Request for Proposals: ATOM Tokenomics Research

[RoboMcGobo]

UPDATE

We have elected to extend the deadline for proposal submission to January 23.

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Cosmos Labs is seeking qualified tokenomics research firms to provide data-driven research to support a redesign of ATOM’s economic model. The tokenomics will center around a new fee model based on various on-chain and off-chain revenue sources. The redesigned model will align token incentives with Cosmos’ new enterprise-facing roadmap, ensuring sustainable demand, controlled inflation, and aligned stakeholder interests. The ultimate goal to keep in mind: under this new model, ATOM becomes the medium by which anyone can get exposure to the network effects of broader Cosmos SDK adoption by enterprises, banks, and governments.

Background

Cosmos is embarking on an exciting new enterprise-driven roadmap. Regulatory changes and social proof around stablecoins and payments have driven businesses to begin researching and adopting blockchain strategies en masse. Many of these entities are already turning to the Cosmos SDK as the premier blockchain stack for their upcoming crypto-facing business lines, and are contracting with Cosmos Labs to assist in bringing their blockchain solution to market.

Numerous prominent fortune 500 companies, multinational banks, and governments are using Cosmos today, or have expressed interest in working with Cosmos Labs to support them in building their Cosmos chain.

Cosmos Labs, pursuant to a mandate from the Interchain Foundation to grow the adoption and utility of the Cosmos Stack, Cosmos Hub, and ATOM, seeks to align ATOM’s utility to these utility drivers on and off-chain, and design a system that better allows ATOM to evolve from a staking-only circular utility model to an open system that allows for multiple utility use-cases.

Overview of the Cosmos SDK

The Cosmos SDK is an open-source framework for building custom, application-specific blockchains. Designed with modularity, flexibility, and interoperability in mind, it enables developers to construct sovereign blockchains that can communicate seamlessly with one another through the Inter-Blockchain Communication (IBC) protocol.

At its core, the Cosmos SDK abstracts away much of the complexity of blockchain development. It provides pre-built modules for core functionality such as token management and consensus, while allowing developers to customize or extend these components to suit their specific application logic. This modular design has made the SDK one of the most widely adopted frameworks in the blockchain industry, powering notable projects such as Ondo, dYdX, Stable, Provenance, and Babylon.

The Cosmos SDK is built atop the Comet BFT consensus engine which delivers fast finality and Byzantine Fault Tolerance. This separation of the networking, consensus, and application layers allows businesses to focus primarily on economic and business-logic design, rather than reinventing low-level blockchain infrastructure.

The Cosmos Hub

The Cosmos Hub is the first and flagship blockchain using the Cosmos SDK. The Hub’s strategic role has evolved over time from the vision presented in the original whitepaper, which proposed the Hub as a relay chain facilitating IBC connectivity (with ATOM as the interchain reserve currency for the IBC economy), to a more service-oriented coordination layer for the ecosystem focused on its shared security mechanism, Interchain Security.

After failing to find product market fit, Interchain Security is in the process of being deprecated, and the Hub’s economic architecture remains relatively detached from the broader activity of the Cosmos ecosystem. It lacks a comprehensive fee model today, outside of transaction fees occurring on the network.

Historically, Cosmos Hub stakeholders have been reluctant to make significant changes to the protocol or its tokenomics. As an example, governance proposal 848, which sought to reduce token inflation parameters by 50%, passed by the narrowest of margins (just 3% of vote power) and was seen as one of the more contentious proposals in Cosmos history. Following passage of the proposal, a significant number of ATOM tokens were unstaked and sold. This event underscores the importance of ensuring stakeholder concerns are addressed before pressing forward with any significant changes to tokenomics in the future.

The ATOM Token

ATOM is the native token of the Cosmos Hub, and serves multiple functions within the Cosmos ecosystem:

1. Staking / Network Security: ATOM is staked (delegated) by holders to validators under a Proof-of-Stake mechanism. The staked ATOM secures the chain and in exchange delegators receive a share of inflationary rewards and a portion of transaction fees, net of validator commissions.

2. Governance / Voting Power: ATOM stakers can participate in on-chain governance, which dictates upgrades, parameter changes, fund allocation, etc. Voting power is proportional to staked weight.

3. IBC Eureka: The Cosmos Hub earns fees from transactions sent over IBC that are first routed through the Cosmos Hub. Transactions that use this routing method use a special type of IBC product called IBC Eureka. Learn more about Eureka here.

4. Transaction Fees & Interchain Security Revenue Sharing: On the Cosmos Hub, ATOM is used to pay transaction fees. ATOM stakers also earn a small revenue from chains that consume security until Interchain Security is deprecated.

Token Supply, Inflation & Emissions

• Supply Details (Source: Coingecko):

  • Circulating Supply: 482,579,147 ATOM

  • Max Supply: Infinite

  • Market Cap Rank: 97

  • Current inflation rate: 10%

• Inflation & Staking Target Dynamics: ATOM currently operates with a variable inflation model, designed to modulate emissions in response to staking participation. The annual token inflation rate ranges between a floor of 7% and a ceiling of 10%

  • When the staking rate is below the target bonding ratio of 66% of circulating ATOM, inflation increases block by block toward the ceiling of 10%. Conversely, when the staking rate is above the target bonding ratio, inflation decreases block by block toward the floor of 7%

  • The speed at which inflation increases/decreases is based on how far away the bond ratio is from 66% and an adjustable scalar factor, currently set to “1”

    • For example: At 70% bond ratio, ATOM inflation would decrease by ~6.06%/yr until it reaches the minimum bound of 7%. A bond ratio of 64% would increase inflation by ~3%/yr until it reaches the maximum bound of 10%.

  • The Inflation rate change is calculated as follows:

• Community Pool

  • A portion of emissions or fees is typically allocated to the Community Pool, functioning in practice as a quasi-treasury for community proposals or grants

Stake & Delegation Landscape

• Staking Participation (Source: Mintscan)

  • Total Staked ATOM: 279.72 million

  • Bond Ratio: 58%

  • Staking APR: 16.91%

• Validator Landscape / Concentration

  • The Cosmos Hub supports 180 active validators, each with varying commission rates, performance reputations, and delegator bases. The size of the validator active set can be increased or decreased via governance.

  • A significant portion of total stake is often concentrated among large validators or entities (e.g. exchanges). The current Nakamoto coefficient of the Cosmos Hub is 6, and the largest validator (Coinbase custody) controls over 17% of stake.

  • Validators may participate in governance on behalf of their delegators, voting with the full weight of all tokens delegated to them. Delegators may override their validator’s vote as to their own stake weight by voting themselves.

Revenue Model Constraint

The goal of this research effort is not to design a new tokenomic model from first-principles, but rather to provide research and design support for a revenue-driven model that synergizes various sources of potential ATOM revenue with updates to ATOM’s supply dynamics and inflation schedule. Ultimately, ATOM’s utility will be driven by these fees, either in the form of ATOM buybacks, ATOM staking rewards, other mechanisms, or some combination thereof.

This will be done in conjunction with evaluating the impact of a cut to ATOM’s inflation on the viability of the model under various scenarios.

Project Objectives

Proposals should aim to meet the following objectives:

1. Understand the current state of ATOM: Including how the token is used today by various stakeholders, how value flows on exchanges, and how sensitive stakeholders have been to previous changes to tokenomics and utility changes.

2. Evaluate the impact of various revenue and inflation scenarios on ATOM: Successful proposals will model revenue potential from enterprise adoption of the Cosmos stack, including on-chain fees from interoperability and Cosmos Hub adoption, off-chain fees from enterprise and protocol usage of the SDK, and any other mechanisms conceived during the research process.

3. Address Supply-Side Concerns: Including evaluating inflation cut scenarios, discovering common sources of ATOM buy and sell-pressure via on-chain investigation, and evaluating market liquidity

4. Discuss proposal impact on all relevant stakeholders and propose mitigations: including the impact an inflation cut will have on ATOM staking APR, validator commissions, and all other relevant components of the token model.

   1. For example, if we assume that cutting inflation by 50% will also reduce validator commissions by 50%, evaluate that loss of profitability against the cost to run a node and other expected validator operations costs to determine the number of validators in the set that are not profitable following the change, and propose mitigation strategies for that loss of profitability (e.g., supplementing with revenue from enterprise activity, adding a validator universal basic income to the emissions schedule, cutting the size of the active set, etc)

5. Improve long-term sustainability and market perception: It is to the benefit of the community as a whole for Cosmos to be a key player in blockchain innovation and in particular for the Cosmos Hub to continue as a leading chain to participate in, at all levels. All actions undertaken by ICF and Cosmos Labs at ICF’s direction, should contribute to this broad goal.

What success looks like: Success for this project is defined by the community receiving a clear, data-driven understanding of ATOM’s current usage and economic dynamics together with well-supported recommendations for how the Cosmos Hub can strengthen its long-term resilience and ecosystem role. A successful outcome will provide transparent modelling of potential future revenue pathways, thoughtful analysis of supply-side considerations, and actionable guidance that balances the interests of all stakeholders. Ultimately, the project should equip the community with objective insights that inform responsible, sustainable evolution of the network

Scope of Work

The proposed SoW is broken down into 3 phases: Research and Audit, Analytics and Modeling, and Community Activation and Governance**.** The selected research firm will be expected to own phases 1-2, and provide support to Cosmos Labs and the broader Cosmos community on phase 3. Cosmos Labs will provide support in execution of phases 1-2 in the form of knowledge transfer, instruction on constraints, introductions to stakeholders, and anything else that may be needed.

Research and Audit

Phase 1 encompasses all activities needed to get up to speed with the current state of the Cosmos Ecosystem, the proposed roadmap, and existing ATOM tokenomics, including:

1. Audit of the current tokenomics model and knowledge transfer

2. Research of similarly-positioned ecosystems and their token models (e.g., ZKsync, Avalanche)

3. Key stakeholder analysis and interviews

Deliverable: State of the ecosystem report outlining pain points with the current token model to be addressed by the tokenomics update.

Key Questions to Be Answered in Deliverable:

1. What does the purchase and sale landscape look like for ATOM today?

   1. Where does ATOM sell-pressure come from today and in what proportions (e.g., stakers, long-term holders, traders, etc).

   2. Where does ATOM buy pressure come from? What actions does a buyer of ATOM take after making a trade (stake, hold, DeFi, etc)?

2. What are the historical effects of inflation changes on ATOM staking and price dynamics? e.g., proposal 848.

3. How have comparable networks managed protocol emissions and supply changes, and how did those changes affect staking and price dynamics on those networks?

4. What tradeoffs should be expected between lowering inflation and resulting stakeholder activity?

Analytics and Modeling

Phase 2 will elicit a comprehensive, data-backed modeling of the tokenomics system that aligns the token’s demand and supply dynamics with the ecosystem’s enterprise-facing roadmap, while addressing inflation, governance, and stakeholder alignment challenges.

The redesigned model should be quantitatively validated with dynamic simulations of token supply and demand under varying scenarios (with assumptions plainly specified for adoption rate, staking participation, demand sinks, etc).

Key activities include:

1. Simulating the rate of demand for ATOM that would be needed to offset sell-side pressures on the token under various inflation scenarios

2. Clearly outlining the impact of these changes on all relevant stakeholders and proposing mitigations for each of these impact scenarios

   1. Validators: simulate validator economics under all of these inflation cut scenarios, including commission, stake-weight concentration, and impact on economic security.

   2. ATOM stakers: evaluate possible unstaking and sale scenarios from reductions in staking yield and simulate the impact of these scenarios on the model

   3. Other relevant stakeholders

3. Proposing a transition plan that allows for a gradual move from the current tokenomics model to the new model with minimal impact

Deliverables:

1. Tokenomics Model Document: Comprehensive report with all relevant formulas, parameters, and methodology.

2. Simulation Workbook or Dataset: Excel, Python notebook, or simulation output validating the model.

3. Comprehensive Dashboard: Allowing us to adjust any of the relevant inputs on inflation, total staked tokens, revenue (used as buybacks or staking rewards), etc to simulate the expected output on net inflation and staking rewards

4. Transition Plan: Detailed timeline to transition from the old tokenomic model to the new proposed model, alongside stakeholder impact mitigation initiatives.

5. Subsequent Revisions of the Above: to address feedback raised by Cosmos Labs and the community.

Community Activation and Governance

The final phase involves soliciting feedback from the community and broader stakeholder base, with the ultimate goal of passing an on-chain governance proposal (or proposals) on the Cosmos Hub to implement the relevant tokenomics changes. While Cosmos Labs will be the ultimate owner of this outcome, the selected research firm may be expected to play a supporting role in various activities needed to pass that governance proposal such as:

1. Designing the proposal and implementation phases in accordance with the transition plan

2. Drafting / helping to draft the governance proposal and put it up for vote

3. Participating in community and stakeholder feedback sessions, either asynchronous, synchronous, or both

4. Engaging with the community’s questions on the Cosmos Hub governance forum

5. Revising the proposal as needed to address feedback

Deliverable: A successful governance proposal (or proposals) on the Cosmos Hub to implement the proposed changes

Proposal Requirements

Proposals should include all of the following:

1. Firm overview, including relevant experience in tokenomics design, research methodologies, and prior experience with the Cosmos Ecosystem, if any.

2. Team bios: key members and their credentials.

3. Proposed methodology: approach to research and modeling.

4. Timeline and milestones: Please provide a timeline broken down by project phase and milestone.

5. Budget and fee structure.

6. References or past engagements.

Proposal Submission Instructions

Please submit proposals in shared doc (google docs preferred) and PDF format to robo@cosmoslabs.io (cc: nico@cosmoslabs.io) or in your relevant shared group with Cosmos Labs as soon as possible. Proposals are due no later than January 15, 2026, however, we reserve the right to close the application period sooner in the event that we receive enough qualified applications. Please reach out to @RoboMcGobo on telegram or email robo@cosmoslabs.io with any questions.

Disclaimer

Cosmos Labs has been engaged by the Interchain Foundation (ICF) to conduct research on, and an assessment of, how best to support the health and long-term sustainability of the Cosmos Hub and the wider ATOM ecosystem. This work is focused solely on analysis, research, and community-oriented recommendations. Nothing in this process should be interpreted as financial advice, an effort to influence the market for ATOM, or any intention to manage, promote, or affect the price, value, or trading behavior of ATOM. This work does not treat ATOM as a security, nor should any part of it be understood as implying future value, returns, or investment expectations. The views and proposals developed through this engagement are for the benefit of the ecosystem and do not create obligations or responsibilities for either Cosmos Labs or the ICF.

[RoboMcGobo]

We’ve begun sharing the RFP out with several research teams and have gotten some initial interest by many of these teams to submit proposals. We will update this thread as we receive proposals to transparently communicate the teams that have submitted.

This is also an open call to the community to refer teams and researchers to this proposal as you see fit. We aim to get a wide variety of proposals to ensure the process remains competitive and we work with the highest-quality research teams.

A general outline of how the process will unfold moving forward can be found in the tokenomics rework process post here: ATOM Tokenomics Research Kickoff

[arlai-mk]

Hi @RoboMcGobo,

Thanks for this.

Can you clarify what information will be shared with community re the RFP? e.g.

1. Name of the teams submitting proposals
2. The proposals themselves (with or without budget details)
3. The evaluation criteria/scoring
4. The evaluation results for each team
5. Any additional material

Thank you.

[RoboMcGobo]

Thanks for this reply @arlai-mk . Right now, we plan on sharing:

1. The name of all teams making submissions
2. The proposals themselves, without budget details
3. The vendors that are selected, as well as next steps for each

It’s possible this may change as vendors start submitting (at the end of the day we will need their permission to publish their proposals), but for now this is the plan.

[Thyborg]

Thanks @RoboMcGobo for driving this. As discussed together, I would like to provide the research firms that are considering submitting a proposal some context about Hydro, which I think can be a useful component of the new tokenomics.

Hydro’s development started in late 2024 at Informal Systems, one of the core contributors to the Cosmos tech stack. The Hydro team spun out of Informal and received funding for Q1 & Q2 from the Hub community pool via Prop 986. In Q3 & Q4, Hydro has operated from the yield generated on ATOM liquidity deployments. Hydro doesn’t have its own token and hasn’t raised external capital.

Since its mainnet launch in late 2024, Hydro has deployed over 4 million ATOM across 20+ Cosmos DeFi protocols through sequential monthly allocation rounds. Protocols request liquidity and offer incentives, ATOM holders vote on allocations and receive the incentives, and Hydro deploys the capital. The model works well, but it does require protocols to submit requests for liquidity in order for capital to be deployed. This means there may be other DeFi opportunities available, potentially offering higher yield, that this system is not able to take advantage of.

To address it, Hydro has built a new product called Inflow. The Inflow vaults automatically deploy capital across market-neutral DeFi strategies, including venues outside of Cosmos. Examples of strategies include LST redemption rate arbitrage, leveraged staking, perp arbitrage, and borrowing and lending arbitrage. Beyond these strategies, Hydro uses its Riptide feature to enable deployments into higher yield (but often market-exposed) strategies while insuring the deposits against potential losses.

The vaults have been operating in private beta for the past few months with promising results:

• ATOM vault: 19.94%
• BTC vault: 4.56%
• USD vault: 9.01%

The vaults are taking advantage of situations like LST de-pegs and market crashes. For example, during a recent de-peg of dATOM, the Inflow ATOM Vault was able to generate >30% APY by arbitraging the difference between the market rate and the redemption rate. As another example, after the Mars lending market suffered an exploit on Neutron, Hydro withdrew its liquidity and redeployed on Osmosis to take advantage of the temporary interest rate spike caused by the liquidity shortage, illustrating the “First out, First back in” strategy that we’re implementing across all deployments.

Hydro also plans to launch a Hub-native, zero-fee ATOM liquid staking token that combines a standard LST model with DeFi-integrated vault shares designed for different liquidity and risk profiles. The core token, hATOM, is designed for institutional users. Variants with 1-day, 24-day, and 90-day withdrawal windows enable progressively higher-yield strategies. All versions are fully backed by ATOM, transparently verifiable on-chain, and can always be converted into hATOM either directly or via Hydro-managed internal liquidity pools. All hATOM variants will be usable as collateral in lending markets with unified liquidation paths.

We have two initial suggestions regarding the new ATOM tokenomics, intended as a starting point to stimulate further discussion (we welcome extensions or variations on the ideas presented).

1- Deploy a portion of ATOM’s inflation to the Inflow ATOM vault

The vault would automatically deploy ATOM into DeFi protocols to improve ATOM’s liquidity and earn optimized yield. The yield generated by the vault would be partially inflationary (as the vault utilizes LSTs) and partly non-inflationary (generated via market mechanisms such as fees, incentives, interest rates, arbitrage etc.). For example, when the vault deploys ATOM and an ATOM LST into a concentrated liquidity position on a DEX, it earns staking rewards from the LST, and also earns swap fees from the pool from traders wanting to quickly exit their staked position. As ATOM’s inflation rate drops (as we expect it will happen through the tokenomics changes), the share of non-inflationary yield will become a much larger percentage of it. Both inflationary and non-inflationary yield will be auto-compounded by the vault, and a set amount of ATOM can be burned per month to provide price support.

2- Sell ATOM when it outperforms, buy when it underperforms

When ATOM outperforms the market, a portion of the community pool (managed by Hydro) would be automatically sold into BTC and USD and deposited into Hydro’s BTC and USD Inflow vaults, which will generate non-inflationary (strictly comes from market activity) yield via DeFi deployments. This would be governed by very explicit rules. As an example, when the ATOM / BTC pair is trading above its 200-day moving average and ATOM / USD is also above its own 200-day moving average, Hydro reduces ATOM exposure and reallocates into BTC and USD. Conversely, when the ATOM / BTC pair falls below its 200-day moving average, Hydro would use the BTC and USD yield to buy-back & burn ATOM, which helps defend certain price levels in downturns and improve confidence in the token.

As Cosmos Labs gets more institutions to use the Cosmos stack, and as these institutions bring tokenized real‑world assets like stocks, bonds, and commodities on-chain, we expect new DeFi protocols will launch on these institutional chains to utilize them. A great example is Arc, launched by Circle (after acquiring Informal System’s Malachite team) to bring more global economic activity on-chain. Hydro will be ready to deploy ATOM, hATOM, BTC and stablecoins to these new protocols and pair them with institutional assets. The more Cosmos Labs is successful at expanding the core infrastructure, the more Hydro will be able to act as a liquidity layer and yield engine that feeds value back into ATOM.

Looking forward to working with you!

[Jack_Hu]

Title: The Future Token Model of ATOM — Value Capture in Cosmos as a Zero Layer

1. Background: Why ATOM Historically Failed to Capture Value

Cosmos has long faced a structural criticism:

“The more chains Cosmos has, the less valuable ATOM becomes.”

This happened because:

- Each chain issues its own token

- Security does not depend on ATOM

- IBC does not require ATOM

- Cosmos SDK does not require ATOM

- There is no unified economic center

As a result:

Cosmos technology is strong, but ATOM historically captured very little value.

The new token model aims to fix this.

2. Core Goal of the New ATOM Token Model

Cosmos is shifting from an “app‑chain ecosystem” to a Zero Layer (0L) infrastructure.

The new token model aims to:

“Make ATOM the economic anchor of Cosmos as a Zero Layer.”

This means ATOM must capture value from:

- Shared security

- Interchain MEV

- Interchain settlement

- Ecosystem capital flows

- Enterprise chain adoption

3. Five Major Future Value Sources for ATOM

3.1 Interchain Security (ICS) — Security Rental Income

ICS allows new chains to:

- Rent security from ATOM validators

- Avoid building their own validator set

- Avoid issuing their own token

- Launch faster and more securely

This turns ATOM into:

Security‑as‑a‑Service (SaaS) for the entire Cosmos ecosystem.

3.2 Interchain Scheduler — Capturing Interchain MEV

MEV is a massive value pool generated by:

- Arbitrage

- Liquidations

- Price discrepancies

- Cross‑chain delays

- DEX slippage

Cosmos plans to:

- Aggregate interchain MEV

- Route it through the Interchain Scheduler

- Distribute it to ATOM stakers

Meaning:

ATOM captures MEV from the entire Cosmos network, not just one chain.

3.3 ATOM as the Interchain Settlement Asset

As IBC adoption grows, Cosmos needs a neutral settlement asset for:

- Cross‑chain payments

- Cross‑chain liquidations

- Cross‑chain collateral

- Cross‑chain stablecoin routing

ATOM is being positioned as:

The “USD/ETH” of the Cosmos interchain economy.

3.4 Interchain Allocator — ATOM as the Ecosystem Capital Engine

The Interchain Allocator aims to:

- Turn ATOM into the capital coordination center

- Allocate funds to new chains and infrastructure

- Create a protocol‑level growth flywheel

This is similar to:

- Optimism’s Retro Funding

- Solana ecosystem grants

- a16z‑style ecosystem investment

But built into the protocol, not a foundation.

3.5 Enterprise Chains — ATOM as the Base Asset for Institutional Adoption

Enterprise chains (permissioned, compliant chains) need:

- IBC

- ICS

- Cosmos SDK

- Auditable governance

- Customizable architecture

These chains may not issue tokens, but they will:

- Rent ATOM security

- Use ATOM for settlement

- Use ATOM for MEV distribution

Meaning:

Institutional adoption of Cosmos technology → ATOM captures value.

4. What ATOM Will Become (Future Roles)

ATOM is evolving into:

4.1 The Security Asset of Cosmos (similar to ETH in EigenLayer)

4.2 The Interchain Settlement Asset (similar to USD in global finance)

4.3 The Interchain MEV Capture Asset (similar to Ethereum’s MEV‑Boost, but cross‑chain)

4.4 The Ecosystem Capital Coordination Asset (similar to OP, but more foundational)

4.5 The Institutional Base Asset (used by enterprise chains for security and settlement)

5. Predicted Final Form of the ATOM Token Model

ATOM will evolve from a governance token into a multi‑role foundational asset powering:

- Security

- Settlement

- MEV capture

- Ecosystem capital

across the entire Cosmos interchain.

It will no longer be:

- A simple staking token

- A governance token

- An inflationary asset

Instead, it will become:

The economic engine of Cosmos as a Zero Layer.

[Drooo]

@Thyborg

2- Sell ATOM when it outperforms, buy when it underperforms

Any market-timed selling/buying, even if done formulaicly as described, should not be built into tokenomics. It’s ultimately price manipulation even if its simple and mechanical. ATOM price needs to be determined by the overall success of the protocol and Cosmos Labs and the community need to have that as their focus.

Any strategic buying and selling needs to remain at the ecosystem layer.

[klendhaar]

Subject Title: ATOM Tokenomics: Beyond Hot Reactions – Towards a Holistic Strategy for Sustainable Value Generation (by Snow-Fall)

Dear Cosmos Community (Forum and Telegram),

During this holiday season, even if my activity is slightly reduced (family obligations!), I’ve taken the time to carefully review the rich and varied discussions on ATOM tokenomics held on both these platforms. As a small, independent, and active validator (@Snow_FalI on X, snow-fall.io), I wish, like a relayer of these exchanges, to synthesize certain points and offer our constructive perspective, aligned with the current market.

I share the general frustration regarding the relative silence of many large validators. These discussions are vital for ATOM’s future and require everyone’s engagement, including those who capture the majority of the rewards. Where is their voice in this crucial debate?

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1. Community Pool Treasury Management: Diversification Yes, but Value Creation First and Foremost

(Response to Кирилл, RoboMcGobo, Vanya, Jeremy Parish)

Кирилл’s proposal to diversify a portion of the Community Pool (CP) into stablecoins to generate yield and fund buybacks is a valid avenue for CP diversification and risk management. It’s an initiative that attempts to counterbalance the structural selling pressure from validators, as Кирилл pertinently reminds us.

However, I share the concerns of M R and RoboMcGobo regarding the marginal impact of such an initiative if it’s not integrated into a broader plan. As RoboMcGobo puts it, “it doesn’t make sense to pilot anything in a vacuum.”

Our priority should not be the management of a small treasury (however wise it may be), but the implementation of systemic mechanisms for massive revenue generation via the Hub’s own activity. This is what can fuel a much more substantial CP and far more effective burn mechanisms. Diversification is a tactic, but intrinsic value creation is the strategy. I also agree with Jeremy Parish that the protocol should not directly engage in staking so as not to compromise decentralization; CP funds should be directed towards revenue generation and burning.

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2. The Central Debate: Utility, Revenue, and the Illusion of “Sell Pressure”

(Response to M R, Guinch, Victor | Moonkitt, RoboMcGobo, PЯӨPΛGΛПDΛ)

The point raised by M R is fundamental: “Tokenomics matters little if there is close to zero utility.” This is the cornerstone of our problem. ATOM suffers from a “Free Bridge Syndrome”: the Hub provides military-grade security and IBC infrastructure for free.

• The Facts : Recent IBC statistics (Week 50) illustrate this: $134 million in volume transits weekly without significant value capture for ATOM. Guinch is right: “Monetize IBC!”

In this context, the discussion about reducing validators to “solve the price” is a dangerous distraction and a strategic error. My figures are clear and based on the Active Set, as many have mentioned in the RFP on “Validator Economics”:

• The Top 10 validators capture ~50-55% of rewards.

• The Top 30 validators control ~78-82% of rewards.

• The 80 smallest validators (including Snow-Fall) receive only 3.38%.

Selling pressure does not come from them. Attempting to reduce them, as RoboMcGobo indicates, amounts to “piloting in a vacuum,” degrading an asset (decentralization) without creating any revenue or utility. This would weaken an already fragile network by targeting the wrong problem.

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3. The True Long-Term Strategy (2-5 years): Monetization, Inflation Management, and Deflation

The solution is not to debate short-term APY (though PЯӨPΛGΛПDΛ raises valid points about attractiveness), but to implement a holistic and pragmatic strategy that will transform the Hub’s raw utility into demand for ATOM and into deflation. We must aim high and be smart, as this won’t happen in a few weeks; the market won’t change overnight, especially in a challenging global market context.

Our approach rests on three interdependent pillars for a sustainable balance: strategic inflation management, massive revenue generation, and the implementation of powerful burn mechanisms.

A. Massive Revenue Generation (Fuel for Burning)

1. Priority #1: Make the Hub a Liquidity Center (DeFi Hub):

   • As Victor | Moonkitt proposes, deploy a powerful native DEX on the Hub. The massive swap fees generated (consider Osmosis’s volumes) would primarily serve to burn ATOM, with a portion potentially redistributed to stakers. This creates direct utility and revenue.

   • Goal (12-18 months): $50 to $100M in monthly volume. **$100,000 to), this represents 25,000 to 50,000 ATOM burned/month, or 300,000 to 600,000 ATOM/year.

2. Priority #2: Monetize IBC Highways:

   • Institute an economic contribution (micro-fees on transfers or voluntary revenue sharing) on IBC flows. These revenues would predominantly be burned to fuel ATOM’s deflation, transforming the “free bridge” into an economic asset.

   • Goal (18-36 months): Capture 0.01% of IBC volume (~$500M/month) = $50,000 in monthly revenue. If 75% is burned, this represents 18,750 ATOM burned/month, or 225,000 ATOM/year.

3. Monetize Interchain Security (ICS) Fairly:

   • Require substantial ATOM collateral and/or native token revenues from Consumer Chains. These funds could be burned, distributed, or strategically used to fuel liquidity pools, generating yields that would, in turn, serve to burn ATOM.

B. Strategic Inflation Management and Staking (Network Security)

• ATOM suffers from infinite supply and continuous inflation (~7% annual minimum), which dilutes value. The solution is not to simply drastically reduce inflation (which, as PЯӨPΛGΛПDΛ suggests, could compromise security by disincentivizing staking), but to manage it intelligently.

• We must aim for strategically adjusted and non-drastic inflation to maintain a healthy staking rate (targeting 66% for security). This ensures network robustness.

• This controlled inflation, combined with massive burn mechanisms fueled by revenues (following Ethereum’s EIP-1559 model), will allow ATOM to transform from a purely inflationary asset into a potentially deflationary or neutral asset, thus becoming scarcer and more valuable. It is the balance between security and scarcity that will drive ATOM’s value in the long term.

• Goal (2-5 years): Transition from a current emission of ~30 million ATOM/year to an annual burn exceeding emission, making ATOM net deflationary (1-2% supply reduction/year). The initial combined burn from priorities 1 & 2 would already be 525,000 to 825,000 ATOM/year (i.e., ~1.75% to 2.75% of current annual inflation), a concrete and non-negligible starting point.

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Our Role as an Active Small Validator (The Voice of Decentralization)

As an independent validator, Snow-Fall embodies the decentralization we advocate. We are the:

• IBC Relayers who maintain vital routes.

• Engaged participants in governance (where many large players are notably absent).

• Active voices pushing for a sustainable and decentralized vision.

We fight for this vision of a strong and economically viable Cosmos for all, not just for a select few.

It’s time to adopt a holistic and long-term strategy, aligned with the current market, to build real utility and scarcity for ATOM.

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Call to Action

This is not an exhaustive manifesto, but a direct contribution to the ongoing discussions on the Forum and Telegram, aiming to synthesize and propose concrete avenues. The full manifesto, with an even more detailed analysis, will be prepared for Wednesday.

We invite the community to debate these crucial points. Decentralization, security, and economic viability go hand in hand. Let’s not sacrifice them.

Sincerely,
The Snow-Fall Team
@Snow_FalI on X | snow-fall.io

[jacksteroo]

The monetization model already exists. We’re just not capturing it.

At Cosmoverse 2025, Cosmos Labs said ATOM should benefit from “licensing stack-oriented products to banks and institutions.” But they didn’t say how. Here’s how.

The problem everyone’s dancing around: 200+ chains use Cosmos SDK. Fortune 500 companies, governments, banks—all hiring agencies who charge $500K-$5M to build on Cosmos. Figure is doing $9.9B in tokenized credit on Provenance. Ondo has multi-billion treasuries. SWIFT, SMBC, MUFG all building on the stack. Two CBDCs in development.

These agencies are getting paid real money. ATOM captures zero.

Why? Cosmos SDK is Apache 2.0. Free forever. Agencies profit from Cosmos without ATOM holders seeing a cent.

The solution isn’t complicated: Enterprise licensing model with legally enforceable ATOM staking requirements. Same playbook as Red Hat ($34B IBM acquisition) or R3 Corda (banks already pay $250K/year for blockchain licenses).

Create two tiers. Base SDK stays free and open source. But agencies building for enterprises need “Cosmos Enterprise Stack”—LTS support, compliance tooling, legal indemnification, 24/7 support, certified configurations. The stuff enterprises actually pay for.

Price it at $100K-$5M/year depending on scale. Require agencies to lock 25K-500K ATOM per license. Enforce it technically (smart contracts verify stake before chain starts) and legally (standard ELA with breach penalties).

At scale: 150 agencies × 100K ATOM average = 15M ATOM locked. That’s 3.75% of supply removed from circulation. Plus $60M/year in USD revenue.

Split revenue three ways: 60% operations, 20% open source security fund (prevents XZ-style attacks, pays SDK maintainers properly), 20% ATOM value capture.

That 20% flows to ATOM three ways simultaneously:

Dynamic inflation formula: Base 10% inflation minus (Revenue / $100M). So $60M revenue = 9.4% inflation. $300M = 7%. $1B+ = 0% floor. Ties inflation directly to enterprise success.

Real yield distribution: 10% of net profits distributed to stakers. At $60M revenue that’s +1.3% yield on top of staking rewards. At $225M it’s +4.9%. Makes ATOM a productive asset with institutional-grade income.

Treasury buyback: 10% of profits buys and burns ATOM. Cumulative supply reduction over time.

All three compound. More enterprises → more locked ATOM + lower inflation + real yield + buybacks.

Why enterprises will accept this: Red Hat charges billions for free software. Why? Support, compliance, legal protection. Cosmos agencies are already charging clients $500K-$5M per deployment. Adding $100K-$500K for enterprise licensing is a 10-20% markup. Much cheaper than hiring Cosmos Labs directly (they charge $2M+ for custom work).

Plus we make it easy. Standard tier? Agency pays USD, we stake ATOM on their behalf. They never touch crypto. Premium tier? Self-stake option with 20% discount for sophisticated customers. Strategic tier? They buy and lock ATOM, recover it after contract ends.

Enforcement works because:

• Technical: Chain checks stake via smart contract before starting. No stake = features disabled.

• Legal: Standard ELA with staking clause. Breach = immediate termination + liquidated damages.

• Economic: Managed service removes friction. Enterprise never manages crypto if they don’t want to.

Fork risk is overblown. Red Hat faced the same with CentOS (free clone). Enterprises still paid billions for support and indemnification. Same will happen here. The proprietary modules (compliance, monitoring, HA features) aren’t in the base SDK.

Compare this to other proposals:

Lock-based staking? Circular. Just moves existing value around differently.

IBC fees? Pennies. Won’t move the needle even at 10x volume.

Inflation cuts alone? Creates validator exodus if no revenue replacement.

Hydro vaults? DeFi yield stays with external protocols.

This? External revenue from enterprises already paying someone. Just not paying ATOM holders.

@Mag said “we don’t know yet how to monetize.” That’s only true if you ignore who’s already paying. The customers exist (Figure, Ondo, SWIFT integrations, CBDC projects). The agencies exist (charging $500K-$5M per deployment). The willingness to pay exists (Red Hat proves it, R3 Corda proves it). (See ATOM Tokenomics Research Kickoff - #3 by Mag)

We just need to build the product (Enterprise Stack with LTS + compliance + support) and tie it to ATOM with enforceable mechanisms.

@Carter_Lee_Woetzel asked “What is ATOM supposed to do?” Here’s the answer: ATOM becomes the access token for enterprise-grade Cosmos deployments. Lock ATOM, get enterprise features. Recover it after contract ends. Stakers earn real yield from enterprise revenue. Supply decreases as adoption increases. Inflation drops automatically via formula. (See ATOM Tokenomics Research Kickoff - #2 by Carter_Lee_Woetzel)

That’s utility. Not circular. Not speculative. Just “enterprises need this, they pay for it, ATOM holders benefit.”

@dogemos is right that past research didn’t deliver. But that was because AADAO couldn’t implement anything. This time Cosmos Labs owns the execution. The research firms just model the economics and stress-test assumptions. We’re not asking consultants to “make recommendations and leave.” We’re asking them to validate whether locking 15M ATOM + $60M revenue + dynamic inflation = sustainable model. (See ATOM Tokenomics Research Kickoff - #15 by dogemos)

Year 5 targets: $60M revenue, 21M ATOM locked, 9.4% inflation, 1.3% real yield, $3M buybacks.

Year 15 targets: $1B+ revenue, 100M+ ATOM locked, 0% inflation, 5%+ real yield, $50M+ buybacks.

The technology works. The customers exist. They’re already paying agencies. We just need to capture value.

Build Cosmos Enterprise Stack. License it with ATOM staking requirements. Flow revenue to three mechanisms (inflation control, real yield, buybacks). Done.

What needs research:

• Legal framework for licensing entity

• Market validation (agency willingness-to-pay research)

• Economic modeling (revenue projections, ATOM supply impact)

• Implementation sequencing (which features first, what pricing)

• Risk assessment (fork risk mitigation, competitive response)

What doesn’t need research:

• Whether enterprises will pay for support (Red Hat already proved this)

• Whether licensing can be legally enforced (standard ELA + smart contracts)

• Whether this creates utility (forced ATOM demand is utility by definition)

Stop trying to optimize circular tokenomics. Start capturing value from people already paying for Cosmos technology.

The only question is whether Cosmos Labs wants to build an enterprise software company or keep consulting. Because Red Hat didn’t become a $34B exit by staying a consulting shop.

For my complete thoughts, read this Medium article

[Drooo]

Thanks for taking the time to put together such a great summary.

@klendhaar

1. Community Pool Treasury Management: Diversification Yes, but Value Creation First and Foremost

Definitely agree with value creation first and with the small, simple treasury approach. Aside from the uncertainty of good treasury management (people screw things up over time), the size of the treasury would have to be huge to offset tokenomic dynamics happening at a protocol scale. We don’t want a cabal of people no matter how OG they might be to be in charge of somehow balancing/offsetting ecosystem dynamics with treasury actions.

[Drooo]

@klendhaar

2. The Central Debate: Utility, Revenue, and the Illusion of “Sell Pressure”

Agree, bottom line has to be capturing value properly back to the token/protocol from the value supplied by the tech and the protocol participants. This loss of value capture is basically the Achilles Heel of Cosmos and turns the protocol into a free public service. It’s really surprising how long it has been allowed to continue quite frankly.

[Drooo]

@klendhaar

3. The True Long-Term Strategy (2-5 years): Monetization, Inflation Management, and Deflation

Agree with a couple caveats/thoughts.

1. Agree that the real question is value creation not rearranging the deck chairs… by tweaking validator rewards or other small scale issues. If the issues we face in Cosmos could have been fixed by little tweaks, that would have happened a long time ago.
2. Not sure about having a massive DEX because it would kind of be like government funded enterprise and disincentivize DEXes being crated in the ecosystem because they would have to compete with it. I could easily see this having negative knock-on effects for general ecosystem growth. Overall we need to keep the protocol / ecosystem relationship symbiotic and not get too fancy with the protocol in a way that competes with the ecosystem.

[Patrick]

Saying that ATOM’s price should only be determined by the success of the protocol would mean that ANY tokenomics mechanism that has a positive impact on price counts as manipulation. Inflation, token burns, fee capture (such as Skip is using with IBC currently to burn ATOM), liquidity incentives, grants, etc. all affect price and are common tools used by many blockchains.

Price manipulation would be something that interferes with fair price discovery, but what we’re suggesting here is a transparent, rule-based, continuous mechanism that uses only public market data.

[brmi]

Hello everyone,

I am not very technical so I don’t know if it’s something possible, but isn’t it possible to create an optional mechanism at the stack’s level, where blockchains using the stack could automatically send to the hub those small quantities of tokens that create UX issues, while being incentivized for it to encourage them using this service.

May be something like : when on the whole blockchain, the value of non native tokens that are not more than 1$ per wallet and have not been used by the wallet for the past 3 months, reaches 1000$ in total, it is automatically sent to the cosmos hub (using just one transaction to optimize fees, may be a transaction payed in atom ideally), and may be the cosmos hub could use a mechanism to generate revenue from this, while keeping those token liquid in case the wallet want’s to use his 0.005 chihuahua token. May be put this money in a vault or some similar mechanism.

The revenue generated by all these dust of tokens coming from all blockchains using this service could be redistributed (in ATOM maybe) to :

• the wallet that has those tokens (would be dusts but its his/her money so it is normal to redistribute to it)

• the blockchain using this mechanism, to encourage them to use this service

• the cosmos hub, generating this revenue

It would be a way :

• to reduce the UX issue, regrouping all the dust on the cosmos hub

• to create a new revenue for blockchains while using inactive money that stays on their chain for nothing

• to generate revenue for the cosmos hub through a new service and some transactions that could be paid in ATOM

• to let ATOM capture value from the growth of the cosmos

But :

• I don’t know how we generate revenue from this once it’s on the cosmos hub, I just assume as it’s money, there is some mechanism(s) that could be used

• I don’t know if it’s technically possible to automatically take these small amounts of tokens from wallets to transfer it to the hub without a form of authorization from the wallet (may be one signed authorization from the wallet that would allow the cosmos hub to take care of his dusts, but ideally, without authorization would be great)

• I don’t know if blockchains contains thousands of dollars of these dusts on their blockchains, I guess it depends on the blockchain

It is just an idea, I don’t know if this mechanism is doable, but maybe it could create some possible ideas to people more qualified than me. Finding a way to generate value from the unused money of the cosmos.

[wcgwcg2008]

The crypto space is an attention market, not a tech market. People aren’t investing in growth, they’re buying into noise. No one cares about a project’s viability or technical progress—if they did, the market cap of useless meme tokens wouldn’t be in the billions.

In this cycle, a viral tweet is worth more than a thousand lines of solid code. Hype is the only currency that actually trades.

[Drooo]

This is how many people currently feel but many people feel many different ways at many different times.

[EL14]

I agree that ATOM needs to appear in the news for one reason or another. I made a proposal to that effect: ATOM Tokenomics Research Kickoff - #40 by EL14

[Drooo]

Think about the consequences of setting up a system that guarantees massive selling of ATOM when () the price moons. No one will want to hold the token because the price is essentially capped. The whole goal of creating a crypto protocol is to generate economic value and recapture value back to the token commensurately in order to incentivize continued development and growth. Selling ATOM when it outperforms would completely contradict that goal.

No teams would want to build in an ecosystem where the native token is not allowed to rise too fast in price.

[Drooo]

I think this is great. Thanks a lot @klendhaar for collecting and organizing all of this.
(I agree with a long term goal of organizing community discussion more efficiently as well)

@klendhaar

Emergency ICF buys ATOM with BTC/ETH Immediate Stop the bleeding

The only nuance I would add is that the ICF should be selling BTC and ETH simply because it needs to be fully ATOM alined and there is no reason for it to hold BTC and ETH over time. Now is obviously the time to begin selling all of that given the (horrid) price action.

@klendhaar

Stabilization Inflation tapering (-0.5%/mo) 12-18 months Avoid shock, restore confidence

I also agree that inflation calibration - in relation to security needs, as emphasized by @Gregory_C and others - is fundamental and immediate.

@klendhaar

Infrastructure Activate IBC fee capture 90 days Signal competence, prepare for growth

Seems clear that this is a simple step in the right direction. This can also be calibrated over time.

@klendhaar

Growth B2B Sales + Atom Intents 6-18 months Inject external capital + UX Solved

Its great to see the proposal addresses intents as a UX upgrade. I think UX is the frontier for Cosmos once the basic tokenomics and value capture at the protocol level (IBC fees, and other possible mechanisms) are addressed. @jacksteroo ‘s discussion of capturing value from SDK is also an important consideration (still have to read that in depth)

[Drooo]

@klendhaar maintaining the epic work here to bring needed clarity and urgency to this discussion and to make sure to include the and summarize everyone’s voices.

I need to read through again but this should likely be broken down into specific proposals and proposed one at a time starting with the most urgent elements - ICF BTC, ETH selling, Inflation rate recalibration - and then subsequent sections in the coming weeks.