to the registration and compliance requirements…

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Update: The tokenomics RFP is live now for review. See the full RFP here: Request for Proposals: ATOM Tokenomics Research

ATOM Tokenomics Renaissance A Revenue-Driven, Deflation-Aware Economic Model for Cosmos Hub TL;DR Cosmos Hub is critical infrastructure, but ATOM still does not capture the economic value it helps create . This proposal outlines a data-driven, governance-friendly tokenomics redesign where ATOM evolves from a purely inflation-funded security token into a revenue-backed, yield-generating, and scarcity-aware economic asset , without compromising decentralization or validator security. Key outcomes: • Sustainable real yield for stakers (10–15%) • Net inflation reduced to ~1–2% • Structural reduction of sell pressure • Clear value accrual narrative for ATOM 1. The Core Problem Today, ATOM tokenomics relies primarily on inflation to fund security. This creates three structural issues: • Permanent sell pressure from emissions • Weak linkage between Hub usage and ATOM value • Staking rewards that redistribute dilution rather than generate real yield As a result, ATOM behaves like a consumable security token instead of a long-term economic asset. 2. Design Principle If Cosmos Hub provides economic coordination, routing, and…

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Makes a lot of sense.

I suggest the buybacks go to an ecosystem development fund rather than burn.

Stakers lock up capital that could be deployed elsewhere. Committing capital is necessary to making anything grow. If stakers don’t hold through bear markets the protocol becomes insecure. You can’t expect people who hold/stake ATOM to be as involved as validators because validators are getting paid commissions from stakers.

It does sound good to have some value capture to ATOM from anyone using the stack, not just from the hub but I don’t know enough to weigh the tradeoffs and it has to be economically viable and create value for the overall ecosystem, not just be a tax on people deploying the stack.

wcgwcg2008: Staking rewards that redistribute dilution rather than generate real yield What do you mean by this? Wealth is transferred from those not staking to those staking, those staking get real yield and those not staking get diluted wcgwcg2008: Permanent sell pressure from emissions If you just cut inflation a lot, the sell pressure will likely be higher from people unstaking and selling large amounts of ATOM wcgwcg2008: Interchain Security (replicated / mesh): $20–35M Did you follow the recent announcement of ICS being sunset? Neutron, Stride left and running their own chains wcgwcg2008: Annual revenues are dynamically allocated: • 40–60% → Buyback & Burn How did you calculate all those revenue estimations? And regarding buybacks, dYdX is a great example, see the price of dYdX since buybacks started early in 2025 and then increased buybacks 3x last month wcgwcg2008: Real yield: ~3–6% What do you mean by this? Inflation is 10%, just APR is higher because the staking ratio went down a lot after cutting the max inflation rate by 50% wcgwcg2008: Assumptions: • Hub…

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Cosmic_Validator:

If you just cut inflation a lot, the sell pressure will likely be higher from people unstaking and selling large amounts of ATOM

People are not staking ATOM because of high staking rewards (inflation). Why would anyone hold/stake ATOM for 17% staking rewards when the token is down 80% from the most recent high and is doing worse than it did during the 2022 bear?

The only people holding/staking ATOM now are people who believe in the project. Any changes to tokenomics that improve the success overall will lead to more holding/staking not less.

If we cannot safely decrease the staking rewards/inflation because stakers are going to sell, then we are completely stuck.

Drooo: People are not staking ATOM because of high staking rewards (inflation). Why would anyone hold/stake ATOM for 17% staking rewards when the token is down 80% from the most recent high and is doing worse than it did during the 2022 bear? This is not necessarily true. Since ATOM gives one of the highest “risk-free” rates of yield, funds or large holders can stake and hedge their downside exposure, collecting one of the highest delta neutral spreads in the space. These actors likely don’t care about pricing downside for ATOM, as it only affects their yield and not their principal. So I personally agree that there’s likely a large subset of ATOM stakers staking for the yield. However one of the key reasons we’ve put out an RFP is to get the data we need to confirm or deny this, and to see how large that userbase is. Drooo: If we cannot safely decrease the staking rewards/inflation because stakers are going to sell, then we are completely stuck. I also strongly agree with this, and would take it a step further to say that if we have a large userbase of ATOM holders that are delta neutral and collecting the spread, those users will leave anyway after…

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Yes, people who stake ATOM are people who believe in the project; it is also possible to farm USDT at a higher interest rate

RoboMcGobo:

However one of the key reasons we’ve put out an RFP is to get the data we need to confirm or deny this, and to see how large that userbase is.

This delta-neutral dynamic makes sense. I had not thought of that. But, yes the question of what proportion of stakers are in fact doing that is key and as we agree, we ultimately need to be making tockenomic decisions holistically, keeping in mind the various participants.

A simple hybrid model: revenue-substitution + safety budget + staking guardrail (for discussion) Hi all — thanks for the kickoff and for the emphasis on asking the right questions and defining trackable success metrics. Based on the discussion here (inflation vs security, buybacks/burn, liquid staking effects, and the need for a clear flow model/dashboard), we’d like to share a hybrid monetary-policy sketch designed to be incremental, measurable, and compatible with the current “mint + staking” logic. • Pillar 1 — Define a yearly security budget target: S_target We frame security funding as a budget (in ATOM/year) rather than debating “a good inflation %” in isolation. Concretely, S_target is the minimum annual amount needed to keep validator economics viable and the chain secure. 2) Pillar 2 — Substitute real revenues for inflation: S_revenus → reduces S_inflation We then treat inflation as a residual: S_inflation = max(0, S_target – S_revenus) Inflation_core = S_inflation / Supply So when Hub revenues grow (Cosmos Stack / services / B2B), inflation mechanically declines without requiring repeated ad-hoc parameter cuts. This matches the “revenue-based…

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Love the dynamic angle - this is a great exploratory path together with the other suggestions as well. Thanks Gregory. Part of the research focusing on data is to be able to answer questions like the ones you pose (i.e. how much is needed for security, what are the existing existing pressures in-out for ATOM) so that the community can think accurate figures for parameters like these.

Thanks for the thoughtful reply, much appreciated.

Just to clarify one or two points that weren’t explicit in my initial message: the hybrid idea is intentionally agnostic about the source of revenues and about the exact security numbers. What matters for the mechanism is observing net, non-circular ATOM flows on-chain over time, rather than relying on abstract accounting assumptions or recycling inflationary rewards.

Also, the goal isn’t to replace the current staking-based inflation logic, but to keep it as a guardrail, while allowing real revenues to progressively substitute issuance in normal conditions.

That’s why i totally agree: having good data on security costs and ATOM in/out flows is a prerequisite for making any of this actionable.

Thanks to everyone contributing here. As a front-office operator running a small validator (Snow-Fall), I’m following this closely—not from a dev angle, but from an economic survival and decentralization lens. I’ll be blunt: the current inflation model creates constant sell pressure . Many validators (not us, yet—we’re funded by other projects) have to sell rewards to cover operational costs. Large validators sell to scale. Holders get diluted. We all know this cycle. So when I look at proposals like Hydro’s (Inflow vaults, hATOM, buy & burn), my first reaction is: finally, someone building a cash-flow engine instead of just talking about “ATOM 2.0” for two years. That said, I have three operational concerns worth addressing: 1. Governance of Treasury Deployments If we’re moving community pool ATOM into vaults that “sell when ATOM outperforms” and “buy back when it underperforms,” who holds the keys? • Is this fully algorithmic (immutable smart contract)? • Or is there a multisig/committee making judgment calls? As a validator, I trust code more than committees. If there’s human discretion, we need transparent governance rules published upfront. 2. hATOM…

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Thanks Olivier. It’s really valuable to have the validator’s on-the-field perspective in this discussion.

Your point about trusting code over humans highlights the need for predictable, rule-based visibility on how security is funded, rather than relying on ad-hoc governance decisions or discretionary treasury actions.

In the hybrid framework I mentioned, that visibility comes from making the required security flow explicit (S_target). Importantly, S_target isn’t a fixed or arbitrary number: it’s constrained by observable economic anchors, such as a minimum viable yield for validators and a macro security budget derived from the value actually secured by the Hub. Governance only adjusts those inputs, and the required issuance follows automatically in code.

Operational tools like vaults, buybacks, or opt-in yield strategies can improve how rewards behave in practice, but a policy layer is still needed to define, in a rule-based way, how much issuance is actually required.

Gregory_C: Operational tools like vaults, buybacks, or opt-in yield strategies can improve how rewards behave in practice, but a policy layer is still needed to define, in a rule-based way, how much issuance is actually required. Agreed. There needs to be a fully mechanical system for token inflation/issuance/security, etc. based on clear metrics (that can be tweaked by governance as needed) in the manor Gregory lays out. Other incentive structures could be valuable but would need to rest on top of a base layer of the most fundamental tokenomics metrics. Vaults to incentivize validators to hold vs sell sound great but it sounds more like an ecosystem thing not necessarily something at the ATOM protocol level. There would need to be competing models to find the best incentive models over time. Liquidity fragmentation is an issue like klendhaar said but again that sounds more like it gets solved by cultivating an ecosystem. Buybacks seem different to me, like they could potentially be woven into the basic tokenomics to a greater degree. klendhaar: If we’re moving community pool ATOM into vaults that “sell when ATOM outperforms” and “buy back when it…

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I think we largely agree here. Burn-only narratives tend to shortcut tokenomics discussions because they focus on stock effects without addressing the harder questions around security funding, validator sustainability, or future dilution.

What enables a truly mechanical system is starting from clear, observable flow metrics: how much security costs per year, how much real revenue comes in, and how much issuance is still required as a residual.

In that framing, buybacks aren’t a policy or a trading tool, they’re simply one way to convert off-chain revenues into on-chain inputs. Once those inputs are observable, the policy layer’s role is to reduce issuance deterministically, not to manage price.

Vaults and other incentive mechanisms can then live at the ecosystem layer, experiment, and compete, but they rest on top of a base-layer rule that keeps security funding predictable and non-discretionary.

Reposting here:

Request for Proposals: ATOM Tokenomics Research Research Workstream

The monetization model already exists. We’re just not capturing it. At Cosmoverse 2025, Cosmos Labs said ATOM should benefit from “licensing stack-oriented products to banks and institutions.” But they didn’t say how. Here’s how. The problem everyone’s dancing around: 200+ chains use Cosmos SDK. Fortune 500 companies, governments, banks—all hiring agencies who charge $500K-$5M to build on Cosmos. Figure is doing $9.9B in tokenized credit on Provenance. Ondo has multi-billion treasuries. SWIFT, …

ATOM is a Critical Patient - Let’s Stop Debating the Hospital Menu I’ve been reading Gregory_C ’s proposals on mechanical systems and Drooo ’s interventions on the ecosystem layer carefully. However, allow me to use an analogy to recenter the debate. The Emergency Diagnosis ATOM is currently a patient in critical condition. • Continuous hemorrhage: Relentless sell pressure from validators. • Weak vital signs: Near-zero retail/institutional interest. • Failing immune system: No effective value capture from the 200+ chains using the Cosmos SDK. • Life-threatening prognosis: Fierce competition from Solana and ETH L2s. And here we are, debating the post-recovery dietary menu. Life Support First When jacksteroo says, “the monetization model already exists, we’re just not capturing it,” he is making the correct diagnosis. But before building a sophisticated $10-15M licensing model (as discussed previously), the patient must survive the night. Immediate Stabilization Protocol: 1. Stop the Bleeding (Within 30 days) • Temporary freeze of inflation at the current rate. • Emergency mechanism: Mandatory 90-day vesting on 50% of validator rewards.…

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Some proposals may come from Telegram

I certainly agree with the critical patient metaphor and the urgency of turning the ship asap but I don’t see the opt-in ATOM vault for stakers as a way of stopping the bleeding for the reasons below.

klendhaar:

3. Reducing Validator Sell Pressure (New Idea)

Here’s a thought: what if we gave validators an opt-in mechanism to redirect their commissions into a yield-generating vault (like Inflow) for a fixed period (say, 30–90 days)?

If this were implemented, that would mean validators would be choosing between opting into the ATOM vault to earn the yield or selling as usual and farming yield elsewhere with the proceeds. So, the ATOM vault would have to be more compelling than having USDC in hand and looking for yield anywhere else. I don’t see how we can offer alpha in that regard, especially since it would be locked up so they are dealing with opportunity cost. It would basically mean we are competing with DeFi specialists across the whole crypto ecosystem. That strikes me as a losing battle.

Responding the the more recent post separately.

So I generally agree with phased approach and most of the proposed elements. klendhaar: • Stop the Bleeding (Within 30 days) Adjusting inflation rates is popular and important but it should be done on a schedule instead of all at once because yes, the patient is critical but “First, do no harm” still applies. Case in point: As discussed in the other tokenomics “kick-off” thread that there are a significant number of stakers that are delta-neutral on ATOM price and selling the staking rewards as ‘free-money’ and there is risk of a big sell-off if those people are disenfranchised by a major and abrupt change in staking rewards. They need to be phased out obviously but not in a way that crashes the ATOM price violently. Similar reasoning applies to a vesting schedule of staking rewards. Overly aggressive adjustments could make more people leave than necessary. ICF selling of BTC/ETH into ATOM is definitely the low-hanging fruit and should be started immediately at a set rate. klendhaar: • Emergency Transfusion (Within 90 days) Agree with all this. Mechanical buy back seems key to capturing value to ATOM. That could be burned or…

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Thanks for the quality and depth of the points raised here, the different perspectives (business, validator operations, urgency, mechanics) have been very illuminating to me. At this stage, here’s where my own thinking stands. The Medium article is helpful in making potential revenue paths around the Cosmos stack more concrete, especially in a discussion that can otherwise remain abstract. That said, it’s important to distinguish the level at which it operates. It mainly frames a business model, starting from a fixed inflation defined ex ante and then exploring how enterprise revenues, buybacks, or distributions might offset or reduce its effects. This can certainly improve outcomes, but it doesn’t fundamentally change how monetary policy itself is defined. What the recent exchange around urgency and validator stress highlights, and where concerns raised by Drooo around yield-oriented solutions seem entirely legitimate, is that a more basic question remains open: what level of security does the Hub actually need, and how much ATOM per year is required to sustain it? In practice, this question seems inseparable to me from validator viability, participation, decentralization,…

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Good point that inflation rate in relation to baseline security requirements is a more fundamental question than growth and value accrual to ATOM because they are at the very base of the protocol layer.

That can perhaps be the initial focal point of community discussion and researcher proposals.

What is the lowest inflation rate possible without compromising security.

(Reminds me to go restake my staking awards)

@RoboMcGobo a new question regarding the data. Structural Downgrade Risk & The Need for a Catalyst 1. Factual Status (Data Snapshot) Analyzing current market data, ATOM’s safety margin has become statistically critical. We are currently teetering on the edge: • ATOM ( #95 ): Market Cap ~$1.018B • LBTC ( #101 , first unranked): Market Cap ~$960M • The Safety Gap: Only $58 Million (approx. 5.7% ) Therefore, an adverse variation of less than 6% (either a drop in ATOM or a mechanical rise in competitors) is enough to trigger a mathematical exit from the Top 100. 2. Competition Analysis: A “Passive” and “Mechanical” Threat Looking at the composition of projects ranked #96 to #110 pushing behind us, the danger isn’t just selling pressure on ATOM, but a mechanical surge from pursuers: • The BTC Beta Effect (LBTC #101 , SOLVBTC #101 ): These are Bitcoin Wrappers. If BTC appreciates by March, their Market Cap rises mathematically . They will overtake us without needing specific buying volume, simply through correlation with Bitcoin. • The RWA/Yield Effect (USDTB #105 , OUSG #107 ): These assets do not suffer from bearish volatility. They gain market…

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Roadmap 2026: The Engine is Ready, But Where is the Business Model? I’ve just completed an in-depth analysis of the 2026 roadmap. As a validator actively engaged with the Hub daily, I feel compelled to share a clear assessment, at the crossroads of tech and investment. The Technical Assessment: Hats Off. It must be stated clearly: technically, this roadmap is excellent. The work on performance (5,000 TPS, 500ms blocktimes), BlockSTM integration, the IAVLx rewrite, and native EVM/Solana openness is exactly what the stack needed to remain competitive. Kudos to the engineering teams. Cosmos Labs proves here that they know how to build the best blockchain engine on the market. The Economic Assessment: The Great Absentee. However, coming out of our recent discussions on token economics, I cannot help but see an elephant in the room. For ATOM’s value capture, it’s yet another missed opportunity. The analogy that emerges from our analyses is this: Cosmos resembles a brilliant startup with a great product… but one that hasn’t found its business model yet. The 2026 roadmap significantly improves the product (the software, the stack, interoperability), but it absolutely…

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atom tokenomics simulator1920×1080 262 KB

Hello Everyone,

This thread has been up for a while, and we’ve been thinking about how to contribute something concrete to the tokenomics research process.

As part of that, together with Silk Nodes, we built an ATOM TOKENOMICS SIMULATOR > https://atom.silknodes.io/ to help explore different design paths and compare outcomes under varying assumptions (adoption, staking behavior, Hydro dynamics, etc.).

The intention is to support the research with something hands-on, a way to test scenarios and reason about trade-offs rather than debate them abstractly.

Happy to iterate on it and add parameters that are most relevant to finding the best possible tokenomics design.

I agree with @klendhaar that the tech roadmap looks great but the question of ATOM value accrual is equally fundamental to Cosmos’ success and needs to be pursued with the same urgency as tech updates. Quite frankly this has been the biggest - and its a big one - blindspot for Cosmos for a long time and it the main reason the broader crypto community scratches their head and shrugs when the topic of Cosmos comes up and ultimately doesn’t take Cosmos seriously as a place to build. We have the open request for tokenomics proposals so there is movement on the subject but the urgency level is not the same as tech improvements which unfortunately fits the profile of the Cosmos stereotype of being all about splendid tech with no sense of creating an economy around said tech. The ecosystem has obviously deteriorated severely. My argument is that this is because capital investment in an ecosystem with a down-only token looks to founders like guaranteed death for their project. If people think Cosmos is some ivory tower project where all we care about is an amazing tech stack, instead of a holistic blockchain protocol and ecosystem - which has to by nature include capital formation…

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This look great. Looking forward to playing with it.

I agree that value accrual and capital formation are fundamental, and that without credible economic incentives, no amount of technical excellence will make Cosmos competitive in the long run. The way I currently frame the problem is in three layers. The technical roadmap defines what becomes possible in terms of adoption and usage. Monetary policy defines how ATOM integrates flows once they exist, while remaining robust in their absence. What feels increasingly important and still under-articulated is the middle layer in between: the economic strategy that connects an open, sovereign stack to concrete and recurring economic activity. In Cosmos’ case, this matters even more because value capture is not mechanical by design. The openness of the stack and the sovereignty of chains are long-term strengths, but they also mean that cash-flows cannot simply be assumed to emerge automatically from adoption. The paths by which the Hub becomes economically relevant (through coordination, security, trust, or interchain functions) need to be made visible, even if they remain optional and non-coercive. From that perspective, the roadmap, tokenomics research, and value accrual are not…

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