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The Decentralized Cooperation Foundation (DCF) recently announced the successful passage of proposal #912, a transformative initiative within the Cosmos network
Building on a foundation of interoperability, Cosmos Network, a blockchain ecosystem known for its ability to connect different blockchains, is taking a step towards greater liquidity and capital efficiency. The community recently passed the proposal, a significant initiative aimed at unlocking these benefits through liquid staking solutions. This move highlights the growing adoption of liquid staking within the Proof-of-Stake (PoS) blockchain space.
Understanding Liquid Staking
In traditional PoS blockchains, staking tokens for network validation often locks them up for a defined period. This reduces the circulating supply and can hinder overall network liquidity. Liquid staking offers a solution by creating derivative tokens representing staked assets. These derivative tokens can be freely traded on secondary markets, essentially unlocking the liquidity of staked assets.
Cosmos’ Implementation
Proposal #912 outlines a two-phased approach to leverage liquid staking. Initially, 4% of the Cosmos Community Pool’s idle ATOM tokens (Cosmos’ native token) will be allocated for liquid staking on Stride and Persistence, established liquid staking platforms within the Cosmos ecosystem. This strategic deployment is projected to increase capital efficiency on staked ATOMs by an estimated 18%. If successful, an additional 6% of the Community Pool will be allocated, bringing the total to 10%.
The Decentralized Cooperation Foundation (DCF)
The Decentralized Cooperation Foundation (DCF), a non-profit organization promoting accessible and efficient blockchain solutions, played a role in sponsoring this proposal. Their involvement underscores the importance of community-driven efforts within the Cosmos ecosystem. “The passage of proposal #912 is a testament to the Cosmos community’s commitment to innovation and decentralized governance,” says Ric Shreves, President of the Decentralized Cooperation Foundation.
Inter Protocol’s Inter Stable Token (IST)
A crucial element of the proposal is the Inter Stable Token (IST). Liquid staked assets will be used to mint IST, a stablecoin designed to maintain economic stability within the Cosmos network. These IST tokens will be distributed to various liquidity pools, generating an estimated combined yield of 18%. The use of a stablecoin aims to mitigate the volatility often associated with cryptocurrency markets.
A look ahead
The successful implementation of proposal #912 has the potential to serve as a model for future blockchain initiatives within the Cosmos ecosystem. By improving liquidity and capital efficiency, this initiative opens the door for further innovation and a more interconnected digital future. It also highlights the power of decentralized governance within the Cosmos community.
This move by the Cosmos community illustrates a growing recognition of the potential benefits of liquid staking in the PoS blockchain space. While the long-term implications remain to be seen, the projected increase in capital efficiency and the introduction of a stablecoin element aimed at maintaining economic stability are positive developments. The success of proposal #912 will likely be closely watched by other blockchain ecosystems dealing with similar liquidity challenges.