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 on the dev side and on more technical users. For Cosmos to have a vibrant ecosystem, it has to attract as wide a range of protocols and those protocols need to be able attract more and more non-technical users over time.
Ultimately using the Cosmos eco has to feel as simple as using the Solana or Ethereum eco.
The key challenges for Cosmos UI/UX as I see it:
Note: I’m quite non-technical so not sure how technically viable any of these suggestions are:
Just brainstorming. It seems like all the Cosmos interoperability tech can become a super-power overtime and maybe underly a lot of bridging-type activity across other ecos as well as Cosmos.
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 decentralized exchange. A similar module could be adopted by other chains via their own governance.
Relayer Reimbursement: A mechanism has been proposed where relayers (which facilitate communication between chains) are reimbursed with ATOM from the Hub’s community pool for fees paid in ATOM on other chains. This incentivizes other chains to accept ATOM as a gas token.
Community Pool Grants: The Hub’s community pool, controlled by ATOM governance, could offer grants to chains that implement specific features like accepting ATOM for fees.
In summary, while the Hub cannot issue a direct mandate, it can use its governance and economic power to create a system where accepting ATOM for fees is an attractive, voluntary choice for other chains.
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 designed for centralized financial intermediaries. Exempted activities include:
Developing and publishing software code for DeFi protocols and applications.
Validating network transactions (e.g., mining or staking to secure a blockchain).
Providing computational work or running a node for a blockchain system.
Providing non-custodial user interfaces (like front-end websites or apps) that do not take custody of customer assets.
Developing wallets for blockchain networks.
Legal Certainty for Developers: By clarifying that “non-controlling” software developers and service providers are not to be treated as “money transmitters” under state and federal law solely for their technical contributions, the bill offers a “safe harbor” that protects builders from legal peril faced in the past.
Clear Jurisdictional Lines: The Act separates a “digital commodity” (regulated by the CFTC) from an “investment contract asset” (initially under SEC oversight during the fundraising phase). This distinction helps DeFi projects understand which regulatory body has authority over their tokens and under what conditions, reducing the current regulatory ambiguity and “regulation by enforcement”.
Pathway to Decentralization (Maturity): The bill establishes a framework with objective criteria (e.g., no single person or group controls more than 20% of outstanding tokens) for a blockchain system to be certified as “mature”. Once certified as mature, a token transitions from being treated as a potential security to being regulated as a commodity, providing a clear path for projects to graduate from SEC oversight to CFTC oversight with lighter requirements.
Protection for Self-Custody: The Act reinforces the right of individuals to use hardware and software wallets for the lawful custody of their own digital assets and to engage in direct, peer-to-peer transactions.
Important Considerations
While the CLARITY Act offers significant benefits, it is important to note:
Anti-Fraud Authority Retained: The exclusions for DeFi activities do not limit the SEC’s or CFTC’s anti-fraud, anti-manipulation, or false-reporting authorities.
Senate Review: The CLARITY Act passed the House but still faces an uncertain path in the Senate, where a competing proposal (the Responsible Financial Innovation Act or RFIA) is also being considered. The final law is likely to be a compromise.
Update: The tokenomics RFP is live now for review. See the full RFP here: Request for Proposals: ATOM Tokenomics Research
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
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.
If Cosmos Hub provides economic coordination, routing, and security, it should capture a portion of that value in ATOM.
The goal is not radical change, but economic alignment:
Users pay for Hub-level value
Revenues accrue to ATOM
Inflation becomes a secondary, not primary, mechanism
Potential annual ranges (conservative assumptions):
IBC routing & settlement fees: $25–40M
Interchain Security (replicated / mesh): $20–35M
Hub-level coordination & services: $10–20M
Total on-chain: $55–95M / year
Enterprise Cosmos SDK & Interchain Stack services: $15–25M
Institutional integrations & partnerships: $10–20M
Total off-chain: $25–45M / year
Key constraint: off-chain revenue is used exclusively for market buyback of ATOM.
Annual revenues are dynamically allocated:
40–60% → Buyback & Burn
20–30% → Strategic Treasury Reserve
10–20% → Validator & security incentives
This creates a deflation-aware floor mechanism without eliminating flexibility.
Circulating supply: ~390M ATOM
Inflation: ~10%
Annual emissions: ~39M ATOM
Real yield: ~3–6%
Assumptions:
Hub revenue: $100M / year
50% allocated to buyback
ATOM price reference: $10
Results:
Buyback & burn: ~5M ATOM / year
Base inflation reduced to: 3% (~11.7M ATOM)
Net inflation: ~1.7%
Sell pressure reduced by more than 50%.
Sources of return:
Inflation yield: ~6–7%
Revenue share: ~4–6%
Deflationary upside: ~3–5%
Total real yield: 10–15%, driven by actual economic activity.
Validators retain stable, predictable income
Security budget becomes partially revenue-funded
Lower governance risk around inflation changes
Transition is phased and opt-in, minimizing market shocks.
Under this model, ATOM becomes:
A yield-bearing asset
A partial revenue claim on Cosmos Hub
A scarcity-aware token with downside protection
Comparable outcome:
ETH-like issuance discipline
But with explicit revenue routing
If selected under the Tokenomics Research RFP, the work would include:
Full open-source tokenomics model (supply, revenue, yield)
On-chain and off-chain revenue simulations
3–5 year supply & APR projections
Governance-ready parameter ranges
Draft governance proposals & rollout plan
Cosmos Hub does not need to compete with app-chains.
It should charge rent for connecting them.
ATOM should represent that rent.
This proposal aims to make ATOM economically self-sustaining, credible to institutions, and attractive to long-term participants — without sacrificing the values of Cosmos.
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.
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
If you just cut inflation a lot, the sell pressure will likely be higher from people unstaking and selling large amounts of ATOM
Did you follow the recent announcement of ICS being sunset? Neutron, Stride left and running their own chains
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
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%
This is a very big assumption 
how did you get to that $100M estimation?
Currently ATOM is around $2 not $10
You are missing here the new sell pressure from large amounts of ATOM being unstaked and sold. You are assuming that everyone will stay with the ATOM staked after you cut yield so much, but that’s very inaccurate, people will unstake, sell and find better opportunities
Totally against wasting ATOM for this sorry. You seem not to even be aware that ICS was sunset and many other key points. If we are going to spend a lot of ATOM we need a very professional, quantitative consulting firm that teaches us something new and valuable for 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.
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.
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 they’ve devalued their yield by selling ATOM staking rewards and can find a better hedged opportunity elsewhere. So while we do want to take these users into account and try to find a happy medium that keeps as many of them engaged as we can, we can’t build an entire strategy around trying to prevent them from selling ATOM, because that’s an inevitability as long as ATOM is in decline.
Yes, people who stake ATOM are people who believe in the project; it is also possible to farm USDT at a higher interest rate
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.
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 constraint” direction of the research kickoff.
3) Pillar 3 — Keep the current inflation curve as a guardrail when staking is too low
We agree with concerns about staking ratio and security. So we propose preserving the existing inflation mechanism as Inflation_guardrail (the familiar curve tied to staking), but only as an emergency floor when:
bonded_ratio < stake_threshold
Final inflation becomes:
Inflation_eff = max(Inflation_core, Inflation_guardrail)
This means:
In normal conditions, revenue-substitution drives inflation down.
In stressed conditions (low staking / high uncertainty), the chain automatically falls back to the known guardrail to protect security.
Why this is useful vs “just burn / just buyback”
Buybacks/burn can reduce dilution, but they don’t automatically create a security-funding rule. This hybrid approach makes the link explicit: real revenues replace issuance while a staking guardrail remains to prevent under-staking.
What we’d like feedback on (aligning with the “right questions” theme)
1. How should we define and measure S_revenus in a way that’s auditable/on-chain? (i.e make off-chain revenue on-chain)
2. What should be governance inputs for S_target and stake_threshold?
3. What dashboard/diagram would best help the community track these flows and outcomes?
Happy to share a concrete numeric example and suggested metrics if helpful.
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.