EntryPoint within the AEZ - An open letter to the Cosmos Hub community

TL;DR EntryPoint provides benchmark and thematic indexes, allowing for non-custodial passive diversification backed by fully-collateralised index tokens. The project’s vision is to join the ATOM Economic Zone (AEZ) as a community-driven, decentralised, and self-governing public infrastructure with the aim of facilitating secure and easy onboarding for retail and institutional investors into the AEZ. Governance, including token whitelisting and index definition, is transparent, democratic, and decided by the protocol’s token holders. Through partnerships and synergies within the AEZ, EntryPoint aims to onboard new users, improve liquidity, increase the TVL, and strengthen the appeal of the Cosmos ecosystem as a whole. EntryPoint’s Ask: • Proposal for a long-term partnership with Cosmos Hub, involving a $2.5 million investment in EntryPoint Cosmos Hub’s Return: • 10% of EntryPoint’s token, $ENTRY (non-inflationary, fixed supply) • Significant influence over EntryPoint governance and treasury spending • 100% gas fees paid in ATOM Open Letter Dear Cosmos Hub community, We, the core contributors of EntryPoint, write this open letter to start a conversation…

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Hey Matt, Appreciate the thorough proposal. I definitely think there is a large TAM for thematic tokenized index funds that could represent both offchain and onchain assets, but the market has shown that there is zero appetite for this kind of product today. There are countless examples, but Index Co-op is probably the most known. Even on Ethereum, where an overwhelming majority of the onchain liquidity is, they are sitting at a paltry $60M TVL today. Why should someone invest in a passive fund when crypto is still very much in its “liquid VCing” stage? Index funds make sense in a more established market, but we are still probably years away from this taking off until it makes sense from a risk-adjusted perspective. If thematic indexes haven’t taken off on Ethereum, why would they take off on Cosmos, where unfortunately, there are less network effects and institutional-grade infrastructure in place today? I also am struggling to see why app-specific blockspace is required for this kind of product. Would this not be best launched on something like Noble, which will likely be the real entry point into the Cosmos as a fiat onramp into the eco? That said, I think this is still…

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Sounds like an interesting idea, if valued at such a high valuation what is the need for a token? I agree with cap as well. If you are going to launch, the AEZ is too infant to onboard a project like Entrypoint. I also think there’s no demand at the moment or product market fit since these already exist in IBCX which has a small bid, as well as Quasar that has low TVL. It’s still a micro market, I don’t think it would be capital efficient for the hub to support a product that doesn’t have demand yet. I would encourage going the Noble route! Best of luck, just my opinion

Joining ATOM Accelerator or Noble or Neutron is the best choice for EntryPoint.

Thank you for your reply. It is true that there are products on other ecosystems that have not seen massive adoption yet, but there many are reasons for this including the fact that the crypto degen DeFi market prefers extremely risky products. Market demands change as the space matures and targeting degen users is not enough in the long term. If such products (ETFs) are so important in traditional markets, it is reasonable to expect that if new users are to onboard into crypto they will demand the same type of products. In fact, if we are able to build benchmark indexes e.g. a Crypto20 index similar to the S&P500, we would have solved a major problem for new users who would be able to easily participate in the market while knowing that their investment (Index token) will still be composed of the top 20 crypto assets by marketcap 10, 20 years from now. This is currently a major issue for long-term investors looking to diversify their portfolio to include crypto. A Crypto20 benchmark index token is the ultimate HODL token, since it represents the value of the entire (95% +) crypto market, and seamlessly (from a user’s POV) adapts to the market over time. On top of that, I…

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Thank you for your reply. The token is required as a governance token of the system, used to make decisions around the Indexes to be launched on the blockchain, treasury management etc. The token is also a tool to align with the key stakeholders of the project over the years, so as not to only rely on the Cosmos Hub community. Such stakeholders would bring expertise in various required areas such as finance, asset management, liquidity etc. Products like IBCX and the initial Quasar vaults focus on the offering solutions for Cosmos ecosystem indexes, but without the rigour required for developing benchmark indexes. Quasar, AFAIK, also aims to focus on providing a marketplace for programmable strategies, (more like active fund management) which is very different from focusing specifically on long-term passive instruments (more like passive index funds). The governance structures and the technological stacks required vary greatly. I am sure there is a market for both, as there is a market for both Index Funds and active products in TradFi. But the product delivering benchmark Index Funds within the Cosmos ecosystem should definitely be within the AEZ with the Cosmos Hub having…

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I see where you’re coming from, but I think there’s a bit more to consider. You’re using Index Coop for comparison, but they’re not exactly parallels, the Coop being an Ethereum project. High gas costs and limited interoperability can be a real barrier to growth. Let’s also not forget that high tx fees can make managing/trading within indexes costly, especially when it comes to rebalancing, which is a key part of managing an index. High fees eats into the returns and makes it less attractive to investors. Plus, Index Coop has had its fair share of management issues, launching too many products without a clear use-case or target audience, and racking up unnecessary costs (seem to be pivoting now tho). Notwithstanding Cosmos’s tech superiority more generally, as more chains connect to IBC (Polkadot just done, ETH, NEAR, AVAX and more coming), a consumer chain index protocol would be in a much better position to fill the current gap in the market for a broad diversified index As for your point about Noble, while possibly valid, doesn’t change the fact that a project with public infrastructure ambitions should ideally operate as a sovereign chain, as it provides the necessary…

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I’m going to be blunt, so apologies in advance. I don’t see the point in adding any more chains to the zone until we solve the issues that are already brought up (stake centralization risks, security risks, etc.). To be fair, I also don’t understand the value proposition to the cosmos hub. The idea for any portfolio is to be diversified and be able to hedge against itself (we are taking AEZ to the hub here) - entry point, IMO, is not answering either of those points. For the AEZ to become meaningful (if problems are sorted) it needs to be meaningful (this constitutes into investments into various fields, a balanced portfolio), not just onboard chains, because they have the tag tradeFi or anything else. This is nothing against entry point personally. But a general opinion.

No problem. It’s my personal opinion, coming from traditional finance, indexing a very complex strategy even passive indexing which takes a very well thought out process since it’s passive and not actively managed. Nobody likes losing money which indexes are supposed to hedge the risk. I still don’t still see the need for a token other than to raise funding without revenue. I think if you charge fees for the indexes like traditional markets it should be profitable. I don’t like the word community, nor governance, both have not proven at least to create value to the project. There are countless examples in cosmos of this.

It’s a good idea in theory but the marketplace is not mature enough, or everybody would be having huge success with it

Also maybe try accelerator!

Quasar Finance already does this.
Also, don’t you think a $25M valuation is excessive (especially in this market) for a product that is already so prevalent in the Cosmos ecosystem?

How is this supposed to be considered an “investment” if the tokens that are being purchased will have no monetary value (beyond voting power?)

In order to get the request off 233.000 Atom in line with what will be delivered, could please deliver more details • a overview o why is this solution the best o what is the benefit for us o how are you going to maintain the delivered product o an overview of a desaster recovery o what licenses are needed o ownership of the delieverd product • a milestone based project plan o milestones are also payment targets for delieverables • a water proofed business case, showing how the work they do will deliver a return on invest - in this case 2.5m$ • a breakdown of man days needed • an overview of the stuff (Senior & Junior) you will allocate to the project (not with some internet pseudonym) . CVs and Skills! • an overview how much time each project member will work on the project incl. the price for each person. We talking about 2.5m$. If you break this down, you can • engage a team of 10-12 Software developers • for a man day rate of 1.000$ per day • for an entire Year, Full Time on this Projcet • that‘s 2.500 man days • how are this persons allocated to the project road map? For a request of project i expect the applying company to deliver more detail.…

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Look great but i dont understand how in long term, there is any add value.

Building something first might be good or having a more detail process on how 2.5M will be used, etc…

Entry point is part of simple staking only? can you explain more about team member background?

All the development so far have been self funded
4 Devs in the Blockchain team
3 Devs front end
1 Designer
2 POs Blockchain and Frontend
2 Working on Governance and Index / Vault Strategies

The ask for the investment is to continue building, marketing etc.
We’ll go over the points above in more detail

Who are the people involved with the team behind this? Where do they operate from? How can we verify this team and what experience do they have? Who is the main contact to request additional information?

Hello Matthew,

I am fond of the idea, personally i see a real gap in the market for such a product

Coming from the relatively unique perspective of working predominately with traditional financial clients who are looking to add crypto to their investment portfolios,

If there was a reliable ETF-like product that would offer my clients an easy & efficient way to gain market exposure without the need to set up 5 different crypto wallets, and in some cases multiple exchange accounts, i wouldn’t think twice to offer it as a solution to their problems

Further to that point, the recent filings by Blackrock, Fidelity & WisdomTree have shown that the greater financials markets want crypto-backed ETFs,

Unless we want all that power & influence over the blockchain centralised we need a well structured, well supported & well funded decentralised alternative to represent us.

I hope EntryPoint will be that solution, as current options on the market are rather lacklustre

Hi @CosmosNews
core contributors of EntryPoint are employees of Simply Staking. It is Simply Staking that has fully funded the development of this project for over a year (link to the Simply Staking website is above).
There are over 40 people employed at Simply staking, the bulk of them being engineers. Simply Staking has been validating for Cosmos since Genesis, validated for numerous other chains that are unprofitable (yet they continue), helped agoric build oracles, built bonding curve module for the hub and much more.
The majority of the Simply Staking team are based in Malta and Brazil.

Come and verify us by speaking to us directly - send a DM to the twitter account ‘entrypointzone’ linked above.

I’m not seeing a lot of appetite/PMF for this right now, so it’s a tough sell to ask for $2.5 mil in a market segment that hasn’t really taken off in crypto yet. It’s cool that the hub has some of these opportunities for early venture opportunities and trying to find alignment with the consumer chains it’s securing, though.

The other questions about why a chain/token is needed combined with the above might be hard to overcome in this current iteration, imo.

That said, the Simply Staking guys are Cosmos OG’s, so this isn’t about them personally, and I hope they can find a way to make something cool, even if this doesn’t pan out. I think leaning in to Effort’s idea with Noble or Neutron is worth exploring.

Hey! Thank you for your feedback, Could you please remind me the evaluation of Quasar before launch? Also, there is not really something like EntryPoint. There are active platform to optimise yield or more complex strategies. EntryPoint aims to offer passive and simple products that give peace of mind to the investor. Moreover the target audience of EntryPoint is not only DeFi native, which could position the platform as a good liquidity onboarding tool within the ecosystem (which would benefit thanks to greater demand for its ecosystem tokens, higher TVL and higher revenues).

Any platform that generates revenue and has a protocol owned treasury has value. You have to look at it long term. Why does UNI have value as a governance token? Because as regulations come and the circumstances allow for it, you can distribute value to your stakeholders in many ways

Thank you a lot for the feedback! I agree, having these opportunities should be reason of excitement for the community, such interesting times for theHub. I think the answer to the question “why a token?” resides mainly in governance complexities and interest alignment. After consulting and studying TradFi businesses that EntryPoint wishes to mirror we understood how overwhelming the management of such a platform would look like. Blockchain allows for simplifications of processes and massive operational costs reduction, so by leveraging on-chain governance you can build extremely efficient (but more complex than ATOM’s) governance structures. This we couldn’t do without a token. Moreover, having your own token allows to have more flexible incentive mechanisms to align and attract experts and new participants in the community, without relaying on a broader platform like the Hub for day to day operations and constant governance activity (the Hub should instead act as a key strategic partner, not as a manager of each chain in my opinion). The value of the token will reflect the value created by the platform, as it happens in the majority of the companies around the world (where…

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Thanks for the reply Matt. I do think this product is something that could help bring in institutional capital into the AEZ and Cosmos at large. To be honest, I am still unsure of why this requires an appchain on day one, rather than a dApp that becomes an appchain as it scales. I am familiar with SimplyStaking’s typical services and the overall commitment to the Cosmos eco. The AEZ and community pool SHOULD be used to align teams like yourselves - I want to make that point clear. I also believe the Hub should hold a much more significant position in Entry if this were to move forward. 10% of ENTRY and 100% tx fees probably wouldn’t provide upside of a venture-style bet, especially because I’m quite confident it would take years to see the upside materialize. I think 25% to the Hub (with 15% sitting in the community pool) with 100% tx fees and 50% vault/Mgmt fees would seem reasonable this early on in. The real value is coming from the vault fees, not the tx fees in my opinion. With that being said, would you be able to provide some background on any institutional partners you have connections with that could help jumpstart EntryPoint? What would the first year look like in…

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Thanks for the reply, I’ll let Matt answer most, just wanted to clarify a point where you mentioned “this early on” most of the development on EP is complete, we are putting the finishing touches and verifying some code changes and should be going to Testnet / Start of audit in a month or so

Hard NO vote from us. Consumer chain economics must be figured out first. Small validators are essential for network security and cannot afford to vote yes for every consumer chain.

Smart contracts, liquid staking, and native asset issuance are core necessities. Duality DEX is debatable. Index token is unnecessary. Please launch on Neutron, or Noble after they onboard.

could you share a link, company information and where is the company registered? Are there CV’s on the website and lead projects?

People want to buy indices when they want to be safer. For crypto, most people choose BTC + ETH as the index, who wants to put $BNB, $XRP, $MATIC, or even $TRX in the index?

Thank you for all the effort, but honestly, your product has a low chance of success, and asking for a 2.5M amount is hard to accept compared to P2P or Stride team.

You should seriously consider Effort’s suggestion, reduce your requirements or change your product. Hope your effort is put in the right place.

Thanks for your reply Sereja, keep it blunt, that’s always useful. I will also be blunt and say that I am not sure I understand the second part of your message. Could you please elaborate on that? On the issue of validator costs, this is indeed a real, important problem to solve. At the same time, if the Cosmos Hub does not build out a group of incentive aligned projects working together towards developing an ATOM economic zone while it waits for this problem to be solved, than it risks to lose much of its competitive advantage, especially if the solution takes over 6 months to be identified and agreed upon (I suspect it will take longer). While this solution is found, one potential way of ensuring blockchain projects wanting to build within the AEZ can build while still being long term aligned with the AEZ is for the Hub to help fund the teams developing such chains and projects in return for some amount of native tokens of these chains. In this way, projects can start off their project as a standalone POS with very limited validator set while at the same time the Hub is ensured a significant say in the governance of these blockchains. We would be open to going down this…

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Thanks again for your reply! The process of managing indexes in TradFi is well understood, and while not completely straightforward, can be replicated through on-chain governance. We have developed a process for exactly this, based on discussions with various people from the field. I would love to hear your opinion on the process we developed . This process relies on a number of working groups for specific fields, one of which is management of indexes . However, on-chain governance still has ultimate decision making power in ratifying the proposals of the working group. We do expect this process to evolve in the coming years, also as we discuss with experts from the legal field and regulators on how such a self-governing system can be regulated. At its core, EntryPoint is a self-governing application specific blockchain and I personally think that it will be much harder to manage the project without a token. This is one of the reasons why a token is important in the system. Another use of the token is to align stakeholders with the project, including working group participants (excluding the core contributors), liquidity providers and other potential partners. At the…

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Thank you for your reply!

Correct, the project is currently being self-funded and incubated by Simply Staking, a blockchain services provider active in the space for since Cosmos Hub genesis. The team working on the project is comprised of mulitple teams as my colleague specified in a comment above.

We expect the funds to be used to continue developing the product over the coming years. We would like to be cautious on providing extremely details plans around the development since such plans are hard to adhere while developing a project in its early stages within a very variable and dynamic market. But we can commit to providing the right level of reporting as we build out product, which will be imperative to keep the Hub informed.

Thank you for your reply!

I am happy to see that there are people in the community who understand and can get behind our vision and that financial primitives like Index tokens are important as the crypto space starts to mature. I suspect that in 3-5 years time this will also be clear to most of the market participants and the development efforts we make till then will bear fruit.

Thank you for taking the time to digest our proposal and seeing the value that we are looking to bring to the Hub. Also thank you for the kind words re Simply Staking. While building a dApp can make sense for some applications, we have chosen not to go down this route for a number of reasons. We wholeheartedly believe in a vision of multitudes of self-governing sovereign application specific blockchains. This vision allows for the chain’s governance structures and technology to adapt to the requirements of the application being built, in this case index management and provisioning. From a practical point of view, given that we have been building this application for some time and we needed to make use of features like the endblocker that were not available for CosmWasm smart contracts until recently. In the long-term, having full control over the chain’s stack is extremely important as we would not be completely reliant on the platform we are building on. Finally, given that the Cosmos whitepaper was developed to address specifically the problem of applications requiring to be sovereign and not be developed on top of “world computers” it would be a shame to not build in line…

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Thank you for your reply!

As discussed in a comment further down, the company self-funding and incubating the project is Simply Staking. Links to the website can be found here. I would be happy to have a chat if you were not aware of us and want to know more.

Thank you for your reply.

Will focus on your first comments as other comments are tackled in other posted answers.

It is true that the fundamental value of some large crypto assets by market cap can be questioned. At the same time, investing in an index of large cap assets in the long term will always capture the average of the market, even if some of these assets end up not delivering. Such assets would have a small allocation within the index and will ultimately be dropped as the project loses value. While this is not always ideal, selecting specific projects only introduces selection biases and emotional decision making that index driven investment are designed to avoid.

Ultimately, as much as we can question today the fundamental value of let’s say XRP or MATIC, nobody know the future and how these project will evolve over the next 10 years. Many people question the fundamental value of BTC and of ETH and of ATOM etc, only time will tell what value these projects ultimately deliver over the next decades.

Looking great.

What about different phase of the project?
Did you consider having a vesting / locked token depending of delivering? TVL?

I didn’t get this point. How do you manage to make newcomer outside of cosmos come?
Same of how can it being sustenable ?

I don’t think that the (potential) solution in the case of the opportunity the AEZ is our only savior against the possible issue of stake centralization, etc. is viable. As in, IMO, the latter prevails. The AEZ is, by far, not something that will be a game changer tomorrow. It will play a role, yet it not tomorrow and not the central role IMO. I also don’t think POA is the answer here. Sorry, have to disagree again. Teams don’t need to rely on VC funding. Any chain is (potentially) capable of allocating these resources via governance, which brings us to my “second part of the message”. I was leading prop 26 in early 2020 As you can see, back then, along with the cyber team, we have long foreseen what is now referred to as the allocator / DeFi summer / etc. My biggest argument back then was diversification - the answer to “why does the atom community need this?”. And at peak (and even still) it would have been a very successful investment. Now, the prop was rejected, primarily by a few people that were followed back then. I must say, at least 2 apologized publicly for voting no. Of course, if that prop happened, cosmos would have been the first of its kind to do what we…

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MatthewSVC:

At its core, EntryPoint is a self-governing application specific blockchain and I personally think that it will be much harder to manage the project without a token.

I do appreciate the openness to feedback, after the Q&A (appreciate the invite btw) I had only a few concerns, but those mostly really only have to do with credibility of the professionals managing the indexes. But as to this point, I do see what you guys are trying to do very commendable and we do need indexes. My only feedback is the investment seeking of 2.5 million which is very high given the environment, the valuation based of quasar, and the token. Other than that I think you’re on a good path, and have the right mindset. It’s just my opinion at the end of the day, I don’t speak for the hub nor the validators. I think we need to see if you want to pass it 1. Less ask from the hub comp wise 2. Tokenization reconsideration 3. Realistic Valuation given the environment 4. Names and credentials of the fund managers. I think if you nail 3/4 it should pass with flying colors, look forward to our call this weekend God bless

I think you raise some valid points - the AEZ will certainly not be a game changer by tomorrow. But how do you see the AEZ/Hub getting there without making investments that may or may not pay off later? It is certainly true that the Hub should manage its community pool with thoughtfulness and care. There are no guarantees to anything, though it seems pretty certain that the AEZ wont materalise along its vision if the community decides to play is overly safe. The lack of revenue early on across the AEZ combined with validator costs does indeed pose a real challenge, true, which needs to be addressed in a way that at least allows validators to stay afloat while the AEZ is built out and starts producing serious value. However, I’m not entirely sure I follow this line of argument. Usually, it takes a while for new companies and such to start generating net positive revenue, no? At the same time, many validators have been making a lot of cash during the last few years. At this early stage, I feel like the most important thing for the Hub to focus on is to onboard relevant chains that can create synergies amongst each other. As long as the Hub does not make large investments…

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ATOM has already proven itself as a store of value across the interchain. This doesn’t take much practice to notice. But if you have good analytical skills for the market and have seen some ecosystem cycles before, ATOM has it already (try seeing how much atom gets locked across pools and compare the incoming / outgoing assets to and from the interchain). That does NOT mean that we shouldn’t look at revenue streams for the hub. We should. As I pointed out above, I was one of the authors of the first such proposal from Cosmos. Certainly, btw, AEZ is not the best tool in the world. In fact, the amount of anti arguments that can be brought to the table are astonishing. And yet again - in the lack of other “alternative” streams - we have this, so let’s discuss it. I’m not sure what else to add to the argument. I feel like it’s been stated, no sarcasm intended. I think that a) it’s not real diversification, b) the stake centralization issue and the potential security risks outnumber all possible result IMO. The issue in the misunderstanding as I see it now is rather simple. Most people here, including yourself, argue from the point of profit. But, alas, a) there is no guarantee for…

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“How do you manage to make newcomer outside of cosmos come?”

Because in TradFi indexes have been an easy way for anyone to invest in a diversified portfolio without needing any prior knowledge = lowers barriers of entry by making investing more accessible.

In a similar way, crypto indexes can serve to onboard new users who are either unable or unwilling to deal with the technical complexities and time-consuming research of managing an active portfolio =)

The project is now in the final stages of development for a v1, with testnet planned for this quarter. Mainnet will depend on audits and ICS discussions. After mainnet launch we expect to launch a couple of vaults - a Broad Crypto Large Marketcap (S&P500 style) and a Cosmos Large Marketcap, while making sure the system is working well IRL and UX is fine tuned. Once the vaults are established, we will work on integrating Index tokens within Cosmos DeFi eg lending protocols and DEXes. Re vesting, we were planning a 4 year vesting schedule with a 1 year cliff. You can find info in the tokenomics section of our documentation. We will be digesting community feedback and amending these if we deem it is appropriate. Re onboarding users outside of Cosmos ecosystem, this requires work on multiple fronts. The broad crypto index token is best positioned to address the needs of non-crypto native and non-degens and we can focus awareness campaigns around it. Integration into existing non-Cosmos tooling such as metamask and other wallets will help grow adoption among that userbase. We see large projects like dydx go down this route and for good reason given the larger userbase. As said,…

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Good rant

Agree that blockchains should be investing in a wide range of solutions. We have to start somewhere and we are proposing we start with EntryPoint.

Feedback re token and tokenomics are being discussed internally and after discussing with several other parties over the coming weeks. We will then post a draft proposal based on all of this feedback in early August.

Re fund managers, we would be very happy to have people with a deep knowledge of finance within the working group structures. But ultimate decision making will be in the hands of on-chain voters, with working groups just proposing.