I’ll start with partial response.
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Governance driven funding will fail, like central planning fails. - where-ever possible we should ensure that intelligence is preserved or amplified in decisions. The way to ensure that good decisions are rewarded and bad decisions punished, is to require individual decision makers to put skin in the game. This is why innovation happens in the private sector, and why governance funding is seen as a corruption of private sector innovation, and why central government planning historically has led to failure. It turns the incentive model of individual merit, into a game of politics. This is true even when decision making is weighted by relative capital.
We can see this clearly in the private sector investment world. The best performing funds do not have their decisions made by weighted voting of LPs. Rather, the LPs are free to join and leave, while the investment thesis of each fund is maintained by select GPs. The ATOM2.0 tokenomics model is akin to taxing all investment funds and putting the proceeds into a giant super-fund controlled by LPs. If this were to happen in the real world, the super-fund would create such a large distortion of incentives as to destroy innovation in general. It would turn into a game of media/mind/political control, and actual innovators would fail to get the funding they need, and even if they did get funding, the entire private sector would become swamped with the resulting dumb money, making it harder for innovators to compete with incumbent politicians. The world would not accept such a policy toward central planning, and we should not accept it either, as it will lead to sure failure not only of the Cosmos Hub, but of the entire ecosystem. -
The proposed treasury inflation is ludicrously high. - there was another tweet by someone extolling the virtues of treasury funding, of how 100,000 ATOMs were able to accomplish so much. The ATOM2.0 proposal creates FIVE HUNDRED (500) TIMES as much to go into treasury in the first year alone. Not only are there enough funds within the ICF alone to complete the featureset of the Cosmos Hub, it is certainly unnecessary to inflate so much in addition. No single centralized entity can responsibly distribute such funds in a responsible way. In fact, it will lead to failure as per point 1 above. Queue all the crypto projects that raised so much money that are not even breaking even. EOS comes to mind, but there are numerous examples.
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Even if there were inflation to fund for common goods, it should not be pre-allocated to treasury. - not only is one governance DAO incapable of distributing such allocation of funds responsibly at this time, it will also decrease the price of the ATOM unnecessarily. So either we are depreciating the price of the ATOM token unnecessarily, or we are committing to allocating funds irresponsibly. More likely, both. It is obviously not true that ATOM2.0 can commit to a more deflationary tokenomics model for the Cosmos Hub, because it would already create the precedent of changing its tokenomics. It might make sense to put a hard cap on inflation in a constitution, but it should be more like a certain % every year (an allocation cap) and not be pre-allocated anywhere. The amount of inflationary funding by ATOM/hub should also increase each year as our reach, community, and thereby intelligence pool increases, just as corporate shares are expanded exponentially; not the other way around.
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The ICF should demonstrate usage on a functional DAO first before suggesting additional inflation. - the ICF cannot responsibly suggest additional inflation to be managed by treasury without first demonstrating that a DAO can work. Since the ICF has a for-Cosmos mandate, it should publish its activity in a transparent way (has that happened yet?), and the best way to do that is on a DAO. Even if the funds cannot be controlled by a DAO, it can publish its internal working structure in a DAO platform, and use a DAO as a coordination/publishing tool, and disburse funds only if the foundation council agrees with the internal (same as DAO) decision making. This should be the first logical step.
The other thing the ICF should be doing is looking into the regulations to allow more to happen. The selling point of Swiss stiftungs is that the regulators are a phone call away, and there is already a close working relationship (such as custom tailored tax breaks for each stiftung). Even if the ICF cannot unilaterally move the DAO relationship all the way as to donate all of its treasury to a DAO, a small portion should certainly be possible, and even if that is difficult, given the public mandate and purpose of the ICF (and its original mission, which know because I did the work of founding it), the Cosmos Hub could play an active role in forcing the ICF’s hand. (That said, this is a last resort to demonstrate all options, not what I am proposing here; my point is, there are clear options on the table that should be considered from all practical, social contract, and moral angles, that are not being pursued). -
Zone developers are already incentivized without central treasury ATOMs. - anybody can port existing functionality of the Cosmos/crypto open-source world and make them available in a new zone secured by ICS with its own native token and premine. Cue Evmos for example, that ports EVM functionality to Cosmos. The incentives are already there, and central planning will only distort things for the worse, as per point 1 and 2.
I’ll write more as time permits. Thank you for reading.