Cosmos Hub Introduces Liquid Staking Module for ATOM
The Cosmos Hub, a blockchain within the Cosmos Network, has undergone an upgrade to launch a liquid staking module. This new module allows users to bypass the previous 21-day unbonding period when unstaking their ATOM (ATOM) funds. Previously, ATOM holders had to wait for 21 days before moving their funds after unstaking the token. However, with this upgrade, staked ATOM can now be used in the Cosmos decentralized finance (DeFi) ecosystem without compromising staking yields.
Unlocking Over $400 Million Worth of ATOM
The implementation of the liquid staking module will unlock more than $400 million worth of ATOM, according to pseudonymous Cosmos validator Cryptocitos. This is expected to accelerate the presence of staked ATOM in protocols running on Cosmos. The new module eliminates the need to choose between staking and DeFi and removes the waiting period for unbonding.
Benefits and Impact
By holding their tokens and participating in the staking process, users can validate transactions and secure the blockchain network while earning rewards. The liquid staking module also allows holders to cancel unbondings already in place, enabling them to return to regular staking and utilize the liquidity staking module.
The upgrade has gone live under the name Gaia 12 and includes measures to mitigate liquid staking risks. Additionally, there is a 25% cap on the total amount of ATOM that can be liquid-staked by holders. The bonded ratio for ATOM will affect its inflation rate, with a higher bonded ratio leading to a faster decrease in inflation.
Mitigating Risks and Governance-Controlled Parameters
In order to mitigate risks associated with liquid staking, the Cosmos Hub has introduced governance-controlled parameters. Validators who wish to receive delegations from liquid staking providers will be required to self-bond a certain amount of ATOM as an additional security feature.
Hot Take: Unlocking Liquidity and Expanding Possibilities for ATOM Holders
The launch of the liquid staking module on the Cosmos Hub is a significant development for ATOM holders. By eliminating the 21-day unbonding period, users can now freely move their funds and participate in the DeFi ecosystem without sacrificing staking rewards. This upgrade also unlocks over $400 million worth of ATOM, accelerating its presence in protocols running on Cosmos. The introduction of governance-controlled parameters and measures to mitigate risks demonstrates the commitment to ensuring the security and stability of liquid staking. Overall, this upgrade expands possibilities for ATOM holders and further strengthens the Cosmos Network.
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