As we head into June, let’s take a look at where the Cosmos Hub is at with staking, rewards, spending, governance, and power distribution.
At a Glance
- Effective rewards rate is 8.92% (know the difference between inflation & rewards)
- May 27 reported inflation bottomed out at 7.00%, but it’s effectively 6.41% (why?)
- May 27 Community Pool balance: ~365.7k ATOM (increasing by 27k ATOM per month)
- Gov Prop25 passed (Proposal for 25k ATOM for CosmWasm smart contracts)
- Gov Prop26 needs 37% for quorum (Proposal for 10k ATOM in exchange for CYB tokens)
- validator voting power is fairly stable (decentralizing slightly)
May 2020 Key Metrics
I take a snapshot for these metrics on the 20th day of each month.
Staking & Community Pool
There are ~1.35M more ATOMs staked this month than last, but the ratio of ATOM staked has hardly changed.
As long as more than 67% of the supply is staking, inflation will remain fixed at 7.00%. However, as I mentioned in this updated article, inflation will still vary based on block times, and will only begin to increase if under 67% of the supply is staking.
Staking rewards have stabilized, and you can expect ~8.78% in annual rewards on the amount you have staked.
The Community Pool currently has a balance of ~365.7k ATOMs as of May 27, 2020, with 25k ATOM being spent from the pool via Prop25.
Prop25 passed. What does that mean?
After much discussion, Prop25 passed on May 26. This means that the CosmWasm team is has now been funded 25,000 ATOM by the Cosmos Hub to enable limited smart contract ability, which will be controlled by ATOM stakers via governance. Hub Governance will control code upload, contract instantiation, upgrades, and destruction (if needed). What can these smart contracts do for the Hub?
- enable rented ‘rented security’ (new chains could pay to temporarily be secured by the Hub’s validator set)
- enable ATOMs to be used as collateral for smaller zones
- enable staking derivatives
- governance DAOs
- dynamic Inter-Blockchain Communication (dIBC)
With the upcoming launch of Inter-Blockchain Communication (IBC), the Hub will need to coordinate a governance vote and upgrade to connect each new Cosmos zone to the Hub. CosmWasm is supposed to enable dynamic IBC (dIBC) so that the Hub can form these connections without having to disrupt the system. This should enable faster support of a growing ecosystem, while also limiting chain restarts that are disruptive to existing IBC connections.
Prop25 had 72.41% of staked ATOM participate (130.64M ATOM), with 99.99% voting ‘yes.’
88 delegators voted with 9,008,941.55 ATOM
66 validators voted with 130,478,253.00 ATOM
They don’t add up because much of the voting power overlaps–delegators have the ability to override their validator(s)’ vote. This is important to do for a number of reasons.
The votes of delegations to validators #fuckgoogle and Bit Cat? did not count because these validators were not in the active set at the time that the voting period ended. Your votes will only count if you have delegated to an active validator. Several other addresses voted with nothing delegated.
Prop26 is currently in the voting period with seven days remaining. You can see the ongoing discussion about the proposal here.
70 addresses have voted, 62 of those are delegator addresses. As we have seen with Prop25, there are many more delegator votes than ever before. However, validator participation is noticeably absent from this proposal.
Only 3% of the Cosmos Hub has weighed in on Prop26, and though the vote is overwhelmingly in favour, the proposal will fail and the 512 ATOM deposit will be burned if quorum (40%) is not met within seven days.
There are a number of ways to vote, even if you don’t have a Ledger wallet. These are the four software wallets that I know of:
– Keplr (web/Android/iOS)
– Cosmostation (web/Android/iOS)
– Rainbow Wallet (Android/iOS)
– Syncnode (iOS)
However, if your ATOMs are on an exchange, you will not have voting rights because the exchange controls these funds until you gain custody.
Voting Power & Cartel Watch
Voting power amongst validators hasn’t changed much.
What’s the importance of validator voting power?
Validators can work together to form a cartel to make changes to the Cosmos Hub. As of May 21, 2020:
- the top 6 validators could halt the chain and veto a proposal
- the top 12 validators can pass a governance proposal (unless delegators override or unless over 1/3 of the voting power vetoes)
- the top 20 validators would need to work together to take control of governance or to defraud other chains (once IBC is enabled)
That’s all folks!
Hopefully you found this useful. Questions? Comments? Feedback is always welcome! I’m on Twitter