figment

By early 2022, the Cosmos ecosystem had a specific smell to it — the smell of something that had grown very fast and was trying not to notice. There were validators on chains like Chihuahua pulling $50,000 to $150,000 a month from staking emissions, and almost nobody was saying out loud what the supply schedules implied about how long that could last. The bull market had created its own gravity. You could model the treasury burn rate for a dozen chains and watch them run out of runway in 18 months, and the people running those chains already knew — they just weren't talking about it in spaces where clients could hear. When Luna collapsed in May and Three Arrows went down in June, the reckoning came faster than most people's models had predicted and slower than it should have.

I joined Figment in that context. The company had onboarded across 60-plus chains during the good years — a wide network roster that made sense when the Cosmos long tail was growing fast and foundation partnerships were abundant. The institutional staking market was stratified in a way that was starting to matter: Coinbase bundled staking with custody, Lido dominated liquid ETH staking, Kraken ran a pooled retail product with enough scale to attract regulatory attention. Figment's positioning was pure infrastructure — non-custodial, institutional SLAs, no bundling — which was the right answer for the clients who understood what they were buying. The question in a bear market was which of those 60 chains still made sense to maintain.

The conversations I was having with protocol teams and institutional clients in the second half of 2022 had a different quality than the conversations from a year earlier. Everyone was recalibrating. Clients who'd made allocation decisions in 2021 on the basis of nominal APR were now asking about inflation-adjusted return, about treasury sustainability, about what the validator set would look like if token price halved again. The questions were sharper because the environment had made them unavoidable. I spent a lot of that year trying to make validator economics legible — not in basis points, but in dollar terms that made the conversations about compounding frequency and governance participation feel like what they actually were: yield questions, not operational details.

The SEC's action against Kraken in February 2023 — the $30 million settlement, the shutdown of US retail staking — arrived while those conversations were still ongoing. Figment's model was structurally different from Kraken's pooled product, but the regulatory framing of staking was suddenly a live question in a way it hadn't been, and institutional clients who'd been deliberating on allocation decisions now had a new variable in the room. The portfolio strategy work from that point required holding both dimensions at once: where does yield optimization point, and where does regulatory trajectory point, and where do those two things conflict. That's a different kind of analysis than the one most staking infrastructure companies had been built to provide.

The model below reflects several of those lessons. It accounts for validator commission, epoch-based compounding frequency, and the option to adjust for network inflation — the gap between nominal APR and realized, inflation-adjusted return is wider than most allocators model.