[PROPOSAL #991] [PASSED] Community Pool USDC deployment via Hydro
Summary This proposal aims to allocate excess USDC from the Cosmos Hub community pool into Hydro, a decentralized liquidity management platform on Cosmos, to optimize treasury utilization and generate additional yield. By leveraging Hydro’s structured liquidity deployment mechanism, the Hub can explore new financial strategies, earn tributes and rewards, and establish a framework for effective stablecoin management within the ecosystem. Currently, the community pool holds 57,530.40 USDC, which remains idle. Rather than leaving these assets unused, we propose deploying them in Hydro’s decentralized bidding system, where various DeFi protocols compete for liquidity through incentive-based mechanisms. This will provide the Hub with valuable experience in managing stablecoins and ensuring that more assets within the community pool are working to benefit the ecosystem and ultimately, ATOM holders. Background The Cosmos Hub community pool primarily consists of ATOM and NTRN, alongside a smaller allocation of USDC. While ATOM has been successfully deployed in DeFi applications offering use cases such as AMM liquidity provisioning, lending, and perpetual protocols, the USDC…
Excerpt (1192 of 5533 characters). Read the whole post on the forum ↗
Thank you @hodlmastermeto - from the Hydro side, we’d love to be able to start deploying USDC. That’s in fact the most common ask from projects. It will be interesting to see if tributes for USDC deployments are higher or lower than for ATOM deployments.
Borg, Do you know @hodlmastermeto ? • He joned the fourm 3 days ago • He wrote a perfectly structured cosmos gov prop • You replied, voicing support for the gov prop from the guy who’s read the fourm for less than one minute I thought that hydro was built to use atom as a POL coin because if we do that then atom number go up? • How many times has POL caused a coin’s number to go up in a sustainable way, without an explosion like 3,3? give examples • Why are you bullish on using usdc for this? I thought $atom was perfect • You support this gov prop from someone who’s read the hub forum for less than one minute, according to his profile? Screenshot 2025-02-23 at 1.07.14 AM 1284×388 131 KB Gosh man, sus. Or, is this person on the hydro team? Who is on the hydro team? What is the company you said you were creating for hydro called? Where is that company registered? How many people work there? What are the roadblocks? What is the ship schedule looking like? How’s your progress been? Please, feel free to answer those questions here: [Prop#986] [Voting] Funding Hydro development & integrations in 2025 Community Spend …but…
Excerpt (1199 of 2139 characters). Read the whole post on the forum ↗
Yes I know @hodlmastermeto and he pinged me on telegram when he posted so I came to leave a supportive comment. I’ve answered your questions in the other thread.
Hey Jacob, I’m a part of the Nolus core team. It’s true that my profile here is new, but my handle is the same as on X. Will reply there as well just to remove the doubts. Also, as you probably know, Nolus is a Cosmos SDK chain that uses the default gov module. I’m the person who’s usually responsible for submitting proposals there so I’m quite familiar with Cosmos governance even though I hadn’t had the chance so far to publish a gov prop on the Hub. This one would be a first. I have, however, published proposals on Osmosis and on Neutron mainnet (on testnets too) Feel free to have a look at my profiles on their forums. Seems like I can’t share links here but it’s the same handle. The profiles there are much older as well. You can additionally have a look at the 250+ gov proposals that we have on Nolus. I believe this answers the question with regards to who I am and why my proposal is well structured even though I’m a new profile here. To clear some other doubts as well, this proposal isn’t like a grant proposal (to pay for salaries and operations). It’s a proposal to deposit the stale 57k USDC from the Hub’s community pool into Hydro. From there on Nolus and literally any…
Excerpt (1195 of 2353 characters). Read the whole post on the forum ↗
hodlmastermeto:feel free to ask. All in for transparency.
Did @thyborg ask you to write the gov prop?
He said that the prop is a result of conversations with you.
Did you know previously that there was USDC in the community pool?
Tbh it was us who initially raised the question to Hydro about them eventually offering USDC as liquidity for bidding and that we would be more motivated to bid for that rather than ATOM because the demand is higher for USDC.
I agree with this proposal. ATOM and USDC are the most liquid assets in cosmos, and since the Hub has idle USDC, it has to use them both to support the ecosystem and also benefit itself.
Of course, it would only be truly beneficial if it was used for battle tested protocols from legitimate teams (like Nolus, Mars etc).
At Govmos, we believe that Hydro’s liquidity auction facility presents a long-term solution for managing multiple community pool assets. Its decentralized auction mechanism provides a structured and efficient framework for liquidity deployment while avoiding governance overload on the Hub. Additionally, the Hydro committee acts as a crucial safeguard, ensuring that proposals are evaluated with the necessary expertise and diligence. Given this context, it seems inevitable that Hydro’s scope will expand beyond ATOM allocations. Among potential assets, USDC stands out as the most legitimate candidate for integration within the platform. While we view this expansion as a natural evolution over time, Nolus’ proposal presents an opportunity to test USDC community deployment in a controlled environment. Nolus has demonstrated resilience as a margined liquidity venue, having weathered multiple market cycles while maintaining operational stability. The lending facility it offers provides a relatively safe yield opportunity for the Hub’s idle USDC. In conclusion, we recommend that the Hub’s governance approve this proposal with a limited initial scope, allowing it to serve as a…
Excerpt (1190 of 1470 characters). Read the whole post on the forum ↗
I think it makes perfect sense for Hydro to branch out into non-ATOM assets like USDC. Most protocols are in need of USDC as liquidity and this is a great first start towards a future where an ATOM-aligned product like Hydro can serve a much broader user base.
I personally support this proposal 
Let’s get this on-chain!
Thank you everyone for the input!
The prop has just been published on the Hub: Mintscan
Im just curious. Does anyone have like a study / report of proposed / launched pools via previous governance props, that shows their success rate? Lets go as wide as the whole eco, not just the hub. Im curious how much money did these props bring into the kitty over the last 4-5 years
I think that this is a very interesting request.
How would you define success in these cases?
Could we have some updates on the roadmap for Hydro ?
For example, is there a plan to add a vAtom or lAtom (locked Atom) token for hydro participants ?
Right now, when you lock your ATOM they just disappear entirely from your wallets, imagine having a wallet with 100 atom, you lock those ATOM in hydro and now you wallet is literally empty, you loose full visibility and tracking, very poor UI imo.
When we lock ATOM we should receive a vToken, not transferable, not tradable, could even have no “price” , but visible. When the lock up period ends and you receive your ATOM back, vToken get burn.
Ideally, those vToken could index ATOM price 1:1 so we keep tracking and see them. From a regular user perspective, that would be so much better.
Except the 100 Devs and influencer/very active Cosmos users, I don’t see the random Joe using hydro with the current design with your entire stack disappearing
Great question. Short answer - I dont know. Long-ish answer: This is what governance should be focused on. Drawing up verifiable and measurable success metrics. Creating props from the community to the validators and to the team. Not the other way around (unless it upgrades, of course). I have theories. We can measure user cost before and after. We can measure mau/wau/dau before and after. We can measure and try to find similarities in it all: price relation, user relation, social activity, dev activity, etc. We can go more fundamental, I guess, and propose success rate as something more abstract. i.e., chain A suggests lowering inflation by 5% due to the theory that the prices will rise in the next 365 days. Has that happened? Yes, success here is restricted to each case. But… I thought this was what governance groups could be working on. Right now, there is (nearly) 0 analytics involved in such things, beyond pure subjective interest and “look, but ada/polygon, etc got away with it.” I dont know the answer to this. We are trying to approach the question from a validator angle and the chain angle in validatorinfo.com , So far, one thing that is defo verifiable and cross…
Excerpt (1199 of 1835 characters). Read the whole post on the forum ↗
Thanks for the feedback! We’ll be sharing a Q1 report, and keep an eye out for features we will be releasing soon. We’re thinking a lot about how we can make the experience of locking and holding tokens in Hydro better.
Regarding building something like vATOM or lATOM, I think about this like an LP position in a DEX, or a lend position on a lending market - you don’t see your position anymore (sometimes you do as an LP share token, but it’s not always easy to see what base assets that corresponds to, and it depends on your wallet). Some wallets do make an effort to display this, and others don’t, it just depends.
The best way to view how much ATOM you have in Hydro is via the Hydro app, just like how even if your wallet has an integration for a DEX, usually you will have better visibility for your positions in that DEXs app directly. Longer term I would definitely be interested in integrating Hydro more seamlessly into popular wallets, but for now we are focussing on making Hydros native app as neat as we can.
Thanks again for the feedback (and for trying Hydro) - really appreciate your time for writing that out and letting us know what you think.
Thank you for your detailed response, appreciate it 
I’m curious, genuine question from someone not technical at all. What is it “hard” to create the vToken ?
Seems pretty straight forward using Neutron Token factory (or creating it on Atom soon?) , create big amount of Vtoken, lock it into hydro smart contracts, give vtoken when someone deposit 1:1 , take back Vtoken when people claim back locked atom , no tradable, not transferable.
What are the technical barriers ?
pofftermatt:building something like vATOM or lATOM, I think about this like an LP position in a DEX, or a lend position on a lending market - you don’t see your position anymore
Agree on this point, with the difference that you go often on your favorite DEX, to check your available portfolio, charts.. etc and you are one click away from your pools position, so it’s still kind of concentrated on a app you were already using and that you use for other things. Where, with Hydro there isn’t much to do once you locked and voted, not necessary an app you visit on a daily basis (from a user pov here).
Have a nice day
The thing that makes it from my perspective weird is that since users lock LSM shares in Hydro, we cannot really mint vATOM that are 1:1 with ATOM (because if a validator gets slashed, the LSM shares will depreciate in value denominated in ATOM, but the shares will not disappear). We could more easily mint “vTokenizedShares”, but to display these in terms of ATOM, we probably would need to work with wallet providers to make sure these are displayed properly.
Maybe I am missing something that would make it simpler, or maybe the vTokenizedShares would be good enough for users, but my intuition is that it would not really help most users.
We plan on adding support for LSTs (like stATOM or dATOM) into Hydro over the next months, but personally I want to keep around support for LSM shares for as long as the Hub supports it and there is significant user demand for it - some users probably prefer locking LSM shares into Hydro, rather than stATOM, simply because they don’t have to pay the commission on their staking rate (i.e. Stride takes a small percentage of the staking rewards generated by stATOM). That said, we might very well offer certain features only for lockups that are made with LSTs and not with LSM shares (as I hinted at, working with LSM shares instead of the completely fungible LSTs makes some things technically much harder or impossible), and minting token representations of the locked up tokens would be something in that category. ETA for other lockup tokens is not far out - if you are technically inclined, we recently finished a PR that rewrites the architceture to support having different voting tokens locked in Hydro . Now what’s left is some integration work for each new token we want to add, essentially getting the information about how much underlying ATOM the different tokens represent into…
Excerpt (1197 of 1274 characters). Read the whole post on the forum ↗