[PROPOSAL #82][REJECTED] ATOM 2.0: A new vision for Cosmos Hub

Summary We propose a new Cosmos Hub vision document, a counterpart to the 2017 paper which focused primarily on the network of IBC-connected chains. With the creation of the Cosmos Stack (Tendermint, IBC, and SDK) and the development of key technologies for secure economic scaling (Interchain Security and Liquid Staking), the original vision of the Hub has been fulfilled. This document marks the transition to the next phase of the Cosmos Hub as an infrastructure service platform, and a renewed role for ATOM as preferred collateral within the Cosmos Network. It describes two pieces of app-specific functionality, the Interchain Scheduler and Interchain Allocator, which together form a flywheel for accelerating interchain growth. The Interchain Scheduler is a cross-chain block space marketplace, which generates revenues from cross-chain MEV. These revenues are used by the Interchain Allocator to capitalize new Cosmos chains, foster interchain collaboration, and thereby expand the total addressable market of the Scheduler. This paper also describes a new issuance regime optimized for Liquid Staking, where after a 36 month transition period, exponential issuance is reduced to a…

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This is exciting. Great Cosmoverse talk also btw

alt link if anyone has trouble with the IPFS host in the original v1.0 backup v1.1 backup v1.2 backup

I think it’s a great idea and this has come a long way… it will take some time to implement but also give the believers the opportunity to accumulate…

Great job at the talk and announcement of this zaki’

I can’t wait to see how this is implemented exactly cause I will be worried when my rewards start Flying away…

I just thought it would be sooner but with all great things . It takes time to develop.

I’ve always awwwwed at atom and cosmos… I knew that cosmos would be something special one day… and here we are…

Thank you guys for everything you do and if there’s anything you need from me , I’ll always be here…

Truly yours… welding Aka weldingdotjuno

Good day/evening to all! A first thought while reading the proposed White Paper is on the role of the Cosmos Hub Treasury . According to the White Paper, Cosmos Hub Treasury, (is) a new capital pool managed by domain-specific councils to fund public goods and grow a resilient interchain . 1 . Can someone expand on this, which can be sub-divided as follows: 1a . Who will control this Treasury? 1b . How will resources be allocated from the Treasury, what will the process be, any checks and balances and which are they? 1c . Will community vote on the allocation of resources? 2 . Also 2a . what will the approximate amount of $ATOM allocated to the Cosmos Hub Treasury be, by the end of the 36 month period? Essentially how much voting power will that treasury gather? 2b . After the 36 months lapse what percentage of the 300k $ATOM per month will be issued to staked holders and what to the Treasury? 3 . What will the total $ATOM supply be by the end of the 36 month period? 4 . Will funding from the treasury be approved by virtue of proposals as happens with the community pool and who votes? 5 . What is the vision for the role of the community pool (and the…

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Thanks for the detailed roadmap, and all the new features we are looking toward with ATOM 2.0. One of my concerns as a validator is the cosmos hub still has fewer spots than the majority of the interchain chains (there are security reasons to why which i will mention later in this post), but this basically disables many cross-chain validators from participating. I would love to see if we can address this. For interchain to be successful the hub should be able to incorporate the majority of the service providers on side-chains. The limited seating on the hub I feel is a blocker. Reasons I know (as i have through SS proposed the increase of validator spots): • Reduced block time. • Higher upkeep with all validators (in terms of coordinating upgrades) • Higher risk (maybe?) I think we should really think about increasing the cosmos hub validators to the initially proposed seating availability (of 300 in the original paper) and think about scaling this to 1000+(if not 10s of thousands) in the future from a technical perspective, so that more people can participate, which works towards decentralization. One of the biggest arguments being that new validators should just…

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While Tendermint, the ICF, and other entities have done an admirable job in pushing the Cosmos ecosystem forward, the ATOM 2.0 tokenomics model transition period is effectively a fundraising round for the Cosmos Hub that dilutes current ATOM tokenholders. If my back of the envelope math is correct, based on the formula presented in the whitepaper, if the proposal is passed, by the 36 month mark (and assuming the current ratio of staked ATOM remains constant), over 37 million ATOM tokens (current value of $525 million) will have been raised for the Cosmos Hub. While the funding may benefit the Cosmos Ecosystem at large, this level of funding seems excessive for a project that already allocated 20% of the genesis block to Tendermint Inc and the ICF, both of which should fund Cosmos Hub. The initial 10,000,000 per month token issuance is just too large, and before we move forward, a detailed explanation of how this money is going to be spent is required. As it stands, my vote for this proposal is a NO

Updates that change the monetary policy are evil. I have most of my portfolio in ATOM because I liked the project, the staking rewards, the unbounding period (which disincentivises undelegation and prevents violent price movement). All of this will be gone and ATOM to me will be just another coin whose staking is liquid and rewards are unattractive. Why don’t you update the interchain security, and scheduler/allocator shenanigans while keeping the issuance intact? Most of this jargon is not understood by the common person who just wants a monetary system with issuance they can easily understand and subscribe to.

My only concern is voting on the whole thing together rather than trying to understand the benefit of each of the proposed updates separately. The paper is good, just seems like its now a bit of a rush to do cramp everything into one vote now.

@johnniecosmos • Ⓐ The Cosmos Assembly (Composed of all Cosmos Councils) would control the Treasury. Groups make a proposal to ATOM governance including the items described in the Governance Stack to become a council. While it makes sense for engineering teams to form a Council, there is also a Community Council described in the paper. Ⓑ If this proposal passes, then one of the first steps would be the formation of a Cosmos Hub Charter, which would entail a public process to figure out these details together. Ⓒ ATOM holders would have a veto on proposals made by the Cosmos Assembly. The Community Council would also have direct representation in the budgeting process. • Immediately following the transition phase (assuming no spending), the Treasury would have 55,198,375 ATOM 55,057,742 ATOM • The total ATOM supply after 36 months would depend on when the transition phase started. If it were to start today then the total supply would be something on the order of 390,000,000 (probably only accurate to the nearest 1M). However, the change in issuance would only happen after Interchain Security is live and Liquid Staking has gotten some traction, my best guess would be late…

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Thank you for the response Sam, appreciated.

Obviously the proposal has involved a lot of thought, work, and time so very grateful. It is very conceptual, which has pluses in terms of conveying a long-term vision, but also makes it a bit hard to understand the impacts in a very concrete way. Curious on a number of points, but one particular question. On the Allocator accumulating Protocal Owned Value, why not devote some of that value to buying back some of the ATOM token, if not immediately (which defeats the logic of raising capital), then mentioning it as a possibility in several years, after further ecosystem maturity. In general, some further elaboration of how building the ecosystem helps bolster the token - though it might seem obvious - would be helpful. In any case, thanks for all the work on this!

Hi @hxrts thanks for the reply. Can you share how you arrived at 55,198,375 ATOM tokens for the Treasury? Following the MonthlyIssuance and MonthlySecuritySubsidy formulas in the whitepaper, I arrived at a total of 37,427,073 tokens allocated to the Cosmos Hub Treasury over 36 months. Either way, this massive amount of ATOM issuance would bode poorly for the price of ATOM during this 36 month period. I understand the need for funding, but the magnitude here is just too much. The market isn’t stupid, if this is approved ATOM will inevitably dump, ushering yet another period of ATOM underperformance vs L1 competitors.

Hi,

i have to say that the new issuance is a very large amount and i wonder how it will help to gain value. As i heard about Atom 2.0 i thought the new token design would more related to the old mechanics.

What about a mechanic, which keeps the old 7-20% mechanic but the rewards coming firstly from ICS and the other sources and only if the ICS rewards are not enough to meet the actual inflation 7-20% it will filled up with new Atom. Further, if the rewards from ICS and other sources will be above the current chain inflation, the above values could be

• looked for later rewards payout
• be used in a community pool
• used to buy back atom and burn or to use them for something else…

this is a bit more tricky to build as prices of the ICS token rewards are fluctuation but at the end the inflation will not increase with a massive token amount which could lead to a devaluation of the atom token.

i had translate into chinese with my friends.
https://icosmosdao.com/ATOM_V2ch.pdf

Helllooooo Cosmos fam!! This is your friendly neighborhood cryptoeconomist speaking. We’re beginning our descent to landing on a new issuance model so please ensure your seat backs and tray tables are in their full upright position.

But actually, I am one of the co-authors of the white paper (Max Einhorn). Community members have been asking some great questions about the mechanics of the proposed new issuance (shoutout to @cryptocat) so to help deepen everyone’s understanding, I’ve created the model below.

Note that I gave @hxrts the wrong figure earlier by reading off the wrong column. Rather than 55,198,375 ATOM in the Treasury Pool immediately following the transition phase, it is actually 55,057,742 ATOM.

ATOM Issuance Model

Issuance SETTINGS,Amount,Units,Category,Month,0,1,2,3,4,5,6,7,8,9,10,11,12 Current Total Atom Supply,300,000,000,Atom,Outflow,Security...

Max thanks for sharing this model, I will take a look at and come back with some thoughts.

So Sam, after the 36 months’ lapse, how will the 300k $ATOM per month be distributed between Treasury, Community Pool and staked holders?

there must be some mistake there, as per your chart, only treasury seems to get the 300k $ATOM per month (aka the full capped inflationary rewards) after the 36 months.
Great info nonetheless.

Thanks for answering everyone’s questions and concerns. Good read.

You da man.

I’ve read through everything and all the responses and have to still digest it all before offering my 2 cents.

I’m confident a lot of thought, time and effort has gone into this and for that we are grateful.

Many thanks for sharing!

First of all, do we need to put it on chain latest 03-10-2022? It is quite an extensive document which has a lot of implications for the future of the Hub. Now rushing towards a proposal seems kinda weird imho and does not respect the concerns people might have if they found a bit of time to dive into it.

I do agree with @serejandmyself. On Osmosis we have set the preference to do 1 gov proposal : 1 topic.
Getting a complete future vision and putting it into 1 proposal is too big. Because what do you do when you agree with most, but disagree with one? Splitting into pieces sounds a better route if you want to go through governance (which I like, because it gives some sort of control back to the community).

Content wise I have to dive into it further. A bit clarification on how all the funds will be managed wouldn’t hurt. We are slowly getting a route for the team delegations to get them transparent and accepted. Let’s not make the same mistake twice and create an unclear financial element at our first opportunity.

Getting a complete future vision and putting it into 1 proposal is too big. Because what do you do when you agree with most, but disagree with one? Splitting into pieces sounds a better route if you want to go through governance (which I like, because it gives some sort of control back to the community). I am strongly in favor of voting on the entire document. It clearly defines the Hub’s purpose within the interchain as well as the mechanism by which to realize that vision. The governance architecture proposed in Section 5, “Cosmos Governance: A Forum for Sovereign Interoperability” explicitly outlines a structure to ensure that the “community has some sort of control” and provides a map that can be used to navigate the ever-present gap in decentralized governance between accountability and control. As for your question, “what to do when you disagree with one part of the proposal,” well: that’s what discussion periods are for! Each piece of this proposal is interconnected (like the interchain itself). While I also would like to see governance functionality whereby sentiment can be expressed toward modular segments of proposals, we are not there yet. Haste is required to…

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Love this proposal. There’s a lot to it, and the numbers can always be changed, but the concept is really innovative and gives Atom a unique niche it can excel at in the interchain. I would say we need at least a few weeks more to debate and tune such a huge proposal before it goes on chain.

There are some big ideas in here that are hard to grasp (especially the MEV part) for most. Personally, I think it would be beneficial if someone put together nice graphics showing what this will look like at each level if it’s implemented. Something that shows clearly how this will build a sustainable future for Atom and how value gets sent back to hub delegators as it makes its way through the system.

very exciting!

Have alternative gov models to classic representative democracy been considered?
Setting targets could be a great opportunity to experiment with sortition and deliberation methods

The extra issuance in the first 36 months, it seems that won’t go to current stakers and strictly will go to the Cosmos Hub Treasury? I like the long term thinking, but it seems to be diluting stakers of their share without allowing them the opportunity claim the extra issuance. It’s like saying here’s a stock split that’s 2 for 1 but you’re only getting your original 1 and the two are going elsewhere.

Thanks for your reply, ala.tusz.am!

I can relate to your point of view, especially taking this part out:

The first step in this process should be a community dialogue on the forum about a Cosmos Hub Charter and initial Rules > of Engagement

If we set these right just after the document has been ratified as the agreed intention of moving forward I am ok with putting the complete document on-chain.

However, it would need to be set in the proposal imo that this step will be taken quickly after. Having the intention to do so is nice, seeing the first steps in action is better.

First off, it seems like there’s some desire to give this proposal more time before it goes on-chain, so I’m going to wait another 3 weeks to be sure there’s enough time for discussion (October 24th). @johnniecosmos The Community Pool will continue to get 5% of all Interchain Security + Cosmos Hub Transaction fees, so there will continue to be working capital there in perpetuity. @danielo The Assembly can organize in any way they like, so I expect this discussion to be part of the Charter formation that would happen if the proposal passes. Individual councils will also have their choice in how to self-govern. @CosmosBobo Yes, the ongoing issuance is slated slated to go to the treasury for public goods and growth spend. This is because Interchain Security revenues should more than make up for the security subsidy paid to delegators and validators. Also it’s the Assembly’s prerogative to use those funds judiciously. They could conceivably send some portion to the distribution module, or burn them if there are already significant revenues coming into the Treasury. @LeonoorsCryptoman I’ve been speaking about the Charter with the Hypha team, and other core entities.…

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I’d like to throw in an idea that we should also take this as an opportunity to consider the % the community pool receives. It’s been extraordinarily under-funded for a long time, yet it is constantly asked for funds for various initiatives. As the largest, most valuable DAO in Cosmos, would it make sense to double it to 10%?

awesome…the model helps a bunch, thanks

Hey, Youssef here from the whitepaper team. @hxrts just added 3 extra weeks to discuss the proposal (October 24th).

As for slicing the proposal into multiple pieces, I don’t think this is a good idea and here’s why:

1. The WP has a holistic vision. The issue with slicing it into different gov votes is that some could pass while others could be rejected and if that was the case, the ATOM 2.0 vision itself would be threatened. Example: the Scheduler and the Allocator go hand in hand where Scheduler generates revenues to be invested by the Allocator and where the Allocator, through the funding of Cosmos projects, expands the size of the Scheduler serviced market. Having one rejected while the other passes would undermine the efficacy of the entire project.
2. The governance process would be burdensome with multiple gov votes, adding unnecessary complexity.

I agree the entire paper is not easy to digest at once. This is why we’ll do custom communication sessions where we treat separately and deep dive into each of the major sections.

Hey @tknox35
The WP suggests the creation of multiple councils, each with different prerogatives. Amongst those newly created entities, we propose a ‘‘Community Council’’ with a proper funding modelled based on both past spendings and projected spending growth. The Community Council will fast-track those spending requests. All relevant initiatives will continue to be funded.

This council will be laser focused on community spending initiatives. We believe it doesn’t make sense anymore to have all ATOM holders vote for minor spending proposals. A qualified team from the community should be put in place that will handle directly those requests, removing burden from the shoulders of the community at large.

@CosmosBobo Adding to @hxrts point, the community pool has been underfunded for years and the opportunity cost for the lack of productive use all those years has been major.

The newly formed Treasury pool fixes this with a proper allocation that is also taking into consideration all the years where Cosmos Hub has been static in terms of investments and treasury management.

As for the dilution argument, while there could be some truth to it, I’d argue that ICS revenues that will be streamed to ATOM holders + the likelihood of extra ATOM price appreciation ( notably because of lower inflation but also the direct exposure to the growth of the Interchain) should more than compensate for it.

Just a couple typos I saw: Page 5, “will lead to a healthier ecosystem and “ a ” more demand for the Hub’s infrastructure offerings.” Page 7, “the user experience and capital efficiency improvement offered by liquid “ stalking ”” 4th reference on Page 6 does not link properly 6th reference on page 8 does not link properly Thank you very much for all the work put into this new horizon for the Cosmos Hub, I would like to request a bit of clarification on a couple points defined in the paper. • We can probably imagine liquid staking to push the ATOM staked rate much higher than it is currently. The fact that we have multiple protocols working on liquid staking solutions including Pstake, Stafi, Quicksilver, Stride and Lido bring the case for cross chain open-market. Is there clarity on the potential pitfalls if Liquid Staking protocols prove to have issues or if people choose to not use them? Could this potentially create a security risk for the Cosmos Hub? • “The transition phase starts the moment that Cosmos shifts to the new monetary policy” This is roughly a year later when ICS and Liquid Staking prove themselves and not before? • “As an additional…

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Will the $ATOM in the treasury be staked or liquid staked? It would be great if they didn’t dilute stakers ics rewards since the treasury will already be awarded at the lowest inflation point 300k atom per month.

Can someone from the white paper team please confirm that the decision-making process for allocation of Treasury funds proposed within $Atom 2.0 white paper is as follows: 1 - DAOs of investment professionals will be invited to form 2 - $atom 2.0 holders can liquid stake to investor-led DAOs where they trust ppl & decisions 3 - voting amongst investor-led DAOs to invest T funds in ecosystem/projects will be weighted according to quantity & duration of $atom liquid stake each DAO collects 4 - DAOs will be given some incentive for winning in this game ! 5 - once a decision is reached by the weighted average of investor DAO votes, then the Allocator tool will be used to technically / administratively buy the tokens in the target project Is this a correct understanding? If this is correct, then we can distill it down to say: “100% of investment decision-making within Cosmos ecosystem will be community-endorsed, merit-based, & w/ competition amongst incentivized investor DAOs that should lead to excellence in decision-making." This model ensures that reputation and track-record will accumulate for investor DAOs over time. We should expect to see ‘cream rising to the…

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It has eventually become clarified that the $ATOM generated inflation after the 36 month period will be going to the Treasury and NOT staked holders. I don’t like sugar coating things so I will say it as it comes straight out of my mind: Treasury continuing to get the rewards past the 36 months, in my view, demonstrates a lack of confidence in what we will be trying to achieve here and constitutes a paradox. Wouldn’t be surprised if some call it greed down the road. The point for raising 55-60M $ATOM is to provide a war chest towards facilitating the plan for $ATOM 2.0. This in turn requires a sacrifice from the community of faithful staked holders that most could be willing to make. This war chest in turn is 15-20% of the supply, not a negligible amount. Administering this fund will require wisdom, yet the amount should be more than enough to facilitate growth and ensure the sustainability and longevity of Cosmos Hub. Excluding $ATOM staked holders from receiving the total of rewards after the 36 month period is over, essentially diluting the stake in exchange of a promise of x,y,z shitcoins providing a decent return is both a paradox and absurd. Cosmos Hub is a PoS…

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@johnniecosmos Your concerns have been voiced and we hear you. A few clarifications: • Governance regarding Treasury & Councils + Assembly: the goal of these newly formed entities is to provide a better infrastructure in order for the Hub to move and scale faster. Current governance mechanisms are clearly not adapted anymore, especially with what we want to achieve with ATOM 2.0. While I understand your concerns about ATOM holders being left out from major decisions, I can assure you this is not the case. More details on governance to come. Please do understand that the scope of the governance framework for the newly proposed roadmap is considerable and will take months to implement. All the governance leg work will be done post proposal voting, not before but you will get a sense of the proposed direction prior to the on-chain vote • Regarding dilution of ATOM stakers vs Treasury Pool: we will implement a mechanism whereby a portion of revenues from Scheduler and Allocators flow back to the Distribution Module (is: delegators + validators). We will make this more explicit if it wasn’t clear. • Finally, the Treasury Pool is in service to the ATOM holders, not the…

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I can understand the point of view from @johnniecosmos.
If after 3 years the Treasury is filled with 55-60 million ATOM the warchest will already contain roughly 1 billion $ against current rates.

And then we aim to improve the price of ATOM, making the war chest even better filled. So cutting the inflation to (near) zero for stakers after the 36 months of accumulation for the treasury might not even be needed.

Imagine that ATOM will go the all-time-high again around $50. At that time the treasury has 2,5-3 billion dollar to spend. And not even taking into account the additional income that can be generated with the things developed in the ATOM2.0 roadmap.

I think it would be best to adjust the whitepaper on that field to make sure that after the first 3 years from now the business model should be self-sustaining. That also puts a little bit of pressure on getting the right things done on time and puts pressure on selecting the best added value.

(I am looking forward to the Cosmos Assembly though, might be something really interesting with the right people on it with all kind of different skill sets)

I will be waiting for more info to surface regarding your point 1 but still don’t get and haven’t been provided sufficient feedback on why sending 3.6M $ATOM to the Treasury annually (after having raised 60M) is a good idea.

Actually i think it is a bad idea we should resist and that the rewards should flow in raw $ATOM directly to staked holders.

Please revisit my post in order to see why i think this.

@LeonoorsCryptoman Cutting the inflation to low levels is absolutely necessary to move towards a sounder and more desirable ATOM. Low inflation + Treasury war chest is the ideal configuration for ATOM holders. We get the best of both worlds.

The Treasury Pool is something ATOM holders will control and will have access to, meaning some of it can flow back to ATOM holders (dividends).

I’m confident this is the right play with the right accountability in place.

Get an even better version by having a 60M $ATOM warchest, low inflation and inflationary rewards distributed in pure $ATOM to staked holders.

See my updated answer to @LeonoorsCryptoman

Thanks for your very very quick responses!!

Can I translate your sentence;

The Treasury Pool is something ATOM holders will control and will have access to, meaning some of it can flow back to ATOM holders (dividends).

This means that your ATOM acts more like a stock? Where you own a part of the company (more or less) and that the stock can rise (and fall) in value, but gives you also the opportunity to earn dividends?
And with the accompanying advantage of ICS and such?

I am prepared to vote in favour of creating a Treasury of 60M $ATOM in order to facilitate the growth of Cosmos hub but i am not prepared to give up receiving rewards in $ATOM for as long as there are inflationary rewards.

You could possibly ask the community to sacrifice some of the rewards down the road if issuing 60M is not enough but looks bad to state that the 3.6M annually will be going to the treasury. It should be the other way round.

I want to control part of the fruits of my tokens’ labour directly, that is i want to receive the inflationary rewards of my staked $ATOM. In $ATOM.

I feel there are many others like me.

Not sure I follow you here. Inflationary rewards will always be paid in ATOM, no matter the inflation rate, whether it is 1% or 10%. On top of inflationary rewards paid in ATOM, you also get:

1. ICS revenues from other tokens (index on ICS growth)
2. Additional dividends from the Treasury pool generated by revenues from Scheduler and Allocator (up to the community to decide how much and at what time)

Correct me if i am wrong but i have been told that inflationary rewards will be going to the Treasury not directly to staked holders’ accounts. That is, 300k $ATOM per month will be issued exclusively to the treasury after the 36 month period has lapsed.

Edit previous post: you were right, the 300 K ATOM were initially supposed to go to the Treasury Pool. Sorry for the misstatement. This is up to debate. I lean towards the 300K ATOM going to the ATOM stakers but this is my personal opinion.

I will vote no to create a Treasury of 60M ATOM， it is so big and we all know no key no money, that is not our money. Maybe less than 10M is ok, and I think there is enough invest to initial ATOM. Why they need again. I donot want to lose my right. if that pass, I will unbond and sell all my ATOM. Fuck, I have buy them at the highest price.

If this turns to be true. My vote will be NO WITH VETO.

I’m in favour of the 36 months treasury “warchest” to boost up Hub development.
But enough is enough.
Further inflationary rewards should go to Atom Stakers , all of it and not a single $Atom to treasury!

If later on the road the treasury would need more funding , draft a new prop.

Having read the whitepaper, I understand the intended vision and direction and agree that this is a positive move for the Hub. Thanks to all those who put in substantial effort to get this to where it is. No small feat. My primary concern with the proposed whitepaper is that ATOM stakers are asked to take on substantial risk while the treasury ‘war chest’ assumes no risk. I understand ATOM stakers get to vote on the make-up of Councils and direction of the treasury. More on that later. Asking any investor to take on 100% of the risk seems naive. A better balance that provides returns to ATOM stakers and builds the treasury while the new modules mature should be found. The current model gives me the impression that the proposers are not confident in the returns that can be generated from the new modules; if you are, you’d also want some of the returns from the new modules sent to the Treasury. Additionally, having an ongoing 1% issuance to the treasury compounds this. The Treasury is a substantial percentage of the supply and dollars; this should not be continually topped up at the expense of ATOM stakers (not talking dilution, BTW). I’m talking about a reduction in returns…

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Re 2b : At the end of the 36 month period, NO atom will be left for stakers.
The 300K a month will go to the treasury.

Of this monthly issuance, the amount of ATOM issued to validators and dele-
gators as a security subsidy will start at the same subsidy level as immediately
precedes the transition phase. The subsidy will decrease by 10% every month
for 36 months, at which point **it will cease entirely.**

I think we can all agree this is a massive shift and with so many moving parts it’s a little overwhelming to try and project what $ATOM will be in 3 years. To me, providing some examples as to what revenues will look like in terms of fee structures, how stakers and the treasury will earn these fees and a complete overview of what we might be able to expect. For sure things will change but it would be nice to try to understand the scope of this proposal vs. just saying “the new fee distribution model will match or outpace current issuance”. Sure, that may be more than possible, but how, exactly, with figures, will this happen? I guess I’m trying to understand if there are “x” consumer chains and the Hub charges “x” for their services it will generate “x” in fees per some period of time. Lastly, I can see why people are saying stakers are losing or having to sacrifice yearly issuance rewards so the treasury can build a warchest that doesn’t directly benefit them. However, if we can get a full picture of the governance model that will be implemented it should ease some minds. What’s stopping the community from proposing to distribute a portion of the monthly issuance plus…

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Once again an upcoming proposal has generated quality feedback and exchange of views here. After days of watching this discussion, my general feeling is that we are talking about something that can help grow the ecosystem, but there are a lot of things that need to be clarified and a few things that should definitely not happen… While I’m not in the mood to repeat concerns that have already been mentioned here, I can’t ignore the fact that this proposal essentially asks from ATOM stakers to bear all the risk and I have the impression that the proposers are not confident for many parameters… As for that sense of urgency, that’s not something I’m comfortable with… Sometimes it’s better to move slowly and with faith to follow ATOM’s consistent principles and I have the impression that this prop must definitely be redefined, with greater respect for ATOM holders. Otherwise, this proposal will probably do harm to the ecosystem and I completely agree with @johnniecosmos that the rewards should always flow in raw $ATOM, directly to staked holders. In my opinion this should be non-negotiable and anything different in this regard, could create bad results and rifts. Finally, as far as…

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I think most would disagree is with the funding of the treasury, or at least are dubious about it. • its at the cost of current diluting current Atom holders and future ones too, because those tokens will be dumped on the market sooner or later to pay for things. • There is no real need to fund projects. Every serious project gets money throw at it. There is no lack of capital in the crypto space. And every projects gets to print their own money and be self-funded! If a project has to ask from funding from this public treasury, its probably just trying to get easy extra money that does not really need. • One can make a case that there are some things that are “public goods” that need funding. I think the Ethereum community funds for these things (and projects too) in a better way through gitcoin. The ones who want to participate, do so, and not at the expense of the others. • Size is massive. 55M ATOM IS A LOT. Half of it is a lot too. Not only at today prices, but Atom can be 100$ easily next bull run, making the treasury as big as 5b or more. This is f* you money, that there is no chance it can be allocated with efficiency. And almost every crap can and will get…

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I will also vote No with a veto to have 60 million Atom in the treasury! Why do we need so much? Let me give you an example. Terra had 150MIllions for funding and nobody applied in 6 months, so the funds remained there. Why Atom treasury will be different from Terra funds if there are no projects? Please check their funding programs here: [Proposal][TFL][CommunityPool Spend] Rapid Grants to Accelerate Ecosystem Development with Committee Oversight- There was no funding for 6 months! So you guys want to do the same thing that Terra did and didn’t work. [Rapid Grants to Accelerate Ecosystem Development with Committee Oversight?? They created the council and nobody got funded for 6 months. No updates, nothing! You guys should read the Luna classic forum and see what happened with that council that had 32Million Luna in their treasury! Learn from their mistakes! there it’s a lot to learn there! Here it’s an example of what happened with 32MIllion Luna that was in the treasury! I hope this message finds you well. I am concerned by the ongoing silence of this committee. The Rapid Grants Committee currently hold $32M in LUNA in its wallet. We have not heard from you since…

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andreas_k:

this proposal essentially asks from ATOM stakers to bear all the risk

so this is fundamentally not true.

there is an important safety feature that seems to have been missed:

if bonding rate drops below 2/3 – which we can expect to happen if revenue generated from ICS is not enough to incentivise stakers – then the new monetary policy stops, and the original monetary policy resumes

Screenshot 2022-10-03 at 11.54.57801×520 111 KB

After gathering some thoughts around this proposal and the feedback that’s been happening over the past few days, there are a few things I want to say: First up, thanks for putting together this proposal, the new whitepaper was definitely well thought out, and it was a good read to set the vision straight as to what Cosmos can be in the future. Next, regarding the discussion, that’s ongoing here about the treasury funds. From the way I see it, there are 2 sides to the story here: • One side is ATOM stakers who are worried that they will get diluted due to the size of the treasury and how after M36, rewards will be heavily reliant on the success of the treasury • The other side is the vision that the whitepaper sets forth: To make sure that the income from the economic engine of Cosmos + the endeavors set out using the treasury will be equal to or more than enough to incentivize users to stake Now, various points have been brought out by @Rarma and @Frank regarding (1) Putting most of the risk towards ATOM stakers at the tail end of the transition phase when the security subsidy is negligible and (2) The risk of having most of the community funds unused in the…

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The purpose of funding the treasury is not funding projects in the Cosmos ecosystem. The purpose of the treasury is ensuring ATOM holders have exposure to projects in the thriving Cosmos ecosystem.

After Month 36 the treasury is well capitalized and should not depend on further issuance to fund itself. Assuming capital has well been allocated should yield returns from growth initiatives, that flow back to the treasury, while issuance rewards continue to accrue to stakers.

Can you elaborate on this? It seems to me that the treasury is earmarked for growth funding and public goods.

My expectation is public good funding would be 5-10% of the initial reserve and only grow if the treasury books profits.

Maybe another 5-10% bootstrapping ICS zones.

Booking profits via the allocator module is in my mind more like 30% of reserve over the next 3 years.

If the this allocation + scheduler are profitable, the flywheel may become fully self sustaining.

The remaining 50% of the Treasury becomes a fund for the next set of opportunities, the ability to double down on what’s working or a reserve to iterate on parts of the allocation aren’t succeeding.

Directing the post-36 month 1% to stakers would resolve many objections.

Sorry this is very confusing…what do you mean?

zaki_iqlusion:

Booking profits via the allocator module is in my mind more like 30% of reserve over the next 3 years.

Are you saying that 30% of treasury would be used by allocator module? Is the allocator not simply a vehicle for investing? If so, how is this different from bootstrapping ICS zones or simply funding new cosmos projects?

The allocator always owns a token, controls some asset over ICA or a yield generating asset like LP token.

The process of bootstrapping chains might not involve putting an asset in the treasury but instead creating things like the asset issuance chain because of the MEV scheduler value.

Vision is fresh and unique in the space (for that is risky), but I like it. I do although think we need to explore other ideas for funding the treasury instead of diluting community so hard.
And also make the treasury smaller and keep the individual sovereignity of the cosmonauts.

I still don’t understand the need to build a bigger war chest via number of tokens. If the treasury has 10M tokens now, why not just cut inflation to 1% immediately and then the rise in price in atom will build the war chest itself. 300 million atom at $7 is 2.1 Billion, same as if those $10M tokens were valued at $210 a piece. Everyone would be happier with a rise in the “Future” reserve asset.

We can’t imagine how much time and effort was put into this updated white paper and we agree, that it should stay in one vote as opposed to being broken down into pieces. We very much appreciate the extra time for everyone to chat about it.

No, don’t agree.
Refinancing at the expense of the existing Staker.

Actually, quite curious @zaki_iqlusion, @hxrts or @Youssef: How did we end up with 10,000,000 ATOMs initially distributed? Was it based on the end goal of 300,000 ATOMs in the steady stage period… or?

Right I see. In any case whether that is owning a token or generating Yield, those activities should have a net +EV. What I am trying to get at is that after 36 months, these activities should have provided positive yield making the treasury self sustaining and not needing additional 300K ATOM/month. Otherwise it is a continuous blank cheque.

From a lot of the twitter discussions happening, it seems there are a few things a majority of people agree on so far:

1. The emissions after the 36 months are complete should be totally directed toward stakers, validators and community pool. The treasury should have more than enough funds by then to be sustainable if it is managed well by the sub DAO’s.
2. The proposed end size of the treasury is staggering and doesn’t have performance of the funding taken in to account. Many, including Zaki (below) would be in favor of restricting treasury emissions initially, then granting more funding if sub DAO’s prove to be effective stewards.

Zaki ⚛️🧮🍷

i think the good idea is that treasury to be replenished with part of Interchain Security’s revenue and atom will be going to staked holders.**

It is great to see community’s involvement in this super important proposal. Imo the aim of this proposal is to make ATOM like the EURO, a common currency among sovereign states (chains), which comes with its opportunities and challenges. Some concerns have been raised in relation to the fact that after year three all emissions will go to the Treasury. In order to evaluate the feasibility of this proposal, some additional info is required. Would be great to get some clarity/inputs on the below: • What are the main assumptions used to come up with the updated tokenomics? Would be great to share the main inputs of what was driving the new emissions schedule. While we can see the calculations re the emissions, there should be some “business assumptions” i.e security revenue generated, Interchain Scheduler fees, number of custom chains and transactions etc. which have led to the proposed tokenomics/ emission schedule. That will help to o better understand what is the forecasted revenue for the transaction fees + Interchain Security +Issuance from consumer chains, which are planned to replace the emissions to stakeholders o assess in the future (i.e year 3) if the projections were…

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How can we vote for it please ?

Since the ATOM 2.0 WP was published a few days ago, we’ve seen, as expected (and desired), a large variety of questions and concerns. I am summarizing them below before answering to the best of my knowledge. I’ve seen a lot of passion, engagement and willingness to contribute. This is healthy for the entire ATOM community and a sign that participative democracy is doing well on the Cosmos Hub. Regarding the whitepaper itself, I’m glad to see there is a relative consensus regarding the overall vision. Solving the high inflation issue seems to please a large portion of ATOM holders and people are also excited about the newly suggested Allocator and Scheduler. From what I have seen, the points that generate friction are the following: • Treasury Pool and Protocol Owned Value: ATOM holders seem in favor and they recognize it will bring value in the long run but they fear centralization in the hands of a few, poor execution and capital misallocation. This is legitimate. • Issuance: Many ATOM stakers expressed concern about being left out from the value generated by the Hub’s new Treasury Pool. They see it as a separate entity that is threatening their own holdings by…

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LeonoorsCryptoman: Imagine that ATOM will go the all-time-high again around $50. At that time the treasury has 2,5-3 billion dollar to spend. And not even taking into account the additional income that can be generated with the things developed in the ATOM2.0 roadmap. I think it would be best to adjust the whitepaper on that field to make sure that after the first 3 years from now the business model should be self-sustaining. That also puts a little bit of pressure on getting the right things done on time and puts pressure on selecting the best added value. The signaling benefit of having $1 billion word chest is just incredible what we would be saying to the world “look this $1b is how we can fund your project and by the way we have a really really great team of allocators and they’re going to figure out how to help you get this set up rapidly or reject you rapidly with useful feedback.” Also if the treasury isn’t self sustaining by year three then the entire concept has failed. Furthermore though that’s why I am in favor of simply minting the new Adams into existence at the upgrade block height. This makes everything else clearer and removes complexity. the wp…

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Rarma: Having read the whitepaper, I understand the intended vision and direction and agree that this is a positive move for the Hub. Thanks to all those who put in substantial effort to get this to where it is. No small feat. yep Rarma: The current model gives me the impression that the proposers are not confident in the returns that can be generated from the new modules; if you are, you’d also want some of the returns from the new modules sent to the Treasury. Additionally, having an ongoing 1% issuance to the treasury compounds this. The Treasury is a substantial percentage of the supply and dollars; this should not be continually topped up at the expense of ATOM stakers (not talking dilution, BTW). I’m talking about a reduction in returns through issuance. There should be a better balance between Treasury and stakers. My feeling is that nobody is fully confident yet and in fact it includes me because there are a number of novel concepts here. Why wait around? We can mint 69,420,808 at upgrade height and put them in the treasury. We also reduce the complexity of the paper and make it easier to understand if we do that. Rarma: This…

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Hello everyone,

After digesting the paper for a bit and following the discussions on the paper, I had another question and wanted to see what the ATOM dev team is looking to go towards.

With respect to the Interchain Allocator, there is the idea of Covenant to establish protocol-protocol communication. I wonder if these protocols mentioned in the reference are limited to just Cosmos-SDK L1 chains?

I raise this point with this mentioned in the whitepaper :

In time, the Hub may support multiple Allocation DAOs. Other chains may form their own Allocation DAOs, which would further streamline crossprotocol coordination.

Since the Allocator is looking to be designed with protocols, would it not be efficient to work with L2 IBC-enabled protocols, so Let’s say CosmWasm-enabled chains like Juno that have DAOs could participate in Allocation as well. I am biased since Shade Protocol is an L2 on Secret Network it would make it possible for Shade to not only offer ATOM-enabled services in the future but enable a wider use case for ATOM to work with it.

This would also target L2’s DAOs on ETH if ETH ever adopts IBC natively.

Answer to @Ticojohnny Question 2: “The transition phase starts the moment that Cosmos shifts to the new monetary policy” This is roughly a year later when ICS and Liquid Staking prove themselves and not before? Answer: This is correct. We need to make sure the staking ratio is considerably higher before kick starting the new monetary policy. Could be a year from one, maybe less. It will really depend on how fast ATOM holders decide to Liquid Stake their token. Same for ICS. Questions 3: “As an additional safety measure, during the transition phase no more than 10% of the Cosmos Hub Treasury can be deployed within a 21 day period.” Will this be programmed in? Answer: We haven’t gotten into that level of details. Question 4: “The Cosmos Hub governance may then elect to use infrastructure provided by the Allocator in order to periodically auction collected fees into a target currency, ATOM, or stablecoins before tokens are sent to the distribution module", This means that we will not receive a rainbow of tokens but that instead they will be swapped to ATOMs or stables before being distributed? Answer: could not find your quote in the WP. This part is about the…

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Youssef thanks for taking the time to respond to the community’s questions, much appreciated! Re your answer to Question 11 on development funding, I am curious why the ICF is not providing the required funding? I have asked this question numerous times on Twitter as well as on the forum, and no one has answered. The ICF’s very mission is to support the Cosmos ecosystem isn’t it? The ICF was allocated ~26 million ATOM during the ICO, and collected all the the ETH and BTC contributions. Is that funding now all gone? There has not been an assets update for over a year now.

Hey @cryptocat thanks for your feedback.

I don’t have a definitive answer to your question. The only thing I can tell is that ICF has funded a lot of initiatives over the years and cannot be everywhere.

Hello all, my name is Harry. First of all, I would like to thank everyone coming together on the forum with the questions and subsequent replies from the WP team. The engagement by the community is tremendous, appreciate every input for shaping the new vision of ATOM. I would like to ask a couple of things to get more clarity: //ICS, the most awaited and hyped protocol will be the major new source of revenue for the ‘Distribution’. How exactly would ICS work? I know there is nothing set in stone yet but to get a perspective since we are going to heavily rely on it as revenue - • How much would the consumer chains be charged approximately? (Will it be fixed or subject to vary?) • Who will validate the consumer chains? • How much approx would each factions of the Distribution( delegators, validators and community pool) will get from the revenue earned • Will there be a contract or consumer chains can cancel the security lending anytime? • If they do cancel, would there be a counter-measure? // “ As an additional safety measure, during the transition phase no more than 10% of the Cosmos Hub Treasury can be deployed within a 21 day period.” • Seemingly…

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I agree with you. The proposal and inflation rate and allocation going to the treasury is a very bad economic model. This will result in a direct transfer of value from current Atom holders / stakers into the treasury. Furthermore, it’s not considering the risks of liquid staking via impermanent loss. Also, at what rate will ICS fees be a viable substitute for staking returns / rewards? The inflation rate built into the 36-month plan is not realistic. It’s much too high and what is the justification for needing so much funding? Instead of locking the community into a 3-year funding scheme without a clear spending plan. Why can’t the treasury be funded on a 6-month basis by providing some type of spending plan and associated budget that gets approved by the community? The treasury should operate on a “funded as-needed” model. Why does it need $500 million sitting in its coffers? It should only need to maintain a funding budget that aligns with its 6 to 12-month spending plans. If it needs more funding, the treasury can go back to the community with a new fiscal year spending plan and seek approval. How about considering other ways of funding the treasury that is not directly…

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Thank you for all the time and effort involved in the new whitepaper. Interchain Security is an exciting addition to the Cosmos Hub, which will add value. I have wondered how dual mining in POW would translate to POS, and Interchain Security seems to be a great solution with great possibilities.

Regarding issuance, I think it is important to jump-start and support the development of this new vision, but in the long run, it should also protect validators and ATOM holders. It makes more sense long term to fund the Treasury based on performance and not at a fixed rate. Having a large treasury before the system is self-sustaining, which may or may not happen, would not be beneficial. I suggest issuing 10 million ATOM to the Treasury in the first month. Afterwards, Treasury would be funded as a percentage of Issuance and Interchain Security, with the majority going to Distribution. The Issuance model could still be reduced to lower inflation and, in the future, could be changed to be deflationary based on Interchain Security’s performance.

The 10.8 million is much more digestible than the 55.2 million that is being proposed in the WP.

They could have greatly simplified the WP by just saying that they would like all Atom holders to contribute 14% of their total Atom holdings into the treasury over the next 36 months. Or even easier just have everyone send 14% after the proposal passes and get it over with.

Embedding the transfer within the context of inflating Atom is just a smoke and mirrors show. If people understood the basic concepts of “Nominal Value” versus “Real Value” then they would reject this proposal. This fixed transfer scheme is bad governance. No accountability, no oversight, and no protections for the holders.

“I get the sense that they don’t care what the community has to say. It looks like they will try to push their proposal and rely on the general ignorance and lack of understanding of the community about what they are pushing.”

I have seen literally the opposite from all parties who wrote the white paper. This is not helpful or productive rhetoric.

Just one of many examples, from like an hour ago in Telegram:

But it is very frustrating the speed that this proposal is moving forward without a comprehensive understanding of its full economic implications. This is a major shift in Atom tokenomics and it deserves to be more thoroughly vetted. Other options and ideas should be discussed and explored so that the best ideas rise to the top.

Here’s an alternative that makes the hub stronger through conservatism. "ATOM ONE" Constitution Proposal

Fundamentally, the point of the hub, and even IBC and ICS is to enable experimentation off chain. If the ideas for ATOM2.0 are good, they can be experimented on first off chain so we have a chance to understand them better before moving anything to the hub. Litecoin to Bitcoin.

Furthermore, anything that can be off the hub, should be off the hub. A minimal hub is less threatening to ecosystem participants. A maximalist hub will drive away adoption from zone customers.

Bitcoin had the sense to limit its functionality and not adopt a turing-complete VM. It only ever made incremental changes to its functionality, making it widely adopted as a safe crypto asset.

My experience in the crypto world is quite limited, but I am quite experienced in traditional finance. The equivalent of atom 2.0 to a publicly traded company would be a capital increase equivalent to almost 20% of the total capitalization (depending on the number chosen, slightly higher or lower, as Jacob proposes even more dilution). For a company to issue 20% of its shares and sit on that ridiculous amount of cash without a purpose would be a horrible decision. The same applies at ATOM. Why dilute all the investors without a defined reason? On the other hand I’ve read proponents say it’s not dilution since all that printed cash is ours. That is simply untrue. It’s as easy as going to the real economy with the welfare check or any rollup company that issues as little as 1-2% each year. It’s quite remarkable how much worse the company’s fundamentals get when they get an investment wrong with such a small dilution, let alone 20%. Without a PERFECT management margins start to decrease so do ROCE. Air money is never free. When cash is not a scarce resource it makes decisions worse when it comes to using it, and in the case of being too abundant, it makes it impossible to…

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I 100% agree with this statement! Devs should listen to the community! I think 5-10MIL atoms will be enough to fund all the projects for 10 years!

Yes, I have read the proposal for a Constitution. I agree a constitution is needed. I have also viewed the Atom 2.0 Governance Debate on YouTube. This discussion helped to clarify some of the significant gaps in the WP. The authors of the WP need to integrate the discussion topics from this video into the WP. If they expand on the topics covered in the video, I would be more receptive to the proposal.

But, I still believe that the authors of the WP do not make a convincing case for why the Treasury needs 55 million Atoms.

The Letter that is presented with Proposal #78 also has a lot of valid points that also need to be addressed by the authors of the WP.

Proposal #78 | Cosmos Hub | Keplr Dashboard

Cosmos Hub is the first of thousands of interconnected blockchains that will eventually comprise the Cosmos Network. The primary token of the Cosmos Hub is the ATOM, but the Hub will support many tokens in the future.

The Interop

Hey All, I accidentally put this first in Jae Kwon’s forum post about an Atom ONE Constitution, but wanted to put it in this discussion as well for visibility. Here are my overall thoughts on ATOM 2.0 and where the community should go from here. • The entire WP should not be voted on in its entirety . There are way too many moving parts, and I agree with Jae’s sentiment that DAO governance controls are not mature enough to handle such a large treasury. While other ecosystems outside of Cosmos have launched $500M+ ecosystem development funds, those funds are raised by private capital and this past cycle has shown that they have led to little value to the communities they serve, even with good intentions. • My prior experience has been in Business and Resource Planning dealing with multi-billion dollar and multi-year infrastructure capital plans, and there is definitely some lessons learned from corporate governance and accountability. Corporations go through yearly reviews of future 1yr, 5yr, and 10yr plans and earmark funds for projects with some estimates that have varying degrees of accuracy depending on how far out the project is. This is something, in my opinion,…

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I am writing a post with my thoughts on it. Draft is here and welcome any comments and feedback: Thoughts on ATOM 2.0 - Google Docs

Tried accessing it, but tells me I need to ask for permission.

Ah sorry. I had posted the wrong link. Corrected now.

It seems like that a significant portion of the community does not comprehend the ramifications of the proposal (regarding the financing of the treasury), either because of ignorance or because of hype that it all be worth it (which could still be true in the long run). The current voting of proposal 78 says it all. Although I have to admit that the headline of the proposal did not help the cause… It is sad because this ecosystem had so much promise, but I am not willing to be exposed to such risky and vague handling of funds, especially one of such magnitude. I understand that a competitive budget is important to attract competent developers and that in high quantity, especially if we are competing for the same software engineers as other big protocols, but 55M ATOM are just way too much. And all this without any concrete governance for these funds in place… We are told that these details will be ironed out in the future and that the council will, of course, act in the interest of the stakeholders, but that is equivalent to me to the aforementioned “trust me bro, gimme the money, and we will handle the rest”-narrative. The irony is that it is claimed how important it is to…

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Thanks for your thoughts. There are many good points here, here’s some feedback for the first 3 points. Looking forward to hearing others’ thoughts. David_Lightning_Cap: The entire WP should not be voted on in its entirety . There are way too many moving parts, and I agree with Jae’s sentiment that DAO governance controls are not mature enough to handle such a large treasury. While other ecosystems outside of Cosmos have launched $500M+ ecosystem development funds, those funds are raised by private capital and this past cycle has shown that they have led to little value to the communities they serve, even with good intentions. I disagree with this stance , particularly because each component of this proposal is connected with every other component. The proposal is as much a call to action as it is an agreement to make changes. David_Lightning_Cap: My prior experience has been in Business and Resource Planning dealing with multi-billion dollar and multi-year infrastructure capital plans, and there is definitely some lessons learned from corporate governance and accountability. Corporations go through yearly reviews of future 1yr, 5yr, and 10yr plans…

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chainblocknewb:

The irony is that it is claimed how important it is to vote on this whitepaper as a whole but the most important aspect for me as a stakeholder, things like governance, checks and balances for the requested funds are left incredibly vague, leaving stakeholders heavily exposed. The unnecessary complexity of the financing does not help either. I do not want to presume ill intent but, at least, such proposals invite bad practice at the expense of stakeholders.

What kind of checks and balances and governance ideas would you like to see added to the proposal?

Some potential ideas can be found in this post from @Youssef.

I appreciate the link, but as you already mentioned: These are potential ideas. They can and may be well-thought-out, but are not fleshed out to a degree to put them in to practice yet and, more importantly, are still not incorporated into the white paper. I think a lot of stakeholders cannot vote in good faith for this proposal.

Well, fortunately the proposal is not yet to a vote. It’s still in the feedback period. So it’s a good time to give feedback on it. There are various discussions happening in different threads about this section of the proposal.

What are the main hurdles to voting on this in separate parts? I’m sure it’s an emotional strain on core contributors especially since governance is messy. On the other hand it seems that the end goal of the whitepaper, with some caveats, could be achieved if some unknowns within the economic engine could actually be proven out before a full overhaul of the tokenomics gets voted on. It seems that a vote on the Scheduler and Allocator would pass. A one time issuance of 10-20M ATOM into the treasury to get the economic engine going would seem more reasonable as well. Throughout this time the main inflationary dynamics would not have to change. The treasury would be governed like the Community Pool, which has already done a decent job at funding initiatives. This is until a proper governance framework has been put in place and voted on, which would then take control of the treasury. Once ICS has launched and we see the Scheduler and Allocator play its parts, we will have more data on revenues to the hub and how liquid staking is being used. At that point the governance framework will be in place and it should be easier to vote on new tokenomics since there will be data to back…

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To add to this (and thanks @NjB!) inflation can also already be capped. People don’t mind making the inflation different than what we have today. The main issue with the inflation is that after 3 years it is prospected to be 0 without knowing what we get in return.

So now starting with a model where inflation is already decreasing slowly will most likely also pass governance. And later on we can always adjust to the final form if people know better what to expect.

Hi everyone! I’d like to thank you all for the lively and thoughtful discussion. As promised, I’m posting an update to the paper. The revision includes some minor typo fixes (s/o @Ticojohnny for finding a few). But the substantive changes can all be found in the Issuance section as a direct response to community feedback. The TLDR here is: • Rather than capitalizing the Treasury all at once, the process will be split into 12 equal tranches, each subject to a separate ATOM vote, providing greater accountability as the social, infrastructural system matures. • The 300,000 ATOM per month tail issuance will be directed via ATOM vote to one or more chosen addresses. For example, by selecting the distribution module address as the destination, issuance would flow to Validators, Delegators, and the Community Pool per the existing staking reward logic. Additionally there have been a number of requests for more clarity on the Cosmos Hub Charter described in the paper, which would provide additional controls on the use of Treasury funds, the relationship between the Assembly and token-holders, and many other details about the social architecture of the Cosmos Hub. You can find a…

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Hello Cosmos fam. This is your friendly neighborhood cryptoeconomist again. Due to some turbulence on our descent, we have adjusted our course to target a different issuance schedule. This new issuance schedule addresses three key points of feedback: 1) funding to the treasury is too high, 2) funding to treasury should happen in multiple tranches rather than in a single vote, and 3) tail emissions should go to the distribution module, not to the treasury. This new schedule proposed 48M Atom to the treasury (down from 55M) and for this Atom to be issued in tranches of 4M each. I created a model to show what this could look like. The model assumes that tranches are approved annually, but actual tranche approval would depend on the rate at which we as a community want to fund the treasury. Note that 100% of tail emissions are going to the distribution module, the distribution module assumes a 5% “tax” that goes to the community pool, and the security subsidy decay rate reduced from 10% to 6.5% so that it more closely trends toward the steady-state security subsidy amount. Model below: docs.google.com Atom Issuance v1.2 (Tranches) Issuance…

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Although there are great aspects such as atom 2.0 ICS, but the revenue in this not very identity, this is to sacrifice the interests of holders of the atom. And I worry about the Treasury funds use.

Thanks all for the lively discussion. A few things I would propose modifying in the latest proposal that I think would mitigate many of the concerns we’ve been hearing: • The tail issuance rate to stakers should be moved out of the whitepaper. The whitepaper proposes that issuance should transition from exponential to linear but the timing and details of that transition will require more data, discussion, analysis, etc. Voting on the paper should not be a commitment to a specific numerical reduction in staking rewards, but rather a commitment to move issuance away from the exponential regime in a manner to be determined in the future by charter/governance. • The community pool needs a top up. First to ensure the community has the resources necessary to govern effectively, but also to bootstrap the entire treasury and assembly system on a community controlled basis, see that is proceeding effectively, and then to ensure the community has the resources to participate in the assembly for the long term. I would propose a 4M ATOM mint direct to the community pool, before anything happens with the treasury. Would additionally be supportive of an increase to the community pool…

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Sounds like a good adjustment imo. I see and feel a lot of sentiment around the staking rewards. Moving that out of the whitepaper while still giving clarity what people can expect regarding their staking rewards is a good thing.

Then it will enable people to actually look like what ATOM2.0 really entails and have a discussion on the content of the revised whitepaper. My best guess is that we are not that far out, so it can be possible to move fast.

Ruging delegator rewards, by changing them from ownership of the chain (Atom) to a mix of IBC fiat (inflationary emissions from various consumer chains), privatizes the chain over time. It funnels governance of the chain away from the community as a whole and centralizes the chain under the council’s arbitrarily subsidized entities of similar ideology with a greater proportion of chain ownership at the same time reducing the say and ownership of the community as a whole &
resulting in the reduced ability for delegators to vote contrary to the council.
a %tax to the community pool inherently reflects the performance of the council and its subsidization policy which should increase proportionally to its successfully increasing growth of the hub. It also makes it so delegators continue to be rewarded with ownership of the chain for securing the network if acquiring atom is not gate kept by the treasury.

Hi, a cosmos pleb here. I understand that under this new vision, ICS will be a main source of revenue for Cosmos stakers. Anything else? Does the Interchain scheduler + allocator duo generate any revenue, and if so, will any of that go to the stakers?

Overall, I believe a shared economy is a good and more resilient economic model. That means that Cosmos stakers need to have a share of every revenue stream of the Cosmos hub, and the same goes for the Treasury/community pool.

If you’re an Interchain Security consumer chain there is an expectation that fees are being used to pay for security, therefore these fees are automatically sent to the distribution module, becoming staking rewards. The Scheduler and Allocator will themselves be consumer chains, so a portion of revenues will also be sent to the distribution module automatically. However, the idea is that the remaining funds will go to the Treasury first. The Assembly (including the Community Council) will then allocate this capital so as to improve the long-term welfare of the Cosmos Hub and ATOM. This would include sending Treasury funds back to the distribution module if deemed the best use of capital.

Thanks for the response! I appreciate the effort from you and everyone else involved in the process.

This reminds me of the Hamilton/Treasury moment in the beginning of the US history. The Republic will not survive without a strong federal government with a deep war chest. On the other hand, rebels certainly do not want to end up with a dictatorship. How to proceed from here? The whole Cosmos community needs to take time to figure it out. Hoping to settle this extremely complex and delicate issue with just one vote is a fantasy. Everyone needs to be mentally prepared to go through many iterations until we find the perfect balance.

Hello and thank you for this proposal, however: 100% of the issue after 36 months allocated to the treasure, and 0% to the stakers seems very excessive to me, why such a clear ratio? Compromise is often better accepted. For now my vote will be no .

removing Atom issuance to delegators privatizes the hub under the treasury and takes ownership from the community. the Atom 2.0 proposal moves to replace community ownership of the hub by replacing Atom delegator rewards with consumer chain emissions. Turning the treasury into the gatekeeper of hub ownership & is headed by a council that distributes that ownership to themselves and developers they feel share the privately owned vision of the hub or can grow the ecosystem. I doubt it would take 36months to organize a cohort of validators to form a supermajority stake to overcome dissent through veto if such a feedback loop passes governance.

Hi Everyone,

I’ve made a new draft with the changes mentioned in Ethan’s post above. To reiterate:

1. There is no precise commitment to tail issuance at this time, it is left for community discussion within the Charter.
2. The Community Pool gets a 1-time mint of 4M ATOM.
3. The number of tranches minted to the Treasury is reduced from 12 to 10.

All of these changes are to the Issuance section. The only other addition is a single line requested by Hyung Yeon Lee of @bharvest, which is to the Assembly section and reads: “Prior to final budget proposal, the Cosmos Assembly must give ATOM holders the opportunity to provide positive signal on budget subcomponents.”

• IPFS
• backup

Expect an on-chain vote on October 31st!

Really appreciate the improvements made.

So the choice here still would be to vote on 1 big proposal instead of breaking it down into several different proposals? I think it would be risky since there are lots of changes and one may not agree with all. Or will it be covered by the Charter?

This signalling proposal will include the version of the paper posted above. However there will be a subsequent proposal with an initial version of the Charter, and numerous proposals following with specifics, refinements, additions. The way I would think about this proposal is it tells core teams to do the following:

• Work on the gov upgrades required for the Councils and Assembly
• Work on the stated issuance for the Community Pool and Treasury tranche system
• Begin the R&D process around the Scheduler and Allocator

These will have subsequent proposals for directional approval/budget, and eventual upgrade proposals at a later date.

This proposal will also signal that the Community should:

• Continue work on the Charter
• Begin forming the Council and Assembly organizational structure in preparation for the required on-chain facilities
• Engage core teams to discuss and refine the technical components develop more robust social processes, eg. reporting and budgeting

Without this signalling proposal core teams have no mandate to work on anything apart from liquid staking and interchain security.

Cool! Super clear.
This proposal will only cover the ground, but for the details, we still need to work on it together with the Devs and the Community.

I believe this should be made very clear when the voting is on, so there will not be any miscommunications.

Thank you.

Going to repost in this topic

[DISCUSSION] Working draft of Cosmos Hub Charter Proposal Ideas

If we are on the topic of promoting multisig councils, can we at least have them get money ONLY via an on chain governance vote. I.e. instead of the council having free funds, they should present each case for on chain governance to get funding. I,E. MINIMIZE THE POWER of the council to mere investigation, research and preparation.

Thanks for the new proposal Sam.

I think these changes leave more room for maneuvering the future once the governance mechanism has been put in place.

1.2 is the best revision so far. I appreciate all the work you guys are putting in despite having to put up with constant critiquing all day by plebs like myself. Jae’s photon concept seems to be an effective solution to the monetary policy issues that arise from the changes in staking and liquidity trends. Photon also supports expansion of the ecosystem. will the proposal only signal that the community desires the R&D process around the scheduler and allocator to begin or will it also commit us to “atom 2.0,” to a traunch system to fund and trust councils, assemblies, and dao’s to transparently administer cosmos payment for order flow? what are the tranches funding? If funding proposals had 11 days instead of 14 days, why are DAO’s and councils or human judgement necessary? Is seems like the whole DAO system is just to use the communities capital to rebalance their asset portfolios. “actively seek to fund incentive-aligned communities that can credibly aid in achieving the Allocator’s mandate” seems to translate to: subsidize core dev projects with atom from thin air that doesn’t count until a project holding atom as reserve currency gets over levered on the bad side of a…

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Thanks for all the hard work to mitigate adjustment requests from the community. After having meaningful discussions and following modification, I believe the current ATOM 2.0 whitepaper is fully agreeable from the community perspective. From my own viewpoint, let me summarize core modification from the original white paper as below: • 4M community pool issuance In preparation for the Community Pool’s role in the future of the Cosmos Hub, prior to the transition phase a one-time issuance of 4,000,000 ATOM will be deposited into the Community Pool to support development, adoption, and maintenance of the various components included in this document, including the Treasury system and Assembly infrastructure. → The community governance should have the authority to approve suggested Treasury and Assembly structure. • 4M * 10 tranches issuance to Treasury And in accordance with the forthcoming Cosmos Hub Charter, 10 tranches of 4M ATOMs may be issued to the Treasury at any time per ATOM holder vote. → Cosmos Hub Charter approved by governance is the condition for 4M*10 tranches issuance. → Each tranche issuance should be approved by governance. •…

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i noticed that v1.2 doesnt address anything from the document linked in Prop80. are you guys going to address any of those Atom 2.0 risks and points of failure before the first signaling proposal?

Tbh I think the big short one is a little misguided. Hub investments into IS consumer chains do not represent liabilities. That should be pretty self-evident. The cosmos minimalism one is also kind of all over the place argumentatively. I appreciate the sentiment that the Hub should be minimal, which is why as much functionality should be pushed to consumer chains as possible. IS will allow the Cosmos Hub chain to remain one of the most minimal and secure in the ecosystem. There are risks around the Treasury being deployed effectively, of course, but if you work backwards from the premise that the objective is for ATOM to be the premier interchain reserve, then (1) the ATOMs need to come from somewhere so the Hub needs a Treasury and (2) bootstrapping demand by deploying into the best risk adjusted opportunities requires a layer of delegated entities that can negotiate and run complex strategies, there’s no way around this. Now you can start with different premises. That ATOM’s main function should NOT be the preferred interchain reserve, or that ATOM should be but it will happen inevitably with zero work or resources from the Hub. However I strongly disagree with both of…

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oh, i didnt write it, its not my philosophy on minimalism or anything like that. the other day i looked at it, and It just happened to be a more complete list than my own, of all the possible risks that emerge based on 2.0.
I think that photon could solve liquid staking governance problem by using it instead, and be the payment layer using colateralized atom=photon and fund first consumer chain on ICS2

ATOM can still be the interchain reserve

*not to be disparaging to the ATOM 2.0 moniker, no preference what stuff is called so long as it has solvable issues.

Atom2.0, why not refined into several function to vote, disposable through atom2.0 is difficult to achieve consensus, now the dispute is whether the Treasury need so much money, it would dilute the holder of the atom.

is there a contemporary estimate for the annual labor costs associated with paying all the various council members and assembly people involved in 2.0?

Yes, it is a good proposal.

I just realized that prop 26 was the OG of this. I specifically remember that it was rejected =)

Just saying…

Voting is up and clear YES from us.

Enough has been talked and this is the best way to move forward.

Yes, it is a good proposal.

MEV only exists until the market inefficiencies that yields it are resolved.
Atom 2.0, rather than striving to resolve these market inefficiencies, proposes gambling the capital of ATOM holders on sustained monetized exploitation of market inefficiency in the hope that MEV, payment for order flow, and monetizing governance will generate enough revenue to make up for the lost revenue spent on under-discussed and under-disclosed projects and expenses.
Atom2.0 virtue signals innovation and growth, yet covets the inefficiency that will theoretically sustain it.

What are the expected monthly labor costs over the first 36 months for implementing the yet to be defined number and purpose of 2.0 councils, assemblies, etc.

Did Atom2.0 intentionally monetize liquid staking votes with anonymous voting out of curiosity relating to the dollar value of democracy?

jaekwon:

If the ideas for ATOM2.0 are good, they can be experimented on first off chain so we have a chance to understand them better before moving anything to the hub.

jaekwon:

Bitcoin had the sense to limit its functionality and not adopt a turing-complete VM. It only ever made incremental changes to its functionality, making it widely adopted as a safe crypto asset.

For the purpose of non-diluting ATOM stakeholders, for the purpose of securing a proven idealogy via one hub first, to ensure the safety of all chains to come, wouldn’t it be safer to step forth w/ ATOM ONE?

I am for the 2.0 vision, the sense of urgency to compete as one of the top 10 “crypto assets” is great AND necessary. 2.0, to me, screams that the collective at large is excited, pumped and ready to GO . It’s beautiful to see the shared belief that the COSMOS ecosystem will provide a safe and secured space for the future generations to come, inclusive and non-discriminatory in any way.

If 2.0 guarantees security/safety for all moving forward, for both the intellecual and the emotional intelligent, including the security of non-diluting ATOM stakeholders, by all means

Hi everyone. This is Mikey from Cosmostation - got some parts that would be nice if there were more specific clarifications.

• Seems like extra 4M $ATOM will be minted according to the whitepaper - is there a specific timeline for the issuance? Or will all the details be outlined in the future in separate proposals? On a high-level view, is the extra 4M issuance inevitably necessary?

• There has been a change in the amount of issuance - a part i still don’t quite understand is: why 4M? What are the factors considered to calculate this amount?

• Will the changes stated in the whitepaper be addressed by proper on-chain proposals separately? As many of us agree, the whitepaper suggests rather a “radical” concepts and i wonder if all of these will be well revised & discussed as they should be.

Hi, and good afternoon community!

Quoted concern:

“The basis for the atom2 tokenomics change was to make it more deflationary, but they didn’t remove the 2/3 staking target nor are the 4M tranches going to their treasury limited to 10…” *

• 3 ATOM: The Interchain Reserve Currency
  3.1 Issuance:

“As a safety measure, if the staking rate ever falls
below 2/3, the new monetary policy will pause and the original monetary policy
will resume, incrementally increasing issuance up to a maximum percentage of
supply until the staking ratio again exceeds 2/3…”
-2.0 hm.

Doesn’t this entail that it’s moreso ATOM HOLDERS, not stakers (or am I mistaken that these are separate) that are the power users moving forward? So what about minnows/minority who are staking? How are their interests being taken care of?

How can we as a community address this? Not only for the COSMOS ATOM holder/believer, but for the ATOM staker as well. I don’t think anyone, anywhere, wants to be taken advantage of. This is why it seemed 1.0, with ATOM/PHOTONS seemed to be appropriate. Am I wrong?

jumping on the discussion as well, i firmly believe that all these updates can be made [and it should] without any additional atom minting, afaik all the teams are well funded… Until a better form will be made available, we [01node] will be voting a NOwithVeto.

ps: what happened to the grants program? that one was going very well.

also, @zaki_iqlusion @ebuchman, Zampolin, aren t you in a bit of conflict of interest here? since you guys are running validators and voted Yes for this proposal? maybe an abstain vote will better reflect the community voice?

Yo!
It was said that a “no” on this proposal needed an explanation here… Seriously?
OK then.

I Think Atom 2.0 is a great thing, really. Nice job.

I’m here (in Cosmos ecosystem), for governance, this IS my spec, I don’t code.

The end of this proposal is a clear disrespect to people who think that a 2/3 vote is sometime pushing the collective stronger.

So my “no with véto”, at the end, is not for burying your project, I think it’s great.

But to tell that I don’t need to be told by someone else (how old are you guys?) what I’m thinking when I vote.

It was said that a “no” on this proposal needed an explanation here

To clarify this - the ‘Please indicate why on the Cosmos Hub forum.’ is generally intended as a request for feedback so that proposal makers can incorporate it into future proposals, not necessarily a demand to explain yourself

No one is obligated to justify their vote, but without receiving feedback, it’s very hard for proposers to adapt and change.

Sorry in advance, my answer is long, translated into English initially, then into the original French afterwards: Hello Lexa, I looked at other proposals, I notice that it is a usual formula in those made by your team. So I come back to a simple “no”. As for Proposition 81… I don’t feel alone at all… ^^ I still think that last paragraph is a really bad idea. I don’t find myself in this one (that would be impossible of course), and it makes me feel trapped in someone else’s vision. As if the meaning of my vote had been taken away from me. There is obviously no room, and that is normal at this stage, for “I agree, but I think the proposal has to go back to the anvil, several times”, or “there is a good idea in proposition 81 which should be tested: a gradation of majorities according to the importance of the subject and the timing”. It is therefore already difficult enough for everyone to fit all their opinion into a single box, therefore towards a single consequence, to see themselves disguised in addition to this opinion. You could say that it’s anecdotal, and that I got upset for nothing, but believe me, if I felt this distraught, I may not be the only one. This also…

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Why All in Bits Recommends a Strong No with Veto on Prop 82 After careful thought and consideration, All in Bits (AiB) recommends the Cosmos community cast a strong No with Veto vote on prop 82, ATOM 2.0. pref 1920×1080 68.7 KB As co-creators of Cosmos and its longest-standing contributor, AiB has a duty to safeguard the development of the Hub and protect the interests of the community at large. Unjustified changes to monetary policy deprioritize ATOM holders and fail to preserve Cosmos’ core values of accountability and transparency; while unproven experimental ideas and lack of prudence in proposed designs place the security of the Hub at risk. We are working to build a viable lasting alternative to the current financial system. Prop 82 recreates many of the existing problems we’re fighting so hard to resolve. Innovation Should Not Compromise Economic Security Cosmos has grown from an idea in a whitepaper to a flourishing ecosystem of independent interconnected chains – the Internet of Blockchains. At AiB, we are proud to have incubated, collaborated with, mentored, and learned from some of the brightest minds in the blockchain space and visionaries in their…

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Yeah ok . Everyone can see through this. Basically copy+pasted all of your boss’s thoughts and philosophy on this.

Don’t see why anyone should care what AiB thinks about the hub anyway, considering their abysmal track record with it the past few years.

Embarrassing that a founding org is being used as a pawn, frankly.

They are presenting valid criticisms and supported opinions. your objection is like saying you use all the same math as your professor to solve equations…duh.
seems foolish not to accept new information and change your assumptions to more closely align with reality.

I am still concerned this is too broad. Separate into each item to be voted on separately. It is too much like Government stuff-in good/bad in the same bill to sneak things through. We should hone each major piece. Specifically as we have seen the tokenomics is too big of issue to lump in. And has been discussed poorly on both sides. As you know, we have been defrauded enough times. I want what is best. Some of the assumptions are: • We need a community pool. - Other chains charge you to join, you need to get a communit behind you. (Polk-sama) • Trust in holders of the community pool - we are about trustless • Inflation - It sounds like it is recognized the ‘rapid coin minting’ (brrr) is okay be cause that goes to the stakers? (Or the stakers are not rewarded to off-set the inflation) and coins are diverted to the ‘community pool’ [much like government prints money for programs]). Let projects raise their funds. If the Cosmos Hub team or others need money, then raise it from the community. Let the community TRULY, choose the projects with their support. (Stake-my-coins for a project and the project gets a %, or other ‘working together’ type programs). Changing…

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The Flipside Governance Team has voted YES on Prop #82. Our full reasoning can be read on Medium on the Flipside Governance page.

Our tl;dr is that while Prop #82 is an imperfect proposal, it paves a way forward for the development of the Cosmos Hub. Advancement of the Hub has been stalled for too long, and it is much more risky to stakeholders to do nothing than to implement new modules while using treasury funds on onboard even more developers and community members.

While it is now looking unlikely that Prop #82 will pass, we will be around to support development of the Cosmos Ecosystem and look forward to what is to come next.

does atom 2.0 have a reason not to use a photon type mechanism that is fixed supply and redeemable for atom through auction only up to a certain amount per month to avoid a native depeg and with no ATOM voting power? If capped supply, it would work similar to a savings bond because, assuming more Atom/month are bonded into photon than removed/month, the photon would mature over time to provide atom yield. it feels like 2.0 puts the interests of liquid staking providers before the interests of atom delegators.

This is what happens when the big fiat banks try to take control of the ideas and products of intellectuals. After they destroy economies, like any kind of parasite they need to look for healthy new hosts : for an example of banks and crypto…. The fiat banks (in USA anyway), are almost all still underwater from the ‘illegal’ mortgage-backed securities market. Banks barely pay interest anymore…they are desperate to reinvent themselves. Look at JP Morgan acting as if they are all about defi (but regulated by banks)…isn’t it ironic? I have loved ATOM project for years and hope they make the right choices. Jamie Dimon: “As Bitcoin makes a slow pandemic-related recovery from its all-time high of $60,000, Jamie Dimon, CEO and chairman of JPMorgan Chase, says it’s “worthless” anyway.” Oct 12, 2021 JPMorgan Says Bitcoin Is Undervalued By 28%, Cryptocurrencies Are Now A ‘Preferred Alternative Asset’~ May 25, 2022 The crypto shift at JPMorgan ~JPMorgan has made strides to get more involved in the crypto industry since last year, when it gave its wealth management clients access to six crypto funds, including the Grayscale Bitcoin Trust.May 25, 2022 As for retail customers,…

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Virtual Hive voted no for cosmos Proposal #82. We fully support Atom 2.0 and appreciate the improvements made on the Cosmoshub vision. However we believe that too much new features are introduced at once and believe further refinement and discussions here in the forum will help the adoption.

For the few minutes the proposal is still live, we would like to take the time to also share our thoughts in Proposal #82: We believe some of the elements of the proposal make a lot of sense but some need to be clarified more in detail. If we talk about the LSM for example, it makes sense from Cosmos’ perspective to have it but given the low-risk approach of the Hub in the past, we don’t feel this is aligned with that approach. This does not mean that we think the Hub should always take a low risk, low reward approach but given the fact that ICS is perhaps the most important development for the Hub narrative, LSM makes things complicated and introduces unnecessary risks to the Hub. What would have been ideal is for the Hub to directly host Liquid staking providers. The next best thing is ICA but without clear incentive alignment between ICA controller and host zones it is a tricky one. Still the pros outweigh the cons because this is the best that can be done without all the other tech. That is why we lean towards YES. For treasury, I think we have already seen projects mint additional tokens in the past to be able to support development. It does work, but for Cosmos, the…

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I hope $ATOM can go as planned by the team