Create & Formalize Sustainable Hub<>Consumer Chain Models to Maintain Sustainability for the Hub

I wanted to start a conversation about the current models we are seeing for Interchain Security (ICS), as well as possible agreements to create formal models to ensure long term alignment and sustainability for ICS. For the Atom Economic Zone (AEZ) of Cosmos Hub to attain long-term success, it is crucial to revisit and adjust the current Consumer Chain (CC) model. Currently, there is no formal structure outside of the initial onboarding proposal which does not create any predictability following its passing. The Hub is largely subsidizing consumer chains while taking the majority of the risk without the corresponding upside. Yes, it is important to help onboard CC’s and entice some of the most promising chains to onboard, but the Hub also needs to have the proper long term incentivization with ALL CC’s. The Cosmos Hub should have meaningful ownership in these consumer chains and/or receive a portion of on-chain revenues beyond gas fees to ensure that incentives are appropriately aligned across all stakeholders. The current model, where the Hub subsidizes the costs for development and security without a balanced incentive structure, is not sustainable and introduces undue risk.…

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Tricky | Cosmos Spaces: The Hub is largely subsidizing consumer chains while taking the majority of the risk without the corresponding upside More than the Hub, it is the Cosmos Hub validators who are subsidizing consumer chains. Imagine a new Cosmos chain launching with negligable revenues for validators, it would be hard to convince any validator to join, especially not top validators from the Cosmos Hub, this created a competition amongst new Cosmos chain since validators were doing due diligence of costs and revenues before deciding to validate any chain. Now the situation is different. A new chain just puts a governance proposal here, gets approved and then enjoys most Cosmos Hub validators paying additional large infrastructure and other costs from their pockets, receiving in exchange negligable revenue, and since nobody seems to complain they have little incentives to start providing revenue to validators. We should discuss more about the different stakeholders in the Cosmos Hub and the incentives of each to have any meaningful discussion here: -ATOM stakers: they want as many CCs to join as possible, because they have 0 additional costs for this but…

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Tricky | Cosmos Spaces:

A critical requirement should be for all consumer chains to use and/or accept ATOM as their default gas token, including for IBC transactions. However, mandating ATOM as the required denom for chains outside the AEZ may not be the best approach. Instead, these chains could opt-in voluntarily to make ATOM their base denom for IBC, creating a more flexible and adaptable ecosystem

all consumer chains have to accept Atom in the AEZ.

I’d like to express our genuine excitement about the ongoing efforts to onboard more consumer chains into the Atom Economic Zone (AEZ). The expansion of the AEZ is undoubtedly a crucial step towards achieving our long-term goals and fostering a thriving ecosystem. That being said, it’s imperative that we approach this expansion with a balanced perspective. While we wholeheartedly support the idea of welcoming more consumer chains, we firmly believe that a thoughtful and discerning approach is essential. Quality should always take precedence over quantity, and it’s vital that we focus on those chains that truly align with our vision and contribute significantly to the AEZ’s growth. In light of this, we propose the development of a comprehensive scoring system. This system would consider a range of factors, including economic viability, utility, and overall impact within the ecosystem. By establishing a passing threshold based on these criteria, we can ensure that the consumer chains we bring on board not only benefit from the AEZ but also contribute meaningfully to its expansion. Moreover, as you rightly pointed out, the current ICS model poses challenges. It’s crucial that…

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Cosmic_Validator: ding a new CC tax directed to validators or reduce a bit the current CP tax and this becomes the CC tax. This CC tax would start smaller and adjusted as more CCs join or as the revenue from CCs increase. There would be some oracle/real time data input about the number of CCs, the revenue from each CC etc., and the CC tax adjusted accordingly with some agreed formula. Or this CC tax could be a combination from the Cosmos Hub and each consumer chain, so each CC will pay a tax from their treasury or community pools for example and the amount of this tax will be determined depending on the revenues they provide to the Cosmos Hub and other variables, this makes a lot of sense, CCs get huge value from t I agree with most of the things stated. I have been vocal since the start that the model is not feasible for the smaller validators. At the time we were discussing how to support the small/medium validators. But a quarter has passed nothing on that front. The core teams don’t really care about the small/medium validators it seems. A few things happening and I commend in this regard are • Setting minimum commission so smaller/medium vals don’t have to…

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So have I.

I would speculate that there are some possible reasons why no one reacts really:

1. The beneficiaries of the current model (or expectations of it in the future) are too many

2. The current proposed model is so far a failure, and usually hopium takes several months - years for everyone to admit it was wrong OR it will become better

3. There are no viable solutions (I would say that this is untrue) to be implemented today

Its kinda of coming to a point of survival for most smaller validators. One another thing NOT to forget is that most bigger names (especially the ones that had projects beyond validators) are struggling to survive too (their tactics are a fail, alas, there are lots of new players in the field - that came in the last cycle - and they are still learning what works). This is not to defend anyone, but yet another theory to the above - they are also busy with surviving.

waqarmmirza: But, this doesn’t mean we should not find solutions. I am not a core tech person so I don’t know but in theory, it seems in favor of validators to have the flexibility to adjust the commission on CC from chain to chain. serejandmyself: There are no viable solutions (I would say that this is untrue) to be implemented today I think some possible solutions could be simple to implement and we are discussing this already with @FelixLts , @Damien and others: -CC tax for ATOM stakers: they benefit from CC rewards without any contribution to the costs. Either reduce part of the current CP tax for this CC tax, or add a new CC tax. This tax will be variable, depending on the number of CC and the revenue each brings, this should be simple to implement -Tax for CCs: they cannot benefit from the security of the Cosmos Hub for free being subsidized fully by Cosmos Hub validators. So they either need to buy X amount of ATOM and stake it with validators or a variable CC tax is implemented, decreasing as the revenues they provide increase. Regarding staking with validators it will be mostly the same for each validator with a multiplier for great uptime…

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In what way is Stride reassessing their delegation program? I dont think the current delegation to 36 chosen validators is optimal.

Cosmic_Validator:

For example, the CCs revenue could be distributed proportionally to the smaller validators so the smaller the validator the more CCs revenue share they receive

This is very interesting idea

Cosmic_Validator:

CC tax for ATOM stakers: they benefit from CC rewards without any contribution to the costs. Either reduce part of the current CP tax for this CC tax, or add a new CC tax. This tax will be variable, depending on the number of CC and the revenue each brings, this should be simple to implement

But they will get slashed when the validators is slashed. This is unfair. Prop 818 already showed how slashing affects a larger portion without getting any revenue from consumer chains.
Either the Hub need to Own the ICS Chain or the slashing mechanism needs a lot of changes.