Change log
- 2025-04-23 Created initial post
- 2025-04-23 Added details regarding “Signed Blocks”, lowered amount to 5m, and increased eligibility to 40 validators
Summary
- Community Pool Size: Estimated at roughly 9.2 million ATOM (≈ $40 M USD).
- Proposed Delegation: 5 000 000 ATOM (≈ 55 % of the pool), leaving 4 200 000 ATOM liquid for other purposes (this amount can be modified later in the governance process).
- Objective: Generate sustainable yield for the community pool by staking with top-performing validators, while incentivizing broader improvements in uptime, decentralization, and governance engagement.
- Validator Selection: Top forty validators by signed blocks (90d), pre-filtered via quantitative metrics—uptime ≥ 99.9 %, commission ≤ 5 %, voting power ≤ 2 %, governance participation ≥ 90 % and no jailed history.
- Re-assessment Cadence: Yearly reviews to rotate or add validators based on updated performance data.
1. Rationale
With the recent shift in the ecosystem and the new leadership role taken by Interchain Labs alongside the Interchain Foundation, there is growing clarity around who can effectively drive strategic development in the Cosmos Hub. These two entities have both the experience and the resources to take over where the now-sunsetted Atom Accelerator DAO left off.
This raises a key question: do we still need a community pool?
At Govmos, we strongly believe that the only sustainable path forward for the Hub is to maintain its own independent source of funding, distinct from both Interchain Labs and the Foundation. While we support the initiative—led by some ICL members—to establish an Expert Committee for Fund Allocation Control, we believe the community pool must never be eliminated or fully drained in favor of committee-led models alone.
Instead, we propose the creation of a self-funded operational budget, powered by the staking rewards generated through this delegation program. Assuming the proposed 5 million ATOMs are delegated and the APR remains around 16%, the program would yield roughly 750,000 ATOMs each year. These funds could sustainably fund any grant allocation program with substantial capital. Importantly, such program would be replenished every year through these constant staking rewards inflow.
When paired with a minimum 2% community tax rate, this creates a robust framework that avoids the dilution of the community pool over time, while also ensuring that it remains an effective tool to fund the Hub’s development in a decentralized and sustainable manner.
2. Validator Selection Framework
To ensure this program incentives target the most legitimate actors, we propose the following eligibility criteria drawn from on-chain data (via Mintscan, Keplr Dashboard and SmartStake Analytics):
| Metric | Threshold | Rationale |
|---|---|---|
| Uptime (90 days) | ≥ 99.9 % | Ensures network stability and minimizes downtime slashing. |
| Commission Rate | ≤ 5.00 % | Maximizes yield; discourages fee racing. |
| Voting Power | ≤ 2 % | Promotes decentralization; reduces single-validator influence. |
| Jailed Events (last 12 mo.) | None | Filters out history of misbehavior or downtime. |
| Governance Participation | ≥ 90 % | Ensures skin-in-the-game; aligns incentives. |
As a community staking program, we also propose to exclude participation of centralized exchange and custodial entities. Assuming the community accepts those recommendations, we will rank all active validators meeting these thresholds and select the top forty by the highest signed blocks[1] amount over 90 days. The final set will be curated in a future update of this topic, before being formally proposed on-chain. Additionally, we propose to update this eligible set every year based on this framework criteria, unless the community decides to change them.
[1] Signed blocks refer to the attestations that validators must submit to approve and finalize a block. This is fundamentally different from proposed blocks, which relate to the role of the proposer — the validator selected (with probability proportional to stake) to produce the next block.
It’s crucial to note that a block requires signatures from at least two-thirds of the vote power to be finalized. Yet, some validators in the current active set consistently underperform on this front. Additionally, we proposed to monitor signature over a 90d period, which also identifies validators who consistently take longer time to perform the planed and emergency upgrades, essentially degrading the quality of the network by extending the downtime. Combat persistent missed signature and extended upgrade downtime are the key motivations behind our proposal: to promote best practices by integrating signing performance as a core selection criterion — after applying baseline quality filters, of course.
Let’s also keep in mind that the Cosmos Hub is undergoing a shift towards becoming a service chain, where blockspace utility will increase — particularly with the potential introduction of a Virtual Machine. A high-performance validator set will be essential to support such evolution. Through this delegation incentive framework, the community helps elevate standards, rewarding performant operators while preparing toward a more resilient network.
3. Proposed Plan
- Signaling Proposal (this one): Debating on the eligibility criteria, ranking mechanisms and the overall program’s scope and delegation amount.
- Curating the set: Filtering eligible validators based the voted criteria.
- Delegating Proposal: Allocate the voted amount across the selected validators, weighted equally.
- Reward Handling Proposal: Claiming staking rewards every year around the anniversary date enacting this delegation program.
- Update: Unless deciding to change the program’s criteria, the community will simply perform a new iteration to curate a new set, and prepare the re-delegations.
- Adjustment Proposal: Submit on-chain proposal to add/remove and re-delegate to validators as needed.
4. Economic Impacts
4.1 Changes to APR
Assuming the 262.13 million ATOM are currently bonded (58.7 % of the 446.25 million total supply) and the proposal to revert the CP tax to 2%, delegating an additional 5 million ATOM from the community pool would:
- Raise the bonded ratio from 58.7 % to 59.8 %.
- Change the staking APR from 15.3 % to 15.0 %, assuming we reduce the CP tax down to 2%, this APR would actually increase to 16.4%.
We strongly invite the community to reflect on this proposition as a complementary measure to the CP tax reduction to 2%. As they share interesting synergies to preserving yield for individual delegators and generating sustainable rewards for the community pool.
4.2 Incentives for Top Operators
Because the 5 million ATOM are distributed equally among the forty selected validators, each would receive 125 000 ATOM. Given that the minimum delegation to qualify for the active set is roughly 80 000 ATOM, every participant in this program is guaranteed to maintain—and likely strengthen—their status as a bonded validator.
- Meritocratic Upside: Smaller, high-performing operators stand to see a proportional revenue boost far greater than that experienced by larger validators, whose existing stake base dilutes this program’s delegation effects.
- Performance Alignment: By channeling material stake to those who have the highest quality of service, while maintaining the lowest commission, and basic governance participation criteria, we reinforce a culture of excellence, motivating all validators to elevate their service quality if they wish to be considered in future delegation rounds.
Together, these mechanisms ensure that the community’s capital supports—and rewards—the best actors, while simultaneously tightening the performance bar for everyone else.
By implementing this delegation program, the Cosmos Hub community pool will transition from idle reserves to a self-growing treasury, enhance network security through high-quality validators, and foster a meritocratic incentive structure for continuous operational improvement.
We look forward to receive community feedback and improvement suggestions to further strengthen this proposal.
Thank you for reading,
Govmos.
