Cosmos Hub 3 has launched: voters are more powerful than ever
This is the first major Cosmos Hub upgrade since launching in March 2019. Some important new features will be enabled, particularly some powerful governance mechanism functionality.
The most apparent thing is that our community is growing–we’ll have some new validator operators, possibly up to 25 more.
Prior to the Cosmos Hub 3, a governance proposal could only be used as a signalling mechanism. What does that mean?
Any passed proposals did not automatically trigger a change to the Hub, but rather legitimized changes that needed to be enacted by protocol developers. These changes then needed to be released as new software and run by participating validators. This process is also known as a hard fork.
Many parameters can be changed via governance proposal
Cosmos Hub 3 enables voters to have the power to change how the Hub works at a fundamental level without a hard fork. This is an immense amount of power, since there are many kinds of potential parameter changes, each of which may be very impactful. It’s important to know that multiple parameter changes may happen from one single proposal. What kinds of changes can be made?
Changing the minimum inflation, for example
If a governance proposal proposed to change the minimum inflation (InflationMin) from 7% to 9% and passed, for example, the inflation rate of the Hub and the rewards rate would both instantly change once the voting period ended.
Inflation is currently 7.26%, and that would instantly become 9%. The current ~9.47% rewards rate would become 11.47%. You can learn more about how inflation and rewards relate here.
Other Examples Include
GoalBonded (current setting: 67%), which determines whether inflation increases or decreases based on a target staking participation rate. Since ~75% of ATOMs are currently staking, inflation is decreasing.
SlashFractionDowntime (current setting: 0.01%), which determines the portion of a validator’s stake-backing that gets slashed for being offline beyond a certain number of blocks. That number of blocks is a parameter that may be changed, and is currently 9,500 out of 10,000 blocks.
There are many more–note that this is a very small subset of all of the possible parameter changes.
The community tax rate (current setting: 2%) determines the portion of block rewards that are diverted from staking rewards to the community pool, and that parameter may be changed as well. Speaking of which..
Governance proposals may now spend Community Pool funds
With nearly a quarter of a million ATOMs available to be spent and growing, this is another powerful function of governance proposals. If I submit a proposal to send 200k ATOMs to my address, the instant the proposal passes, I will control those funds.
How can we see proposed parameter changes & community spends?
It will be critical for interfaces that show governance activity to show more than just the description of the proposal, so that voters are aware of any coded parameter changes. Voters will also need to know if the proposal proposes to spend from the community pool. Hubble is prepared to display this information.
The Vote That Got Us Here
Here are some stats:
Delegator votes: 40 (35.71%)
Validator votes: 72 (64.29%)
Total: 112 votes
Delegator vote stake: 19,950,686.19 ATOM (12.90%)
Total vote stake: 154,680,230.97 ATOM of approximately 184M staked ATOM
Yes – 154,154,642.30 ✅
No – 525,588.66 ?
What’s important about delegator votes?
When a validator votes, they direct all of their delegators’ voting power toward that vote. When a delegator votes, they override how their validator has voted (if they have voted).
In this vote, ‘yes’ had an overwhelming majority, so what’s the point of voting as a delegator? Probably a number of reasons, but I think it’s good 1) to show the Cosmos community that you’re paying attention and 2) to signal to validators that ATOM stakers have power over the Cosmos Hub (and not just the validators).
Curious to know more about what’s important about delegator voting? Check out my concern for combining governance power with the validator role.
Hopefully you found this useful. Feedback is always welcome! I’m on Twitter.