Cosmos Blockchain Founder Jae Kwon Opposes Proposed Changes to ATOM Token

The changes would introduce "liquid staking" to the system.

AccessTimeIconNov 11, 2022 at 12:11 p.m. UTC
Updated Nov 11, 2022 at 3:10 p.m. UTC
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Will Canny is CoinDesk's finance reporter.

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Jae Kwon, founder of the Cosmos blockchain, said he is against proposed changes that would introduce liquid staking to the system.

The introduction of liquid staking, which would allow holders of Cosmos’ ATOM token to use derivative tokens to earn rewards elsewhere, is unjustified, Kwon said in an interview with CoinDesk. Passing what’s known as Proposition 82 would create a dangerous precedent of minting a “scandalous” number of new tokens – ATOM2.0 – to a treasury that is controlled by select insiders.

“The extreme risks of this should be abundantly clear to everyone,” especially given the current contagion in crypto markets caused by the collapse of the FTX crypto exchange and its sister company Alameda Research, he said.

In September, Cosmos released a white paper that proposed major expansions to the utility of the Cosmos Hub – the blockchain that sits at the center of the ecosystem. Voting on the contentious reforms ends Monday, with votes 2-to-1 in favor of the proposal as of Friday.

“In an ecosystem with one of the most advanced systems of governance like Cosmos, changes affecting the development of the Cosmos Hub and placing its security and dependability at risk, as well as radical changes to its monetary policy, must be thoroughly examined from all angles and broken down into individual components to be assessed one by one – not grouped together in an omnibus white paper proposed by a centralized committee,” Kwon said in emailed comments.

The Cosmos Hub continues to display resilience and economic security because the ATOM tokens are bonded and not earning yield or absorbing losses in a high-risk over-leveraged environment, he said.

“We need to ensure that such a harmful division of the Cosmos community does not happen again,” and the way to do that is by creating a constitution, he added.

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Will Canny is CoinDesk's finance reporter.