Splitting ATOM: Money or Governance?

This post is a draft of research which may or may not be completed in this format. It derives in part from Neta DAO’s living public research seminar Coining Reason current focus on economy and money (see https://academy.netadao.zone and https://x.com/coiningreason for more information) and is essentially an effort to take some thoughts for a walk, responding in part to concerns raised in The Interchain Federalist Papers, Carter Woetzel’s “ATOM Endgame: Moneyness, Security, Liquidity” (here), and other texts, as well as broader conversations about ATOM on Twitter and other social media. My intention in citing these sources is less to give faithful reconstructions of their particular positions than to point to preexisting ideological backgrounds which disorder and disorient our thinking about what ATOM really is and can be. This background disorder and disorientation conspire against our ability to find common ground and build forward.

1. ATOM: Money, Commodity, or Security?

There is an active effort currently underway to reorganize the ATOM token as money, beginning with Prop 848 (or even, albeit in rejected form, Prop 82) and entailing several further forthcoming tokenomics adjustments.

Zaki Manian recently described the $ATOM token as “governance controlled money” and “the people’s money” and went further to declare that “money is so much more of a purpose than security for ATOM”, while Youssef Amrani has announced that the Atom Accelerator DAO is “fully committed to advance $ATOM as the Interchain money”. In a similar spirit, Woetzel writes in his essay, “I believe $ATOM as interchain money is the best foundation by which both security and utility of $ATOM can exponentially scale.”

These advocates for ATOM-as-money are in marked opposition to Cosmos cofounder Jae Kwon’s repeated, flat assertions: “ATOM isn’t money”. For Kwon, ATOM is a governance token, not a monetary primitive.

This split has riven ATOM’s communities of developers and users, with “hard fork” politics seemingly the only way forward.

However this schism may ultimately resolve, I believe both visions are fundamentally confused on essential points: in particular, neither properly understands money in agitating for or against ATOM’s status as such.

Manian and AADAO, in advocating for Prop 848 and similar supply-side tokenomic adjustments to supposedly “improve” ATOM’s moneyness, are succumbing to the neoclassical myth of “commodity money,” as articulated most famously by Adam Smith and James Mill, revamped by certain Austrian economists, and recently repurposed for crypto audiences by Saifedean Ammous and others. No doubt the appeal of this account resides in the intuitive simplicity of its quantitative framework: if there is more of something, it is worth less. Obviously. Right?

But this neoclassical/quantitative account is “mythical” for several reasons, not least the paucity of historical evidence to support money emerging from barter and commodity trade, for the “essential function of myth” is that of “naturalizing” our concepts (Roland Barthes, Mythologies, 241). Indeed, the neoclassical myth of commodity money entrenches ideas of markets as “natural” or “spontaneous” systems of rational valuation, necessarily flowing from the private (and ostensibly rational) activity of individuals—to the degree that, today, many regard markets and economic activity as tautologies for rationality itself:

behind this identification of the object of economic analysis with conducts involving an optimal allocation of scarce resources to alternative ends we find the possibility of a generalization of the economic object to any conduct which employs limited means to one end among others. And we reach the point at which maybe the object of economic analysis should be identified with any purposeful conduct which involves, broadly speaking, a strategic choice of means, ways, and instruments: in short, the identification of the object of economic analysis with any rational conduct. (Michel Foucault, The Birth of Biopolitics, 268)

In this way, the “dismal science” of economics becomes a propagandist of the status quo: if resources and relations have been distributed in a certain way, it is because the market has optimally arranged them to be so, and no further rational optimization is possible. To question or challenge the market’s decisions, to intervene in the economy, is but the folly of politicians and social engineers. Yet, as our daily experience in crypto readily attests, markets are hardly rational. The movements of capital are not intrinsically allied to global welfare and justice, toward a common Good, but self-enrichment and auto-valorization through private goods. As Alenka Zupancic aptly quips, “The invisible hand of the market, supposedly looking after general welfare and justice, is always also, and already, the invisible handjob of the market, putting most of the wealth decidedly out of common reach” (What IS Sex?, 32).

This ideological mystification of economy by the neoclassical myth of commodity money not only obscures the irrationality at the heart of markets but also, and more importantly, the public or social (rather than private) character of money. For as long as the private individual is the unit of economic analysis, raw self-interest must reign over the moneyed principalities.

What disappears from view on this account is the fact that money, rather than simply being used by individuals, actively creates and constructs the individuals in question: money individuates (it “accounts”) individuals. This process of individuation is not done once and settled for all time; it is ceaselessly at work in every transaction, every obligation and its discharge, exposing private individuals to the promise (or, as the case may be, threat) of public (re-)organizations:

To say that money is a social link typical of modern times means defining it as a way of “accounting” individuals and organizing them into groups and distinct territories, by means of a relationship between public and private. Because it is a social link, money is also (functionally) an instrument of trade, an object of accumulation or support of power; but to reduce it to these functions alone would mean leaving out the essential. (Boyer-Xambeu et al, Private Money and Public Currencies: The Sixteenth Century Challenge, 3)

It is precisely money’s essential process of individuation, and especially its permanent potential to revise and reconfigure public/private relations, that the neoclassical myth disavows and forecloses.

By assimilating money to the status of an instrument of trade—albeit, as the myth tells us, the premiere commodity, the commodity that emerges as the most salable, most exchangeable object between private individuals (never mind the fact that commodity theorists’ beloved precious metals are precious precisely because by and large they did not pass hand-to-hand and circulate among individuals, with most gold and silver squirreled away in royal vaults… we are told by John Kenneth Galbraith that early American colonists, like those in other British colonies, were chronically starved of a monetary medium by the Bank of England’s austere gold (commodity) standard, fomenting both revolutionary appetite and a craving for monetary experimentation, such that the legacy of “paper money issued by a government belongs indubitably to the Americans” (Money: Whence It Came, Where It Went, 52-66))—that is, by reducing money to a mere commodity, our ability to think about money falls into the quantitativist grooves most prominently laid down in James Mill’s Elements of Political Economy:

By value of money, is here to be understood the proportion in which it exchanges for other commodities, or the quantity of it which exchanges for a certain quantity of other things. […] This proportion is determined by the total amount of money existing in a given country. (95)

Mill’s thesis that the value of a monetary token is a function of the total supply of that money relative to the goods and services it can purchase is implicitly reformulated in Woetzel’s remarks as follows: “value (the driving consensus debate behind liquidity) = scarcity + desiredness, where desiredness is derived from a subjective interpretation of utility.”

In other words, value is the intersection, or equilibrium point, of supply and demand curves. The self-evidence of this truism, so obvious when applied to commodities and securities, breaks down when used to evaluate money—for supply and demand curves are the product of monetary media. Money, especially access to money, defines and denominates the social curvature of supply and demand before it is itself a subject of supply and demand.

If particular classes in a society lack robust access to money, it should not necessarily be inferred that they demand less or lower-quality water, food, shelter, education, etc., than do their richer counterparts, since their demand may just as well be regarded as having been consigned to oblivion, muted, erased from the social ledger—such was the feeling of the American revolutionaries, whose famous slogan “No taxation without representation” registered their erasure. In these conditions, the concept of economic “demand” naturalizes the inequalities and inefficiencies that enrich some while disenfranchising others.

This explains the broad (and substantially “sticky”) appeal of Web3’s ability to “make money”—not in the gambling or entrepreneurial sense of “making money” (putting, or losing, stacks in the bank), but the revolutionary sense of fabricating new forms of money (the American colonial experiments), thereby unclogging the circulation of goods and bonds that have become insular and sclerotic, or that were underdeveloped or unaddressed to begin with. It seems ATOM is not the only Web3 community still wrestling with the question of whether, and how, their tokens are auxiliaries or alternatives to so-called traditional banking, whether they are entrepreneurs “making the most” of the existing system or revolutionaries standing in the cause of a better system.

The claim I advance here is that tokenomic changes aimed at reducing the total issuance of ATOM, like Prop 848 and its planned forthcoming accompaniments, paradoxically reduce $ATOM’s viability as a new form of money insofar as they reduce the potential redistribution and rebasing of constituent power (via reduced staking rewards) that a credible monetary system demands.

As Christine Desan argues, money is “a constitutional phenomenon,” a legal or governance construct, not a commodity or security susceptible of ordinary economic analysis (Money Talks: Explaining How Money Really Works, 126). In a related essay, Desan explains:

Economists ask exchange alone to do far too much [in their accounts of money]. The transactions they imagine turn out to depend on payments. Payments, in every modern society at least, depend on money. And money is a complex project, a legal enterprise that creates a unit of account through debt; liquidity through supporting the travel of that obligation; and credit for its money through collateral, public debt, insurance, and (at bottom) the sheer fact of public obligation to contribute to the state. (“Money’s Design Elements: Debt, Liquidity, and the Pledge of Value from Medieval Coin to Modern ‘Repo’,” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3897399)

Proposals to “drive value” to $ATOM stakers by increasing the Hub’s “revenue” rather than through inflation carry $ATOM even further from the concepts of both money and commodity. These proposals would, in effect, convert the $ATOM token into a security offering, requiring registration and disclosures with regulators in whatever jurisdictions the token is traded. Under these proposals, $ATOM is neither “Interchain money” nor a commodity like Bitcoin, but a share in a common, for-profit enterprise.

In summary, the proponents of ATOM as “Interchain money,” though admirable in their desire to grow the ecosystem, must be careful not to propose and pursue policies which turn ATOM into a mere commodity for speculation or (if “revenue” is to be the new keyword) an unregistered security—to achieve genuine moneyness, something altogether different is required.

2. The Power of Cosmos: Sovereign or Constituent?


Well at least you are trying to learn what money is :slight_smile: But at least try to read the original sources of these theories. I mean talking about supply and demand and not quoting John Locke is pretty bizarre.

In any case, “money” as it were is not one thing. It can represent different things. For example, commodity money - shekels, weights - represent an accounting of some commodities (in its original form - grain). 1000 shekels means that 1000 bags of grain were created. In societies which are short on important first need commodities such as food and energy - without food you can’t live for a week - and without energy (oil) - you can’t go anywhere, commodity money is paramount means of since the society is trying to acquire needed resources.

In societies that have commodity surpluses, like the USA today, money transforms into political money - a way to redistribute the resource among the politically powerful factions in society. That is when you arrive at things like the US dollar and modern fiat money which is a redistribution of resources according to politics (since Congress prints new fiat money via its fiscal deficits). BTW communist theory operates under the notion that there is permanent surplus of all commodities and as such money is then entirely political money. Which is all fine and dandy, until you get into a war and your commodity surplus gets bombed away. At which point you are back into the dark ages and looking to acquire resources again.

To answer your question, money can be both things - it can be both commodity money and governance money. It depends on the context. While other coins like Bitcoin are commodities, ATOM is clearly governance money construct given that its monetary policy can be set by the community. Bitcoin’s monetary policy can’t be set by the community.

Supply of a unit of account is clearly important because if the supply is limitless then the unit of account is unusable. If the unit of account inflates quickly and rapidly, it simply can’t be used to account for anything. Pretty much every fiat currency, which is a token very similar to any crypto token, with limitless supply has not remained used in any capacity as money. You don’t use the Zimbabwe dollar or the Weimer german mark for any sort of commerce today or for redistribution schemes because the numbers there are meaningless. If you want to destroy a unit account, you oversupply it.

Lastly, please remember, you are just arriving in this world, you first have to catchup to prior knowledge and by the looks of it, there is a lot to catch up to. If 20% token inflation made sense, the Fed inflation target would be 20%. And as you see it isn’t. It is 2%. And there is an insane amount of research from people far more educated and smarter than you going into deciding whether the US dollar token inflation target is 2% or a range between 2 to 2.5% or 3% or 1.8%, etc. There are massive amounts of arguing on business TV over these VERY IMPORTANT matters. Monetary supply is a paramount issue.

Reducing the max inflation of ATOM from 20% to 10% brings it a step closer to being a proper monetary unit of account. So au contraire, it made it better interchain money than before.


I mean talking about supply and demand and not quoting John Locke is pretty bizarre.

I discussed John Locke’s bizarre accounts of money and property in Coining Reason sessions ~2.0-2.2, if you’d like to hear my comments. Among other features of his argument, Locke—a direct investor and beneficiary of the human slave trade—perverts Christian doctrine to argue that debt is sinful, with slavery a fitting punishment for debt (whereas Jesus had preached against the money-changers and implored the political elite to “forgive them their debts,” to avoid the creation of perpetual debt peonage and slavery).

In any case, “money” as it were is not one thing.

Agreed, I plan to address this in subsequent sections, but have already been saying in Coining Reason that the great benefit of crypto is that it allows us to un-bundle the four functions typically ascribed to money: unit of account, store of value, medium of exchange, means of payment. As the Reagan economist George Gilder argues in The Scandal of Money: Why Wall Street Recovers but the Economy Never Does, the confusion of these four functions in a single medium—the US Dollar—is what fueled the latter-day financialization of life and society, where money as a measure of wealth became wealth itself. (This is a danger of commodity money more generally.)

In societies that have commodity surpluses, like the USA today, money transforms into political money

You may want to check out Boyer-Xambeu et al’s study Private Money and Public Currencies: The Sixteenth Century Challenge, which argues that “political money” (as you call it) was invented in the 16th century with the asiento, which replaced bills of exchange and paved the way for the ideology of commodity money and its peculiar incentives to hoard and accumulate. Keynes would argue that money’s purpose is not to be accumulated but “to disappear,” to be used up in society. The sociologist Viviana Zelizer complicates Keynes’ account without rejecting it, arguing that there are in fact non-hoarding reasons people save and earmark money for particular uses (see Zelizer’s The Social Meaning of Money).

The economic historians John Kenneth Galbraith (cited above) and Bray Hammond (in his magisterial Banks and Politics in America from the Revolution to the Civil War) draw much attention to the original creation of political (fiat) moneys by the American colonies during the Revolutionary years—that creation had nothing at all to do with a surplus production of commodities in the colonies, and everything to do with the failure of commodity money via the Bank of England’s gold standard.

In Making Money: Coin, Currency, and the Coming of Capitalism, Christine Desan argues that even as the Bank of England promulgated the ideology of “hard” or commodity money, the reality is that specie circulated very little. The Bank’s real money-making activity was the creation and sale of public debt, a political creation, while the Bank’s adherence to the rhetoric of hard money had the effect (consciously or otherwise) of disempowering and disenfranchising those at the Empire’s peripheries.

You write:

ATOM is clearly governance money construct given that its monetary policy can be set by the community. Bitcoin’s monetary policy can’t be set by the community.

But this is incorrect in several ways. The ability to change tokenomics does not make a token “governance money” per se. Moreover, Bitcoin’s community can change its tokenomics at any time by switching to another algorithm—such as already happened for some in that community with BCH and other forks (ETH and ETH Classic, etc). ATOM’s use of a “governance module” to reach consensus makes it unique (relative to proof of work) in how these changes are realized and executed, but not in their possibility—or actuality!—as such.

Supply of a unit of account is clearly important because if the supply is limitless then the unit of account is unusable.

This is why the US Dollar collapsed ages ago, right…? I think such hard-line takes on these issues is really obscuring or outright denying everyone’s shared reality—it turns out monetary creation can accelerate at relatively rapid rates, as it has in the US since the introduction of the “free float” of currencies rather than the gold exchange standard, without directly causing disintegration. It might be that we simply have different timescales for evaluation, but the US Dollar supply has certainly not decreased since COVID, and yet inflation has fallen the last six months. The supply of money alone is not adequate to explain the value (or purchasing power) of money. We should not retreat to just-so stories because they are convenient or simpler to understand.

If 20% token inflation made sense, the Fed inflation target would be 20%.

I will argue in the following section that ATOM’s inflation rate is not even close to the same thing as the rate of price inflation, nor is it even a good proxy for inflation of the monetary base. This is a jingle-jangle fallacy: the word “inflation” is used in all three cases, but in each case it designates something quite distinct.

This is perhaps most obvious when we observe the simple fact that ATOM is nowhere a unit of account—so why model it as one? And, supposing we wish to make it one, the question now facing us is: How do we get a unit of account? In the case of “political” money, as you call it, the unit of account primarily emerges as the means by which the State denominates the one-sided obligations citizens owe it: taxes, penalties, fees, etc. Taxes drive (political) money by creating a sizable and relatively consistent demand for the money, which the State has a monopoly on violence to enforce. The Hub has no such monopoly power, and there is no meaningful equivalent to Interchain taxation beyond, perhaps, gas fees. But IBC makes it such that these fees do not need to be denominated in ATOM, even if they can be.

ATOM’s path to moneyness is—and must be, if it will have any chance to succeed—different from all these approaches, attuned to the unique reality of the tech stack it’s built on and the unique social/poltical realities it generates.

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Bitcoin’s tokenomics didn’t change and that is why some people in the community created a different fork (Bitcoin Cash) and left. You are mistating what happened. I am not sure you can adequately describe other events given this demagoguery here.

In any case, your critiques don’t offer any sort of alternatives. I am not sure what you are arguing for. You haven’t explained why 20% max inflation makes ATOM more money-like than 10% max inflation or for that matter 30% max inflation. Why is 20% the correct number? Would love to see your white paper on the subject along with the numerical justification.

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PS: For my Satoshis, the problematic issue with “communist theory” writ large is less its naive belief in a permanent surplus of all commodities than its tendency to zero-sum logic concerning distribution: many Marxists do not possess an adequate concept of “newness” or “becoming,” and instead believe that any material imbalance or difference between people is necessarily the result of exploitation and deprivation of some by others—someone cannot have more, many Marxists seem to believe, unless (and because) someone else has less. This leads to what I regard as Marxism’s most unfortunate and least appealing aspect: a secular asceticism towards commodities and production. The Italian Autonomist theorists are perhaps the main exception to this trend. In any case, I do agree there’s much to be cautious about with these ideologies.

A subset of the community that was mining under Bitcoin’s original algorithm switched to another algorithm, BCH—in my view, that is effectively a governance change to the tokenonomics under the “fork politics” that Proof of Work imposes, even if it has been relatively unsuccessful. By contrast, the ETH/ETH Classic fork did change the ledger of the main Ethereum network, and perhaps this is the better comparison.

Anyway, I do believe the Cosmos governance module diminishes the need for these hard “fork politics” and transforms the means by which such changes are wrought, but I do not believe it is correct to say that Cosmos is “governance money” and BTC is not. All tokens are “governance money” in the sense that they depend on the consensus of those running it, whatever “running it” means under a particular Proof-of regime.

I appreciate you taking the time to read and critically engage. If you stick with me, I hope the forthcoming section(s) will provide the positive constructions you are looking for—though, with thinking, often a great deal will have been accomplished if we are simply spared from errors. Medicine may not have an adequate account of cancer and its treatment, but that is no license to revert to the model of the Four Humors.

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Cosmos Hub offers its community the opportunity to direct the token’s monetary policy by changing basic parameters (min inflation, max inflation, rate of change, bonding ratio target) and via staking participation (staking or not staking). That effectively makes ATOM stakers a monetary policy governance committee similar to the Federal Reserve Open Market Committee (FOMC) which sets interest rates for the US dollar. In that respect, it is “governance” money but more like money that can be governed.

That is an unique proposition in crypto as most other tokens have preset monetary policies. Their monetary policies can only be changed via a forking but unfortunately you can’t fork a community and as such economic activity as we have discovered time and again with ETH/ETH Classic and BTC and BCH. So this flexibility to change monetary policy without impairing existing economic activity in the token is unique.

In that sense, ATOM is the closest crypto offering to a fiat government bond. And fiat bonds are important because they provide income - a financial product that is in high demand. Depending on economic conditions that yield can be made higher or lower.

ATOM’s ability to govern the token inflation and rewards yield definitely offers something unique in the crypto space but I am not sure “governance money” is the best way to sell it. “Income” would sell a lot better among financial advisors. If I can spin this as a “Structured Products” offering then the German pension funds will be going gaga over it. lol

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In that sense, ATOM is the closest crypto offering to a fiat government bond.

The flaw in this analogy—and it seems to me a major flaw—is that government bonds are debt instruments that have value because governments promise to repay. But the ATOM token, like BTC, is no one’s liability, not even ICF, AIB, AADAO, or whoever.

When the Federal Reserve “prints money,” they are not usually printing dollars that circulate in the economy but, as you say, issuing Treasury bonds and performing open-market operations. It is commercial banks that “print money” in the sense of money that readily circulates in the economy and causes price inflation, and it is commercial banks (not the State) that crypto principally challenges.

Put another way: commercial banks, which are “too big to fail” but also apparently to powerful to regulate, pervert and confuse the public/private or state/society distinction. They perform a public function under cover of private enterprise—hence the appeal of a true “people’s money”!

The degree to which crypto challenges “the State” is primarily the degree to which the state has allied itself to the commercial banking industry. This alliance is near the heart of the US’ founding, with Alexander Hamilton writing multiple treatises on currency/money arguing that the fledgling government should ally itself not to military but economic power to secure its authority. It seems to have worked. But is it healthy?

So this flexibility to change monetary policy without impairing existing economic activity in the token is unique.

100% agreed here, and I think that flexibility is beautiful—but being more flexible to do something is not the same as saying nothing else can do it, only that they do it more rigidly. But that flexibility also comes with substantial responsibilities: if you can change tokenomics against the will of a strong minority (Prop 848 had 30+% No votes), you better be capable of keeping everyone together and selling the changes.

Yet what I see on Twitter and elsewhere are Cosmos members ‘dunking on’ and condescending to those they disagree with. Just look at your initial responses to me here: you first implied I’m naive and unstudied, then young (thank you), then accused me of “demagoguery.” The long-term result of this culture of dunking rather than thoughtful engagement will be a waning of the Hub’s legitimacy, and legitimacy is a more fundamental component of sound ‘moneyness’ than supply—as the examples of the US dollar, Weimar marks, and the Zimbabwean dollar all show in varying ways. (Note, please, that I am not saying supply does not matter at all, only that it is significantly downstream of other factors.)

Will write up the subsequent section when I can. Thanks again for these provocations to keep thinking.

You continually make mistakes in your statements and when I confront you about it, you complain about dunking. Monetary systems are not common knowledge and 99.99% of the people I interact with online know less about them than me. My knowledge doesn’t come only from reading but also from experience and the experience part is what people usually don’t have because getting to where I have been is not a common path but a very selective process that tests not only your book reading abilities but also your ingenuity to put that multi-disciplinary knowledge in practice better than others. It’s not easy being no one. You can read all the books in the world, but until you apply the theory in practice you really still don’t know what you are talking about. There might be about 4-5,000 people in the world that know more about these matters than me. Mike Tyson had a saying about this - everybody has a plan until they get punched in the face. The punch is the real world/experience. In any case, most people’s experience with me is they feel dunked on (and rightfully so) and that’s why they don’t like me. As a guy who used to play basketball a couple of decades ago, my strategy is to indeed dunk on the little guys. I only shoot three pointers against big guys when my size is not to my advantage. The dunk is the higher percentage shot after all :slight_smile:

Your understanding of the Federal Reserve is not complete. The Federal Reserve is banker not only to the banks but also to the US government (Treasury General Account). As such the money that enters the economy from the Fed doesn’t do so only through the banks and credit creation process you correctly describe but also via printing money and funding the Treasury’s general account. Which obviously they can’t do on their own unless Congress authorizes and guess what - Congress has been authorizing it since 2008. As such there are 2 money printers in the economy - one is the banking system and the 2nd one is Congress via budget deficits. Most of the bitching and moaning on business TV like CNBC is from libertarians who really don’t like Congress printing money and want supremacy of the printing press by the banking industry. But guess what? The US government is 20% to 25% of the economy and like it or not, it is a factor if not the predominant single factor in setting monetary policy. The US government can decide to be a factor in monetary policy or not. Under Reagan/Bush, the US government had decided to stay out of monetary policy, but since Obama it has become more active. You have been seeing the 2nd printer (the US government) in action since 2008. During the Obama years, the newly printed money via QE was directed towards investment (stock market) while under Trump and Biden the newly printed money was directed towards consumption (stimulus checks). I recommend reading Quantity Theory of Disaggregated Credit by Richard Werner for more complete understanding. I have a post on it here.

The Fed itself is comprised of the Federal Open Market Committee which is public/private partnership. The regional Fed bank “presidents” are representatives of the banking industry (and usually advocate for higher interest rate policies or “hawkish” since interest income is how banks make money) while the “governors” are appointed by the US president and as such represent “the people” (and advocate for lower interest rate policies or “dovish”). The Presidential appointees numerically always are more than the Fed bank presidents as such if there is a tie, it is the president’s people that win the argument.

In this sense, Jay Powell as an appointee of the President, represents the people, not the banking industry. Now obviously in practical terms, the administration of any given US president doesn’t really represent all people in America society but usually about 30% - the faction that won inside their party and then later on won the general election. But usually this sectarian group acts as if they have the mandate of the whole society which leads to the consistent problems we have today where about 70% of people are unhappy with the direction of the country. That is because any given administration makes happy only about 30% of the people (their primary voters). The US is a classic Roman patrician republic in the sense that different patrician families take turns running in the country for 4 years (liberatrians under Trump, neoliberals under Obama, neocons under Bush, progressives under Biden) which makes the other 70% bitch and moan. Monetary policy is influenced by the President’s economy strategy even though they say the Fed is “independent” but how independent is it if more than half the board is Presidential appointees?

In any case, your view of the money printing in the economy (only banks do it) is from before 1913 and before the creation of the Fed. It’s not an invalid view, just an incomplete one. Here is a little graphic about how the power to print money in the US has progressed over the past 100 years. The public (ie the US government via President and Congress) has more power over the money printing process than ever.

You state that government bonds are debt instruments because governments promise to repay. Yes, they don’t repay you in Gold but in their own token - the US dollar in this case. As such they have ability to print unlimited amounts of it and fulfill all their obligations in it. And the US government (and technically the Federal Reserve is part of the US government, but not entirely in the executive branch but a co-managed branch between the executive and legislative branch, the Fed reports to Congress but is operated by the President) can’t default unless it chooses to on its own for some other non-economic reason (like for example, Russian sanctions). You state that ATOM is no one’s liability. That is incorrect. It is the liability of the validators of the computer network. Shut down all the validators and ATOM stops to exist. Same with BTC. A token is always someone’s liability - the one that provides the token. In the case of the US, you have a bunch of government institutions giving you a token, in the case of ATOM, a bunch of validators who operate computer equipment. If they can’t pay their electrical bills or can’t procure the computer equipment as a whole, ATOM goes poof into thin air. Nothing shows up in your Cosmostation wallet.

I don’t think crypto challenges the State. The US government is failing politically (its policies are not popular) and is acting out in authoritarian fashion because its political power is slipping. Nothing new under sun. Happens all the time. At the end, Hitler was sending 10-year olds to the front. If you are looking for signs of a failing state, the state getting kids involved in its political battles is one of them. The reality is the US dollar financial system has become inferior - economically and technically - compared to the instant global settlements available in crypto. And as such the state provisioning it is acting out. You know, if you are driving a horse drawn carriage and are shoveling horse poop off the road, of course you’ll be mad at the guy who is driving a car and smoking a cigar and laughing at you.

Crypto so far has not offered an alternative to the fractional banking system. The essence of the banking system is the credit creation process - the alchemy of turning short term deposits into long-term loans. ie turning your savings into a loan to make houses for a young family, etc using money that doesn’t exist. So I don’t see how it is a threat to the banking system at all at this stage. If anything is a threat to the banking system ability to create loans, it is the US treasury paying 5% for 1 month treasuries and sucking up bank deposits :slight_smile: Sen. Warren is pissed off about self-custody, as if 150 years ago the US senators knew how much silver you had stashed in your basement. These people are just totalitarian maniacs. Maybe one day they will read the books that came after Hobbes’ Leviathan. lol

As far as Prop 848, Jae’s Atom ONE idea is far less popular. Last year it got overwhelmingly rejected by like 70%. Yes, the current ATOM community will fork, but the changes ATOM is making now to lower inflation levels will attract new members of the community. ATOM will lose Jae and his cult of “supply doesn’t matter” but it will gain new members of the opinion that “supply does matter”. And there is a lot more people there. You think supply is downstream of other factors, but everybody who has taken Econ 101 knows that supply is just as big a factor as demand. They are equally important factors. Economic activity can’t be modeled with just with a single factor (demand). In fact, supply is so important that the Fed has 1000 PhDs trying to figure out how much supply of the US dollar token there should be. With Prop 848, ATOM has moved from a token that embodied a fringe philosophy to one that is more widely accepted and understood. The discussions on the topic of ATOM supply have only just started :slight_smile:

I think there are some parallels to the Bitcoin blocksize wars here. The argument there was which monetary property of Bitcoin was more valuable - its store of value (SOV) property or its medium of exchange (MOE) property. Bitcoin cash people made a bet on MOE even though as I showed in my analysis back then SOV is the much more valuable strategy for Bitcoin. The Bitcoin community stuck with SOV. The Bitcoin Cash initiative didn’t win inside the Bitcoin community and they had to fork. What happened later? Bitcoin Cash got outcompeted by new technologies who can provide MOE functionality faster and more efficiently. And that’s why its price has gone nowhere. Solana or Cosmos are much faster payment systems than Bitcoin Cash.

In any case, of all the cryptos I have seen, Cosmos tech stack has the best chance to deliver distributed systems that can compete with the 5000 member banking system’s credit creation process and that’s why I like it. You don’t need 60,000 tps for that. You need sovereignty and interoperability :wink:

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I like both of you gentleman’s spirited discussion over here. Money is a lot like politics and I don’t think the 4,000 or 5,000 thousand people that know more than you - know more than you, as the amount of positions that people can take on any one position has many correct assumptions depending on the monetary policy you are approaching any discussion with. In fact, Regan (an actor) is the President that unleashed the Kraken in terms of America shifting into a debtor nation from a creditor (hoarder) nation. I find that assertion puzzling.

P.S. I wrote the above before asking Bing Chat about the accuracy of my memory, but my memory is pretty good. :upside_down_face: I wouldn’t deem Regan’s spending/trade deficit as fiscally conservative, but unrolling regulations can have the effect of increasing opportunities and thus growing the economy. Sometimes to our detriment - like when Clinton unrolled the regulations that were in place for the housing market which led to defaults on under collateralized sub-prime mortgage loans and landing the insurers for those loans and derivatives in HOT water…and BAM, Bitcoin. Hummmmmmmm.

Here’s my thoughts on this…I think we - we being several nations in the world who function sovereignly yet share the same finite resources - are in a very unique period in history, both economically and environmentally. Any future is speculation and in the realm of possibility. Internationally - GLOBALLY - think about all the direct deposits handled by the current fiat banking system, billions of people - COVID payments, and all the mediums offered for compensation - pre-paid cards, ect… That is a lot of accounts being precisely updated. Probably some fraud and bad actors too.

If Ai and Robotics start to eat into the labor force significantly - and we allow it, that system can handle Universal Basic Income payment distributions. I think there is a strong likelihood as the technology continues to mature a flavor of Univeral Basic Income is inevitable.

It is worth noting that Barclays became the first British bank to order a computer in August 1959. However, it was not until the introduction of the Emidec 1100 in 1961 that bookkeeping was done by computer.

Computing in general is still maturing. We’re like 60 years in from the 1st bank using a computer for record keeping. I just imagine all the mom and pop shops, and even corporations - that had horrible accounting laced with human error and how many years it took to replace the error prone ways human error effected reporting, willfully or ignorantly. History can teach us a lot about economics, but it also teaches us that maybe we’re not the best ones for the job and that we need to evolve.

I’m not anti-traditional system, and it’s easy to see how Cosmos could satisfy some role in a Universal Basic Income paradigm, but is it better than the incumbent? Just imagine all nations getting together and agreeing on a GREAT RESET, at least as fairly as can be between debtors and creditors, and agreeing to developments that focus on securing the necessities for the people and then worry about disposable income from there. I think this planet could support 10,000,000,000 people, but I try not to be too optimistic.

The real people’s money - FOOD AND WATER.

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Money is politics if you have abundance of resources and economics if you have a shortage of resources. Modern Monetary Theory applies to resource rich societies, Austerian (sorry Austrian) economics to resource poor societies as the name suggests. And America has been both in its history - and hasn’t been a resource rich society for very long. And unfortunately it has demonstrated an inability to remain resource rich for a long time. Empires rise and fall. They usually fall when the imperial center becomes too enamored with itself (money becomes way too political) and stops managing the colonies well or its geopolitical adversaries well and then the colonies - along with their resources - splinter away to the adversaries. Everybody wants to live well you know.

My comment about Reagan (and Reagan is a big time MMT practitioner, I know) was that Reagan was bit more hands off on monetary policy than other presidents. In fact, neocons were so hands off that Bush Sr. allowed the Fed to trigger a recession in 1992 which lost him the election and the GOP is still pissed off about it to this day. No other political group since has made that mistake. Obama is a Zero Usury guy and he had the Bernanke set the rates at zero for his entire 8 years term in office and had Bernanke announce QE3 in 2012 which was a reelection year. Trump famously browbeat Powell into cutting rates in 2019 (a pre-election year) in order to avoid the Bush Sr. mistake of having recession in 2020 prompting comparisons to Nixon who also forced Arthur Burns to lower rates in election year regardless of whether it was warranted economically. Biden is now employing Reaganesque techniques of stacking the FOMC board with political loyalists in an attempt to corner and isolate the Chairman. That is how Reagan got Volcker to quit and replaced him with Greenspan and once Greenspan was the chairman, Reagan was hands off. But all in all, I stand by my statement that the neocons - Reagan and Bush - exercised their presidential mandate over monetary policy least actively of all others. I guess I should throw Bill Clinton in there with them because he was hands off too by reappointing Greenspan twice and not meddling at all with monetary policy.

I think you are confusing fiscal policy - Reagan running big deficits - with monetary policy. The Fed didn’t finance Reagan’s deficits. The rest of the world did by buying US treasuries. Since 2008, the world is selling US treasuries and the Fed is financing the deficits by buying Treasuries (QE). In other words, Reagan’s deficits are substantively different than Biden’s deficits. During Reagan, the world financed America’s fight with the Soviet Union. Today, the world doesn’t want to finance the fight with Russia and instead America is financing itself by devaluing its currency - making Americans poorer in order to the defended the March of Ukraine. In imperial terms a March is a border territory ruled by a Marquis - a sadistic son of a bitch who needs to keep a restless population in line. It is not a coincidence that the word “sadistic” is named after a Marquis. Oh, and by the way Ukraine literally means “border” in Russian :slight_smile:

Yes, like Trotsky says resources are global but unfortunately they aren’t yours because you don’t have the army to get them. Little practical problems, you know. As such you have to deal with political actors who are not going to be your liking (on social/cultural matters or on economic matters). Sovereignty is important. But obviously interoperability also is - sovereign actors do want to deal with others but they want to control these interactions in a hands off way for domestic/political or foreign policy/diplomatic reasons. You don’t want to deal with Russia publicly but guess what? You still need to dump your nuclear waste in Siberia less Fishkill, NY becomes completely unihabitable from the radiation. That’s why you have Hong Kong - the Chinese jurisdiction through which China interoperates with the rest of the world, Monaco for France, Lichtenstein for Germany, etc, etc.

Banking has multiple layers. You have state to state settlements - for these you need reserve currencies like bancor (didn’t happen, US dollar instead), gold and now Bitcoin. You have corporate and individual settlements inside a country - for that you have the fiat of the country. In states with failing government, you have local currencies - like Argentina. There is no one size fits all solution.

Money in global context is a complex tapestry and I agree that Bitcoin maxis simplify it greatly. Fiat reserve like US dollar is good for payments, but not trade settlement (not with an extensive sanctions regime). Non-sovereign reserve assets like Bitcoin and Gold is good for international trade settlement (no sanctions) but terrible for payments. Denominating debt in national fiat reserve like US dollar or supra-national fiat reserve like Euro is a big pain for emerging economies - too strong of a currency for the growth profile of these economies (China and India) and as such they need currencies with far easier monetary policies. This is the reason why the high growers (BRICS0 want their own international trade settlement asset - the BRIC. The need is legitimate. Usage of either the Dollar and the Euro restrains their potential. Dollar and euro are good for developed countries not emerging countries.

In any case, all nations will not get together for a Great Reset because the world is populated by a lot of people with drastically different belief systems and ideologies and many of those are directly opposite each other. That’s just not gonna happen. But here is the thing, the world works because everybody has a part to play precisely because they are different. If there is no sovereignty, there is no need for interoperability. Then you are in a giant single state machine and then other people can crowd you out for resources. If you want to own and control your resources, you need sovereignty. But like Trotsky says, autarky is not sustainable in the long run so then you need to talk to others - which means you need interoperability.

I don’t know what “fairness” means. Maybe you think getting $2 gas is “fair” but the guy digging for gas in -50F weather in Yamal, Russia might have a different opinion… Maybe things today are far more “fair” in the fair sense of the word (as in Fair Lady) than you think :slight_smile:




  1. relating to government revenue, especially taxes:

I’m not confused about debt no matter who is acquiring it or how it is created, but I do agree with most everything you’re saying. I’m not a trained economist, so I tend to shy away from asserting things I have no right to assert about the arguments an economist would make about the fiscal decisions. Just because society and civilizations have functioned in a certain way doesn’t mean it will always function in that way.

The world agreed that the dollar would be the world’s reserve currency back during the Brenton Woods Agreement in 1944 to diffuse power struggle’s in the Eastern Hemisphere, but mainly the European block. We were a strong industrial nation whose governance experiment was still maturing with innovation in other markets as well. 80 years now almost. The seat of power doesn’t shift overnight. It takes time. There is interoperability keyed into the “leader election” for that as well I think. I’ve read more than I can remember - author or title, especially when binge reading. Offshoring manufacturing and other jobs at the time America did - which I don’t know how many other affluent nations did that as well - greatly helped increase the quality of life and per-capita income of those people. There was a lot of assistance in academic curriculum as well. This was in the 60’s-70’s. Corporations tapping into the “human capital labor pool” and maximizing profit margins - thus accelerating economic growth. Spreads the wealth, the knowledge.

There might be some greed in there as not everyone is sharing in the reward the same, but by proxy the quality of life and income is increased in one location and cost of living in lowered in another. I think the costs in several industries are over heated now and it’s that way not because things have to cost that much, but because this is how big the money supply is and politicians fell like failures if the analyst aren’t reporting that the economy expanded by xyz percentage.

Cook’n the books.

Anyhow, there are new technologies - like liquid metal battery, coming from the innovation labs that has been melting-pot of the world. This kind of tech improvement could prove to be very disruptive and transformative to civilization. Oh you want $0.005 per kilowatt energy, that would change things wouldn’t it? Supply is a huge deal in economics. Right now there is artificial scarcity. Just like there is planned obsolescence.

Evaluating what is happening on earth things could go either way. Things could rapidly get better, and just as easily I could see things rapidly deteriorate. I just don’t think most people on earth are cut out for the reality of civilization rapidly deteriorating. Energy cost and all these other extenuating cost - they do play a big role in politics of change.

Can’t say that mentality isn’t wrong, per say, but in my opinion it’s archaic. Fair in the context that it was written was pertaining to creditors and debtors, mainly what I have in mind are people that have been paying into social security their working career and have an expectation of a living wage in retirement. As of now - the funds in that program are projected to be underfunded and technologies like Robotics and Ai could contract the flow of capital into a program as such.

This effects all humanity similarly. This is what I mean that we are in a unique time period in civilization right now. Cancelling a program like Social Security and implementing a Universal Basic Income would resolve that debt. I don’t know how other countries/states mange things like retirement funds, but I suspect that programs all around the world model themself in a similar fashion - no matter what kind of political framework one lives under. Things are more similar than they are different. The same kind solution to resolve those kinds of domestic debts would logically lead to determining how to resolve international debts - most fairly.


The post is a draft of research stemming from Neta DAO’s living public research seminar on the current focus on economy and money. It engages with ongoing discussions about the nature of ATOM, exploring whether it should be considered money, commodity, or security. The author references various sources and ideological backgrounds, aiming to navigate the complexities surrounding ATOM’s identity and purpose within the Cosmos ecosystem.


In order to provide some valuable feedback, we first want to aligns with the initiative to bring more nuances to the debate around the aspect of money in the Cosmos ecosystem. We emphasize the misalignment of current measurements of “moneyness” and recognize the paradigm shift introduced by Web3 in the overall value system design. Our approach to defining a good money primitive for such new infrastructure organization requires a rethinking out of traditional frameworks (taking inspiration from it in its existing forms and improve).

To this purpose, we created a simplified system built to explain levels of primitives:

It categorize ATOM as a “money multiplier”, the equivalent of our existing investment banks in the traditional financial system. This involves possessing certain characteristics, including reliance on a rehypothecation system where the yield correlates with default risk. Multiple money multipliers operates in parallel within an extensive network, interacting with each other via clearing houses. As we can see, ATOM and its Liquid Staked Tokens (LSTs) derivatives would definitely fall into this category.

In this framework, optimal “money” is determined by three key factors: its rapid mobilization (liquidity), swift exchangeability with other ecosystem assets (high liquidity and value), and the ability to circulate rapidly to designated areas. All these attributes contribute to the concept of “monetary velocity.” However, as rightly pointed out in the original post, effective money must be neutral, free from interference, and devoid of counterparty risks. Hence, the significance of the governance aspect of ATOM cannot be understated.


At Govmos (the governance initiative of the PRO Delegators’ validator, we also think that both “ATOM as money” and “ATOM as governance” are valid, yet simultaneously flawed. The proposed primitives by the “money group” seem to lack adequate focus on the velocity aspect, overly concentrating on reducing asset issuance, which could potentially hinder velocity if employed excessively. Regarding governance we contend that this crucial aspect should be directly integrated with the monetary asset to avoid introducing counterparty risks. In the event of a separated governance chain, liveness issues (considered the primary risk in pBFT-type consensus) could pose existential threats, therefore significantly undermining the quality of the monetary asset itself.

Thank you for the quality of your original post, we look forward to further debate these complex topics and we are very happy to see more people joining this space.


I think both of these working in Tandem creates an ideal conditions for the ecosystem. With the exception that as a monetary unit ideally, you’d want relative stability with the price and as money velocity of the system accelerated or slowed the function of the supply be adjusted accordingly. USDC and USDC loans for ATOM could be one of the better ways to track this. I suppose this was the overall goal with Terra, except Terra was focused on basing the supply on the price fluctuations of the primary token and not the money velocity of the system. Money velocity more equates to how many people receive and spend a unit of money thereby multiplying the amount of goods a unit of money can represent.

Money velocity is a suburb metric for a system’s utility and adoption. When the power of governance is bought and controlled there is sure to be corruption in governance. KYC/AML - Proof of person, one vote - a resisted entity effectively votes as a person. There can be weights added here, but this would be a better governance system. Atom can be both money and governance.

Opinions are my own.

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The debate of who should price money is eternal - should it be market based (Austrians), committee/expert/policy maker based (Monetarists, Friedman), or empirical/formulaic/algorithmic based (Keynes, Taylor). Currently, all of these forms of money pricing are being used in different parts of the US dollar money markets. On the short end, in the interbank market, the price is set by the FOMC committee which is a collection of expert bank and government officials. In the medium term and long term markets (ie Treasury Notes or Bonds), the price is set by the market when the Fed is not involved in QE or QT. The “market” of Treasury Notes and Bonds, however, is not you and me with our $5 but other governments and their trillions - China, Japan, Saudi Arabia, etc. As such the money market on a global scale is not an efficient little guy utopia democracy but a market of states - all of whom are the most sophisticated economic actors out there you will find (for the most part). So when Austrian people on TV (like every talking head on CNBC) argue for “market” pricing of money, what they really mean is “allow foreign states to price money in America”. That is not necessarily always desirable for the US national interest so that is when the Fed gets involved with QE or QT. That is when the “free marketeers” scream to high haven and you have to wonder are they really total idiots or agents of foreign states. But in any case, the long end of the curve is set by the “market” or by a mixture of “market” and “policy makers” if the Fed is doing QE.

At present no part of the market uses formulaic price setting - as in - there is a computer setting rates based on economic inputs, however policy makers do use formulas to set the Fed overnight interbank rates. The formulas have some discretionary inputs which are set by the policy makers. So even though policy setting is formulaic, expert discretion is used. So I would describe the “policy maker” regime of today as a mixture of “formulaic + policy maker”. That was not always the case. Before the 2% inflation target introduction by Bernanke in 2012, policymakers weren’t restrained by any formulas and price setting was entirely discretionary (“gut feel”). They could target 3% inflation or 5% inflation based on whatever reason (often political). Today policymakers have discretion within a strong empirical framework, so rate setting is dramatically different than it was 20 years ago during the Greenspan maestro era or earlier like during pre-Volcker era when the rate setting was almost entirely influenced by political considerations of the President. Then the Fed chairman was more or less treated as member of the Treasury team. Political considerations still figure in rate setting but dramatically less than before. BTW, progressives in the Dem Party (Sen. Warren) do want the Fed to lose its independence mandate and be folded inside the Treasury. Treasury is a 10,000 person organization while the Fed is 1,000.

To bring this back to ATOM, I am generally of the opinion that rate setting should be a combination of market based and formulaic with occasional human discretionary guard rails. More or less what the modern money market looks like today. The original setup of ATOM was entirely market based (0% to 20% based on staking ratio of 67%). With the halving of the max inflation, we disrupted Jae Kwon market fundamentalist philosophy and introduced human discretion in the pricing of ATOM interest rates. The human discretion was always there BTW, since Jae Kwon set the monetary policy parameters, but he basically set them wide enough to where it was effectively entirely market based monetary policy. The reality is that markets aren’t perfect (Econ 101 is not reality and never was reality). Markets are inefficient, they are gamed by big market makers, they have demand shocks, supply shocks based on real world events (wars, etc), markets rely in government/institutional contract enforcement regimes which can get corrupted. Econ 101 of efficient markets is a utopia which doesn’t exist in the real world and will never exist. And for that reason market fundamentalism fails time and again and failed with ATOM as well.

The correct answer is to have a proper mixture of formulaic, market and human inputs and pay some attention to market inputs for market failures (I am looking at you < :eyes: big validators, stakeholders) and big attention (ie regulate well) the human inputs as they are the most likely to get corrupted.

We supported this thesis by proposing to add the LST ratio in the inflation adjustment formula instead of moving the min and max parameters. Governance seems to have chosen a different path unfortunately so we’ve accepted this new path and putted our research in standby.

Regarding the velocity of money we clearly think it can’t be measured solely based on the number of transfers. Moreover, in the Cosmos context, each unit of account can be materialized through three forms: liquid, staked and liquid staked. Each offering different trade offs directly impacting the velocity capabilities of the whole ATOM supply. Therefore, supporting our base thesis around the need to review the inflation formula to include three ratios:

  • staked_% : corresponding to the ratio of all staked tokens, including staked + liquid staked (already existing today with a 67% target)
  • liquid_staked% : corresponding the ratio of liquid staked tokens as a share of all staked tokens
  • velocity_% : corresponding to the ratio of all liquid tokens, including non-staked + liquid staked tokens

Historically speaking the rate at which a unit of money exchanges hands defines money velocity. I agree that the base unit measurement and the derivatives of it is different and also prone to be more volatile, and that is why bringing the context of how much is locked for a more stable unit of exchange is raised here.

Wikipedia has some formulas for determining what nominal money velocity is.

What velocity is being calculated with these variables?

I agree, and to sum up how these variables could be managed in a Universal Basic Income scenario -


will do a better job than the various actors around the world who sometimes work collaboratively, but sometimes work collaboratively to undermine counter parties, to disrupt financial stability of markets and capitalize on volatility. This points to the previously cited artificial scarcity and planned obsolescence. If there is something that should be scheduled for planned obsolescence - it is the experiment of distrusting people capitalizing on market manipulations. When the data and decisions with data can be made real time - and with an international voting body intervening, if/when necessary, and that control is ceded to something that isn’t selfish and greedy…a new market paradigm emerges.

Like I said - history can teach us a lot about economics, and “experts” of different economic philosophy can argue til their face turns blue about how this policy or that should be leveraged here and there, but those with monetary and/or natural resources leverage and dominate those without. Fundamentally speaking at nation state level. Could you imagine people ceding all that power to a system whose only goal is resourcefulness and how much wasteful activity could be mitigated out of civilization?

I am not sure efficiency is always the goal of human activity. In many cases resiliency is. It is always a bad idea to fall into single factor thinking such as “efficiency is the only objective”. You can become very efficient and then die quickly. Resiliency and efficiency are orthogonal - they are direct opposites.

Your body is made for resiliency, not efficiency. It would be more efficient from energy perspective for you to only have one breathing organ - for example the nose. But then the first time the nose gets plugged up with boogers, you die. For that reason the body introduces resiliency - you can breathe through both your mouth and nose. It is less efficient but more sustainable. And of course those organs have additional functions such as smell for nose or eating food and taste for mouth. So each organ in the body is multi-functional and introduces multi-functional resiliency because resiliency is what allows the organism to live longer (sustainability).

One of the core elements of sustainability is having buffers. A cybernetic principle (and cybernetics, science of control systems, is the precursor to what we call “artificial intelligence” today) is the presence of a buffer and maintenance of a buffer. If the buffer gets exhausted, the system falls apart. Many societies create buffers (armies or Strategic Petroleum Reserve) that can be used if the system is under attack or if the system has problems inside it with procuring resources. So what you consider “wasteful” is really “sustainable”. And no, I don’t imagine people ceding power to what exactly? That thing, whatever it is, can’t guarantee their existence nor a guarantee will be believed. I don’t spend a lot of time thinking about things that can’t and don’t happen.

The rationale here is quite straightforward. A fundamental approach to determining velocity involves calculating the proportion of the circulating supply capable of actively participating in economic transactions. Given ATOM’s strong emphasis on security, a velocity of 35% (referred to as liquid percentage if preferred) signifies that 35% of the supply is either in a liquid state or liquid staked, indicating that 65% of the supply is currently immobile.

By evaluating the ratio between tokens available for unrestricted movement and those that are not, we can indirectly gauge the demand for money, which is the primary objective of the velocity of money concept. While a more in-depth analysis could consider the “true” velocity by examining transaction throughput, the ongoing debate pertains to the inflation formula, and we aim to keep it as straightforward as possible. The ratios mentioned earlier are deemed the most elegant form for this purpose.

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Sounds like that’s just TVL - which in actuality constricts the money supply in favor or incurring interest. The equation in the link for money velocity is roughly GDP/money supply, in that way it can be determined how much economics - good and services, was produced with the money supply. There are many competing crypto monies, what I am hypothecating is the core system that see the most money velocity will win in protocol adoption.

Surplus = resilience. I get your argument and I’m sure there are conditions where this applies. Again - six sigma is a business function of designing inefficiencies out of systems. We’ll use the example of 50 laborers with shovels and a backhoe tractor to dig a hole. The inefficiencies to examine here are time, man power and capital costs. If your goal is to maximize labor force with no constraint on time or cost, by all means pick you up a shovel and dig the holes - it’s resilient.

We’re getting way off topic now though.

Ceding power to a system to make decisions about resources more or less, and monetary policies. I’ve put significant thought into this and I scrutinize my own logic harder than most. What would people do if we eliminated the inefficiencies of their role in several business sectors? Preparation in the event that something like a massive solar flare creates an eltromagnetic pulse that damages the functionality of that system would be high on that list.