[ESSAY] Cosmos Hub: The First Democratic State of Capital

One member of our community has recently shared with us an essay regarding the Cosmos Hub’s particular position in the legal jurisdiction framework. We though this work was definitely worth being published to the whole ATOM community as it is describing an interesting vision which we could all learn from.

Introduction:

Jean-Jacques Rousseau asserted that, in the face of the natural tendency of situations to threaten equality, it is essential for laws to work tirelessly towards its preservation. Historically, nations have experienced numerous revolutions, often motivated by the quest for equality and freedom - ideals now deeply ingrained in our collective understanding of the state.
Blockchain technology constitutes a new field of study that would have captivated thinkers such as Rousseau, John Locke, or Montesquieu. It proposes new forms of governance, envisions a reorganization of state structures, and could lead to new ideological revolutions and the redefinition of boundaries.
The aim of this study is to explore how democratic, political, and international principles can interact with these emerging technologies. This is to better understand the key issues posed by these new actors: decentralized governance, citizen participation, and transparency to combat censorship, encourage collaboration, and envision a world where moderate capitalism would be regulated by new decentralized and sovereign entities.
Our analysis will focus on the Cosmos Hub, which, since its creation five years ago, has continued to develop as a major player in the public interest through the construction of the cosmos while refining a system of decentralized governance, now paving the way for new territories.

I: The Notion of State

The notion of the state is fundamental here to discuss the possibility for these blockchain entities to establish themselves as genuine state actors. Even more intriguingly, we will observe that some monopolistic actors (Google, BlackRock, etc.) could be perceived as equivalents of states due to their scale and, especially, their distinctive attributes. To be recognized as a state entity under international law, three essential criteria must be met: the possession of a well-defined territory, the presence of a determined population, and the exercise of sovereign authority over this population and territory. Let’s delve into these criteria to determine what these new state actors could be.

  • A: The Territory

In the framework of international law, territories are usually classified into three main categories: terrestrial, aerial, and maritime, each possessing specificities defined by treaties between nations. However, this study suggests reconsidering the notion of territory by focusing on the concept of useful space. Space is deemed useful if it supports activities such as construction, agriculture, navigation, or overflight, thereby attributing notable intrinsic value to traditional territories. From this perspective, we consider broadening the definition of territory to include new spaces, such as financial, digital, or data-related territories. It is important to remember that this conception of useful space is a necessary abstraction to define our new states.
The primary objective of the Cosmos Hub is to function as a capital reserve, immobilizing Atoms to offer security and financing in exchange for returns. This model is similar to that practiced by commercial and institutional banks, which offer returns in exchange for the liquidity provided by capital. How then can the financing and security offered by the blockchain be considered a territory? By applying our new definition of territory, useful space is defined here by these capitals seeking to secure or generate financing in exchange for interest, thereby transforming capitals into exploitable territory. Just as banks create a territory by concentrating capital for financing, the Cosmos Hub, by allowing the immobilization of assets for security and financing, also establishes a known territory known today as the AEZ (Atom Economic Zone).

  • B: A Population

Continuing our exploration of the characterization of a state through the prism of the Cosmos Hub, we address the notion of population. In the context of international law, the population of a state includes not only its nationals but also foreigners present on its territory, i.e., those who use this space.
In our analogy where the territory is envisaged as a capital space, who are the users of this space? These are the entities that borrow capital in exchange for a return, namely, companies that finance themselves through commercial banks.
The Cosmos Hub offers similar services in terms of capital mobilization, notably through Interchain Security. This feature allows for the shared security of the various chains connected to the Hub by Atom capital. The arrival of Partial Set Security introduces additional modularity, allowing chains to choose their degree of dependence and alignment with the Cosmos Hub (domestic or foreign). This approach to capital management and blockchain security reflects a new form of “population” in the capital space, where companies and blockchain chains interact and use the Hub for financing and security purposes.

  • C: Sovereign Authority

The key element to highlight here is the notion of sovereignty. For an entity to be recognized as a state, it must exercise effective control over its population and territory, while having the capacity to manage its entire state sphere. However, this sovereignty is relative, being tempered by international law. Without delving further into definitions, let us focus on the realm of capital.
Do banks completely dominate capital and businesses?
While their control is not total because it is regulated by states and their laws, it remains sufficiently significant to exert major influence on the sector, thus allowing the largest financial institutions to be considered major actors in this model of statehood of capital. Indeed, if we adopt this perspective, considering useful space as territory, entities such as BlackRock and other centralized capital management institutions can be seen as states.
The form of governance of a state matters little for its qualification as such; what truly counts is its recognition as a sovereign entity by other actors in international law. Thus, traditional state theory is insufficient to define a democratic state in the modern context, which the Cosmos Hub seeks to address.
The aim of this section is to highlight the ambiguity of the criteria defining a state actor and, by extension, a global power, by showing how the redefinition of territory can blur these boundaries. The crucial question now is whether we will allow centralized entities to govern these territories as sovereign authorities, or if we have the opportunity to lead a revolution using blockchain technology.

II: A New Model of Social Organization

It is clear that the main issue lies in the creation of a decentralized state, promoting a participatory and inclusive governance model, aiming to align more closely with the principles of a democratic state rather than those of a tyrannical state. To address this theme, it is essential to briefly examine the history of different political systems. Then, we will analyze the place of the Cosmos Hub in this context and explore the advantages and disadvantages of its governance system.

  • A: Exploring the Best Mode of Governance

The quest for an ideal governance model has long occupied the minds of philosophers, each presenting their own vision of a society organized optimally. This search for a middle ground between different forms of government and citizen engagement finds its roots in the thoughts of Aristotle, Montesquieu, and Rousseau. Aristotle introduces the notion of Politie, aiming for a balance between democracy, which can be vulnerable to special interests, and oligarchy, characterized by power concentrated in the hands of an elite.
This aspiration for harmonious governance echoes Montesquieu’s theory of the separation of powers, designed to avoid excessive concentration of power by distributing it among the judicial, legislative, and executive institutions. Rousseau, on the other hand, values the social contract as the cornerstone of governmental legitimacy, emphasizing that sovereignty must emanate from collective will. These theories underscore the importance of political balance to prevent the accumulation of power and promote active citizen participation, offering a framework that continues to influence contemporary democracies.
In summary, power must be distributed among various branches and belong to the majority to truly serve the common good and avoid pitfalls related to special interests. The judiciary must be independent and have the ability to interpret the law, while the legislative process should be designed to operate without direct interference from the executive. Meanwhile, the executive is responsible for implementing the law.
But where do blockchains stand in this philosophical landscape and these democratic ideals?

  • B: The Cosmos Hub, Aristotle’s Politie

The Cosmos Hub adopts a delegated governance model, based on the proof of stake principle. Token holders are rewarded through inflation and Atom token rewards. Validators, on the other hand, receive a portion of these rewards for managing their infrastructure (5%), with the aim of staying in the top 180 to benefit from inflation. Regarding governance, proposals to modify the code or manage Cosmos Hub liquidity depend on both delegators and validators. Delegators vote with their delegation powers and according to their conscience, while validators vote with their own stake as well as that of delegators who have not voted, with voting power being proportional to the amount of tokens staked.
Several points deserve highlighting. Taking Rousseau’s perspective, this system partially applies democratic theory since only those holding Atom tokens have governance power, proportionate to their investment. This introduces considerable variation if we wish to evoke a democracy where all citizens would have voting rights. This system could be described as a census-based democracy, requiring token ownership to participate. However, this eliminates inactive citizens in governance, implying that only those interested in the decisions of this “state” participate, thus approaching Aristotle’s Politie, where rulers are motivated by the collective interest of the ecosystem.
From Montesquieu’s perspective and the separation of powers, delegators, who vote on proposals (the legislative branch), and validators (the executive branch), who execute the code, represent a partial application of this theory. However, the confluence between the executive and legislative, observable in democracies to ensure cohesion, is also present here, with validators having a crucial role in maintaining infrastructure and legislative power.
However, concerning the judicial branch, its representation is less evident. The inherent transparency of the blockchain could serve as a judicial mechanism, allowing public oversight of every action and facilitating the detection of abuses or fraud by external parties.
Regarding legislative initiative, although theoretically open to all, in practice, the strongest technological and financial teams exert predominant influence. This raises the question of the need to more strictly regulate the responsibilities of entities funded by or through the hub, a reflection that would deserve further development.
But are these mechanisms sufficient? What is the best way to ensure balance within a state, that is, how to move closer to a level of fair democracy? The answer to this question is complex and, by nature, always imperfect. This is precisely what characterizes the field of politics: managing compromises between parties with often divergent interests is what gives these systems their resilience, sometimes at the expense of speed.

III: Atom One

Atom One is a fork of Gaia, adopting a minimalist approach that manifests in two ways. Firstly, it operates as a political party seeking to directly influence Gaia. Secondly, it materializes through the creation of its own layer 1, acting as a proof of concept. Let’s begin by exploring the political aspect of this project.

  • A) Atom One as a Political Party

What role do political parties play within a decentralized entity? Furthermore, how can these parties be represented within Atom? These two questions will be the focus of our analysis. Let’s start by examining the utility of these political systems before delving into implementation methods.

  1. The Importance of Political Parties in a Democracy: Political parties play a central role in maintaining the democratic balance of our societies, serving as foundations to ensure diversity of opinions and the pursuit of consensus. In a democracy, the existence of a balance between different ideas and oppositions is crucial to reaching a fair agreement. By analyzing various political groups and their interactions, we understand how ongoing debates help formulate the best possible compromise. This constant movement, marked by alternating political orientations, illustrates the pursuit of an ideal society that often fails to fully satisfy the expectations of all citizens.
    In contrast to dictatorial regimes, where a single vision prevails without dissent, limiting the plurality of perspectives, democracies highlight the multiplicity of viewpoints. In these systems, political parties advocate for various causes, thus fostering a more balanced power sharing and preventing its concentration, whether in good faith or not. Faced with the challenges posed by the emergence of new digital states, the role and impact of political parties acquire a novel dimension. Despite the hopes of decentralization brought by blockchain technology, there is often a tendency towards the predominance of a single vision, led by a minority and leaving little room for internal dissent. This reality underscores the need to maintain a balance of powers, a principle cherished by Montesquieu, and to perpetuate the ideal of popular sovereignty, as advocated by Rousseau, in pursuit of a fairer and more representative society.

  2. The Case of Atom: One How can a political party be created within a blockchain like Cosmos Hub? The answer lies in liquid staking. By studying the case of Stride, which allows liquid staking of Atom and other tokens, it is noted that tokens are allocated to validators according to the choices of the Stride team. Atom One plans to develop its own version of liquid staking (phAtom), where Atoms would be entrusted to validators based on Atom One’s governance directions. In this way, validators aligned with Atom One’s goals would receive these funds, influencing Atom’s evolution.
    Users who stake their phAtom in DeFi could be assured that validators representing them would vote in accordance with Atom One participants’ preferences. For validators, this would mean diversification in governance, driven by their willingness to adapt their views to those of Atom One in order to attract delegations and be selected by Atom One holders as faithful representatives of the initiative’s values. Atom One might not remain the sole example of political ideas embodied within Gaia through this means. It is plausible that other liquid staking projects, such as Stride, pSTAKE, or new actors with specific visions, will use liquid staking as a means to create a political party.

  • B) Atom One as a New Hub

It is now crucial to understand what differences in values have motivated the desire to create a new fork of the Gaia chain to represent an alternative vision, before examining how this fork will be realized.

  1. The Heart of the Divergence: Is it appropriate to classify Atom One as a political party when members of this group are currently in the process of developing the fundamental principles of their own structure? Atom One goes beyond the scope of a mere political force to also present itself as an independent center, committed to spreading its ideas through its own economic ecosystem.
    To achieve this goal, Atom One is developing its own layer 1 infrastructure, thus laying the groundwork for its ideology. The main difference in approach concerns the ambition to ensure that the Atom One blockchain and its associated cryptocurrency, Atone, are primarily dedicated to security. Any introduction of new features will have to go through ICS chains, which will compensate validators for the economic security they provide. Atom One’s vision of liquid staking is also distinctive: Atone can only be staked liquidly in exchange for PHOTON, which will act as a currency within the ICS chains. In this way, Atone could be seen as an entity strongly focused on security, virtually invulnerable, with highly restricted attack risks, and using a separate currency to facilitate transactions within a defined economic space.

  2. GovGen, the Constituent Assembly: There is much to be said about Atom One’s current development, but let’s focus specifically on a crucial point for our conception of a Democratic Digital State. An assembly dedicated to governance is being formed with the primary mission of creating a constitution in anticipation of Atom One’s launch. This Constituent Assembly is formed by those who rejected the proposal to decrease Atom’s inflation. This initiative could be seen, in the future, as a pivotal moment, similar to the French Estates-General of 1789, initiated to transform rules through law, represent the majority, and establish sustainable norms within an Assembly tasked with drafting, writing, and validating this constitution, aiming to establish the foundations of this State and drawing inspiration from the Declaration of the Rights of Man of 1789.
    GovGen is thus this Constituent Assembly, which is tasked with defining the basic rules of its system. These rules must receive almost unanimous approval, embodied in a Constitution amendable only by a considerable majority. It must guide the Atom One blockchain, by inscribing its essential principles in the indelible code of the blockchain. After all, what better way to ensure security than with a constitution that is both robust and enduring? The hub itself could benefit from the adoption of a constitutional framework, adding an additional layer of security. Or should we let the hub evolve in a shifting political context, always seeking better compromises? Ultimately, it is up to the hub to forge its identity. Political parties and Atom holders are the ones who must determine the direction of the Cosmos Hub, through a governance system that sets it apart from centralized structures, which exploit their financial domains to the detriment of system users.

Conclusion:

By studying the spheres of political philosophy, statehood, and technological innovation, this study aimed to shed light on the complexity and ambition of the Cosmos Hub as a precursor to a new democratic state of capital. Through a thorough exploration of its governance mechanisms, its ability to redefine state concepts, territory, population, and sovereign authority, we have uncovered the promises and challenges inherent in the conceptualization and implementation of such digital states. The Cosmos Hub, by elaborating on principles of decentralized governance, shows a future where democratic participation and collective sovereignty could be strengthened by blockchain technology. However, the questions raised by Atom One’s experience remind us of the importance of ongoing reflection on the balance of powers, inclusion, and representativeness within these new digital spaces. Atom One’s initiative, with its willingness to forge a constitution and rethink governance through active participation via GovGen of a constituent assembly, illustrates the revolutionary potential but also the complex challenges of digital democracy. This approach raises fundamental questions about the future of our societies and how we envision power, governance, and citizenship in the digital age. In conclusion, the Cosmos Hub embodies both a bold vision and a living laboratory for future democratic experiments. It invites us to reimagine the foundations of the state and governance in an increasingly digitized world, while reminding us of the crucial importance of civic engagement, fairness, and transparency. Drawing inspiration from the philosophies of Rousseau, Locke, and Montesquieu, we are invited to participate in the creation of a new world order, where blockchain technology could play a central role in redefining our political and social structures for the common good.


All credits to this essay are to the Original Author:
Vittecoq Quentin
Jurist apprentice at the University of Toulon (France)


We thank everyone who took the time to read this entirely.
If you did, please take some time to share your thoughts below!
Bests,
Govmos.
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