Cosmos co-founder splits ATOM after years of infighting

Cosmos co-founder Jae Kwon has long felt that the protocol’s community is conspiring against him. Now, he may be leaving it for good.

After a proposal passed to crimp inflation on Cosmos’ ATOM token, Kwon announced AtomOne — a “minimal fork” of the Cosmos Hub application.

Kwon and his opponents fundamentally diverge on how much inflation is needed to keep the Cosmos blockchain secure.

Cosmos narrowly passed on Saturday Proposal 848 pledging to set ATOM’s inflation rate at 10%, down from 14%. The proposal’s proponents argue that Cosmos is overpaying for security by raising inflation rates to incentivize staking.

Other layer-1s maintain high staking demand without inflation, which needlessly puts downward pressure on ATOM’s price, advocates say.

ATOM’s price is down 9% in the past 24 hours as Cosmos’ founder announced his breakaway token. It is unclear how exactly AtomOne tokens will be distributed, though the token’s constitution says Proposal 848 voters will receive fewer tokens, and the fork would still support ATOM tokens.

Kwon voiced opposition at the proposal’s outset and throughout the two week voting period. For some, the founder’s inability to sway the outcome is emblematic of Kwon’s waning influence in the Cosmos community.

Kwon co-founded Cosmos in 2014, but has accused the community of conspiring against him multiple times in the years since.

AtomOne’s GitHub page shows Kwon began working on the document two weeks ago, around the time that voting started on Proposal 848.

At the center of Kwon’s critique is the argument that ATOM was never meant as money, and viewing the staking token for its financial prospects risks compromising the Cosmos Hub’s security.

“In the long run this is [a] game of survival, and survival comes from strict adherence to first principles (of security especially),” Kwon wrote on X Monday.

Activist minority factions forking crypto projects have generally seen limited success — from bitcoin cash to more recent “rage quits” from the Nouns and Floor DAOs. In each case, some forkers profited, but the forkers were ultimately unable to recapture the social capital of their predecessors.

Updated Nov. 27, 2023 at 5:10 pm ET: Clarified that the forkers, rather than forked chains, were unable to recapture the social capital of their predecessors.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.