Cosmos Hub heading into July 2020

As we head into July, let’s take a look at where the Cosmos Hub is at with staking, rewards, spending, governance, and power distribution.

At a Glance

Network

  • Effective rewards rate on Jul 3: 8.72% (know the difference between inflation & rewards)
  • Jul 3 reported inflation bottomed out at 7.00%, but it’s effectively 6.32% (why?)
  • Jul 3 Community Pool balance: ~398.5k ATOM (increasing by ~28k ATOM per month)
  • Stargate upgrade on the horizon

Governance

  • Spent 25k ATOM from Community Pool on Prop25 (Proposal for 25k ATOM for CosmWasm smart contracts)
  • Gov Prop26 rejected (Proposal for 10k ATOM in exchange for CYB tokens) – stats are here
  • while validator voting power appears to be decentralizing, DPoS makes governance power challenging to assess
  • UPDATE: correction to governance power analysis–I reported that Dokia Capital appears to control 16.84M ATOM, but this was due to mistake and there is not sufficient evidence for this claim.

Related:
Cosmos Hub heading into June 2020 (May 28, 2020)


June 2020 Key Metrics

I take a snapshot for these metrics on the 20th day of each month.

Staking & Community Pool

There are ~1.39M more ATOMs staked this month than last, but the ratio of ATOM staked has hardly changed. This suggests that stakers are collectively selling about as many ATOMs as they are earning.

As long as more than 67% of the supply is staking, inflation will remain fixed at 7.00%, and will only begin to increase if under 67% of the supply is staking. However, as I mentioned in this updated article, inflation will still vary based on block times.

Staking rewards have stabilized, and as of Jul 3, you can expect ~8.72% in annual rewards on the amount you have staked.

The Community Pool currently has a balance of ~398.5k ATOMs as of July 3, 2020, since 25k ATOM was spent from the pool via governance Prop25.

Stargate Upgrade on the Horizon

We introduced an overview of Stargate, the largest Cosmos upgrade yet. Stargate will enable higher transaction throughput, cross-chain transactions, accelerate UI development, and so much more. Here’s what you need to know:


Governance

Prop26 rejected. What does that mean?

After some discussion, Prop26 was rejected on Jun 4. That means that the opportunity to purchase CYB for the Cosmos Hub’s community pool has been declined. Why? A number of different reasons, each raising this question: What is the role of the Cosmos Hub in funding the broader ecosystem? Two great things came out of this: discussion about governance proposal expectations, and another jump in delegator voting numbers.

Prop26 Voting Stats

Prop26 had 56.97% of staked ATOM participate (103.36M of 181.43M ATOM), with 45.69% voting ‘no.’

108 delegators voted (uncertain how many addresses voted with nothing delegated)
47 validators voted

I didn’t record voting power stats for delegator accounts because I don’t have an automated way of doing this. Please contact me if you can help me automate this process.

Your votes will only count if you have delegated to an active validator.


Voting Power & Cartel Watch

Voting power amongst validators hasn’t changed much in the 31 day period since last stats, but we should expect that this will be different next month, thanks to a large redelegation from Dokia Capital. This is a snapshot from July 1, 2020:

What’s the importance of validator voting power?
Validators can work together to form a cartel to make changes to the Cosmos Hub. As of July 1, 2020:

  • the top 7 validators could halt the chain and veto a proposal
  • the top 13 validators can pass a governance proposal (unless delegators override or unless over 1/3 of the voting power vetoes)
  • the top 22 validators would need to work together to take control of governance or to defraud other chains (once IBC is enabled)

A Closer Look at the Hub’s Voting Power

Jul 6, 2020 correction:
I previously reported that Dokia Capital appears to control 16.86M ATOM, however, there is no evidence to claim that the delegator address cosmos1dtq0y9reqst7d99fd3c7x6dflh4eazm4ha8qqh is controlled by Dokia Capital. This was a careless error on my part that could have been avoided by discussing the analysis with Dokia Capital prior to publishing.

Dokia delegates many ATOMs to a diverse set of validators that contribute to the Cosmos Hub. These delegations (and the nature of delegated proof of stake) can make it challenging for critical analysis when it comes to evaluating governance power. It’s worth noting that unless Dokia’s delegators override, when the account controlling Dokia Capital’s validator votes, their vote will represent 17M ATOM, which is currently ~9.29% of the network, while the analyses that I typically publish suggest that Dokia’s validator will represent ~4% of the voting power.

This is important to remember when reading these governance voting power analyses: delegation makes it challenging to see at a glance how much governance voting power various entities have.

That’s all folks!

Hopefully you found this useful. Questions? Comments? Feedback is always welcome! I’m on Twitter