Cosmos Hub Staking May Soon be Revamped Following Latest Proposal

LSM will remove the 21-day unbonding period for liquid-staked tokens

article-image

Satheesh Sankaran/Shutterstock modified by Blockworks

share

The Cosmos Hub has passed a signal proposal to replace existing Cosmos Hub staking, distribution, and slashing modules with the Liquid Staking Module (LSM).

Proof of stake blockchains are designed so that validators must lock up their tokens in order to participate in securing the network and earn rewards.

For Cosmos, this means that validators must lock up ATOM tokens. 

Once a token is locked into the network, validators must wait 21 days before they are able to use them again — this is considered an unbonding period and its intention is to prevent masses of validators from suddenly withdrawing their tokens.

Implementing LSM means that ATOM token holders will be able to liquid-stake their already staked tokens without needing to wait for a 21-day unbonding period. 

Blockworks Research Analyst David Rodriguez notes that this proposal is a big win for the Cosmos Hub and its wider ecosystem. 

Loading Tweet..

“Cosmos liquid staking can unlock billions of dollars in staked liquidity and allow Cosmos DeFi to flourish over time,” Rodriguez said. “By double dipping in ATOM inflation and Cosmos DeFi yield, ATOM has a chance to become the de facto reserve asset of the ecosystem and make Cosmos DeFi much more attractive to users.”

To alleviate some risk, a limit of 25% will be placed on liquid staking tokens which can be staked, and this limit can be changed through the Cosmos Hub governance.

Further, LSM will introduce a mechanism called a “validator bond,” where each validator must self-bond ATOMs at a ratio of 1:250 to receive ATOM tokens from liquid staking delegations. 

Traditionally, if a validator were to be malicious, their self-bond would be slashed — with LSM, validators will be required to put more skin in the game, Rodriguez notes. This means that delegations will have the choice to delegate their ATOM to a validator who has self-bonded more tokens. 

A little over 60% of ATOM holders voted in this signal proposal. Among them, 87% voted in favor of the proposal, with only 6% voting against and a little less than 7% choosing to abstain.

A proposal to implement LSM will likely be created later in the year.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

tg trading bot report graphic.png

Research

Telegram trading bots have found their primary niche in highly speculative token launches and retail-dominated memecoin markets, with many features specifically tailored to token sniping and copy-trading strategies.

article-image

Paradigm’s Charlie Noyes thinks that the attention on stablecoins is well-deserved after Mesh’s $82 million round

article-image

Crypto may benefit from developments during the second quarter after a rough start to the year

article-image

With a friendlier regulatory outlook and the airdrop flow being stemmed, some are looking to how new native tokens can become valuable assets

article-image

The recent action paints an uncertain picture for future monetary policy moves

article-image

Is the finance world becoming “more liquid”? Experts give their takes as TradFi players consider new moves