[PROPOSAL ##][ABORTED] Initiate a Community Pool Staking Program

Change log • 2025-04-23 Created initial post • 2025-04-23 Added details regarding “Signed Blocks”, lowered amount to 5m, and increased eligibility to 40 validators • 2025-12-31 Aborted the idea as we support a more productive option through deploying funds in Hydro indead: Deploy community pool ATOM into Hydro’s Inflow vault - #10 by Govmos Summary • Community Pool Size: Estimated at roughly 9.2 million ATOM (≈ $40 M USD). • Proposed Delegation: 5 000 000 ATOM (≈ 55 % of the pool), leaving 4 200 000 ATOM liquid for other purposes (this amount can be modified later in the governance process). • Objective: Generate sustainable yield for the community pool by staking with top-performing validators, while incentivizing broader improvements in uptime, decentralization, and governance engagement. • Validator Selection: Top forty validators by signed blocks (90d), pre-filtered via quantitative metrics—uptime ≥ 99.9 %, commission ≤ 5 %, voting power ≤ 2 %, governance participation ≥ 90 % and no jailed history. • Re-assessment Cadence: Yearly reviews to rotate or add validators based on updated performance data. • Fully Sovereign: Entirely executed by On-Chain Governance…

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I will vote for this delegation program. For me, it is a very reasonable use of CP funds. A substantial impact on the APY but offset by the reduction in the CP tax. All is well. Thank you, Govmos, for taking care of the valuable funding source of the Atomic Community.

Guinchmos

Very good proposal

To join the discussion, I had this idea:

Do you think it could be interesting to have a dynamic staking system for the community pool — where the percentage of ATOM delegated changes based on the market price?

For example:
When the ATOM price is high, we stake less (because the community pool already has strong value).
*When the price is lower, we stake more — to generate yield and grow the pool.

This way, we can balance safety and performance over time.
What do you think?

Agree with this proposal, thank to take care of us

Hi there,

Staking is definitely a better use case for the funds than letting these funds sit, but if the community agrees, I would ask that we hold off on making a move like this before (a) we complete a decision on the reduction of the CP tax from 10%->2% and (b) I have a chance to put up a proposal to use the funds to create the Atom Aligned Apps (AAA) fund, which staking the funds now will make more difficult to execute on.

The AAA fund will also make some use of staking in housing its idle ATOM, but I would suggest waiting to do it from that entity versus from the CP today.

Mag

I think we can all agree on one thing: the community pool funds should be used. And using them to support validation decentralization by delegating to validators is a very solid direction. Right now, there are two paths forward: either use traditional governance, as proposed by Govmos, or go through the AAA (Atom Aligned App) proposed by Magnus and ICL. At this point, we don’t have details about how the AAA would be managed or what portion might potentially be allocated to staking. Maybe @Mag could shed some light on that. For now, I lean more toward the Govmos proposal, simply because the allocation to validators would come directly from a general governance vote, which would greatly legitimize the decision. It would also allow governance to retain direct control over part of the community pool before delegating any portion to the AAA effectively diversifying capital exposure across different entities with distinct goals. That said, I’m also waiting to see how the proposed Atom Aligned App will be structured. It will depend on the kind of governance model it adopts (and what flavor of democracy it offers). Still, I believe centralizing the entire community pool into a…

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Hi there, dear Atom Community,

First off, I want to take the opportunity to thank you all for developing this precious decentralized ecosystem.

I’ve been invested in ATOM since early 2022, and although I’ve mostly been a reader here on the forum, today is the day I’ve decided to take action and get more involved — contributing with my (modest) skills and (committed) presence.

So!

I completely agree with @Quentin when he says that CP funds should remain decentralized in some form.
In that regard, I support @Govmos’s proposal, which seems reasonable and economically efficient. Allocating two-thirds of the CP funds among the top 30 validators and using the actual APR to fund the CP sounds like a smart approach.

The 3M ATOM that would remain leaves room for your AAA program, doesn’t it @Mag?
Of course, your desire to innovate and incubate a new DApps ecosystem should be given a real chance — even prioritized. But to me, CP funds are part of the community and could serve multiple purposes.

Thanks for reading and for considering my point of view!

Best regards,
Eru

Thanks @Govmos for another well laid-out proposal.

I agree that allocating a portion of CP funds for staking makes sense, though I’d lean towards expanding the validator set receiving delegations (perhaps doubling to 60 validators?).

That said, I don’t think we need to rush into discussing specifics just yet. We’re all waiting for ICL’s communication regarding the AAA fund, and as @Mag mentioned, that proposal should be hitting the forum soon. Rather than discussing this in isolation, it seems more logical to wait for the AAA proposal and then evaluate all alternatives together, seeing how these proposals might complement each other.

By the way, I believe you meant “6 million ATOM” here:

Govmos:

Because the 8 million ATOM are distributed equally

Govmos:

Governance Participation ≥ 90 % Ensures skin-in-the-game; aligns incentives.

Could actual skin-in-the-game (aka self bond) be a criteria? Either as a % of their total VP or some kind of set min value?

Also, a note on implementing the 90% participation - it should be calculated from when the val joined the active set, not “all time Hub props”.

I also have a concern about Community Pool ATOMs contributing to gov votes. Intuitively, it feels wrong, but I’m not sure why - I’d normally come to you to draw out the worst-case-gov-exploit scenario…so yeh, what could go wrong with having CP ATOMs vote in gov?

I’m with the idea of increasing the number of validators covered. 200k to a validator with 1% VP is a very small amount, 100-150k to a validator with <0.1% VP is a lot. So maybe evaluating if 45-50 can be a good value in order to not going outside of the active set (it seems strange but there are a LOT of validator that doesn’t meet the criterias).

I would had proposed also to increase the VP limit to <1%, but in the 1-2% range there are only 2 validators that meet the criterias, so it doesn’t change that much.

Govmos: By implementing this delegation program, the Cosmos Hub community pool will transition from idle reserves to a self-growing treasury, enhance network security through high-quality validators, and foster a meritocratic incentive structure for continuous operational improvement. I strongly disagree. Your proposal fundamentally conflicts with the Hub’s architectural principles by: • Compromising governance • Potentially reinforcing or amplifying existing validator centralization • Utilizing flawed performance metrics • Creating potentially non-trivial compliance vulnerabilities Purposeful Use vs Abuse This feels like abuse (albeit unwittingly). The community pool must be expressively allocated, reflecting diverse stakeholder interests and purposeful governance objectives that serves the network writ large. This means it cannot be used to aid, enable, or abet the economic and political interests of the Hub validators. This proposal incorrectly characterizes the pool as an “idle reserve” when it must function as a mechanism for funding STRONG and COMPLIANT initiatives. Compliance here means the governance of the pool remains objectively independent…

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Syed:

Intuitively, it feels wrong, but I’m not sure why - I’d normally come to you to draw out the worst-case-gov-exploit scenario…so yeh, what could go wrong with having CP ATOMs vote in gov?

It feels intuitively wrong because this proposal validates one of the harshest criticisms about the political economy of the Hub…that it’s cartelized.

Good luck trying to unwind this proposal once it passes.

This prop is interesting and seems to mean well, but CosmosNanny brings up very valid points.

Why would anyone want to participate in these forums, moving forward, knowing this all echoes efforts to further compromise governance and concentrate validator (voting) power.

think this reaction is too radical. First, we can absolutely discuss how this will be implemented, and we could easily have the community pool systematically vote “abstain” on all proposals. Also, the fund allocation could be reworked to be even more decentralized (even though I must admit I have trouble understanding your uptime argument personally, I support anything that promotes meritocracy for the health of the network). Finally, I would point out that if you’re truly concerned about regulatory risks, you should try to avoid concentrating the community pool’s capital exclusively in AAA, which seems to be what you are currently suggesting. As a reminder, the classification of an asset as an unregistered security could also takes into account the lack of decentralization in the management of capital. Allowing annual delegation to validators without granting them voting power (for example, by having the community pool systematically vote abstain) seems to me to be a good way to manage the community funds. It would also allow validators to be indirectly compensated, while requiring them to demonstrate professionalism throughout their term if they want to retain their…

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Quentin:

Finally, I would point out that if you’re truly concerned about regulatory risks, you should try to avoid concentrating the community pool’s capital exclusively in AAA, which seems to be what you are currently suggesting. As a reminder, the classification of an asset as an unregistered security could also takes into account the lack of decentralization in the management of capital.

I agree. And have said the same.

It’s also why I don’t recommend sending the pool to 0.

Quentin:

could easily have the community pool systematically vote “abstain” on all proposals

Voting “ABSTAIN” is not a true abstain in hub governance. It affects quorum.

Not voting at all is the true definition and application of ‘abstain’.

Yes, that’s true. If we want real neutrality by voting abstain with the cp on this proposal without fully overhauling the governance, we could increase the quorum proportionally to the amount of funds allocated, based on a staking ratio target for example. However, it would still be a makeshift solution.

Sooner or later, the Hub will need a proper governance reform.

Quentin: even though I must admit I have trouble understanding your uptime argument personally, I support anything that promotes meritocracy for the health of the network). This proposal does not promote validator meritocracy or greater health of the network. Hoping the below is clearer. Uptime Uptime is a vanity metric. Near-perfect uptime is not a mark of service excellence. It simply reflects the minimum technical competence required to avoid slashing. It says nothing about broader contributions to the Hub or the quality of operations or its operators either. And we see this clearly: 179 of 180 hub vals have +99% uptime; 172 maintain 100%. Uptime is a baseline expectation showing non negligent behavior . It’s not a differentiator. Meaningful metrics differentiate . Moreover, the community over prioritizing uptime incentivizes geographic clustering as operators chase latency advantages. And this is already happening. We have a lot of nodes clustering (city, region, data center) around European cloud zones rn like AWS Frankfurt (eu-central-1) and Hetzner. Geographic and jurisdictional concentration materially increases systemic risk and regulatory…

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I agree with most of the points you raised and the goal should be to find the most objective criteria possible for selecting validators without harming decentralization and ideally, even strengthening it if possible. Cosmos_Nanny: Number of signed blocks is marginally better than uptime but also problematic. It’s biased towards those with greater voting power. Validators with more vp get scheduled more often to sign blocks (propose and vote). This is bc Tendermint Core uses weighted voting. • Higher stake = more signing opportunities. • Smaller, high-performing validators sign fewer blocks bc they are selected less often under Tendermint’s rotation. The reasoning: vals with more stake have more to lose via slashing if they behave badly. So, “highest # of signed blocks”, is more expressive of existing power hierarchies and structures. It doesnt reflect operator’s service quality or diligence. However, regarding this above, I believe you might be confusing proposed blocks with signed blocks. Proposed blocks are usually chosen among those with the highest stake, whereas block signing is supposed to be performed by all validators to reach the two-thirds…

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Quentin:

block signing is supposed to be performed by all validators to reach the two-thirds voting threshold.

Correct. I worded poorly. Thanks very much for pointing it out. I clarified phrasing.

Great idea but against " Validator Selection: Top thirty validators by signed blocks"
Why further enrich the largest validators? Everstake has originated more blocks than the bottom 20 validators combined!

Makes more sense to follow Stride’s model. Divide the whole set into traunches, filter out, then stake.

The idea is grand. I have spoken about similar ideas before, and from what I understood this has a lot of technical and decentralization compromises. Beats me as tho why (not the technical part, I really don’t understand why there are no workarounds around those compromises - I think there are). Seems that a lot of these concerns come out of nothing. IMO, if this can be done via on chain governance, we should do it

I strongly disagree.

Firstly, it looks like an attempt to get more commissions by a validator. It will create further selling pressure on ATOM as most of the validators sell their rewards.

Secondly, why would CP need additional ATOM from staking rewards? While we have enough ATOM for future projects, there is always a print button. It will reduce the inflation for ATOM stakers.

Thirdly, there is already an FD programme ICF is leading, so why do we want another? Who will lead this? Why would I trust a few people with millions of USD?

Lastly, your validator performance metrics are flawed. Why is a jail history an ineligibility? Being a validator, you should understand that there are downtime jail cases with the people who are actually providing the geographical redundancy; no cloud validator gets downtime, don’t penalize the true workers.

First of all, we want to sincerely thank all community members who took the time to contribute — both in support and in critique. Every comment was carefully considered, and as a result, we’ve adjusted several proposed amounts and quantities. Below, we address some key points raised in the discussion. 1. Financial Aspects Guinch_Roze: A substantial impact on the APY but offset by the reduction in the CP tax As outlined in our initial post, the APR may decrease by approximately 0.3% — a negligible figure when considered in context. Coupled with a reduction in the CP tax, the net effect should be a meaningful increase in the APR for stakers. More importantly, this program is designed to maintain the Community Pool’s relative share of the total supply over time while generating ≈750,000 ATOMs per year. These additional funds could support long-term community grant initiatives, such as the Atom Aligned Apps (AAA) program proposed by Interchain Labs — or any other community-led effort. Our goal is simple: to reduce the CP tax while maintaining the CP’s relative share between 1–2% of the total circulating supply, and to use staking yields to sustainably fund…

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Thank you for the elaborate reply, but No let’s get to basics, being an active individual for the last 3 years and an investor since the start. 1- Can someone just explain why we need to create another Foundation Delegation-style program parallel to ICF’s when that program already exists and has its own issues? We need the sustainable income for CP. Adjust the Tax rate . That’s a vote away. This new plan would redirect 750,000 ATOM per year —taken straight out of stakers’ rewards, into the hands of a small group managing the Delgations. Why should anyone trust a few individuals with that level of unchecked influence? If the goal is to grow the Community Pool (CP), then just adjust the CP tax rate . That’s a trustless , on-chain mechanism that doesn’t require opaque delegation committees or off-chain decision-making. Also, let’s talk numbers. There are 9.2 million ATOM in the treasury right now. Can anyone tell us how much has been spent each year from the CP in the last 3 years ? Because if the idea is that 9.2 million ATOM isn’t enough, what are we even planning to spend that makes us this worried? If you’re preparing to dump $50 million worth of ATOM in the market…

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GATA HUB Statement on the Community Pool Staking Program Proposal We appreciate the effort behind this proposal and recognize the broader goal of supporting validator sustainability through community funding. However, as it currently stands, GATA HUB would abstain if this proposal moves on-chain—not out of opposition, but because we find ourselves in a complex position with respect to the proposed eligibility criteria. The clause disqualifying any validator that has been jailed in the last 12 months is overly rigid in our view. While we agree that uptime and reliability are important, this parameter should be evaluated case by case . As probable reason to avoid Sslashed validators might be to protect treasury funds and stake with higher uptime, GATA HUB has experienced two jail events in the past year, unfortunately, but despite that we are managing highest uptime and In both instances, we were transparent, quick to recover, and compensated 1.5x of losses . We have nearly 100% governance participation rate at the top 8th position. We spend 100s of USD each month for relayers and community activities. We believe this kind of context matters. Automatically excluding…

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Thank you again for the reply and for keeping the discussion constructive. Let’s discuss the political aspect of it before indulging in other matters.

You say raising the CP tax to 4% would have the same effect on staking APR as your proposal — then why not just raise the tax? That’s on-chain, trustless, and doesn’t require a new power center. Your argument confirms this program isn’t financially superior, so it’s a political preference disguised as a technical proposal. Even if the CP is needed to fund 900K each year to function properly, we have enough funds for many years. Why are we having this discussion just on the parallel of CP tax reduction? Why do we want to throw a curveball here?

waqarmmirza: Why not just raise the tax ? We’ve explained our reasoning in previous posts, but we’re happy to elaborate once more. 1. The Core Problem: Overfunding The community pool is currently overfunded. The original expectation was that the AAA program would receive the entire CP allocation — and likely have to stake the surplus themselves, as those funds wouldn’t be immediately spendable. Instead of concentrating this control within a single committee or group, we’re suggesting a more decentralized alternative: a community-managed staking program , governed directly through on-chain mechanisms. No representatives, no multisigs, no power centers — just rules encoded in governance decisions, transparent and open to all. 2. The Proposal: A Decentralized, Criteria-Based Staking Program We outlined a framework for selecting validators based on objective, performance-based criteria — notably signed block counts — after filtering through some basic qualitative metrics like uptime, commission, and governance participation. These criteria are not set in stone: they’re open to adjustment by the community through the very process this proposal initiates. The…

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Syed: Could actual skin-in-the-game (aka self bond) be a criteria? Govmos: Requiring self-bonding would exclude smaller validators — often those operating at breakeven or a loss — and contradict the inclusive purpose of the program. Agreed with Validators to self bond as a criteria. If larger, more established validators are being inclusive by rightfully watching out for smaller validators, have these higher ranked teams voluntarily donate their own self-stake/rewards/etc. to provide aid. The new 2% tax rate should sufficiently help fund this initiative. Govmos: We believe this proposal provides a sustainable , math-based framework to fund grant programs indefinitely , without ever depleting the CP’s principal. Although this working proposal aims to create a sustainably interesting program, which we should appreciate, let us simply: waqarmmirza: Adjust the Tax rate . Lastly, Govmos: The funds are entirely controlled by on-chain governance , Yet, we just witnessed: [PROPOSAL 993][DRAFT] Neutron and the Hub: A new chapter the Neutron Foundation has committed to return 50,000 ATOM…

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so we are doing 1 more aadao, right? or am i getting this wrong?

Once and for all, the initial post makes it explicitly clear: we are proposing the use of on-chain governance, not another multi-signature wallet.

There is no committee, no compensation, no appointed representatives, and no intermediaries involved in this model.

Every action—whether it’s delegating, claiming rewards, or redelegating annually—can be executed directly through the governance module. This ensures that control remains fully and exclusively in the hands of ATOM holders, as it should be.

hmmm. maybe something puts readers off then. i also understood a multi pulti decision making committee is proposed

Thank you for this valuable feedback, we updated the original proposal accordingly, removing all possible misunderstanding on this essential point.

We would vote NO and possibly NWV because the validator selection criteria centralizes profits.