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?