Key learning points
- After a hotly contested vote, the Cosmos Hub community rejected the proposal to implement the ATOM 2.0 white paper.
- 37.99% of tokens voted “NoWithVeto”, indicating strong backlash from the community.
- The proposal sparked controversy over the revamped tokenomics and the desire to deploy multiple complex new tools at once.
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The ATOM 2.0 proposal was rejected by the Cosmos Hub community in a hotly contested vote; the proposal failed despite the support of the majority of voters.
ATOM 2.0 fails
After weeks of debate and a tense two-week voting period, the Cosmos Hub community decided earlier this morning to reject proposal #82, “ATOM 2.0: A New Vision for Cosmos Hub.”
Based on a white paper written by Cosmos co-founder Ethan Buchman and eleven others, the proposal was marketed as the next step in the evolution of Cosmos Hub. Among other things, the white paper suggested drastically changing ATOM’s tokenomics and building two new tools, the Interchain Allocator and the Interchain Scheduler, which they said would help strengthen Cosmos Hub as one of the most important appchains in the wider Cosmos industry. ecosystem.
The proposal, now regarded by some in the community as the most controversial in Cosmos history, saw an unusually high voter turnout of 73.41% of all ATOM tokens, with voting held tight until the end. In the end, 47.51% of the coins were pledged, 37.39% voted “NoWithVeto”, 13.27% abstained and 1.82% simply voted no.
While most of the tokens have indeed been pledged, Cosmos Hub’s governance mechanisms mean that a proposal cannot pass if more than 33.4% of voters opt for “NoWithVeto” – a system that prevents the Hub from falling prey to attacks of 51%. “NoWithVeto” is therefore a strong signal that community members use to communicate their belief that a proposal is actively detrimental to Cosmos Hub’s interests.
Buchman recognized the strong reaction against the proposal in a tweetstorm: “To those who voted NoWithVeto, I respect your decision and hear you loud and clear: The proposal in its current form is untenable. Even if it passes, amendments are needed!”
Why was it rejected?
ATOM 2.0 was an ambitious and exciting proposition, and that may have been part of the problem.
The 26-page white paper did not limit itself to changing one or two aspects of the ATOM token, as the community had initially expected, but aimed to fundamentally transform the way the Cosmos Hub functioned by introducing three new key tools in addition to revamping tokenomics. For example, the Interchain Scheduler aims to be an on-chain MEV marketplace, while the role of the Interchain Allocator would be to enable mutual interest in various IBC chains; these are two very different, very complex topics, and ATOM participants may have ended up voting against the proposal because of one of the tools, despite liking the other.
Another vivid issue in the ATOM 2.0 proposal had to do with the revamped tokenomics. The whitepaper advocated sharply increasing ATOM token issuance for a short time to subsidize the Hub, then reducing emissions over a 36-month period. Critics argued that the change in monetary policy was unwarranted and details were missing as to how the Hub would use the accrued ATOM. Others were not convinced that ATOM emissions could be successfully replaced by other sources of income by the time emissions decreased.
Most likely, the various components of the ATOM 2.0 white paper will eventually be resubmitted to the community for voting as their own individual projects, as will a detailed proposal for Interchain Security – another ambitious initiative to position Cosmos Hub as a central part of the Cosmos ecosystem – was adopted in March.
Disclaimer: At the time of writing, the author of this piece owned ATOM, BTC, ETH, and several other cryptocurrencies.