- 30% of ATOMs has almost never been staked which means that there is significant population of token holders who are steadily being devalued. If the ATOM market cap stays the same, ATOM price goes down 10% a year simply because of 10% of new issuance.
- Nobody is buying ATOM’s market cap, they are buying the ATOM token. The ATOM is the security sold to investors. And ATOM is most definitely a security since there is a protocol treasury and pretty active continuous issuance and sales of ATOM on crypto exchanges from that protocol treasury and other entities associated with the Cosmos Hub.
- There is no disclosure anywhere clarifying that “market cap matters much more than token price” to investors purchasing ATOM on Coinbase, Binance or any other exchange. I am pretty sure the guys at Coinbase in charge of listing tokens probably aren’t aware of your ridiculous claims. You are random guy on the internet making excuses for a token which is programmed to go to zero.
- At the very minimum, going forward purchasers of ATOM on regulated exchanges like Coinbase and Binance need to be made aware that Jae Kwon floated a token whose price is intended to go to zero and has no intention of fixing the inflationary setup. Which is fine. Jae can do what he wants but regulated exchanges have to avoid listing tokens in which retail investors are guaranteed to lose money by the token’s supply design.
- People involved with putting forth a token with no utility and such high inflation on Coinbase and Binance should be sued so that they don’t do it again. For the most part Coinbase does a good job of screening what tokens they put on their website but in the case of ATOM they clearly dropped the ball. It is not out of the realm of possibility that state attorney generals or the SEC can sue exchanges on behalf of retail investors. That has already happened a few times over the past 2-3 years.
- I don’t have information about anything. Nobody is delisting anything yet. However, ATOM has been mentioned in a couple of lawsuits by the SEC already and its status as a commodity is not yet formally determined. It could be very easily ruled to be a security by the SEC which would cause it to be delisted from regulated exchanges.
- Any person at the SEC following up on developments here and all the activity with spending community pool funds would likely come to the conclusion that they are dealing with a token in which promises to deliver product have been made continuously to this very day and token sales are performed with expectations that this product is delivered making ATOM a security. There is a ton of people on here making hard sales pitches for ATOM (including yourself) which clearly makes it a security.
There is nothing to tear apart good sir, I’m just looking to the conversation around the forum, and we are hitting all-time low in term of community.
Good products coming and people just focus on doing drama and hold the Cosmos Hub from becoming a chad chain.
Im’ even surprised this convo is still happening after almost a year
One more thing: your market analysis is literally idiotic blaming the lower ATOM price singularly on the inflation cut. If anything that action preserved the ATOM price over $5 over the past 9 months, otherwise it would have been lower.
There are number of factors that changed in the market environment over the past 2 years that are leading to a lower usage of ATOM:
- Noble USDC came on the scene and to acquire IBC assets investors no longer had to purchase ATOM first on Coinbase or Binance. Now they can purchase USDC, move it to Osmosis and trade for the token they want there. USDC is now the biggest asset on Osmosis.
- Many IBC tokens are now listed on Binance and Coinbase. Previously they weren’t and you could only purchase them by first purchasing ATOM, moving the ATOM to Osmosis and making DEX purchase there.
- Terra and Terra USD (UST) imploded removing a lot of fictitious “liquidity” from the Cosmos ecosystem. The high prices of ATOM in 2021 were accomplished using purchases with UST which was counterfeit US dollar - it had no real backing. As such the price spike were never real to begin with. Right now you get what you can call “real” pricing of IBC assets as they are priced using real US dollars like USDC. Osmosis has only $180 million in TVL and demand for IBC is just not that big relative to other ecosystems. Part of the lack of demand is that big investors don’t trust the Tendermint consensus protocol. I should correct this - they trust the technology but they don’t trust the 20 random guys that are validating the various chains. They don’t view neither ATOM nor any other IBC chain as sufficiently “decentralized” to invest large amounts of money (in other words hundreds of millions or billions).
The combination of the elimination of fictitious liquidity after the Terra implosion and IBC tech’s fundamentally less decentralized setup is the reason for these prices. Nobody on the Cosmos Hub can make projections that ATOM market cap can increase in the future in the face of stiff competition from Solana and other Ethereum Killers. ATOM maybe be an Ethereum Killer but it certainly isn’t a Solana killer from a technological perspective and Solana is the 800lb gorilla in the room right now. 2-3 years ago Solana was an unproven upstart. Now it is a chain with 5 years under the belt and investor trust it to the extent of plunking big dollars there. It is still not Ethereum’s size but for sure is leading the Ethereum Killer sector by two horse lengths. ATOM competes squarely against SOL right now and the comparison isn’t favorable. And for that reason it struggles to keep the 2021-2022 era pricing.
2 Likes
God no. I think there are many, many other forces at play.
But it doesn’t seem that inflation is highly impactful here.
And wdyt discuss mkt cap instead of unit price?
its not. there is no such ifo. in fact if anything, the exchanges are greedy and will jump onto it
this, this, this
Alas, people hate being wrong. And will almost never admit it. Its a prop that damaged Cosmos, imo, stronger than others. And killed several projects at infancy and satoshi knows how many more it will kill yet
As soon as Cosmos Hub completes its integration with Babylon, I think max inflation should be reduced to 7%, min inflation to 3% and lock up period reduced to 2 weeks.
1 Like
We would like to remind you and everyone else about the actual functioning of the x/mint module which is in charge or the inflation mechanism for the chain.
TLDR; here is a list of the adjustable parameters as they are currently operating in Gaia:
| Key | Type | Example |
|---|---|---|
| MintDenom | string | “uatom” |
| InflationRateChange | string (dec) | “1.000000000000000000” |
| InflationMax | string (dec) | “0.100000000000000000” |
| InflationMin | string (dec) | “0.070000000000000000” |
| GoalBonded | string (dec) | “0.670000000000000000” |
| BlocksPerYear | string (uint64) | “6311520” |
ANALYSIS:
Focusing excessively on the inflationMax parameter is ill-advised. It’s crucial to remember that ATOM inflation is not detrimental, as it is distributed proportionally among stakers, thereby not diluting their holdings. Instead, it serves as an incentive for users to stake, which is a fundamental requirement for a security-based network.
The inflationMax parameter solely functions as a safety measure, preventing excessive inflation that could have adverse effects. The preoccupation with ATOM’s price depreciation due to inflation is understandable, nevertheless it remains a false flag. It is important to note that the value held by each staker remains unchanged, as does the ATOM market cap. Liquid holders are the ones diluted, which is the intended purpose of the inflation mechanism, encouraging them to stake.
If reducing inflation is the community’s primary objective, efforts should be directed towards increasing the amount of staked ATOMs. Once the staked ATOMs surpass 67% (the GoalBonded parameter), the effective inflation rate will start to decrease. The higher the percentage above this threshold, the faster the inflation will reduce towards the minimum boundary, which is a topic that warrants future discussion.
The primary challenge for ATOM lies in the suboptimal adoption of liquid staking, which was designed to boost the amount of staked ATOMs while providing liquidity for deployment within the ecosystem. Regrettably, the adoption of existing liquid staking protocols has been less than stellar. Lido’s Drop is imminent, which could potentially serve as the catalyst we’ve been anticipating.
CONCLUSION:
It would be beneficial to shift the focus of our discussions away from inflation parameters and towards enhancing the staking ratio. Liquid staking should play a pivotal role in this strategy. Furthermore, we should consider revising the inflation formula to account for the ratio of liquid staking and make the inflation more responsive, a proposal we intend to present in the forum soon.
Thanks for reading,
Govmos.
2 Likes
OK, why is the bonding goal 67% (or 2/3rds)? Plenty of chains have much lower bonding ratio and haven’t been attacked successfully. At present, Cosmos Hub can have 50% bonding ratio and an attack on it can’t happen. For example, I see no issue with 60% bonding ratio. Why is it 67%?
Also once Bitcoin timestamps arrive on the Cosmos Blockchain, we can very effectively prevent “long range” and “double spend” attacks. The reason for the 3 week bonding period is because attackers can build an alternative chain and it requires consensus between validators to prevent the alternative chain. For that a 3 week period is provided to build social consensus. Once you introduce timestamping, you can eliminate the “long range” attack because it is clear from the timestamps which is the real chain and thus the bonding period can be reduced dramatically. The bonding period could 2-3 days instead of 3 weeks. But also you can lower the bonding ratio.
10% inflation remains very high and it is a problem and ATOM slide will continue. Ultimately, we need rational explanation why the bonding ratio should be 67% and why the bonding period should be 3 weeks if you can introduce Bitcoin timestamping via Babylon.
Finally, liquid staking is a hedge fund product. Retail doesn’t want liquid staking because it makes their funds insecure. So then stATOM is really a hedge fund product and let me tell you - hedge funds don’t care about ATOM given that its price is going to zero. The argument that ATOM is overpaying for security with 10% is made by hedge funds.
In other words, you want hedge funds to use the liquid staking product while the hedge funds are telling you inflation is too high. For as long as the ATOM community doesn’t address the inflaition issue, hedge funds will not be using the liquid staking product either.
1 Like
This is indeed a viable solution on the pipeline. This can effectively help reducing the bonding period on the Cosmos Hub, as well as other chains using Babylon’s aggregated time-stamping service. At least now we are discussing potential improvement on rational terms.
This governance parameter can be subject to adjustment based on community consensus, should we identify a need for change. If reducing inflation is a priority, modifying this parameter may yield the desired outcomes. Contrarily, inflationMax serves as a safety measure to guarantee staking maintains an appropriate incentive over liquid forms.
The importance of incentivizing staking within the Hub stems from its role as a shared security consensus. Consequently, the denominated asset’s staking is crucial for the hub to prioritize security over liquid form utilization as money. The primary function of ATOM is to ensure security. The GoalBonded is set at 67% to adjust or maintain inflation as we move above or below this threshold. While the parameter may appear arbitrary, it’s been carefully balanced. We would advise against altering this parameter, given its current equilibrium. The challenge lies in the delayed adoption of liquid staking.
Regrettably, the information provided is purely speculative and, with our background in traditional finance, we must emphasize that these statements do not align with our understanding.
The assertion of overpayment for security is incorrect. We’ve consulted with @effortcapital regarding this misconception. We’ve analyzed the security revenue mechanism as part of our PSS economic modeling (ICS 2.0 Economics : Partial Set Security (PSS) Financial Model). This is a complex system involving multiple parameters. The true cost of security should be determined by inflation in combination with the minimum validator fee, which establishes a base revenue for validators and discourages dumping practices. In essence, the validator fee represents the cost to secure the network, as validators are the only entities with operational costs. Stakers, however, receive new tokens as an incentive to stake, rather than hold, as previously described. This constitutes an incentive mechanism, not a revenue source for stakers, which is why stakers often compound their rewards.
1 Like
- If ATOM is insecure at 61% bonding ratio like right now, I think people should attack it and raid it while there is some value in ATOM. ATOM market cap is plumbing new 4-year lows at 1.9B now; pretty soon there will be nothing to steal and nothing for the ATOM token to “secure”. There is plenty of other chains that are more trusted as IBC hubs such as Osmosis. No IBC chains have achieved 67% bonding ratio. Of the top 10 chains in map of zones over the last 30 days, Osmosis has 52% bonding ratio, Celestia 72% with 8% inflation, dydx is at 23%, Axelar 62%, Sei 62%, Kava 12%, Injective 61%. Only one has achieved 67% and I am not aware of the other chains being successfully attacked. So again I wonder how this 67% number is arrived at.
- stATOM is less used today than a year ago. There is no “delayed adoption”. It is a product without a product market fit. Sorry. Saying that Lido’s DROP will turn around its fortunes is what is speculative and misleading. Last year people were saying big things about stATOM and as we see a year later none of it came through. Nobody cares about stATOM outside Zaki and a few of his friends. There is only about 3 million STATOM, that is 1.2% of the 250 million bonded ATOM. It’s a product that is not really getting any sort of adoption. If anything as time has gone by stATOM is used half as much today as one year ago. It’s market cap has gone down by half.
Pinning your hopes for ATOM turnaround on a product with -50% growth in the past year doesn’t look like a very sound plan to me.
2 Likes
We’ve made efforts to clarify misconceptions regarding the essential economics of the ATOM token and its function within the Cosmos Hub blockchain. However, you continue to hold a different view, we can agree to respectfully disagree. The truth will ultimately prevail. Wishing you a pleasant day.
Any reasoning behind this? As far as the price is concerned we haven’t seen any improvement with the last changes. Initially (for a few days) it started to really and everyone including Zaki posted the achievement on X. Now no one is talking about that. If price is the standard of gauging (that was touted during the initial discussion), ain’t we failing?
1 Like
I wish it was easier to make it understandable for the masses.
If you ask Jae Kwon, the price is supposed to go down to zero in order to ensure cheap IBC transactions. As far as Jae is concerned, price going down is succeeding. In January there were 4.6 million transactions, in July there were 620K.
Mission accomplished. Price is going down and nobody is using the chain.
1 Like
Maybe you misidentify me as the Jae Kown advocate.
Reading your posts, I am not sure what you are an advocate of.
If you think 20% max inflation was the correct setting, put up a proposal and if people think that is better, they’ll vote and so be it. I am done arguing Econ 101. If you think flooding the market with more ATOMs will result in higher prices, that’s your prerogative. I don’t think so and I will go and invest in something else. I really have no desire to go around in circles arguing the same thing over and over again. Investing in ATOM a couple of years ago was a mistake. Moving on. People were right that this community is a total shitshow.
weak hands to strong hands .
plz leave and let atomers make hun great again ( without you )
constantly the same people who were and never bring anything to collective intelligence
And what exactly is your contribution to collective intelligence? 13 words?!?
Good job. “strong hands”. lmao
That’s the problem you are stuck on Economics 101, but it is more complex than that. Also, you are part of the shitshow as a dear community member.