Hi,
Firstly, I apologize for my poor English proficiency.
I’d like to delve into the role of Atom as a form of money. Here’s my humble opinion; no offense intended (I’m a big Atom and cosmos supporter)
A thorough theoretical discussion took place here: Splitting ATOM: Money or Governance?. In my view, Atom isn’t well-suited as a money, and it’s crucial to clarify its role.
The primary role of Atom is to secure the blockchain. It’s evident that using Atom as a money would compete with its primary function. As a money, Atom must be liquid, but as an asset ensuring security, Atom needs to be staked. Liquid staking could be considered as a solution, but it comes with its challenges:
Distribution Issue:
Supply Limitation: If Liquid Staked Tokens (LST) were to become a currency, their supply is voluntarily limited. There’s no logical reason to limit the money supply to 25% of the Atom bonded supply. In fact, it makes no more sense to align the money supply with the security needs of the network.
Minting Process: LSTs are mintable by users it’s not manage by the hub. This means that to invest the Cosmos Hub, one must mint Atoms or wait a considerable time to increase the community pool value through community taxes and then spend those Atoms.
Some may argue that the community pool is sufficient, and Atom’s value will increase, allowing for investment. However, the value of money increases only through utility creation. With the Cosmos ecosystem expanding rapidly, and the Cosmos Hub proportionately shrinking, Atom may not be suitable as an interchain money for the entire ecosystem.
In traditional finance, banks leverage central money with credits, but replicating this on the blockchain might not be feasible. The Cosmos Hub struggled to merge Stride and launch Neutron without its token, which could have been seamlessly integrated into the Cosmos Hub.
Atom 2.0 proposed minting a large quantity of Atom quickly because the writers knew that the Cosmos Hub must invest now to establish itself as a leader in the ecosystem.
But there is a security issue when you mint liquid atom and also Atom investor used to dislike the risk of dillution
In my opinion, a good money is a meme coin, mintable to create public goods and reward entities building within the ecosystem. The key question with money is “Why mint new money?” Given the excellent decentralized governance of the hub, it should be considered an ideal candidate to manage this money.
The purpose is investing to create utility
I think that the ecosystem’s money should, at the very least, reward relayers and be accepted universally within the ecosystem. Injecting it through relayers could be a good starting point. If the Cosmos Hub deems merging Stride a good idea, it could finance it by minting currency without risking Atom’s security or value.
This money will assume investing risk and let Atom be as secure as possible
In conclusion, Atom’s security restricts the Cosmos Hub from becoming a major capital investor in the ecosystem. If the hub wishes to assume this role, perhaps it should manage a new token specifically designed to be a money. This token could be controlled by the hub or an ICS chain utilizing the hub’s governance (I don’t think it could be a Noble token issuance). The primary aim of this currency should be to benefit the entire ecosystem. It would serve as the hub’s true governance currency, while Atom would remain the governance/security token and APR provider derived from revenues. This isn’t competition for Atom; it’s a tool to leverage Atom.