Cosmos Hub, a blockchain that is part of the Cosmos Network, has been updated to launch a liquid staking module, allowing users to bypass the previous 21-day unbinding period by unstaking ATOM (ATOM) money.
ATOM is the native token of the Cosmos network. Prior to the upgrade, ATOM holders had a 21-day lock-up period to move their funds after withdrawing the token. With the new module, Staked ATOM can be used in the Cosmos decentralized finance (DeFi) ecosystem without compromising staking returns.
The staking process involves users holding their tokens to validate transactions and secure a blockchain network. Participants receive rewards for their contribution, similar to earning interest on a savings account.
v12 update completed successfully โ๏ธ
The Liquid Stake module is now available on Cosmos Hub!
With LSM, the Hub unlocks new dynamics within the ATOM Economic Zone.
Users can now place liquid bets directly on their already wagered bets. #ATOM without waiting for the separation period. pic.twitter.com/IdIyr8nsdL
โ Cosmos Hub โ๏ธ (@cosmoshub) September 13, 2023
According to pseudonymous Cosmos validator Cryptocitos, the new module will unlock over $400 million worth of ATOM, which will likely accelerate the presence of ATOM in play in protocols running on Cosmos. "The implementation of the liquid staking module means that it is no longer necessary to wait 21 days to unlink and there is no longer a choice between Staking or DeFi", Cryptocitos wrote on X (formerly Twitter).
The new version also allows holders to cancel unbinds that already exist, allowing ATOM to be re-staked regularly and used in the liquidity staking module. The update went live at 1:00 pm UTC on September 12 at block height 16985500 under the name Gaia 12.
Another expected impact will be seen in the ATOM inflation rate, Cryptocitos explained. โAt this time, ATOM's linkage rate is 67.8%. As long as it is above 66.67%, the inflation rate will slowly decline to a minimum of 7%; It is currently at 14.26%. The higher the bond index, the faster the inflation rate will fall.โ
Additionally, ATOM holders will be subject to a 25% limit on the total amount of ATOM they can hold with liquid participation. Furthermore, Cosmos Hub revealed the measures taken to mitigate the risks of liquid participation:
โLSM introduces governance-controlled parameters and, as an additional security feature, validators who wish to receive delegations from liquid staking providers will need to self-bind a certain amount of ATOM.โ
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