A little bit of chit-chat

Injective, a blockchain platform optimised for financial applications, has announced the launch of its $150 million ecosystem initiative, which includes some of the largest institutions in the Web3 and traditional finance space. This venture consortium is the largest assembled within the Cosmos community. It includes investors such as Pantera Capital, Kucoin Ventures, Jump Crypto, IDG Capital, Gate Labs, Delphi Labs, Flow Traders, and Kraken Ventures. The initiative aims to accelerate developer adoption of Injective and support projects pioneering new ideas across various sectors, including interoperability, DeFi, trading, PoS infrastructure, rollups, and scalability solutions.

InflATOM

The Cosmos community has been discussing the sustainability of Atom’s tokenomics, as exponential inflation is a long-term concern. One proposed solution on the community forum is to remove the lower bound of 7% from the dynamic issuance model. This would allow Atom issuance to reach 0%, providing a temporary fix while a sustainable long-term update to the hub’s economic model is developed.

One of the critical features of the current system is that Atom issuance scales with the percentage of staked Atom on the hub, with a minimum issuance of 7% and a maximum of 20%. The higher the percentage of Atom supply staked, the lower the issuance rate, and vice versa. This is intended to incentivise people to stake for economic security.

Several upcoming catalysts may encourage people to stake their Atom again and bring the hub issuance back to the 7% level. The release of Interchain Security will reward Atom stakers with fees and emissions from consumer chains that the hub secures. The release of the Liquid Staking module will allow stakers to remain staked and receive an Atom derivative token that can be used elsewhere in Cosmos. Additionally, the Interchain Foundation is updating its validator delegations policy, which may result in a large portion of Atom being staked with validators who applied to the program, pushing the percentage of Atom staked even higher.

The Tweet of the Week

Another Thirdening?

A proposal has been put forth to address the issue of net negative yield for OSMO stakers. OSMO is currently emitted daily at the end of the Epoch, with the amount reducing by a third every 365 epochs. This is known as “The Thirdening”.

Inflation is currently at 38.7%, while the staking reward is 23.4%, with the typical OSMO reward from LP emissions being around half of this. This has led to a common complaint among stakers that they see a net negative yield, even when considering market effects.

The proposal suggests redirecting 70% of liquidity incentives to the stakers while leaving the emissions schedule. This would fix the net yield complaint while reversing the previous incentive reduction proposals that aimed to minimise unsustainable inflationary rewards during the bear market. Additionally, the proposal suggests redesigning the long-term tokenomics of Osmosis by keeping emissions into circulation relatively static, causing stakers to have a net-positive yield, slowing down the growth of the community pool, and either reducing the maximum supply of Osmosis or flattening the inflationary curve for a more sustainable rate over a more extended period of time.

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