Cosmos Hub Co-Founder Proposes AtomOne Fork Amidst Governance Controversy

Jae Kwon, co-founder of Cosmos, has ignited a heated debate within the Cosmos community by proposing a fork of the network. This proposal comes in response to the passing of Cosmos governance proposal 848, which aims to reduce inflation from staking rewards for the ATOM token.

Kwon's call for a split stems from the governance decision to cap ATOM inflation at 10%, down from the current rate of 14.24%. Additionally, staking rewards are set to decrease from a 19% annual percentage yield (APY) to 13.4%.

The proposal argues that ATOM's historically higher inflation has adversely impacted its monetary premium and subjected it to constant sell pressure, affecting its price performance.

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Proposal 848 and Network Dynamics

Proposal 848 estimates that the majority of Cosmos Hub's 180 validators will operate at break-even or profit after the proposed adjustment. The plan encourages unprofitable validators to increase their staking commission to enhance returns.

The proposal's foundation lies in an analysis by Blockworks Research, revealing that Cosmos might be overpaying for network security. According to comparative findings, most rival Proof of Stake networks issue staking rewards at a rate below 7% when over 60% of the supply is staked. Cosmos uses a delegated Proof of Stake consensus to allow ATOM holders to select validators.
However, it is important to note that Kwon himself, along with other influential members of Cosmos, opposed this plan.

The Voting Outcome and Community Response

Despite Kwon's appeal and the community's voting efforts, Proposal 848 passed with 41.1% support, 31.9% votes against, 6.6% vetoes, and 20.4% abstaining.

Nearly three-quarters of ATOM's supply participated in voting, with 80% of validators joining. Validators backed the proposal with 54.5% support, while 95% of other tokenholders supported the measures.

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AtomOne Emerges as a Solution

In response to these changes, Kwon proposes the creation of a new network, tentatively named AtomOne, by forking the Cosmoshub4 code. This move aims to ensure the new network runs on the latest Cosmos software.

Kwon advocates for the fork to support ATOM, suggesting that rather than mass-selling ATOM and risking a collapse, the community can actively participate in AtomOne with improved tokenomics.

Kwon's attempt to fork the network reflects longstanding internal conflicts within the Cosmos ecosystem. Influencers, such as John Galt, see the potential for a chain split to resolve years of political tension within the Cosmos community.