Cosmos Labs Seeks Economists to Revamp ATOM Token Amid Ongoing Price Challenges
Cosmos Labs has initiated an urgent search for external economists to assist in the redesign of the ATOM token, as it grapples with sustained pricing difficulties. The organization highlights that the Cosmos SDK has emerged as one of the leading frameworks for launching blockchain networks in recent years, gaining traction among projects linked to major corporations and government initiatives. These instances are often cited as evidence of engagement from Fortune 500 companies.
Identifying Issues with ATOM’s Current Structure
Despite its successes, Cosmos faces a fundamental challenge. The open-source nature of its code allows developers to create independent sovereign blockchains without incurring fees or royalties to the Cosmos Hub. Consequently, large enterprises and institutional teams can leverage the network’s essential technologies without needing to own or engage with ATOM. This means they can utilize the Cosmos infrastructure while sidestepping the token entirely.
New Revenue-Focused Model for ATOM
To address this situation, Cosmos Labs is pursuing a new revenue-driven model. This approach aims to generate income from both on-chain and off-chain utilization of the ecosystem’s technologies. The company clarifies that this initiative is not about creating an entirely new tokenomics framework: “The goal of this research is not to develop new tokenomics from a blank slate. We want to offer research and design support for a revenue-focused model that will combine different sources of potential ATOM income with changes in supply dynamics and inflation schedule. Ultimately, ATOM’s utility will be formed by these fees, whether it’s token buybacks, staking rewards, other mechanisms, or their combination.”
Shift Towards a Sustainable Economic Model
This initiative also signals a broader strategic transition within the Cosmos ecosystem, moving from a focus on abstract growth towards establishing a sustainable economic framework surrounding ATOM. Cosmos Labs has acknowledged that the Interchain Security mechanism, once touted as a primary source of ATOM’s value, has struggled to gain real market traction. The company has indicated that Interchain Security is being gradually dismantled, revealing that the economic structure of the Cosmos Hub is loosely connected to the overall ecosystem activity: “Interchain Security is in the process of winding down, and the Hub’s economic architecture remains relatively isolated from broader activity in the Cosmos ecosystem. To date, it does not have a full-fledged fee model, except for transaction fees within the network itself.”
Political Constraints on Implementation
In light of these challenges, any proposed changes will encounter significant political hurdles, as all major decisions require approval from the Cosmos Hub DAO. Historically, the community has expressed skepticism towards initiatives perceived as potential steps toward centralization. Cosmos Labs referenced a prior proposal to decrease inflation, which barely passed with a margin of just 3%. This decision prompted a rapid withdrawal of funds from staking, underscoring the community’s sensitivity to tokenomics.
Future Prospects and Current ATOM Performance
Given these considerations, the company has emphasized that a successful initiative must clearly outline potential revenue streams, account for supply limitations, and propose actionable steps that align with the interests of all stakeholders. Applications for the request for proposals (RFP) will close on January 15. Meanwhile, ATOM continues to face downward pressure, having declined nearly 76% since the start of the year, reaching a five-year low of approximately $2.1. This trend highlights the underlying tensions within the ecosystem, even as the Cosmos software stack sees growing adoption among blockchain developers and institutional projects in pilot phases.
