The Cosmos community found itself at a crossroads after a recent vote on Cosmos Hub to de-inflation native altcoin ATOM sparked controversy and led founder Jae Kwon to call for a hard fork. Proposal 848, which aimed to reduce ATOM’s inflation to 10%, divided the community and caused a 4% drop in ATOM’s price in one day. Kwon’s response, advocating the split and the creation of a new network called AtomOne, fueled the ongoing debate. Here are the details…
Altcoin community attracted attention with controversy: ATOM price dropped
The adoption of Proposal 848, with 41.1% supporting and 31.9% opposing reducing ATOM’s inflation, led to tensions within the Cosmos community. The controversial proposal aims to reduce ATOM’s inflation from around 14% to a maximum of 10%, thereby reducing its Annual Percentage Rate (APR) from 19% to around 13.4%. According to CoinGecko, this dispute caused a 4% drop in the value of ATOM and it currently stands at $9.29.
Supporters argue that the inflation discount is crucial to maintaining network security and ensuring that validators remain financially viable even at the discounted rate. This discount gives them the option to increase their commission rates to cover operational costs.
Hard fork call came
In response to the community vote, founder Jae Kwon took to Twitter to urge the community to “coordinate a split.” Kwon’s proposal involves forking a new network from Cosmos called AtomOne and issuing a new token called ATOM1. This new network aims to support both ATOM and ATOM1 and provide an alternative for those opposed to Proposition 848.
Write all of your ideaas about a split here in the form of issues. Don't be too concerned about discrepancies in the README/CONSTITUTION, but feel free to make issues. What matters is that you participate in discussion. https://t.co/DycVlf1cIl
Maybe somebody can make a gitter.
— antechristus #343 (@jaekwon) November 25, 2023
The proposed AtomOne network plans to pre-allocate 10% of the genesis supply for various purposes, while the remaining 90% is set for airdrops based on voting activity to those opposing Proposition 848. Although it uses much of the existing Gaia architecture, AtomOne will have a higher maximum inflation rate of 20% and a modified governance mechanism that requires a two-thirds quorum threshold for proposal approval.
What will happen now?
If realized, the fork will use the same underlying software of the existing Cosmos Hub network, known as Gaia, with the chain ID “cosmoshub4”. It will retain core features such as IBC and cross-chain security. The original maximum inflation rate of 20% will be maintained to adequately reward validators and stakers. Additionally, Kwon proposed a separate fee token called Photon (phATOM1) to work alongside ATOM1. This fork network will be separate from Kwon’s other Layer 1 Blockchain project in development called Gno.Land.
While the Cosmos community grapples with this significant development, the future of the network remains uncertain. The hard fork proposed by Jae Kwon presents AtomOne as a potential alternative. However, the community’s reaction and consequences for both ATOM and ATOM1 will emerge in the coming days.
