[PROPOSAL][ABANDONED] Reduce community pool tax to 1%

09-Apr-25: Proposal abandoned in favour or fresh proposal in line with the original sentiment of this proposal here: [PROPOSAL ##][DRAFT] Reverse Proposal 88 — Revert Community Pool Tax Rate to 2%

18-Dec-24: The idea of a reduction to 1% is gaining steam and interest to throw this on chain. Please provide any comments.

Original:

Folks,

Throwing a feeler out there to see if there is appetite to reduce the community pool tax back to where it was at 2%.

In my view, community atoms are almost always spent frivolously and due to the inherent lack of ability for the hub to provide oversight, fails in typical market standards one would expect when procuring services.

I would like to see the community pool used for the bare minimum - to fund atom maintenance not currently within ICF scope.

Additionally, I’d like to see part of the pool burned into oblivion as well, which will do more for price than paying for “services” ever will.

Thoughts?

It appears there’s a concern about prices, much like previous complaints we’ve noticed recently. This seems to align with the prevailing negative sentiment, which is strongly associated with the current low ATOM dominance.

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However, the key point to remember is that this chart shows a stable range. There are times of excitement, times of disappointment, but only a few assets in this industry have the privilege to endure for over 5 years and remain in the top 50. We might be at a historical low in terms of dominance, but this could be an excellent opportunity to remain optimistic about the Hub and counter the prevailing negativity.

Historically, ranges are ideal for contrarian behavior until they are broken. These challenging times for sentiment are when critical decisions should be made. We believe that reducing costs and ‘doing nothing’ is the opposite of what should be done.

Thanks for reading,
Govmos

I’m not saying do nothing. I’m saying do the bare minimum for services that are actually driving value to ATOM , like informal’s work, and possibly some other much smaller high value grants that a small pool can support.

rolling back taxes validators implimented to steal from delegators for grant farming is not something validators will vote for.

reduce the community tax, redirect ICS revenues to the community pool .

Bumping this thread for visibility

Is this actually sustainable, considering teh we are literraly launching a product to provide atom liquidity

Bumping this for any additional feedback. I’d like to put this on chain for a vote soon.

In my mind, the only real question is whether the parameter should go back to the original 2% tax or simply halved to 5%.

This is a good proposal. We definitely need roll back some of the spending as there is not much to show for it over the last 2 years. Increasing the community pool tax to 10% was a really bad idea a couple of years ago.

Ultimately, I believe there’s more than enough funds in the community pool for any future initiatives. More likely coming back soon with AADAO winding down.

Stakers also got squeezed a bit by the inflation halving. Increasing the APR until other tokenomics reform is a good checkpoint along the way.

Will support this initiative. The large community pool being used time after time for stupid reasons had led to so many bad lights. I also think we have more than enough for now.

i agree with this proposal, bearmarket is behind us, i think so its a good moment to reduce this taxe till the next bear regarding the community pool trend.

Could anyone kindly explain the logic to keep Prop#848 in effect, instead of reverting back to the original inflation rate above 10%?

In addition, is it not, in fact, the case a higher tax on the CP would assist in making ATOM, which was not originally designed to be viewed as “money,” rather a staking/governance token, to become deflationary? Would a deflationary ATOM not serve the same “effect” as what the active forum community is striving for, assuming “price” is what most are focused on?

Bump! Shall we make it 1%?

What I would prefer is that we spend some time thinking about what exactly we want to use the Community Pool for and have a vote to reduce its scope. I think using this for providing liquidity (where we never sell the ATOM) is still a really good use case.

I agree that money has historically been spent unwisely. I think in an ideal situation we don’t need grants from the CP to fund work that benefits the Hub. Instead, the ICF should cover most, if not all, development work. And as you likely know, the ICF has made it clear that they’ll continue funding the Hub moving forward.

However, I can imagine that in some cases ATOM holders might want to fund something that the ICF is not interested in funding, so to account for that we could separate the CP into 2 buckets:

• Grants (e.g. receives max of 5% of the community pool tax)
• Liquidity (receives the rest)

We do need a better definition of how to distribute this liquidity before we take this step, but we’re working on some ideas and will be able to share these in Q1.

Noam: I think using this for providing liquidity (where we never sell the ATOM) is still a really good use case. At Govmos, we strongly resonate with @Noam ’s point regarding the utility of ATOM for liquidity provision without the need for selling it. A perfect example of this would be Hydro. Alongside this, we support the ICF’s updated approach to funding development work. However, the Hub’s reliance on community pool for certain specific funding still exists, Hydro is another example to this point, as the current discussion in this forum seeks CP funds to source operations for 2025. Funding Hydro development & integrations in 2025 Community Spend Note: It was decided to wait for yesterday’s Skip announcement before posting this draft so that the community would be aware of next year’s plans. The discussion period will be shorter than usual to ensure that the results of the on-chain vote are available by 1-Jan-2025 and product development can proceed without pause. The Hydro team will respond to feedback as diligently as possible on this forum post and in the Hydro Telegram group . We will also organize a couple of Twitter spaces, and call… In…

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Could you break down how you consider $84M to not be oversized?

For liquidity provision I think this isn’t even close enough tbh. We really need to 10x the liquidity in Cosmos. Not saying the Cosmos Hub should carry that responsibility on its own but

Imo, best way to think of it is that if we have a pool of ATOM that can’t be sold and only used for liquidity, you’re basically taking ATOM out the circulating supply.

Hydro has been nice for user activation, but it’s a long way from being scaled to make use of a large % of the community pool. Personally, I don’t like extremely high POL deployments because it dilutes average LPers. Cosmos needs a cultural shift, more users and more opportunities for users to deploy their own liquidity vs. the current status quo with multi-sig POL. Go all in on Hydro to give direct benefit to users or stop it, imo. Outside of POL, I struggle to think of anything that the community pool should be used for at this point (with size). There isn’t a good enough framework for efficiently using a giant pot of money and ensuring it’s spent wisely. So, final thoughts: • Atom needs to be a more desirable asset that users want to use in deFi. Whether that’s via Hydro, LST’s or otherwise, users need to be activated and get away from multi-sig POL. • There is no proper framework for managing the community pool funds efficiently and with accountability. • The community is tired at this point. The status quo must change because perceived mismanagement of funds has caused severe damage to Atom (and Cosmos’) reputation. • Stakers and LST users will appreciate the…

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They said at some point in near future hydro will be able to auto fund itself, so after the 2025 integration it seems the CP will start to stop funding hydro or at least reduce its funding. And the CP is already large enough so I don’t see why reducing CP taxes now would impact that, we already have enough to fund.

Also, I feel like we keep saying over and over again that we will make change to stop CP raiding, while not doing anything in this direction and in the meantime the CP continue to get raid. 1 year, 2 years, 3 years, at which point the changes are implemented?

Tbh it’s a bit concerning to me because we all know the missused of CP fund come from validators voting on proposals (who els’?) so it’s suspicious when all validators come to agree to not reduce the high CP taxe

If the community wants to reduce CP taxe, who are validators to decide we should not. A signaling proposal would give a clear idea of what wants the broader active community, not just 180 vals who have full access to the CP we try to protect.

Going to skip signaling it. Put it to a vote and see what the will of the people is.

Noam:

we could separate the CP into 2 buckets:

• Grants (e.g. receives max of 5% of the community pool tax)
• Liquidity (receives the rest)

I’m not expressing any opinions on whether to reduce the CP tax or what a prudent use of the community pool is. Just wanted to hop in here to say that Stride separates out its community treasury into completely separate module accounts based on purpose:

• Community growth
• Security
• Incentives

Each can be accessed with different proposal types. This has helped a ton with budgeting and ensuring that spends remain relevant and targeted. The Hub could feasibly do the same with a liquidity and grants bucket, and allocate whatever proportion of the pool it feels prudent to each.

PaulEdward: Could you break down how you consider $84M to not be oversized? Thank you for raising this concern Paul. To clarify, the Community Pool (CP) does not hold $84 million but instead contains approximately $200,000 in liquid assets, alongside 7.6 million ATOM and NTRN tokens. This represents around 1.9% of the circulating supply of ~390 million ATOM. At Govmos, we believe this share is insufficient for a network at its current stage of maturity, falling short of the industry standards. We propose targeting a CP size of 5% of the circulating supply and implementing the following allocation structure to ensure both effective use and sustainability: • 25% for Public Liquidity Allocations via Hydro This ensures liquidity is strategically distributed to support the ecosystem’s stability and growth. • 50% for a Community Staking Delegation Program This would fund top-performing validators while generating staking rewards to maintain the CP’s relative share of the supply over time, avoiding slow dilution. • 25% for Hub-specific Grants Governed by the community and managed by a skilled grant review committee, this portion would fund initiatives with direct…

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Govmos:

We plan to publish a comprehensive proposal regarding the CP allocation strategy early next year, with detailed arguments and data to support our thesis around this 25/50/25 allocation prospect. In the meantime, we welcome any preliminary feedback on this approach and look forward to engaging with the community to refine these ideas further.

Hello @Govmos ; any updates on the several comprehensive proposals and debate posts planed for early 2025 ?

Due to recent policy shifts within the Cosmos ecosystem, we have decided to postpone these initiatives. However, we remain certain that their time will come in the future. The ideas and efforts we previously shared are still in the pipeline, but we believe the current timing is not optimal.

In the meantime, we will redirect our efforts toward other forms of contribution. Our commitment to supporting this ecosystem remains unwavering, and while governance has been one of the many ways we engaged, it is far from the only one.

Community pool tax should be 0%. Cosmos Hub doesn’t need to finance anybody. The community pool is a den of vipers and thieves and while it sounded like a good idea 5 years ago, it is clear now it hasn’t lived up to its original purpose. There doesn’t need to be any reform. It needs to be shut down.

It is pleasant to see that we have the same pov regarding something.

Going to wrap this thread up and throw support behind this: https://forum.cosmos.network/t/proposal-draft-reverse-proposal-88-revert-community-pool-tax-rate-to-2/