[Research] Capital Allocation Mechanisms for the Cosmos Hub

Research Report: Allocating Capital in Decentralised Networks: Mechanisms for the Cosmos Hub Authors: Darcy Allen , Chris Berg , Sinclair Davidson (RMIT Blockchain Innovation Hub) We are excited to share our latest research paper, supported by the ATOM Accelerator DAO. The paper, Allocating Capital in Decentralised Networks: Mechanisms for the Cosmos Hub , is available for download at the Social Science Research Network here . This research complements our previous work on governance in Cosmos (on the governance of interchain security , also supported by AADAO) but focuses on the governance of capital allocation from the community pool. How should the Cosmos Hub think about robustly allocating shared capital to competing alternatives? Allocating funds from the community pool is necessary to facilitate growth. But Cosmos, like all decentralised ecosystems, will never be able to allocate shared capital perfectly. There will always be tension about what to fund, how to ensure accountability and transparency on the delivery of projects, and the constant threat of opportunistic behaviour. Decisions must be made in an uncertain environment, with evolving objectives and…

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Thanks to the authors for their insightful work in advancing our understanding of capital allocation within the Cosmos ecosystem.

We particularly enjoyed reading your conclusions on the necessity to use a polycentric governance in the Cosmos ecosystem, the research aligns with the multi-layered and complex decision-making framework. This approach, reminiscent of the theories of Elinor Ostrom, advocates for a system where multiple autonomous entities operate under diverse governance models. This setup is very similar to the models we initially envisioned for the potential future evolution of the AADAO.

Regarding the Atom Accelerator, I’d be keen to learn whether the authors explored the legal structuring of sub-DAOs during their research and their insights into the use of a Guernsey trust, as adopted by AADAO in their recent renewal proposal. Such insights could provide valuable perspectives on legal frameworks for decentralized organizations. Overall, the research stands as a significant contribution to our understanding of decentralized governance in the Cosmos ecosystem.

Thank you for reading,