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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.