Proposal for Enhanced Token Locking Mechanism on Cosmos Hub

Introduction:

As the Cosmos Hub community continues to evolve, it is essential to reassess and enhance the existing token locking mechanisms to align with the dynamic nature of the ecosystem. This proposal advocates for an adjustment to the current token lock duration, from the existing 21 days to a more flexible and user-driven period of 4 years. Additionally, we introduce a progressive rewards structure to incentivize users to opt for longer token lock durations.

Key Changes

Token Lock Duration:

Current: 21 days
Proposed: 4 years
This change aims to strike a balance between providing security to the network and allowing users greater flexibility with their locked tokens.

Individual Choice:

Users will have the freedom to choose the lock duration that best suits their preferences and strategic objectives.

Progressive Reward Structure:

Introduce a tiered reward system based on the duration of token locking.
Each additional year of token locking will result in a percentage increase in rewards.

Rewards Calculation:

For each additional year of token locking, a certain percentage (to be determined by the community consensus) will be added to the base staking rewards.
The formula for calculating the total rewards for a user with a locked token for ‘n’ years would be:
Total Rewards = Base Staking Rewards * (1 + Percentage Increase)^n

Benefits

Enhanced Network Security:

A 4-year token lock still provides a robust security layer for the Cosmos Hub, while allowing for greater user participation.

User Flexibility:

Individuals can align their token locking strategy with their specific goals and risk tolerance.

Community Engagement:

The introduction of a progressive reward structure encourages users to actively participate in securing the network for an extended period, contributing to the overall health of the Cosmos Hub.

Implementation Timeline:

The proposed changes can be implemented in the next scheduled network upgrade to ensure a smooth transition.

Conclusion:

By adjusting the token lock duration to 4 years with individual choice and introducing a progressive reward structure, we aim to create a more adaptable and user-friendly token locking mechanism for the Cosmos Hub. This proposal seeks to balance the needs of the network and the desires of its participants, fostering a stronger and more vibrant Cosmos community.

Additional Clause: Maintaining Inflation Neutrality

To ensure the implementation of the proposed changes does not impact the overall inflation rate on the Cosmos Hub, it is crucial to adopt a mechanism that offsets the increased rewards for longer token locking durations. To achieve this, we propose a corresponding reduction in the base staking rewards for the initial 21-day lock period.

Base Staking Rewards Adjustment:

The rewards for the standard 21-day lock period will be slightly reduced to maintain the existing inflation rate.
The Reduction Percentage will be determined through community consensus and will be designed to maintain overall inflation neutrality.
The rewards for users opting for longer lock durations (1 year or more) will see an increase according to the progressive reward structure outlined in the main proposal.
This compensatory increase ensures that the total rewards for participants with longer lock durations contribute to the network while not adding additional inflationary pressure.

Benefits of Inflation-Neutral Implementation:

Users choosing longer lock periods are incentivized appropriately without causing a disproportionate impact on the overall reward distribution.

Conclusion:

By incorporating an inflation-neutral rewards adjustment, this proposal aims to strike a delicate balance between incentivizing longer token lock periods and maintaining the stability of the Cosmos Hub’s economic ecosystem. It is imperative that the community engages in further discussion to fine-tune the specifics of the rewards adjustment, fostering a cooperative decision-making process for the continued success of the Cosmos network.

*The reference to time units is a convention and can be changed to days or weeks.

Note: This proposal is subject to community discussion and consensus before implementation.

1 Like

Hey @Dmitriy_Dintsen, is this prop is an alternate solution for Atom wars?

1 Like

Hey, @waqarmmirza maybe, but I didn’t want to touch the voting power because it might cause problems.

where is the liquid staking module located in your mecanism ?