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Cosmos Hub’s low barrier to becoming a validator could have these effects

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  • Cosmos Hub ranks number one in terms of cost to become a validator
  • Despite the low costs, the number of stakers on Cosmos Hub declined

According to new data shared by Polkadot Insider, Cosmos Hub has the lowest cost threshold required to become a validator. This, because it only takes 1 ATOM to become a validator on the network – Worth $10.87 at press time.

Read Atom’s Price Prediction 2023-2024

Low costs, high price

Even though this requirement lowers the barrier to entry for becoming a validator, it comes with a set of problems as well. Due to the low cost of becoming a validator on the Cosmos network, many ATOM holders are able to have a say in the governance of Cosmos.

A high number of users participating in governance can cause delays in passing proposals. Additionally, due to the high number of stakers voting on Cosmos governance, a discrepancy between stakers and developers on various issues has been fueled too.

Despite the low costs of becoming a validator on the Cosmos network, the number of stakers on the network have continued to decline.

In fact, according to data shared by Staking Rewards, the number of stakers on Cosmos Hub’s network fell by 11.03% over the past month.

Source: Staking Rewards

Cosmos Hub’s token ATOM hasn’t been doing too well either.

According to Dune Analytics’ data, the number of ATOM transactions on L2 networks such as Arbitrum, Polygon, and Optimism has declined significantly of late.

Source: Dune Analytics

Due to the decline in the number of transactions of ATOM, the overall volume of the token fell too. Additionally, based on Santiment’s data, ATOM’s volume fell from $302 million to $134 million within the span of 1 month.

And the new developments are…

Even though interest in ATOM has been declining, it could be regenerated by new additions to the Cosmos Hub network. Over the past few days, development activity on Cosmos Hub has increased, indicating that there may be new upgrades and updates on the way.

Realistic or not, here’s ATOM’s market cap in BTC’s terms

One of them would be the introduction of “relay fees” on the Cosmos Hub protocol. These would be launched on the protocol in the future. Relayers are nodes on the Cosmos network that enable transactions across the protocol. However, despite their relevance to the network, they are not incentivized to make transactions on the network and hence, have been accruing losses.

With the addition of relay fees to the protocol, the relayers would be incentivized to stay on the Cosmos network. These relay fees could also attract new users to the network who are looking for new ways to generate income.

Source: Santiment


Himalay is a full-time journalist at AMBCrypto. A Computer Science graduate, Himalay writes about crypto with a special focus on the latest coin-based updates. He is a fan of gonzo journalism, transgressive fiction, heavy metal, and Manchester United.
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