This proposal is to pilot an allocation of 4% of Cosmos Community Pool’s idle ATOM for liquid staking on Stride (stATOM) and Persistence (stkATOM) and use these tokens throughout the Cosmos Ecosystem to deepen liquidity while generating value for the Hub. The staked assets will deposit stATOM and stkATOM into Inter Protocol Vaults to mint IST and provide LP to numerous liquidity pools throughout the Cosmos ecosystem. This increases the Community Pool’s capital efficiency of the idle ATOM, earning a projected yield of 18-19% annually on deposited ATOM. This proposal increases ecosystem use, increases network effects, deepens liquidity in Cosmos, strengthens relationships, and earns a high net yield for the Cosmos Hub. After an initial 3-month period, an additional 6% will be allocated to achieve a 10% total allocation of Community pool to earn these ecosystem and staking rewards, deepening Cosmos liquidity throughout various appchains.
TL;DR
- 4% of Cosmos Community Pool ATOM to be staked via stATOM and stkATOM in the first quarter as a pilot program, increasing by 6% to achieve a total 10% of Cosmos Hub Community Pool to this opportunity. Deposit 4% stATOM and stkATOM to an Inter Protocol vault to mint IST. Take the IST to Osmosis, Astrovault, Astroport, Shade, and Quasar to provide IST/stablecoin liquidity to various Cosmos stablepools. Stableswap yield is expected to remain around 10%, increasing total capital efficiency on the original ATOM by 18-19% with an estimated APY of 18-19% based on current market conditions (market conditions subject to change).
The split of minted IST to be used in Cosmos DeFi is proposed to be as follows:
- 30% to Osmosis IST/USDC Concentrated Liquidity pool
- 25% to Astroport IST/USDC.nbl pool
- 15% to Astrovault IST/USDC.nbl pool
- 15% to Shade IST/SILK pool
- 15% to a Quasar IST/USDC vault
Incentives on these pools will further increase the total yield earned by the Cosmos Hub assets, which will be held in the community treasury. These incentives will be paid out in the DEX’s governance token, effectively resulting in Cosmos Hub receiving a basket of various Cosmos governance tokens. On top of this, additional yield is anticipated from swap fees generated on each DEX.
Proposed Use of Funds
The funds are proposed to be allocated in the following way:
-
90% of ATOM allocation to be staked with Stride and Persistence
- If only stATOM is approved as vault collateral when the proposal passes, then all ATOM will be staked as stATOM at first
- Once stkATOM is onboarded as Inter Protocol vault collateral, 10% of the ATOM from the community pool will be converted to stkATOM and the following strategies below will be carried out:
-
Deposit staked ATOM to an Inter Protocol vault to mint IST.
- Take the IST from above to each DEX to provide IST/stablecoin liquidity to each DEX stablepool
-
The split of minted IST to be used in Cosmos DeFi is proposed to be as follows:
- 30% to Osmosis IST/USDC Concentrated Liquidity pool
- 25% to Astroport IST/USDC.nbl pool
- 15% to Astrovault IST/USDC.nbl pool
- 15% to Shade IST/SILK pool
- 15% to a Quasar IST/USDC vault
-
Rewards and yield from positions to go back into Cosmos Community pool, more details below
With a collateralization ratio of 300%, stATOM and stkATOM can yield 18-19% annually via IST/stablecoin positions throughout Cosmos ecosystem LP positions, increasing total community pool by 60,000 ATOM (~$700,000) per year.
Rationale:
- Increase Cosmos Community Hub capital efficiency assets that are currently idle.
- Exemplify the composability and interoperability of Cosmos projects, increasing network effects among many prominent high value projects in the space.
- Deepen liquidity of Cosmos assets across DeFi.
Implementation Details
Multisig for Fund Management
This is the proposed plan:
-
Execution: the proposal will direct funds to an administrative 5/7 multisig. The members agree to reasonably implement the process below on behalf of the voters. However they are not responsible for the financial outcomes or correctness of the associated systems
-
Fund Utilization: Period funds will be allocated for a year by default. Governance can enact early withdrawal or extend the allocation.
-
Funds and proceeds are returned at the end of the Fund Utilization Period. That may require unbonding and so could take up to 25 days to complete.
-
The multisig will serve as custodian for the funds. After extensive consultation with Cosmos community contributors and stakeholders, we propose the inclusion of the following active and trusted contributors from the Cosmos ecosystem for the multisig:
Zaki Manian
Riley Edmunds
Dean Tribble
Josh Lee
Bart Van der Voort
Carter Woetzel
Jack Zampolin
Please note: The funds under the multisig will be deployed based on decisions made by the Cosmos Hub governance. Multisig participants will act as stewards, utilizing the funds in accordance with governance directives.
Once there is innovated technology for this class of fund management (i.e. Covenant as built by Timewave) there will be an opportunity for the community to vote to employ the use of that technology and phase out multisig handling of funds.
Fund Utilization Period
It is proposed that the allocated funds remain within the proposed protocols for an initial duration of one year. This implies that the funds will be held within the proposed protocols for a period of x+365 days, where x represents the days until the funds are transferred to the multisig.
However, the allocation can be re-evaluated through $ATOM governance at any time, allowing for potential withdrawal at any time in the future. Once the funds are unbonded, the return process may take 21-25 days following the approval of the proposal.
Positions within Inter Vaults will be adjusted if a 50% price decrease is observed. In case of debt pay-off, debt will be paid off equally on all positions. This will occur on a quarterly basis by the multisig stewards. Rewards from various LP positions will be harvested quarterly.
The proposal begins with a 3 month pilot program with 4% of Cosmos Community Pool ATOM. Following this, an increase of 6% will be implemented to achieve a total 10% of Community Pool ATOM earning ecosystem rewards, staking rewards, and deepening liquidity throughout major Cosmos Appchains.
The community will have an opportunity to extend after 1 year via a follow on proposal.
Liquidity Provisioning on Cosmos DEXes
Liquidity providers can earn rewards through multiple mechanisms, including: LP yield, generated from swap fees within the underlying liquidity pair, and incentives that often require bonding liquidity for a specified period.
The assets can be deployed to on each DEX and left unbonded to facilitate swift withdrawal in response to governance decisions or market volatility. Alternatively, bonded positions could be chosen which would lead to larger rewards in certain ecosystems (i.e. Superfluid rewards on Osmosis). The community can vote on whether assets will be bonded or unbonded in a following prop prior to deploying assets in accordance with this proposal. LP fees and additional incentives will be harvested quarterly by the multisig.
Provide Feedback
As we move closer to consolidating this discussion and preparing a governance proposal, we invite everyone to share their thoughts. Your continued feedback and input are crucial in shaping the final version of the proposal. Please add your thoughts, feedback and comments to the discussion forum.
Thank you for your active participation, and we look forward to the final stages of this collaborative process.
Updated proposal text for the on-chain governance proposal:
DCF - Agoric Cosmos Hub Proposal
This proposal is to pilot an allocation of 4% of Cosmos Community Pool’s idle ATOM for liquid staking on Stride (stATOM) and Persistence (stkATOM) and use these tokens throughout the Cosmos Ecosystem to deepen liquidity while generating value for the Hub. The staked assets will deposit stATOM and stkATOM into Inter Protocol Vaults to mint IST and provide LP to numerous liquidity pools throughout the Cosmos ecosystem. This increases the Community Pool’s capital efficiency of the idle ATOM, earning a projected yield of ~18% annually on deposited ATOM. This proposal increases ecosystem use, increases network effects, deepens liquidity in Cosmos, strengthens relationships, and earns a high net yield for the Cosmos Hub. After an initial 3-month period, an additional 6% will be allocated to achieve a 10% total allocation of Community pool to earn these ecosystem and staking rewards, deepening Cosmos liquidity throughout various appchains. This proposal is coordinated by DCF, the Decentralized Cooperation Foundation, https://dcfoundation.io.
TL;DR
- 4% (179,071 ATOM) of Cosmos Community Pool ATOM to be staked via stATOM and stkATOM in the first quarter as a pilot program, increasing by 6% (268,606 ATOM) to achieve a total 10% of Cosmos Hub Community Pool in the next quarter to achieve a final amount of 447,677 ATOM devoted to this effort. Utilize the 179,071 ATOM to mint stATOM and stkATOM to an Inter Protocol vault to mint IST. Take the IST to Osmosis, Astroport, Shade, and Quasar to provide IST/stablecoin liquidity to various Cosmos stablepools and increasing total capital efficiency on the original ATOM by ~18% based on current market conditions (market conditions subject to change).
The split of minted IST to be used in Cosmos DeFi is proposed to be as follows:
- 30% to Osmosis IST/USDC Concentrated Liquidity pool
- 25% to Astroport IST/USDC.nbl pool
- 25% to a Quasar IST/USDC vault
- 20% to Shade IST/SILK pool
Incentives on these pools will further increase the total yield earned by the Cosmos Hub assets, which will be held in the community treasury. These incentives will be paid out in the DEX’s governance token, effectively resulting in Cosmos Hub receiving a basket of various Cosmos governance tokens. On top of this, additional yield is anticipated from swap fees generated on each DEX.
Proposed Use of Funds
The funds are proposed to be allocated in the following way:
-
90% of ATOM allocation to be staked with Stride and Persistence
- If only stATOM is approved as vault collateral when the proposal passes, then all ATOM will be staked as stATOM at first
- Once stkATOM is onboarded as Inter Protocol vault collateral, 10% of the ATOM from the community pool will be converted to stkATOM and the following strategies below will be carried out:
-
Deposit staked ATOM to an Inter Protocol vault to mint IST.
- Take the IST from above to each DEX to provide IST/stablecoin liquidity to each DEX stablepool
-
The split of minted IST to be used in Cosmos DeFi is proposed to be as follows:
- 30% to Osmosis IST/USDC Concentrated Liquidity pool
- 25% to Astroport IST/USDC.nbl pool
- 25% to a Quasar IST/USDC vault
- 20% to Shade IST/SILK pool
-
Rewards and yield from positions to go back into Cosmos Community pool, more details below
With a collateralization ratio of 500%, stATOM and stkATOM can yield ~18% annually via IST/stablecoin positions throughout Cosmos ecosystem LP positions, increasing total community pool by 72,628 ATOM (~$978,980) per year.
Rationale:
- Increase Cosmos Community Hub capital efficiency assets that are currently idle.
- Exemplify the composability and interoperability of Cosmos projects, increasing network effects among many prominent high value projects in the space.
- Deepen liquidity of Cosmos assets across DeFi.
Implementation Details
Multisig for Fund Management
This is the proposed plan:
-
Execution: the proposal will direct funds to an administrative 5/7 multisig. The members agree to reasonably implement the process below on behalf of the voters. However they are not responsible for the financial outcomes or correctness of the associated systems
-
Fund Utilization: Period funds will be allocated for a year by default. Governance can enact early withdrawal or extend the allocation.
-
Funds and proceeds are returned at the end of the Fund Utilization Period. That may require unbonding and so could take up to 25 days to complete.
-
The multisig will serve as custodian for the funds. After extensive consultation with Cosmos community contributors and stakeholders, we propose the inclusion of the following active and trusted contributors from the Cosmos ecosystem for the multisig:
- Zaki Manian
- Riley Edmunds
- Dean Tribble
- Josh Lee
- Bart Van der Voort
- Carter Woetzel
- Jack Zampolin
Please note: The funds under the multisig will be deployed based on decisions made by the Cosmos Hub governance. Multisig participants will act as stewards, utilizing the funds in accordance with governance directives.
Once there is innovated technology for this class of fund management (i.e. Covenant as built by Timewave) there will be an opportunity for the community to vote to employ the use of that technology and phase out multisig handling of funds.
Fund Utilization Period
It is proposed that the allocated funds remain within the proposed protocols for an initial duration of one year. This implies that the funds will be held within the proposed protocols for a period of x+365 days, where x represents the days until the funds are transferred to the multisig.
However, the allocation can be re-evaluated through $ATOM governance at any time, allowing for potential withdrawal at any time in the future. Once the funds are unbonded, the return process may take 21-25 days following the approval of the proposal.
Positions within Inter Vaults will be adjusted if a 50% price decrease is observed. In case of debt pay-off, debt will be paid off equally on all positions. This will occur on a quarterly basis by the multisig stewards. Rewards from various LP positions will be harvested quarterly.
The proposal begins with a 3 month pilot program with 4% of Cosmos Community Pool ATOM. Following this, an increase of 6% will be implemented to achieve a total 10% of Community Pool ATOM earning ecosystem rewards, staking rewards, and deepening liquidity throughout major Cosmos Appchains.
The community will have an opportunity to extend after 1 year via a follow on proposal.
Liquidity Provisioning on Cosmos DEXes
Liquidity providers can earn rewards through multiple mechanisms, including: LP yield, generated from swap fees within the underlying liquidity pair, and incentives that often require bonding liquidity for a specified period.
The assets can be deployed to on each DEX and left unbonded to facilitate swift withdrawal in response to governance decisions or market volatility. Alternatively, bonded positions could be chosen which would lead to larger rewards in certain ecosystems (i.e. Superfluid rewards on Osmosis). The community can vote on whether assets will be bonded or unbonded in a following prop prior to deploying assets in accordance with this proposal. LP fees and additional incentives will be harvested quarterly by the multisig.