The Evolution of Cosmos Hub: Liquid Staking and Beyond

The Evolution of Cosmos Hub: Liquid Staking and Beyond

BY ICIAug 31 · 2 min read

Liquid Staking: A Game Changer for Cosmos Hub

What is Liquid Staking?

Liquid staking is a transformative feature that allows users to stake their tokens while maintaining liquidity. In traditional staking mechanisms, users receive a synthetic asset in return for their staked tokens, which can be traded or used in DeFi applications. Cosmos Hub is currently voting on a major software upgrade proposal to replace existing staking, distribution, and slashing modules with the Liquid Staking Module (LSM). The voting period began on August 25 and will run until September 8. As of the latest data, 99.8% of participants have voted in favor, although the proposal has not yet achieved quorum.

The LSM Proposal Details

If the LSM proposal passes, 25% of staked ATOM tokens can be used immediately. This means that a quarter of the staked capital will be unlocked and can be immediately liquid staked to any provider ATOM stakers wish to use. An additional security measure known as a “validator bond” will also be introduced. Each validator must bond 1 ATOM to receive up to 250 ATOM tokens from liquid staking delegates. The more ATOM tokens a validator self-bonds, the more likely they are to receive delegated tokens.

Network Liquidity and Usability

Enabling the LSM would be a significant development for network liquidity, unlocking millions of dollars worth of ATOM tokens. These funds could then be used to fund DeFi activities across the various chains that comprise the Cosmos ecosystem. The unbonding period on the Cosmos Hub lasts 21 days and is used to prevent mass withdrawal of funds. With LSM, this unbonding period could be bypassed, offering immediate liquidity and thereby attracting more participation in the staking process.

Revamping Staking in Cosmos Hub

The Gaia v12 Upgrade

The Gaia v12 upgrade is another milestone in the roadmap of Cosmos Hub. This upgrade is not just about adding new features; it’s about refining the existing ones and making the network more resilient and efficient. The proposal for this upgrade was thoroughly discussed within the community, highlighting the decentralized and democratic ethos of Cosmos.

Community Feedback and Governance

Community involvement is an ongoing process in Cosmos. The governance model allows for community proposals and voting, ensuring that the network evolves in a way that its users find most beneficial. This has been evident in the discussions around the Gaia v12 upgrade, where community feedback was actively sought and incorporated.

The 2023 Roadmap: A Glimpse into the Future

Replicated Security v1.1

The Cosmos Hub team at Informal Systems has been working on a roadmap for 2023, which includes several exciting updates. One of these is Replicated Security v1.1, aimed at enhancing the security features of the network. This includes protocol simplifications and the introduction of an “untrusted consumer chain” protocol to make the network even more secure.

Governance and Funding Innovations

The 2023 roadmap also includes significant improvements in governance mechanisms. These range from stabilized funding methods to multi-choice proposals, allowing for a more dynamic and responsive governance model. The team is also working on streaming/vesting funding options that would make community pool funding more accountable.