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:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

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.

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.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Maple Finance has successfully navigated significant market challenges through its strategic pivot to secured lending (Maple v2) and the launch of its Syrup product. Syrup has become a primary growth driver, delivering sustainable, outperforming stablecoin yields and rapidly increasing TVL. The upcoming custody-first Bitcoin staking product (istBTC) presents another significant avenue for expansion. Crucially, Maple has achieved operational profitability, a key inflection point that, combined with a fully vested token and active buyback mechanism, strengthens its investment case. While valuation metrics suggest potential undervaluation relative to peers and growth, the primary forward-looking risk identified is the long-term sustainability of its current high-take-rate collateral staking revenue model.

article-image

In 2014, Microsoft virus scanners were detecting viruses in Bitcoin software

article-image

Ledn’s Mauricio Di Bartolomeo explained how this cycle’s been different for the lender

article-image

The shorts looking for funding range from charming animated series to gritty live-action dramas

article-image

Money, it turns out, is emergent, like consciousness

article-image

Bridge flows churn in both directions as risk appetite returns