[PROPOSAL #82][REJECTED] ATOM 2.0: A new vision for Cosmos Hub

Good day/evening to all!

A first thought while reading the proposed White Paper is on the role of the Cosmos Hub Treasury.

According to the White Paper, Cosmos Hub Treasury, (is) a new capital pool managed by domain-specific councils to fund public goods and grow a resilient interchain.

1. Can someone expand on this, which can be sub-divided as follows:
1a. Who will control this Treasury?
1b. How will resources be allocated from the Treasury, what will the process be, any checks and balances and which are they?
1c. Will community vote on the allocation of resources?

2. Also
2a. what will the approximate amount of $ATOM allocated to the Cosmos Hub Treasury be, by the end of the 36 month period? Essentially how much voting power will that treasury gather?
2b. After the 36 months lapse what percentage of the 300k $ATOM per month will be issued to staked holders and what to the Treasury?

3. What will the total $ATOM supply be by the end of the 36 month period?

4. Will funding from the treasury be approved by virtue of proposals as happens with the community pool and who votes?

5. What is the vision for the role of the community pool (and the community in general) in the future?

6. As a final question, will the Treasury vote on Proposals?

These are important questions that need clarification ahead of the proposal being submitted. Thorough responses would be appreciated.


Thanks for the detailed roadmap, and all the new features we are looking toward with ATOM 2.0.

One of my concerns as a validator is the cosmos hub still has fewer spots than the majority of the interchain chains (there are security reasons to why which i will mention later in this post), but this basically disables many cross-chain validators from participating. I would love to see if we can address this.

For interchain to be successful the hub should be able to incorporate the majority of the service providers on side-chains. The limited seating on the hub I feel is a blocker.

Reasons I know (as i have through SS proposed the increase of validator spots):

  1. Reduced block time.
  2. Higher upkeep with all validators (in terms of coordinating upgrades)
  3. Higher risk (maybe?)

I think we should really think about increasing the cosmos hub validators to the initially proposed seating availability (of 300 in the original paper) and think about scaling this to 1000+(if not 10s of thousands) in the future from a technical perspective, so that more people can participate, which works towards decentralization.

One of the biggest arguments being that new validators should just validate on side chain deters the spirit of a decentral application.


While Tendermint, the ICF, and other entities have done an admirable job in pushing the Cosmos ecosystem forward, the ATOM 2.0 tokenomics model transition period is effectively a fundraising round for the Cosmos Hub that dilutes current ATOM tokenholders. If my back of the envelope math is correct, based on the formula presented in the whitepaper, if the proposal is passed, by the 36 month mark (and assuming the current ratio of staked ATOM remains constant), over 37 million ATOM tokens (current value of $525 million) will have been raised for the Cosmos Hub. While the funding may benefit the Cosmos Ecosystem at large, this level of funding seems excessive for a project that already allocated 20% of the genesis block to Tendermint Inc and the ICF, both of which should fund Cosmos Hub. The initial 10,000,000 per month token issuance is just too large, and before we move forward, a detailed explanation of how this money is going to be spent is required. As it stands, my vote for this proposal is a NO


Updates that change the monetary policy are evil. I have most of my portfolio in ATOM because I liked the project, the staking rewards, the unbounding period (which disincentivises undelegation and prevents violent price movement). All of this will be gone and ATOM to me will be just another coin whose staking is liquid and rewards are unattractive. Why don’t you update the interchain security, and scheduler/allocator shenanigans while keeping the issuance intact? Most of this jargon is not understood by the common person who just wants a monetary system with issuance they can easily understand and subscribe to.


My only concern is voting on the whole thing together rather than trying to understand the benefit of each of the proposed updates separately. The paper is good, just seems like its now a bit of a rush to do cramp everything into one vote now.



  1. Ⓐ The Cosmos Assembly (Composed of all Cosmos Councils) would control the Treasury. Groups make a proposal to ATOM governance including the items described in the Governance Stack to become a council. While it makes sense for engineering teams to form a Council, there is also a Community Council described in the paper. Ⓑ If this proposal passes, then one of the first steps would be the formation of a Cosmos Hub Charter, which would entail a public process to figure out these details together. Ⓒ ATOM holders would have a veto on proposals made by the Cosmos Assembly. The Community Council would also have direct representation in the budgeting process.

  2. Immediately following the transition phase (assuming no spending), the Treasury would have 55,198,375 ATOM 55,057,742 ATOM

  3. The total ATOM supply after 36 months would depend on when the transition phase started. If it were to start today then the total supply would be something on the order of 390,000,000 (probably only accurate to the nearest 1M). However, the change in issuance would only happen after Interchain Security is live and Liquid Staking has gotten some traction, my best guess would be late next year.

  4. The Council would collectively propose a (likely yearly) budget based on the criteria set out in the charter. ATOM holders could veto based on virtue.

  5. The Community Pool will still exist and get 5% (this is a gov-controlled param) of Interchain Security revenues, so no changes there. The Community Pool is a great way for anyone to access resources and would complement to the Treasury.

  6. ATOM holders have veto power over all Treasury proposals, so while it might be technically possible for the Treasury to make a proposal to vote with its ATOMs on another proposal (depending on the implementation), this could be veto’ed by ATOM holders, so in practice the Treasury would not act as a voting bloc.


While I think this is a valid discussion, I think it can be treated separately from the contents of the paper. There’s a similar conversation happening here that might be more appropriate.


Though tokens would technically be be issued, I invite you to read Hasu’s essay on how to conceptualise tokens held in Treasuries, which is a little more subtle than giving tokens to a 3rd party. You are correct that this is a substantial issuance event, however after ~21 months total issuance would be at parity, and then subsequently reduced vs if issuance model were to remain unchanged. The newly proposed infrastructure is extremely ambitious, so a portion would likely be used for development of the components described in the paper, however this expense would only constitute a fraction of the Treasury. The primary reason why the Treasury must be funded to this magnitude is to capitalize the Allocator, which would be used to expand ATOM markets and deploy into new Cosmos projects, accumulating protocol-owned value for the Hub. This is the key driver for ATOM becoming the preferred Interchain reserve asset. I’ll note that ATOM holders always have the final word on the Treasury budget, so this is just the start of a long process of a long process for determining how best to deploy ATOM. There will be ample time until the issuance and Treasury changes are implemented and put up as an upgrade proposal for the community to start laying out specifics together.


As mentioned in the paper, it’s not really possible to prevent liquid staking. Liquid staking does not eliminate the unbonding period (those tokens are still accountable for slashing), but allows entities to freely trade vouchers for staked ATOMs. There is a paper forthcoming about the security model under liquid staking and the cost of security (which is where staking rewards come from).


As I noted above, the change to issuance wouldn’t happen tomorrow. Ideally Interchain Security would be deployed, liquid staking solutions would start to come online, the staking ratio would start going up as more liquid stake ATOM is issued, and then at a point the community would have enough information and confidence in the system to move into the new issuance regime with an upgrade. Initial formation of the various governing constituencies is definitely going to be a long road, but nothing in this paper is going to happen overnight, it would be incrementally developed, refined, and rolled out in stages over the coming months and years.

I’ve been working with folks at Informal Systems on a second paper that gives a more formal treatment of the security model and relative costs today vs after liquid staking, which we’ll be publishing soon. Couple takeaways are [1] over-spending for security today, [2] the opportunity cost of exogenous ATOM opportunities is the number one cost, which is removed by liquid staking, so the cost of security is significantly reduced. I believe it’s quite achievable to build enough recurring revenue from Interchain Security over the course of 3 years to cover these costs, and if there is a problem where revenues are insufficient to keep 2/3 ATOM staked then the last resort is that issuance automatically falls back to the current model, in which issuance incrementally increases until the stake ratio is brought back to normal levels.

Also, I found one typo in the paper. When converting to LaTeX the ⅔ symbol did not render (comes up a couple times in the issuance/fee sections). I’ll make a light edit to correct this before the paper goes up, but if anyone else sees a typo let me know so I can incorporate that correction as well.


Thank you for the response Sam, appreciated.


Obviously the proposal has involved a lot of thought, work, and time so very grateful. It is very conceptual, which has pluses in terms of conveying a long-term vision, but also makes it a bit hard to understand the impacts in a very concrete way. Curious on a number of points, but one particular question. On the Allocator accumulating Protocal Owned Value, why not devote some of that value to buying back some of the ATOM token, if not immediately (which defeats the logic of raising capital), then mentioning it as a possibility in several years, after further ecosystem maturity. In general, some further elaboration of how building the ecosystem helps bolster the token - though it might seem obvious - would be helpful. In any case, thanks for all the work on this!


Hi @hxrts thanks for the reply. Can you share how you arrived at 55,198,375 ATOM tokens for the Treasury? Following the MonthlyIssuance and MonthlySecuritySubsidy formulas in the whitepaper, I arrived at a total of 37,427,073 tokens allocated to the Cosmos Hub Treasury over 36 months. Either way, this massive amount of ATOM issuance would bode poorly for the price of ATOM during this 36 month period. I understand the need for funding, but the magnitude here is just too much. The market isn’t stupid, if this is approved ATOM will inevitably dump, ushering yet another period of ATOM underperformance vs L1 competitors.



i have to say that the new issuance is a very large amount and i wonder how it will help to gain value. As i heard about Atom 2.0 i thought the new token design would more related to the old mechanics.

What about a mechanic, which keeps the old 7-20% mechanic but the rewards coming firstly from ICS and the other sources and only if the ICS rewards are not enough to meet the actual inflation 7-20% it will filled up with new Atom. Further, if the rewards from ICS and other sources will be above the current chain inflation, the above values could be

  • looked for later rewards payout
  • be used in a community pool
  • used to buy back atom and burn or to use them for something else…

this is a bit more tricky to build as prices of the ICS token rewards are fluctuation but at the end the inflation will not increase with a massive token amount which could lead to a devaluation of the atom token.

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i had translate into chinese with my friends.


Helllooooo Cosmos fam!! This is your friendly neighborhood cryptoeconomist speaking. We’re beginning our descent to landing on a new issuance model so please ensure your seat backs and tray tables are in their full upright position.

But actually, I am one of the co-authors of the white paper (Max Einhorn). Community members have been asking some great questions about the mechanics of the proposed new issuance (shoutout to @cryptocat) so to help deepen everyone’s understanding, I’ve created the model below.

Note that I gave @hxrts the wrong figure earlier by reading off the wrong column. Rather than 55,198,375 ATOM in the Treasury Pool immediately following the transition phase, it is actually 55,057,742 ATOM.


Max thanks for sharing this model, I will take a look at and come back with some thoughts.

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So Sam, after the 36 months’ lapse, how will the 300k $ATOM per month be distributed between Treasury, Community Pool and staked holders?


there must be some mistake there, as per your chart, only treasury seems to get the 300k $ATOM per month (aka the full capped inflationary rewards) after the 36 months.
Great info nonetheless.


Thanks for answering everyone’s questions and concerns. Good read.

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You da man.

I’ve read through everything and all the responses and have to still digest it all before offering my 2 cents.

I’m confident a lot of thought, time and effort has gone into this and for that we are grateful.


Many thanks for sharing!

First of all, do we need to put it on chain latest 03-10-2022? It is quite an extensive document which has a lot of implications for the future of the Hub. Now rushing towards a proposal seems kinda weird imho and does not respect the concerns people might have if they found a bit of time to dive into it.

I do agree with @serejandmyself. On Osmosis we have set the preference to do 1 gov proposal : 1 topic.
Getting a complete future vision and putting it into 1 proposal is too big. Because what do you do when you agree with most, but disagree with one? Splitting into pieces sounds a better route if you want to go through governance (which I like, because it gives some sort of control back to the community).

Content wise I have to dive into it further. A bit clarification on how all the funds will be managed wouldn’t hurt. We are slowly getting a route for the team delegations to get them transparent and accepted. Let’s not make the same mistake twice and create an unclear financial element at our first opportunity.


Getting a complete future vision and putting it into 1 proposal is too big. Because what do you do when you agree with most, but disagree with one? Splitting into pieces sounds a better route if you want to go through governance (which I like, because it gives some sort of control back to the community).

I am strongly in favor of voting on the entire document. It clearly defines the Hub’s purpose within the interchain as well as the mechanism by which to realize that vision. The governance architecture proposed in Section 5, “Cosmos Governance: A Forum for Sovereign Interoperability” explicitly outlines a structure to ensure that the “community has some sort of control” and provides a map that can be used to navigate the ever-present gap in decentralized governance between accountability and control. As for your question, “what to do when you disagree with one part of the proposal,” well: that’s what discussion periods are for!

Each piece of this proposal is interconnected (like the interchain itself). While I also would like to see governance functionality whereby sentiment can be expressed toward modular segments of proposals, we are not there yet. Haste is required to align on a vision in order to build the social and technological infrastructure needed to bring about the Integration phase of Cosmos.

Beyond the pragmatic motivation for leaving the whole intact, there is also the call to action within the proposal. Compartmentalizing aspects of this document dampens this call for community members to organize themselves under a unified vision because it reduces the availability of context, which is so important for on-boarding and authority delegation.

On Osmosis we have set the preference to do 1 gov proposal : 1 topic.

The governance needs of Osmosis differ greatly from the needs of the Hub. Osmosis, being a DeFi appchain, has greater need to adhere to a corporate governance model (Vitalik, " DAOs are not corporations: where decentralization in autonomous organizations matters") in order to move quickly and efficiently. Insofar as the interchain has one, the Hub is a sovereign. Sovereigns require an overarching structure under which public infrastructure is built, aligned projects are funded, and authority is delegated. It is only right that this structure be ratified on-chain. Given our current governance module raising a signaling proposal is the most effective means by which to ratify such a document.

There are certainly actionable items that should be voted on as individual topics in governance but manifestos, constitutions, or documents that align a constituency under a structure which connects an entire ecosystem do not fall under that category.

A whole is greater than its parts. The interchain is better for everyone when the Hub is unified Hub. If there is disagreement with a piece of the document, let’s hash it out during this discussion period, not dilute the document by breaking it into separate proposals.


Love this proposal. There’s a lot to it, and the numbers can always be changed, but the concept is really innovative and gives Atom a unique niche it can excel at in the interchain. I would say we need at least a few weeks more to debate and tune such a huge proposal before it goes on chain.

There are some big ideas in here that are hard to grasp (especially the MEV part) for most. Personally, I think it would be beneficial if someone put together nice graphics showing what this will look like at each level if it’s implemented. Something that shows clearly how this will build a sustainable future for Atom and how value gets sent back to hub delegators as it makes its way through the system.