Cosmos votes on liquid staking plan in bid to boost DeFi

LSM may soon remove the 21-day unbonding period of 25% of all ATOM tokens

article-image

WindAwake/Shutterstock modified by Blockworks

share

The Cosmos Hub is voting on a major software upgrade proposal to replace existing staking, distribution and slashing modules with the Liquid Staking Module (LSM).

The vote, which began on Aug. 25, will run until Sept. 8. At the time of writing, 99.8% of participants have voted in favor of the new upgrade, though the proposal has not yet achieved quorum. 

Enabling the LSM is a significant development for network liquidity and unlocking millions of dollars worth of ATOM tokens. These funds could then be used to fund DeFi activities across the various chains that comprise the Cosmos ecosystem. 

Like on any other proof of stake network, Cosmos Hub validators must lock in their own “stake” to the network before participating in network activities. This unbonding period on the Cosmos Hub lasts 21 days and is used to prevent mass withdrawal of funds.

If the LSM proposal passes, 25% of staked ATOM can be used immediately, Blockworks research analyst David Rodriguez said. 

“Essentially, 25% of staked capital will be unlocked and can be immediately liquid staked to any provider ATOM stakers want to use,” Rodriguez said. 

An additional security measure — known as a “validator bond” — will also be introduced with LSM. This means that each validator must bond 1 ATOM to receive up to 250 ATOM tokens from liquid staking delegates. The more ATOM tokens a validator self-bonds, the more likely they are to receive delegated tokens.

Riley Edmunds, co-founder of Stride Labs — the team behind liquid staking network Stride — notes that the LSM model will be a safety framework for liquid staking across the Cosmos Hub.

Loading Tweet..

“It’s a safety framework that regulates the adoption of liquid staking by preventing providers from controlling over one-third of total stake and safeguarding against the risk of validator corruption,” Edmunds said. “All the LSM’s settings are controlled by Cosmos Hub governance.”

With these necessary features in place, Edmunds notes that the cost of liquid staking will be radically reduced.

“It lets users instantly convert staked ATOM into liquid staked ATOM instantly. Previously, users who were already staked had to unbond and wait three weeks before they could liquid stake,” he said. “With LSM, these same users will be able to instantly liquid stake. A few mouse clicks on app.stride.zone will convert their staked ATOM to stATOM.”


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.
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

Research Report Templates (5).png

Research

Outside of stablecoins, the value of tokenized assets sits below $20B, dominated by the following asset classes: private credit, US Treasuries, commodities, institutional alternative funds, stocks, non-US government debt, and corporate bonds. In the coming months, we see the greatest opportunities in the tokenization of illiquid markets, particularly private equity. However, the successful integration of offchain assets into blockchain ecosystems relies heavily on clear and consistent regulatory frameworks, with purpose-built infrastructure to support it.

article-image

The S&P 500 was mostly flat after a month of losses, and the Nasdaq has been slowly gaining

article-image

Movement Labs is once again at the core of some criticism after it declined to name a market maker offboarded by Binance

article-image

Experts discuss the future of crypto ETFs as Trump puts “money where his mouth is”

article-image

Luke Barwikowski took to Twitter to raise awareness about the threats against him and his family

article-image

David Chaum’s ecash in the 90s offers insights into balancing priorities in DeFi today

article-image

The forthcoming stablecoin was praised by BitGo’s Mike Bleshe as an advancement in “institutional-ready digital assets”