Coinbase Says It’s Wary of Suggested Changes to ATOM’s Monetary Policy
Very little of the revenue generated by Cosmos’ ecosystem has historically accrued to holders of its ATOM token, the report said.
Cosmos’ revamped road map attempts to position interchain security as the core application of the Cosmos Hub, with the introduction of liquid staking and the possible monetization of shared security, Coinbase said in a research report dated Thursday.
Cosmos released a white paper last month that proposed major expansions to the utility of the Cosmos Hub – the blockchain that sits at the center of the ecosystem.
“Despite its potentially critical role in a multichain future, very little of the revenues generated by the growing ecosystem of Cosmos appchains have historically accrued to holders of the native token, ATOM,” analysts Brian Cubellis and David Duong wrote. An appchain is a blockchain dedicated to running a single application.
The proposals aim to allow the Cosmos Hub to become a “credibly neutral provider of security,” the note said, while also further aligning the incentives between appchains and ATOM holders, the Cosmos’ native token.
“In this way they are trying to increase the likelihood that ATOM will generate a monetary premium,” the note added.
The white paper is ambitious, the report said. While some parts such as liquid staking, an on-chain market for MEV – or maximal extractable value, and a system for the coordinated deployment of capital to help grow the ecosystem are innovative improvements that may catalyze future adoption are clear, the advantages of the updated ATOM monetary policy are not as obvious.
Coinbase says it remains wary of the suggested changes to the monetary policy and questions whether potential benefits from the future capital deployment of the Cosmos Hub Treasury justify the risk of dilution for token holders in the near-term.
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