Why All in Bits Recommends a Strong No with Veto on Prop 82

Why All in Bits Recommends a Strong No with Veto on Prop 82

After careful thought and consideration, All in Bits (AiB) recommends the Cosmos community cast a strong No with Veto vote on prop 82, ATOM 2.0. As co-creators of Cosmos and its longest-standing contributor, AiB has a duty to safeguard the development of the Hub and protect the interests of the community at large. Unjustified changes to monetary policy deprioritize ATOM holders and fail to preserve Cosmos’ core values of accountability and transparency; while unproven experimental ideas and lack of prudence in proposed designs place the security of the Hub at risk. We are working to build a viable lasting alternative to the current financial system. Prop 82 recreates many of the existing problems we’re fighting so hard to resolve.

Innovation Should Not Compromise Economic Security

Cosmos has grown from an idea in a whitepaper to a flourishing ecosystem of independent interconnected chains – the Internet of Blockchains. At AiB, we are proud to have incubated, collaborated with, mentored, and learned from some of the brightest minds in the blockchain space and visionaries in their notions of Proof of Stake and governance. Ideas are the lifeblood of the community and Cosmos has evolved through their continued innovation. Yet, this innovation has always been carefully considered and adopted (or not) thanks to our advanced system of governance that ensures appropriate checks and balances are observed.

We believe that some ideas laid out in the ATOM 2.0 whitepaper hold merit and are worthy of exploring. However, these types of unproven and experimental suggestions should not be implemented directly on the Hub (and, not all at once). Neither should they be rushed through in an omnibus whitepaper but broken down into components to assess by individual merit. We have seen time and again through multiple examples of bleeding-edge iteration that high innovation can come at a high cost; most often, to the token-holding minority.

Observing the conservative, predictable, and minimal development of the Hub guarantees the economic security of all. We can continue to deliberate the concepts in prop 82, and we can implement them carefully, unhurriedly, and one by one. Should any of them fail, we ensure that the entire ecosystem is not endangered. Take the Interchain Allocator or Interchain Scheduler as examples. These proposals are innovative and may result in generating value for the Hub. However, they are untested and unproven; we have not conducted suitability tests and have no means of knowing whether they will work or generate value.

Liquid staking, while attractive to many participants in the ecosystem, poses a plethora of security concerns that must be addressed. Staked ATOM tokens deployed in DeFi can easily be lost through bad trades or liquidations at lending protocols. The amount of liquid staked tokens should therefore be limited to reduce systemic risk, primarily by limiting interchain accounts. It’s also possible that liquid staking may not be safe at any level; liquid staking combined with shorting markets would incentivize employees or insiders of validator companies to sabotage their own validator employer. As far as we are aware, nobody has considered this risk factor, because not enough attention is paid to designing safe systems.

Let’s remember, Cosmos Hub’s greatest strengths are stability and security – as demonstrated by its resilience to the collapse of Terra LUNA in May 2022 – nothing should interfere with these core attributes.

“ FTX <–> Alameda compounding is exactly the kind of systemic risk that unchecked LS (liquid staking) will bring to Cosmos unless we are proactive in putting checks on it, such as by limiting ICA (Interchain Account) staking. Vote NoWithVeto on 82 to save Cosmos,” wrote Jae Kwon on Twitter.

Most of Cosmos Hub’s tokenomics or proposed future value generation for ATOM stakers relies extensively on Interchain Security (ICS). When launched, ICS is expected to allow ATOM holders to benefit from the launch of Consumer Chains that request security from the Hub and, in exchange, distribute part of their staking rewards to the Cosmos Hub community. When you have a strong value proposition for the Cosmos Hub that benefits from security as the main feature, it is essential to take the proper measures to ensure that security at all times.

Proposed Changes to Tokenomics Are Detrimental to ATOM Holders

Proposed changes to the tokenomics are unjustified, and the passage of proposition 82 for ATOM 2.0 creates a dangerous precedent of minting scandalous amounts of new tokens to a treasury controlled by a few selected members. The whitepaper does a disservice to public education because it fails to explain to Cosmonauts that the ATOM token is intentionally designed to NOT be a deflationary monetary token for the purpose of security – to ensure that ⅔ of ATOMs are bonded. In fact, ATOM 2.0 doesn’t prevent exponential ATOM inflation either for this exact reason, so it isn’t any more deflationary than before. This makes moot the premise for the up-front (and following proposed mint tranches) in the first place (at the time of the proposal, around $500M). In addition, the inflated ATOMs would go to a treasury that isn’t controlled by Cosmos Hub governance.

Instead, we should change the existing parameter of the tax rate from 2% to something higher, with the flexibility to execute slight modifications to the ATOM inflation model to remove the minimum inflation bound of 7%. With these simple changes, we could create sufficient funds for development going into the Hub governance-controlled community pool, and with the adoption of ICS over time the inflation rate would approach zero and may even become negative, making the ATOM effectively a deflationary token. Yet still, we can explore alternative models of supporting deflationary fee tokens such as that proposed in the ATOM One Constitution draft, or otherwise, simply support any of the many tokens of zones connected to the Cosmos Hub.

The Hub’s clear, predictable, and calculated tokenomics are not something we should underestimate, undervalue, or take for granted. Can the system be improved? We believe it can – through public conversations and open dialogue – and using the existing tools that were specifically designed for this very purpose.

Using the existing framework, we can further ensure the fair and transparent distribution of the funds – without changing the monetary policy or sacrificing decentralization. We encourage the community to draft competing plans for increasing the tax rate and managing the community pool to fund multiple competing DAOs for permissionless experimentation. How can we best ensure that approved DAOs are held accountable for performing work contracts funded by the community pool and approved by the Hub? Let’s find out.

Final Thoughts

The Cosmos Hub was created with a guiding vision to enable decentralization and transparency. These core values (along with accountability, security, and simplicity) have been fundamental to the ongoing success of Cosmos. Further, the Cosmos Hub was outlined in the original whitepaper, built, tested, and released piece by piece after multiple testnets and strenuous troubleshooting. Prop 82 places this methodology of prudence, transparency, and decentralization at risk.

AiB remains committed to the continued growth of Cosmos and upholding its core values. The only way to do this is by voting No with Veto on Prop 82 and finding a way to collaborate on a renewed effort on a new ATOM whitepaper. Let’s propose a better way to move forward that builds on our legacy rather than tears it apart.

For a call to action and more specific criticisms of the ATOM 2.0 proposal, take a look at Jae Kwon’s Call to Arms of True Cosmonauts.

By Cristina Cosmos

Notice: This content represents an official statement from All in Bits, and should not be confused with a statement made by the new Ignite entity.


This is a well-written rebuttal to the Atom 2.0 WP. I agree with all of the positions in this post.

There is much that I like about the individual components of the Atom 2.0 WP. In fact, I like most of the WP ideas, except for the huge inflationary expansion of the Treasury. Furthermore, I do not like how Atom 2.0 is being pushed through as an “All-Or-Nothing” omnibus proposal.

The individual components of Atom 2.0 can be evaluated and vetted on their specific merits and voted on independently. The sum of the Atom 2.0 WP parts can be greater than the current whole and can be made even stronger by breaking it down into smaller bite-size chunks.

A “NoWithVeto” is necessary to support minority rights within the community and force the supporters of the 2.0 WP to pass their proposal with a Super Majority. We can continue to have an open discussion on Atom 2.0 innovation ideas and move forward as a united community.

Vote “NoWithVeto” because it’s necessary. The authors of the Atom 2.0 WP gave the community no other choice because of the way they framed and presented the WP.


[Mod note] Please leave this in the ‘essays’ category. It is not a proposal in and of itself, and the ‘hub proposals’ category is used for filtering so that people can see all drafts and ideas that are being worked on to propose in the future. I really appreciate everyone’s help in categorizing and keeping the architecture tidy so we can find things easily.

If you think another category should be made for something like ‘vote explanations’ - let me know! :slight_smile:

I disagree with your mischaracterization of this thread. The composition of a proposal and the governance procedures related to how the proposal should be organized or reorganized is 100% relevant to the proposal process. The content of how a procedural vote should be facilitated is not outside the scope of discussion to clarify how a proposal should be restructured to achieve the proposal objectives.

The very nature of a proposal being submitted for discussion by a proposer on this forum always implies they are either seeking an affirmative (Yes) or negative (No) vote by default. Therefore, explaining the procedure difference between a “No” vote versus a “NoWithVeto” vote is well within the standards for discussion within the proposal and the discussion forum since it is a meaningful voting path that results in a specific type of outcome.

If you are going to apply this arbitrary standard, then you need to be consistent and move all posts that have any implied or explicit leanings toward any specific vote choice to the essay section. You need to support your claim with objectively defined criteria for how the post specifically violates the required standards. That way the post can be modified to adjust any violative content. It’s not adequate to apply an arbitrary, subjective interpretation and move content and give the impression of content censorship.

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I recognize the vision, but personally I’m not quite sure that should be the stated goal. There are several disruptive technologies that could effect the future of the financial system. I personally knew of Tendermint and different products being developed using the consensus mechanism before the Cosmos white paper was released. Votem and Eris. I reached out to BigChainDB and suggested they implement Tendermint for consensus with that product as well.

Improvements to “the current system - financial or otherwise,” have been implemented since the birth of blockchain technology…TLS and HTTPS for encrypted transmission over the wire, encrypted at rest data with cloud providers, research and development ongoing with Fully Homomorphic Encryption, ect…create the desired security properties the masses expect. I’ve explored the Open Banking Initiative and things of that nature as well, and I think using those systems are valid.

Some of the same exploits people complained about in traditional systems are occurring in cytpo, with what was supposedly standardized cryptography utilization.

Instead of this overreaching goal to be a replacement for the current system, which honestly there are several blockchain solutions with a variety of features, some of which may make them more suitable as a replacement - greater decentralization, key swapping, ect…, however, in all their forms I think being a good partner for whatever the future of finance is a more reasonable mission statement.

Open Banking Initiative + Crypto Economy

I’ve done some due diligence to understand that things can turn on a dime. Artificial Intelligence could disrupt the workforce demand for employees, Robotics could displace the work force furthermore - blockchain could be a part of that. Artificial intelligence and robotics needs low latency data stores. High frequency trading requires low latency.

Not a disbeliever in Blockchain or crypto by any means, and I think it has a place in the future of finance, which brings me to this…it took quite some time to discern how systems could be meaningfully optimized for the intersection of the traditional system and crypto at large. I’m sure there are several ways to accomplish this feat, but the one I feel gives L1s and application developers the most freedo is to use the eventing system to log an appropriate message format.

The message format that is being adopted in the broader finance industry is ISO-20022. 1st learned about this messaging format at the end of 2021, By September I had discovered a solution for implementation in Cosmos-SDK, cosmwasm and EVM.

  1. [ Feature Request ] - ISO-20022 Interational Financial Institutions Standardizations Module · Issue #30 · line/lfb (github.com)
  2. ISO-20022-Cosmos-Ecosystem-Financial-Messaging-Standardization · Discussion #1413 · CosmWasm/cosmwasm (github.com)

Let’s assume global leadership takes the disruption technology could influence on civilization seriously. The next step in acknowledging government programs created 50+ years ago could become insolvent - we’re talking about 100’s of billions, trillions or 10s of trillions in liabilities, is making this system responsible to those liabilities while simultaneously negotiating debt forgiveness in areas such as:

  • Infrastructure Costs
  • Medical
  • Pensions
  • Food Programs
  • ect…

Implementing a Universal Basic Income with infrastructure that reduces current overhead cost in some areas and improves lifestyle changes in others is my own personal long-term vision.

This is stated, and a mention of the LINE Financial Blockchain - a fork of the Cosmos-SDK for Central Bank Digital Currency (CBDCs) - because the features in the tech stack and sharding at the “app chain” level has made more sense to me than many other solutions I’ve seen.

For Cosmos to build value - which it has a lot of potential to be a significant piece of some UBI system as such - finding ways to enhance the current system or optimizing it would be much better positioning in my opinion

Giving feedback on votes and modifying current standards is definitely relevant to the proposal process, but in the form of the OP, it is not a proposal itself.

You have already outlined the objective criteria that could be used to exclude this from being tagged as a proposal: it does not propose anything.

It is, like @lexa said, perhaps fitting to make a vote explanations category, but then again: the thread of the proposal should be sufficient for that.

I also don’t think the suggestion was arbitrary. The category descriptions are outlined under each category: " [the proposal category is…] Parent category for proposals intending to go on-chain. Please use sub-categories to identify what kind of proposal you are making."

Whereas conversational topics include: “Thoughtful commentary and discussion of anything relating to the Cosmos Hub.”

I would say this thread pretty clearly falls into the latter category…

As an aside: I’m an active user of the forum, and I appreciate the organizational standards of the forum for ease of searching and archiving content.

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Are you people realy talking about the place where this topic should have been wrote? Considering the fact that it wouldn’t had any visibillity after 142 posts on the 82’s?
I dit it myself… Sorry about that, but I didn’t found any other place.
Did you thought about creating “locations”, like a senate, an agora, a war zone, a bar or a night club?
I 'm looking myself for a bar: it has been hard days, and not only because of 82…

Again I repeat, this is nothing but your own subjective and biased opinion and is not supported by the visible facts and content of the post. Within the posts, they are multiple topics covered that are very relevant ideas for how to improve the proposal. Simply because you disagree with the proposed ideas or because you do not support or like the ideas is not a valid basis for overt censorship under the premise of enforcing “forum standards.” You are just plain wrong. You need to read it again with more of an open mind.

The individual components of Atom 2.0 can be evaluated and vetted on their specific merits and voted on independently. The sum of the Atom 2.0 WP parts can be greater than the current whole and can be made even stronger by breaking it down into smaller bite-size chunks.

Yeah you’re right. The post proposes some things, and finish by a synthesis link to “Call to arms to true Cosmonauts” which is another proposal for some purification of the hub.
There have been some proposals of that kind throughout history. Then yeah, you’re right.