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Atom Fork & 10% Inflation Rate Cap
Everything That You Need to Know

On 26 November, the vote on a proposal that seeks to reduce the ATOM inflation rate from ~14% to 10% ended.

It resulted in 41.1% of voters approving the proposal and 31.9% voted no. 

Less than an hour after the vote ended, Cosmos’s founder Jae Kwon revealed his displeasure at the outcome and called in a tweet for a hard fork of its native token ATOM while showing suspicion that the later votes came from newly purchased ATOMs. 

ATOM is the native coin of Cosmos Hub, a blockchain acting as an intermediary among all independent blockchains created within the Cosmos network.

Here is the summary of everything you need to know about proposal #848 and the hard fork plan:

Proposal #848: ATOM Halving

• This proposal seeks to reduce the ATOM inflation rate from ~14% to 10%, bringing its Staking APR from ~19% to ~13.4%.

• This will be the first of three proposals being voted on to reduce inflation, provide better incentives for staking, and improve the security of the network.

• Blockworks Research found that ATOM is overpaying for security and transitioning to a set supply schedule was suggested.

• Nearly all 180 validators are break-even or profitable at 10% max inflation off of commission alone, and validators have the option to increase their commission rate to help cover operational expenses.

• 41.1% of voters approved the proposal, 31.9% voted no, and 20.4% abstained. 

• This decision comes with the highest turnout in Cosmos Hub history: 73.4% or 40% quorum. 

Jae Kwon, despite contributing to Cosmos' growth, is deviating from its decentralization principles. He called for the community to “coordinate a split” and plans to create a new network, AtomOne, by forking Cosmoshub4.

Jae Kwon’s Hard Fork Plan: AtomOne $ATOM1 / $ATMO

• Jae Kwon implicitly stated that the outcome of the vote cleared the way for Cosmo's self-destruction.

• Kwon's Github document outlines AtomOne as an alternative network aimed at enabling the Cosmos community to navigate divergent views on mission, tokenomics, and security philosophy.

• AtomOne would be “equipped to handle contingencies and embody a bastion for diverse political thought”

• AtomOne, as outlined in the document, aims to be a minimal fork of Gaia (Cosmoshub4), operating alongside it to prepare for contingencies. 

• It serves as a political party base in relation to Gaia, seeking to complement the Cosmos ecosystem with innovative solutions. 

• The overarching goal is to set a new precedent for adaptive self-organization in the Cosmos multichain multi-token universe.

• An Atom1 token would power the new blockchain network. However, Kwon suggested that the old ATOM token could still be integrated into the new network.

Kwon's plan has drawn criticism from community members who argue that it goes against the principles of governance and democracy within the Cosmos ecosystem:

Huginn Tech founder Rua questioned whether Kwon would persist in chain splits if faced with similar challenges after attracting significant players to the ecosystem. 

• Rua advised Kwon to stay and contribute positively to the network rather than opting for further splits.

• @cosmonaut_joon, a core contributor to MilkyWay, stated that “accepting the results of a voting process whether one was against it or not is part of governance/democracy” 

The creation of AtomOne poses risks for ATOM, leading users to abandon Cosmos for the new chain.

After the proposal passed, ATOM’s price was increasing 7.61%. Right now ATOM is trading at $9.31, almost back to the pre-drama level.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.