Jae Kwon, the founder of Cosmos, has called for a split in the blockchain, proposing a hard fork named AtomOne, just a day after the Cosmos community approved a proposal to reduce ATOM’s inflation rate from 14% to 10%. This decision, known as Proposal 848, received 41.1% support for the reduction and 31.9% against it.
Impact on ATOM price following founder’s proposal
However, following this statement by the founder of Cosmos (ATOM), its impact was observed in the price of ATOM as it declined by over 3% in the last 24 hours. Over the last 28 days, it has shown a significant 33.63% upside momentum, surpassing Bitcoin, which has only experienced a 9.5% upside movement.
Cosmos Hub, functioning as an intermediary for independent blockchains within the Cosmos network, utilizes ATOM as its native coin to power various ecosystems of interconnected blockchains designed for scalability and interoperability.
Kwon expressed disappointment with the community’s decision, stating on social media platform X (previously Twitter), “Despite our voting against the plan 848 has ended up passing.” He highlighted the need for a hard fork, suggesting that the final plan should integrate both the existing ATOM token and a new token, ATOM1, on the forked chain.
ATOM holders eye potential benefits amidst hard fork proposal
The approved reduction in inflation aims to address concerns that the double-digit inflation rate was excessive, impacting the security of the Hub and discouraging the use of ATOM in decentralized finance. The change is anticipated to lower Atom’s annualized staking yield from approximately 19% to around 13.4%. Staking involves locking coins in a blockchain to earn rewards.
John Galt, an expert on Cosmos and Head of Strategy at Stride Zone, sees the potential hard fork as a positive development for ATOM token holders. Galt believes that a fork could resolve years of community infighting that has hindered the progress of Cosmos Hub, particularly referencing the vetoed ATOM 2.0 proposal in the Fall of 2022.
“A fork would be very bullish. Without Jae’s conservatism, Cosmos Hub could be more innovative,” commented Galt on X. He also predicts the hard fork will lead to the largest airdrop for ATOM, potentially resulting in a significant increase in trading volume for both ATOM and ATOM1 tokens.
Airdrops, a common occurrence in blockchain projects, involve the distribution of free tokens to a community, typically as part of a broader marketing initiative.
In the niche of a hard fork, the native coin of the new blockchain (ATOM1 in this case) is usually airdropped to holders of the original blockchain’s token. As Kwon pushes for AtomOne and proposes potential benefits for ATOM stakes, the Cosmos community now faces crucial decisions in navigating the path forward amidst this governance and tokenomics debate.