Cosmic Discord: Founder's Call for Split Casts Shadow as ATOM Plunges 3%

Community Decision on ATOM Inflation Sparks Call for Hard Fork

Cosmos founder Jae Kwon has proposed a blockchain split, tentatively named AtomOne, in response to the Cosmos community's decision to reduce the inflation rate of its native token ATOM to 10%. While the potential hard fork could be viewed as bullish by some, ATOM experiences a 3.5% decline post-announcement.

In a move to align ATOM's inflation with community sentiments, proposal 848 garnered approval, with 41.1% supporting the reduction and 31.9% opposing it. The proposal argued that the existing double-digit inflation rate for ATOM was an overpayment for security and hindered its utility in decentralized finance. The revised inflation rate is expected to lower ATOM's annualized staking yield from around 19% to approximately 13.4%, impacting those who lock coins in the blockchain for rewards.

Expressing his discontent with the community's decision, Kwon called for the hard fork and detailed his vision for AtomOne. He proposed an integration plan accommodating both $ATOM and $ATMO/$ATOM1 to prevent a mass sell-off of ATOM. Kwon urged tokenomics experts to contribute their insights to refine the plan.

Cosmos expert and Stride Zone's Head of Strategy, John Galt, sees the potential hard fork as a positive development, suggesting it could resolve longstanding community conflicts. He believes that the hard fork might unleash innovation within Cosmos Hub, especially considering the previous veto of the ATOM 2.0 proposal in fall 2022.

Galt anticipates the hard fork to trigger a substantial airdrop for ATOM holders, potentially leading to a significant surge in trading volume for both ATOM and ATOM1 tokens. Airdrops involve the distribution of free tokens to a blockchain's community, typically occurring when a chain undergoes a split.

Jae Kwon's proposal envisions the new chain, AtomOne (ATOM1), with a substantial allocation for ATOM stakers based on their holdings. However, details regarding liquid ATOM inclusion remain unclear.

Despite the optimistic outlook for a potential hard fork, ATOM currently trades 3.5% lower at $9.59. Over the weekend, the cryptocurrency briefly surpassed $10 but failed to establish a sustained position above the three-week resistance. The broader market struggle, with Bitcoin encountering resistance around $38,000, may contribute to the weakness observed in ATOM. (Photo Source / CoinMarketCap Screenshot)