#Summary This is a signaling proposal to replace the Cosmos Hub staking, distribution, and slashing modules with variants that regulate liquid staking. We call these variants collectively the “liquid staking module” (LSM). The LSM mitigates liquid staking risks by limiting the total amount of ATOM that can be liquid staked to 25% of all staked ATOM. The initial GlobalLiquidStakingCap would be set to 25% and is configurable by Cosmos Hub governance. As an additional risk-mitigation feature, the LSM introduces a requirement that validators self-bond 1 ATOM to be eligible for 250 ATOM in delegations from liquid staking providers or to be eligible to mint LSM tokens. This new mechanism is called the “validator bond,” and is technically distinct from the current self-bond mechanism, but functions similarly; the initial validator bond factor would be set at 250 and is configurable by Cosmos Hub governance. At the same time, the LSM introduces the ability for staked ATOM to be instantly liquid staked, without having to wait for the twenty-one day unbonding period. In sum, the liquid staking module equips the Cosmos Hub to thrive in a world with increasing demand for liquid staked ATOM. It proposes a safe, regulated path toward increasing capital efficiency.

Next steps

This proposal is a temperature check with the Cosmos Hub community. It is NOT executable. No onchain actions will be triggered if the proposal passes. Before any onchain actions are executed, a separate software upgrade proposal would need to be posted onchain and be voted in by governance. If this proposal passes, it will signal to the Gaia team to integrate these changes into a near term future upgrade. Our goal would be to include LSM in a Cosmos Hub upgrade proposal within the next six months.

See full proposal: here

Governance votes

The following items summarize the voting options and what they mean for this proposal:

• YES - You wish to signal your support for the LSM, and would like to see LSM included in a future Cosmos Hub upgrade proposal
• NO - You wish to signal your disapproval of the LSM, and are opposed to seeing it in a future Cosmos Hub upgrade proposal
• NO WITH VETO - A ‘NoWithVeto’ vote indicates a proposal either (1) is deemed to be spam, i.e., irrelevant to Cosmos Hub, (2) disproportionately infringes on minority interests, or (3) violates or encourages violation of the rules of engagement as currently set out by Cosmos Hub governance. If the number of ‘NoWithVeto’ votes is greater than a third of total votes, the proposal is rejected and the deposits are burned
• ABSTAIN - You wish to contribute to quorum but you formally decline to vote either for or against the proposal