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Cosmos FAQs

Why is Cosmos' expected reward rate a range of numbers?

Rewards are dependent upon the number of ATOMS currently staked in the protocol. If less than two-thirds of the total atom supply is staked, the annualized inflation increases anywhere from 7-20% until two-thirds of all ATOMS are staked again.

To determine the current reward rate, divide the inflation rate by the staking ratio. You can find those numbers on Mintscan, a Cosmos block explorer.

What are the risks associated with delegating?

If a validator doesn't follow protocol rules, Cosmos slashes their bonded tokens as well as the ATOMS delegated to them. ATOMS remain at risk for slashing even during the 21-day unbonding period.

Slashing primarily happens for one of the two reasons outlined below.

  • Double signing: If someone reports on chain A that a validator signed two blocks at the same height on chain A and chain B, the validator will get slashed on chain A.
  • Unavailability: If a validator’s signature has not been included in the last X blocks, the validator will get slashed by a marginal amount proportional to X. If X is above a certain limit Y, then the validator will get unbonded.
    Coinbase Cloud takes these risks extremely seriously and have built our infrastructure to protect our customers and minimize slashing risk.

How does Coinbase Cloud's service fee work?

Coinbase Cloud charges a percentage service fee on all rewards earned by tokens delegated to our Cosmos validator. The service fee is paid to Coinbase Cloud automatically by the protocol. You can withdraw your rewards from the protocol directly.

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