July 21, 2024
Cosmos Hub Introduces Liquid Staking
Latest Cryptocurrency News

Cosmos Network Enhances ATOM Liquidity with Liquid Staking Module

The Cosmos Hub, a blockchain component of the broader Cosmos Network, recently underwent an upgrade to introduce a liquid staking module. This development offers users the capability to bypass the prior 21-day unbonding period associated with unstaking ATOM funds.

ATOM represents the native token of the Cosmos network. Prior to this upgrade, ATOM holders were obligated to abide by a 21-day locking period before they could move their funds following the unstaking of tokens. With the introduction of this new module, staked ATOM can now be utilized within the Cosmos decentralized finance (DeFi) ecosystem without compromising the yield derived from staking activities.

The staking process entails users holding their tokens to validate transactions and contribute to the security of a blockchain network. Participants in this process receive rewards akin to earning interest on a savings account. According to an anonymous Cosmos validator known as Cryptocitos, this new module will unlock more than $400 million worth of ATOM, likely augmenting the presence of staked ATOM in protocols running on the Cosmos network. Cryptocitos highlighted, “The implementation of the liquid staking module means no more need to wait 21 days to unbond and no more choosing between Staking or DeFi.”

Furthermore, the upgraded version empowers token holders to cancel previously initiated unbonding processes, facilitating the return of ATOM to regular staking and enabling its utilization in the liquidity staking module. The upgrade was activated at 1:00 p.m. UTC on September 12, denoted as Gaia 12.

One expected consequence of this upgrade is a potential impact on ATOM’s inflation rate. Cryptocitos elucidated that right now, the bonded ratio for ATOM is 67.8%. As long as it’s above 66.67%, the inflation rate is slowly going down to a floor of 7%; currently, it’s at 14.26%. The higher the bond ratio, the faster the inflation rate goes down.

Additionally, ATOM holders will be subject to a 25% cap on the total amount of ATOM they can liquidate. Cosmos Hub has also disclosed measures taken to mitigate risks associated with liquid staking, stating, “LSM introduces governance-controlled parameters, and as an additional security feature, validators who want to receive delegations from liquid staking providers would be required to self-bond a certain amount of ATOM.”

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

Related posts

UK Researchers: Metaverse Risks Copyright Infringement

Harper Hall

Challenges in Central Bank’s Pursuit of CBDC Inclusivity

Anna Garcia

Chicago Fed Economists Predict Decline in Inflation Below 2.3%

Eva Moore

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Please enter CoinGecko Free Api Key to get this plugin works.