[Proposal ####] - Composable to join ATOM Economic Zone and Adopt Interchain Security

ICS 3840×2160 153 KB Change log • 2023-09-07 Created initial post • 2023-09-08 Removed section regarding POL; Add 6-second block time • 2023-09-14 Added Last call date • 2023-09-14 Removed Last Call to allow a longer discussion period Summary IBC. Everywhere. Our vision is for the Composable ecosystem to become a transaction-processing locale for chain-agnostic transactions. To facilitate such transactions, we are deploying new features and connections on our Cosmos SDK Chain. Thus, we present a signaling proposal for the Composable chain to become a member of the ATOM Economic Zone (AEZ) and integrate Interchain Security (ICS) from the Cosmos Hub. Resultantly, the Composable chain would share the Cosmos Hub’s economic security. In return, Composable would share revenue. If this proposal passes, Composable will share 20% of IBC Bridging fees across all ecosystems Composable connects to with the Cosmos Hub. We will also allocate 20% of inflationary staking rewards to the Hub. Additionally, Cosmos Hub validators will be able to operate relayer side cars in our ecosystem. Relayers will be able to capture MEV by sending order flow to order flow auctions like…

Excerpt (1195 of 14199 characters). Read the whole post on the forum ↗

Need some detail on how this 450K Atom will be used, or are these asked Atoms for liquidity only and will always belong to Cosmos Hub community pool?

Gig is up Brainjar. No more fraudsters & scammers we don’t want this BS here. Go find another chain to siphon. Truth always prevails.

Reference: https://x.com/zachxbt/status/1700010172351967391?s=46

To speak on this, the crypto related projects are not concrete, which is really not the area I care about. Charges by the SEC are serious especially in the business of handling peoples money. It’s like people praising Jordan Belfort, it’s all so tiresome…

Fees need to be much higher. I don’t think this is sufficient, as bootstrapping Neutron and providing economic security to Stride has demonstrated. It’s also not the AEZ’s obligation to commit ATOM to consumer chains in exchange for joining the AEZ. We’ve set bad precedent and we need to rethink what it means to become a consumer chain and what it costs to join. There are also no USD-equivalent values, only tokens balances included in these models. What is the PICA token worth today, what will it be worth tomorrow, and how does it accrue that value? Also, what is the minimum commission that validators will earn and what is the average amount (in tokens and USD equivalent) validators can expect to earn? Also, is it accurate to say rollups will be settled on Cosmos Hub simply because Composable’s chain is leveraging economic security through Replicated Security? What is being submitted and settled on the Cosmos Hub? If the bottom 65 validators opt-out, that leave 115 validators that are still opted in. Is it necessary for 115 validators to validate for these chains? Do you have any figures or calculations on what it will take for that many operators to be profitable, given…

Excerpt (1199 of 1306 characters). Read the whole post on the forum ↗

Personally I would like to see no opt out.

As for the rest of your questions, I’ll let the composable team address them.

Hi there Mike, that tweet seems oddly deleted.

foul language warning

Zach has a bit of a potty mouth

Jacob Gadikian 🐳⚛️⚗️

This is something that has already been addressed, and this is a proposal for Composable chain, not Brainjar.

asynchronous brainjar 🎛️

We’ve removed the piece on POL as it isn’t necessary for the main prop here

I understand that but it’s not wrong for me to bring up my concerns when your in a business that deals with assets and the SEC charged a member of your team. That does speak on your reputation, whether you think it’s important or not. I’m an investor in Atom so I believe it should still be brought to light with my explanation which is unbiased.

Charge: SEC.gov | Unregistered Adviser Settles Hedge Fund Fraud Charges

Dealing with others money and becoming an ibc compatible consumer chain does require funds to be responsibly held and transporting money from chain x to y. I think it’s been very clear that he addressed the issue, but that doesn’t forgive him for misleading investors, and falsifying returns. If somebody shows you who they truly are, you believe them. Just because you guys are all friends doesn’t mean you have to do business. You have to separate the two if you want to be taken seriously, as of right now everyone is really underplaying how serious a Bar from the securities industry is but yet no one seems to care.

He deleted his tweets, no explanation which that what he is claiming now has less credibility. I can’t speak on that case, I’m specifically talking about SEC charges not allegations.

Btw you have every right to prove me wrong but the reward vs the risk especially if composable is subject to litigation and regulation because of securities laws in the US. I’m thinking long term big picture here and possible caveats

Personally very in favour of this. I am far from a Cosmos maxi, and spend most of my time on chains that have much higher liquidity and adoption (e.g L2s). However, I have a strong appreciation for IBC, Cosmos, and other cross-chain goals. I love using Osmosis and IBC, but the reality is there is not enough novel use-case being built in Cosmos to meaningfully draw users from EVM chains. Just look at somewhere like OP, ARB, or Polygon… a user has the deepest liquidity to swap, borrow, trade perps. Why would they want to come to Cosmos to do the same thing? Cosmos, like other cross-chain ecosystems such as a Polkadot, needs to carve out its adoption sooner rather than later, whitepapers will not suffice. All of this to say, that Composable were are actually the only team to get my attention into Cosmos lately. Whilst Polkadot has no users or real adoption, bringing IBC outside of Cosmos was an awaking moment for me. Using Centauri to bridge between Polkadot and Osmosis was the first time I felt like Cosmos was close to it’s ‘moment’. It made me understand the necessity to take IBC much further than its current bubble. As far as I am aware, no one else is putting in the…

Excerpt (1195 of 1712 characters). Read the whole post on the forum ↗

There are two main components outlined above for revenue generation to the Hub: i) Bridging Fees - Outlined in $ estimates above ii) Validator Staking Rewards - Outlined in tokens above i) Bridging fees are dollarized and are laid out across two scenarios of fee structure — flat-fee (static $ amount per transfer) + variable fee (% of volume transferred). ii) At the moment, validator staking rewards are paid out in PICA and will eventually be transitioned to LAYR upon TGE. The amount of PICA tokens being distributed to validators is outlined above as well, and currently stands at 8,333,333.33 PICA per month. This would break down to 1,666,666.67 being distributed amongst the split to Hub validators. At the moment, PICA is relatively nascent as it is only being used for collator and validator staking, but will be enabled to capture bridge revenue in the near future. It’s current DEX trading price stands at $0.00044. Similarly, once the switch to LAYR in enacted, 125,000 LAYR will be distributed monthly with 25,000 of that LAYR being split to Hub validators. The main goal here is to flow bridging revenue from all external ecosystems connected via IBC back to the Hub. We…

Excerpt (1196 of 1692 characters). Read the whole post on the forum ↗

We absolutely hear the concerns here, but the reality of the situation is that there are no funds being custodied or handled by any one person at Composable. We have a team of 30+ individuals that have put an enormous amount of time and effort into building and shipping these products to deliver IBC everywhere and that remains & continues to be our core goal. Becoming a consumer chain with the Hub allows us to increase the security of this platform and ultimately deliver value back to the Hub as we continue to expand IBC to an increasing number of ecosystems outside Cosmos.

From a pragmatic standpoint, the execution of getting IBC assets into Ethereum will be a net positive to the ecosystem, It may be starting off at the Hub level only with Atom but if Composable can get IBC assets (Osmo, Akash, Mars, Stride, etc) to Ethereum all the DeFi primitives could potentially adopt the tokens which will lead to value accrue.

In the Ethereum landscape, we can drive Atom usage into other DeFi solutions like lending protocols, DEXs, Yield Farming, and others. The EVM world is the deepest liquidity and defi user and allowing IBC assets to operate there is beneficial. To give a metaphor, it’d be like getting assets into the NYSE. This will be true interoperability and allow the IBC ecosystem to flourish as demand is not as fragmented.

Screenshot 2023-09-08 at 4.46.56 PM1308×908 50 KB

I appreciate the onus is not on Composable to do this but I think the Hub needs to come up with approximate values of revenue it would like to earn from ics chains. This might vary if a chain is considered to be strategically important beyond the fee it pays etc.

The calculations of all of these proposals will also be tricky as forecasting can never be as accurate as we would like.

I think that social consensus is that broadly Neutron and Stride deals were both on the cheap side (EDIT - I think both those chains are valuable partners and that governance was correct to onboard these). I suspect that the value of what is proposed here is actually even less while it is just an IBC connection to DOTSAMA.

This is not specific criticism of the proposal but a broader point about ICS revenue.

I understand, I don’t speak for the cosmos hub. I think looking out for future roadblocks. It’s just a cost benefit analysis, I think the risk outweighs the reward. Personal preference, open to be proven wrong.

BendyOne:

This is not specific criticism of the proposal but a broader point about ICS revenue.

So there are the broad points, but also there the specifics. I would love to have a call with you to try to make this thing ideal.

Lake many others, I’m not totally sure what idea looks like yet but taking the effort to make this work in an ideal fashion Will pay lasting dividends not only to the hub numerous pieces of the cryptocurrency ecosystem .

I look forward to seeing what @velvetmilkman has to say on the matter next week.

Big concern here. Why?

Composable win parachain auction 7 in polkadot (Jan 07, 2022). Reward pool was 16% (of total supply).

Nothing was given or unlock since they didn’t do TGE and they need to win next parachain in 2024 (4month from now). 16% of sell pressure (with vesting).

This next paracahin might need 0.5% of the supply to win (if we see what was need for EWT).

You only give AEZ, 20% of staking reward which is nothing.

If inflation is 5%, staking APR might be 10% then will be ONLY 2% for AEZ.

Neutron give a part ot their token supply and a % for token holder : 15%+

Asking 450k atom is a big thing.

I dont see Composable as a big gain for AEZ for atom holder, for tech is a big gain but does composable can put a out post (or hub) in Neutron?

Might be easier to do to gain traction and swith after to AEZ?

I am also have a concern if polymerdao want to join AEZ in the future.
Since i saw composable as a competitor for them.

Whats the volume and revenue generated from the DOT <> Cosmos IBC connection to date?

What will be the drivers to see this volume perform a 100x or more to ensure your chain is profitable for the hub?

Rarma:

Whats the volume and revenue generated from the DOT <> Cosmos IBC connection to date?

i think my 3 years old nephew owns more on his savings plan

Quick note to start off - we’ve removed the 450k ATOM request as its not necessary for this focus of this proposal.

In terms of AEZ, staking reward is not going to be the main driver of revenue behind the proposal. As Composable continues connecting to external ecosystems via IBC, each will offer a revenue split back to the hub for transations. Specifically, we see our upcoming connection to Ethereum as a major driver of transaction volume to and from the Cosmos ecosystem which will be split and diverted back to the AEZ in addition to typical validator rewards.

As we continue connecting IBC to additional ecosystems (other L1’s, rollups, etc.) this will allow the AEZ to benefit anywhere IBC is used outside of Cosmos.

My point here is that these numbers aren’t sufficient to validators and they seem unrealistic.

Validator revenue: At current prices, this is $733.33 per month to ~160 validators. At current prices, on average this would amount to $55 per year paid to validators (1,666,666.67 PICA per month * 12 months * $0.00044 per PICA / 160 validators in the active set). Let me know if my math is off.

Estimated metrics: Thank you for sharing the metrics you listed in the proposal, but I’m finding it difficult to understand how and where these numbers are derived. Do you have any realistic estimates of what to expect in transaction volume? $1M in average daily tx volume seems inconceivable right now. Transfer fees of $10 per xfer is not something realistic that the protocol will be able to charge on top of gas fees. I guess what I’m saying is that these numbers are made up.

I would strongly recommend Composable attempt to find product market fit first, then submit a proposal to be added to the AEZ.

On top of this, I am not blaming if the rumors about them being scammers are true or false, the original scam orchestrate is working with the team right now or not. Their market reputation is not good. Just check all over the internet. And onboarding them doesn’t make ATOM/AEZ look good.

Now, if they are honest people with a working product and everything, they need to start working on the marketing to present their true picture. After that, we should talk about onboarding.

Long overdue in getting around to commenting on this…

As a fan of interoperability across any and all ecosystems, I am all for this proposal. Having more IBC connections connecting more ecosystems will only make every ecosystem stronger.

In the interest of disclosure, as a Polkadot native who enjoys Cosmos very much, I crowd loaned more DOT to the CL team than any other. I believed in their vision then, and do so even more so now with their focus on IBC and connecting other chains/ecos.

Although I cannot speak on whether or not the numbers demonstrated above are realistic, I am still hopeful that the broader Cosmos community and its validators will support this initiative so that we can all become that much more connected.

Respectfully,

Phunky

Will revenue generated from tx between non-cosmos hub be part of the 20%? Say Solana to Ethereum.

Since AEZ involves giving up security responsibility to Cosmos Hub, how is other L1 chain stakeholder responding, Say Solana community.

Bravo on removing the 450k ATOM. The 20% will likely need to be a higher percentage to get the community onboard.

Additionally, all comments concerning the SEC and moral flexibility must be directly addressed and cited.

The Twitter spaces was informative. For those who would like to hear it: https://twitter.com/cosmoshub/status/1701611433610690814?t=ULyi2JNhqxVKxH-y8x9Vig&s=19

Guys, can you please explain your change and incident response process for the Composable chain and bridge? The DOT <> Cosmos bridge has been down for 10 days and there are no public comms outside your Telegram channel. This is simply not good enough for the public service you provide. I’d like to see both your change management and incident response process provided publicly before you go anywhere near ICS and connecting additional chains to IBC. twitter.com Rarma @Rarma_ Poor bro took a 17 $DOT hit because of the DOT <> OSMO bridge being down, so no one can arb it. The bridge went down 20th Sept TG update on 22nd sept, EOD. TG update on 26th And update 30th Guys, if we're taking down mainnet bridges, you have to do better comms than just TG.… twitter.com/i/web/status/1… twitter.com/logicalgraphs/… Logical Graphs, LLC @logicalgraphs 🚨🚨 OY! You LEVERAGE LOVIN' POLKADOTTIRS! 🚨🚨 @Levana_protocol has opened up their single-sided $DOT LPs (currently at 19% APR) and their LONG and SHORT $DOT perpetuals! You must 🚨🚨🚨 FIRST CONVERT $axlDOT to $DOT (composable) with not insignificant slippage on @osmosiszone…

Excerpt (1178 of 1244 characters). Read the whole post on the forum ↗

Thank you for the feedback on incident response and change management, we have disclosed our process to the community here:

Security Disclosure and Retrospective Analysis

TL;DR

Reading time: 6 min read

On validator revenue here, your math looks to be correct w/ consideration to current rewards rate/market price.

In terms of estimated metrics, further projections can be based on taking a 30-Day average volume over the past 90-Days from Axelar (ETH <> Cosmos) and Wormhole (SOL <> Cosmos <> ETH). From here, we can take estimates of ‘Volume Captured,’ ie., the % of this volume that we may expect to see across the Composable IBC connections. Below I will outline how this looks from the variable fee perspective as this will most likely be the avenue we use.

Validator column in the images below denotes est. fees per validator (total fees (30-Days) * 20% / 160 validators)

0.4% Fee

0.5% Fee

We then look at a relatively conservative estimate of Est. Volume Capture in the 20-30% range. We are heavily focused in finding a balance that ensures validators are compensated for the extra upkeep they are managing, while users do not face fees that price them out of the market.

We hope that you can take our previous response into consideration:

We have a team of 30+ individuals that have put an enormous amount of time and effort into building and shipping these products to deliver IBC everywhere and that remains & continues to be our core goal.

Over the coming weeks we’ll be working toward improved marketing and transparency that look to meet the cocerns you have voiced.

This is not exclusive to ETH <> Cosmos. As additional IBC connections are opened between new ecosystems, fees generated from this activity will continue to flow back to the validators securing our Cosmos chain, and stakers of the PICA token.

With all due respect to the work you’ve achieved. This project doesn’t pass our basic due diligence.
Frankly we have raised way too many red flags while even just scratching the surface.
On behalf of Govmos (the governance arm of PRO Delegators’ validator) we will not support this proposition.

Just to give some context to the readers of this post, we won’t enumerate all the problems we’ve raised, we think this medium post alone should be more than enough to convince most people : Analyzing Composable Eth-IBC. Introduction | by Darth Goblin | Oct, 2023 | Medium

Thanks for reading ! If you like our job, you can support by delegating to PRO Delegators Validator

I will, thank you for your response, and I believe there will be better times in the future to onboard the chain.

Just wanted to come on here and leave a comment to state our intentions to vote NO on this if it manages to go on chain for a couple of reasons. Firstly for us and the main reason for our NO vote it that right now ICS does not work, although both Stride and Neutron are great projects for us as validators it has made no sense with our validators total earnings from Neutron since genesis being $0.02 !!! It’s just ridiculous to even consider adding more chains until we can first come to a resolution to the poor revenue for validators especially as the ones taken all the risk in terms of additional slashing risks with running more and more infra. So for that reason will vote NO on any proposals to onboard new consumers until there is some sort of benefit to the validators taking the risk. We have already seen how the poor revenue has effected chain upgrades on both Neutron and Stride with the largest validators in the ecosystem opting to not take part at all meaning it is taking far longer to reach consensus that it has before. I’m assuming they do this to protect themselves from risking their Atom attempting to upgrade chains that simply offer nothing to validators other than…

Excerpt (1197 of 2347 characters). Read the whole post on the forum ↗

We’ve responded to this publicly, but for context here,
This was in regards to our testnet. These efforts help us collect feedback to accelerate our development and launch the first Ethereum IBC connection. Being that these are all testnet funds, they hold no monetary value.

The request for 450k ATOM would have been directed towards making ATOM more widely available in cross-chain applications, but we felt it was out of scope in regards to the ICS proposal itself. Our only intention was to keep the focus of discussion for this post on ICS.

We apologize for the confusion around yesterday’s testnet upgrade. Our first ICS testnet had remained online longer than planned and the upgrade announcement was not disseminated properly to the hub validators. We certainly don’t mean this in any disregard for hub operators and will have communications corrected moving forward.

Stakewolle support this proposal.
Composable’s commitment to expanding IBC and exporting ATOM liquidity to other ecosystems is commendable. This proposal aligns perfectly with the goals of achieving a more interconnected and secure blockchain ecosystem.
We believe that Composable at AEZ will bring significant benefits not only to Composable’s ecosystem and users but also to the broader Cosmos ecosystem, its validators and users.