Cosmos
Layer 1 Protocol, Cosmos SDK
Cosmos is a layer 1 protocol and one of the first protocols to successfully address the interoperability issue. Cosmos effectively solves the problem of interoperability through its use of the Inter-Blockchain Communication (IBC) protocol ensuring that blockchain technology doesn’t remain siloed, inaccessible and that other protocols can communicate. Cosmos’s mission is to have over a million different blockchains interconnecting constituting an internet of blockchains.
APY | ~14% |
Total Supply | Inflationary |
Compounding | Manual |
Compounding Frequency | Every block (~6 seconds) |
Reward Distribution Period (Payout Frequency) | Every Block (~6 seconds) |
Unbonding Period | 21 Days |
Validator Self-Bond Requirement | |
Figment Validator Address | Cosmosvaloper1hjct6q7npsspsg3dgvzk3sdf89spmlpfdn6m9d |
Recommended Wallet | |
Slashing Penalty | 5% on double signing, 0.01% on downtime |
Validator Diversity | Currently the top 100 validators with highest stake comprise the active set |
- Rewards are distributed automatically every block
- 5% slashing penalty for double signing, 0.01% slashing penalty for downtime
- 21 day unbonding period
- Tokens are locked during the staking period
- A new delegation is required for compounding rewards
For this guide, we will be using the Keplr wallet. This wallet is non-custodial, and requires the user to keep track of their own mnemonic phrase, and password. To learn more about custody and best practices, check out our “What is Custody?” video.
To begin staking Cosmos using the Keplr wallet, first head over to https://wallet.keplr.app/#/dashboard and install the kepler extension to your browser.
Once installed, if you are creating a new wallet, Keplr will walk you through the wallet creation process.
Click “Create new account” and follow the instructions on screen.
Creating a new wallet will promote you to generate a 12 or 24 word key phrase. This is a crucial step of the wallet creation process. Please ensure to backup your 12-word or 24-word key phrase. Please also ensure that you backup your wallet password.
Once you have created a new wallet. You are now ready to use the Keplr wallet for sending, receiving, and staking assets.
To fund your wallet with ATOM, simply find your newly created ATOM address in the top left corner. Send over some ATOM to this address.
Once you have funded your wallet with ATOM, head down on the left hand side of the wallet where it says “Cosmos” and select the “Stake” option. Selecting the “Stake” option will bring up the view above, from this view, find the Figment validator.
Once you find the Figment validator and you are ready to stake your ATOM, press “Delegate”
Pressing “Delegate” will prompt you to enter how much ATOM you wish to stake. Enter the amount of ATOM you wish to stake, and press “Delegate”
Keep in mind that there is a 21 day unbonding period for ATOM.
Pressing “Delegate” will bring up a confirmation window within the Keplr wallet. If everything looks good, clicking “Approve” on the transaction will put your stake into action.
Once the transaction is confirmed, congratulations! You have successfully staked ATOM using the Keplr wallet.
To undelegate your atom, simply click “Manage” to the far right side, and then you will have the option to undelegate.
Cosmos’s network governance is on-chain and 1 ATOM counts as 1 vote. Discussions are on the Cosmos Discord and the Cosmos official Forum. Governance proposals can be put forward on-chain. An outline for drafting public proposals on-chain can be found here in Cosmos’s governance documentation. Delegators can directly vote on proposals. If they do not vote this way, they inherent the vote from the validator.
The Cosmos ecosystem (also referred to as Cosmos SDK) has attracted a very large ecosystem of projects building that building on its unique technology. Cosmos is continually integrating and adding more networks to its ecosystem including other Layer 1s protocols such Crypto.com, Binance Smart chain and Terra. Cosmos and the wider ecosystem is building multiple protocols and platforms to tap into and bring some of the value from Ethereum to Cosmos and some Cosmos’ value to Ethereum. Examples of this include EVMOS (previously known as Ethermint) which operates as an EVM compatibility layer for Cosmos and Gravity bridge which is a bridge created by the Althea team which allows the bi-directional transfer of assets to and from Ethereum and Cosmos. This link provides an overview of the Cosmos ecosystem.
What is staking?
On a Proof of Stake blockchain, staking is the act of depositing tokens into a smart contract on the chain to become a validator; thus participating in proposing and attesting to transaction blocks. Anyone with a minimum necessary coin balance can validate transactions and earn staking rewards on these blockchains.
What is the name of the asset being staked?
The Cosmos Hub’s native token, ATOM, is used to stake, pay for transactions, and participate in on-chain governance.
Where can I explore the network and create a Cosmos Hub wallet?
Why Stake Atom?
Initially, ATOM is staked to earn new issuance ("inflationary") subsidies. It means that the supply of ATOM will increase, and stakers will capture the newly issued ATOM. Generally, you will earn around 10.5% annually on your staked ATOM, but that can change.
Stakers will also capture fees from network transactions, and as Cosmos Hub transaction volume increases, ATOM stakers will earn more than new issuance subsidies. The ATOM tokens also give stakers the right to vote on policy decisions on how the Cosmos Hub will operate and distribute treasury funds.
The main drivers of ATOM’s value could be more than transaction fees. ATOM holders should be able to somehow extract value related to the “assets under management” that the Cosmos Hub secures (via products like DeFi).
In a world of thousands of connected blockchains, credibility could be the scarcest resource, and the Hub aims to be the most credible. Owning staked ATOMs is ownership of the Cosmos Hub, giving ATOM stakers the entitle to set/change the rules of the Hub.
How long does it take to stake and unstake?
Staking is instant, while it takes 21 days to unstake once you initiate the unbonding process. During this time, you will not earn rewards. When the process is complete, you can transfer/trade your ATOM tokens.
When are staking rewards and transfers enabled?
Transfers and staking rewards are currently enabled.
How is staking income disbursed?
Staking income on the Hub is automatically distributed in each block. Figment is never in control of your staking income.
Staking income is liquid, which means you can withdraw your rewards to use at any time, but you will need to delegate them if you want to add them to your existing stake. Reward income is not automatically staked.
Can I lose potential staking rewards?
Your potential rewards depend on validator performance. When your validator is down for over approximately 20 hours (i.e., "jailed"), you will not be earning staking income.
Can my staked ATOM be slashed (seized or destroyed)?
Yes, a portion of your staked ATOM can be destroyed. There are two ways this can happen:
- 1.If you delegate to a validator that is offline for over 20 hours (assuming a 7.22s block time), you will lose 0.01% of the tokens you have delegated to that validator.
- 2.If you delegate to a validator that signs the same block twice with the same key, you will lose 5% of the tokens you have delegated to that validator.
Figment insures our clients from slashing and has never had a slashing event.
What is the rate of new issuance (aka "annual inflation") for ATOM? How does the token supply change?
The new issuance ("inflation") rate is around 9% of the total supply. When less than 67% of the supply is staked, the rate gradually increases to a maximum of 20%. When over 67% of supply is staked, the rate gradually decreases to a minimum of 7%.
Currently, the Cosmos Hub pays delegators roughly 7% rewards in ATOMs per year. The annual inflation rate changes depending on the percentage of the network tokens staked. When less than two-thirds of all tokens are staked, inflation gradually increases up to 20%. When over two-thirds of tokens are staked, the network inflation rate gradually decreases to 7%.
As of March 2022, the network staking rate was 63%.
What affects future yields?
Delegators will continue to earn inflationary rewards until 2029. After this date, the rewards will be created from transaction fees on the network. Depending on the adoption rate of this network, rewards will vary.
Do I maintain custody of my ATOM tokens? Who or what controls my staked ATOM token?
Figment has partnerships with many top-in-class custodians. For inquiries, please contact [email protected]. The Cosmos Hub protocol takes control of your ATOM tokens while you are staking. If you unbond your tokens, this process will take 21 days before the protocol returns your tokens to you. While your ATOM tokens are staked, you may participate in on-chain governance by voting on different proposals.
How are decisions about the Cosmos Hub made and executed?
The Cosmos Hub uses staked token voting for on-chain governance. Governance proposals are typically discussed on the forum and then deployed on-chain. The voting period lasts for 14 days and requires a quorum of 40% of staked ATOM and a simple majority to pass. Read more about the voting process and proposal types here. You can see active proposals on most popular explorers and some wallets:
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Last modified 5mo ago