The core developers at Cosmos have implemented the anticipated "Gaia v12" upgrade on the Cosmos Hub to integrate what's known as a "liquid staking module" onto the network.

The upgrade was implemented at block height 16985500 around 9 am ET.

LSM is an add-on software mechanism that allows for native liquid staking on the Cosmos Hub. With the LSM implementation, Atom coins staked with Cosmos Hub validators can be swapped into liquid staked Atom without the need to unstake and wait for the two-week unbonding period.

"Users can now directly liquid-stake their already staked ATOM without waiting for the unbonding period," the Cosmos team said.

The update is significant, as it allows over $1 billion worth of staked Atom to be deployed as capital across DeFi protocols in the Cosmos ecosystem.

Cosmos is an interoperability network whose ecosystem contains several chains that can interact with one another using the Inter Blockchain Communication protocol via the Cosmos Hub.

LSM capped at 25% of staked Atoms

At launch, LSM mitigates liquid staking risks by limiting the total amount of Atom that can be liquid staked to 25% of all staked Atom for the time being. The cap can be increased or decreased in future via a governance vote.

Liquid staking protocol Stride said it contributed to the development of LSM, alongside others like Persistence, core Cosmos SDK developers and Iqlusion.