Over the course of eight articles, we have tried to separate facts from noise.
The hacks attributed to Cosmos did not necessarily involve the Hub or IBC. Several projects presented as pillars of the ecosystem actually brought almost no value to ATOM. Cosmos technology continued to work, but its success did not automatically benefit its historical token.
The Cosmos Hub’s main weakness therefore became clear: it was useful, but it still did not know how to monetize that utility.
This ninth and final episode could have ended with a harsh assessment. However, the latest work carried out by Cosmos Labs and Gauntlet offers a more encouraging perspective.
For the first time in years, the Hub’s strategy and ATOM’s future economic model appear to be moving in the same direction.
Inflation does not explain everything
The criticism seemed straightforward: ATOM issues too many new tokens, these rewards are sold, and this pressure prevents its price from recovering.
The first phase of Gauntlet’s research provides a more nuanced answer.
Between January and March 2026, 8.18 million ATOM in rewards were withdrawn. Of that amount, 42.6% reached a sell-like route during the same week, 27.7% was restaked, and 29.7% remained liquid without being sold.
According to Gauntlet, weekly selling directly linked to rewards averaged around 0.063% of the total supply. It did not increase over time and therefore cannot, on its own, explain ATOM’s difficulties.
Sell pressure also appears to be highly concentrated. A few dozen wallets generate most of it, primarily through centralized exchanges. Some of these movements originate from validators operated directly by exchanges and do not necessarily represent retail users selling their ATOM.
This does not mean inflation is harmless. The Cosmos Hub still distributes a significantly larger amount of immediately liquid rewards than several comparable networks. Gauntlet estimates this footprint to be approximately 3.6 times larger than NEAR’s and 5.7 times larger than Ethereum’s.
The problem is real, but it is different from what many assumed.
Source: Phase 1 findings published by Cosmos Labs and Gauntlet
Proposal 848 left its mark
Another important finding concerns how ATOM holders react to economic changes.
According to Gauntlet’s analysis, the adoption of Proposal 848, which reduced ATOM’s maximum inflation rate from 14% to 10%, triggered a seven-day sell reaction equivalent to 10.25% of the supply.
This reaction was reportedly 21 times greater than the usual level observed among the studied wallets. It also exceeded the movements recorded following the collapses of Terra and FTX.
The conclusion is uncomfortable but important: a sudden reduction in inflation can destroy part of the demand it is intended to protect.
For many holders, yield remains one of the main reasons to hold and delegate ATOM. Reducing it too quickly could lower the pressure generated by new issuance while encouraging even more holders to leave.
ATOM’s future tokenomics therefore cannot be reduced to an inflation cut approved through governance.
No longer rewarding passive capital alone
Gauntlet is now asking a more ambitious question:
What can ATOM holders provide to the network in exchange for their yield?
Today, staked ATOM essentially performs one function: securing the Hub. Its rewards are still funded primarily through new issuance.
The future economic model aims to transform that stake into a productive resource. It could provide liquidity, support intent execution, produce attestations or secure new services.
It is also worth remembering an idea previously raised by Snow-Fall: gradually funding ATOM vaults with a portion of staking rewards, then using those reserves to acquire revenue-generating assets such as tokenized US government debt or other real-world assets.
The resulting yield would no longer come exclusively from new ATOM issuance. It could also come from interest generated by those assets. That revenue could then be reinvested in the vaults, distributed to stakers and validators, or used to buy back ATOM.
This idea is not the model officially selected by Gauntlet. It nevertheless illustrates what genuinely productive stake could become: no longer merely tokens locked to receive more tokens, but capital capable of generating income from outside the inflationary cycle.
Under such a model, stakers would contribute to products used by paying customers, and part of the value created could flow back to them.
That would be a fundamental change.
Inflation would not necessarily disappear immediately. It could act as a transition mechanism until real revenues become large enough to supplement and eventually replace part of the issuance.
A gradual reform rather than another grand redesign
Phase 2 is now focused on evaluating possible mechanisms.
The options being studied include dynamic issuance adjusted according to demand and sell pressure, rewards distributed progressively, stronger incentives for longer commitments and an economic-security floor below which inflation could not fall.
Ideas submitted by the community are also being evaluated:
- reducing issuance when the Hub produces empty blocks;
- rewarding delegators who commit for longer periods;
- redistributing part of the rewards earned by dominant validators to smaller operators.
None of these solutions has been selected yet. No new tokenomics model has been adopted through governance.
This caution is not necessarily a weakness. Following the rejection of ATOM 2.0 and the divisions caused by Proposal 848, proceeding in stages appears more realistic than attempting to impose another complete economic architecture through a single vote.
Source: official Phase 2 progress update
Small validators must not become the adjustment variable
This issue does not only concern ATOM holders.
Reducing issuance also reduces validator revenues. For smaller operators, whose commissions sometimes barely cover their servers and the work required to maintain the network, a uniform reduction could accelerate the concentration of voting power.
That would be a contradiction: improving ATOM’s tokenomics while weakening the decentralization that gives it value.
The original research brief explicitly requested an assessment of how reform would affect validator profitability. It even mentioned possible mitigating measures, including revenue from institutional activity, a minimum income for operators or a change in the size of the active validator set.
For Snow-Fall, this point will be decisive. Sustainable tokenomics should better reward the services actually provided without reserving the Hub’s security for a few exchanges and operators that already hold the largest delegations.
Source: ATOM tokenomics research brief
The Hub’s strategy is finally beginning to align with ATOM
Throughout the previous episodes, we repeatedly asked the same question: can Cosmos Labs attract customers without ATOM benefiting from them?
That question remains valid. But the beginnings of an answer are now emerging.
Cosmos Labs is working to drive adoption of the Cosmos stack among businesses, banks and institutions. The Hub, meanwhile, is exploring a role as a gateway between traditional finance and DeFi: issuing, distributing and moving tokenized assets, providing access to liquidity, and connecting institutional infrastructure with on-chain markets.
At the same time, Gauntlet is exploring how ATOM stake could become an active component of these future services.
The two initiatives could therefore converge:
- Cosmos Labs attracts institutional users.
- The Hub provides them with products and infrastructure.
- Staked ATOM contributes to the operation of those services.
- The resulting revenue gradually supplements the issuance paid to stakers and validators.
This is precisely what has been missing until now: a potential economic connection between adoption of Cosmos technology, activity on the Hub and ATOM’s utility.
The product direction is still being validated, and no definitive revenue model has been announced. But the Hub is no longer searching for another abstract utility. It is attempting to build an economy in which its services have customers, a price and clearly identified beneficiaries.
Source: the Hub’s proposed direction as a gateway between TradFi and DeFi
Light at the end of the tunnel
After nine articles, our conclusion is ultimately more optimistic than we would have imagined at the beginning of this series.
The Cosmos Hub is not dead. Its technology works, its security remains important and its ecosystem continues to innovate. But its old model—in which the success of the Cosmos stack was expected to benefit ATOM naturally—has shown its limits.
That weakness now appears to have finally been acknowledged.
Cosmos Labs is looking for customers. The Hub is beginning to define the services it could sell to them. Gauntlet is working on an economic model capable of connecting those revenues to ATOM stake and its holders.
Nothing has been won yet. The new tokenomics has not been adopted, the products still need to be built and the revenues must be demonstrated. The reform will also need to protect smaller validators, prevent further network concentration and convince a governance system that has historically been wary of major economic changes.
But for the first time in years, the different pieces of the puzzle are beginning to form a coherent picture.
ATOM may not need to eliminate its inflation abruptly. It needs to learn how to use that inflation to build more productive demand, finance its security and prepare the transition towards real revenue.
The road remains long, but it no longer necessarily leads to a dead end.
The Hub is not dead. Its old model is probably approaching its end. And beyond this long tunnel, ATOM is finally beginning to glimpse an economy in which its utility, revenue and security can move forward together.
