What would be the unhealthy part for the voting power economy if 100% of $ATOM where delegated?
Yes, this is highly unlikely. The unhealthy part to the voting power economy would be the conflict of interest we are currently dealing with. While everyone who has bags of ATOM wants to see price go up, ATOM is also our governance token.
- Less ATOM coming into the world, price go up.
- Less ATOM on the market trading, price go up.
- [additional utility cases for ATOM to rise in price not listed here]
The concern is The Cosmos Hub will become centralized due to the barrier of entry to acquire ATOM. If it cost a premium to get ATOM due to the increased price, only whales or those who are well off will be able to accumulate the asset at a rapid rate. The chain would be decided and controlled by a few. We would be no better than the following at that point:
- BTC being centralized/controlled by a few large mining companies.
- ETH being centralized/controlled by a few large stake pools.
- SOL being centralized/controlled by a handful of VCs.
As contentious as the prior vote of moving the max inflation rate down to 10% was, it was our governance system working. This isn’t to say our governance system is perfect and couldn’t use some improvements, but it by no means is what I would call broken.
As the price of ATOM rises due to these tokenomic changes, our governance system will become centralized as a result. I would have no problem with this if we created a separate governance token that stayed at a manageable price (suppressing the price - the conflict of interest) to keep The Cosmos Hub decentralized.
Let me know if I have any massive oversights in my observations above.