Boosting ATOM with ICS income

Conversation Tokenomics
1

Using ICS Revenues from Consumer Chains to Create Buying Pressure on ATOM

Context

Today, consumer chains that benefit from the security of the Cosmos Hub (via PSS Top-N or Opt-in) compensate the Hub by sharing a portion of:

  • their native inflation,
  • their revenues generated on their own chain (transaction fees, MEV, etc.).

Some chains even go further by integrating mechanisms such as buyback & burn on their native token or other tokenomics strategies in favor of ATOM.

Idea

I’d like to open a discussion on the possibility of integrating—either directly into the protocol or via economic conventions—the following:

  • That the ICS revenues paid to the Hub are partially or entirely converted into ATOM on the market.

Each ICS consumer chain would remit its revenues to the Hub in native tokens or stablecoins.

These revenues would be used (in whole or in part) to buy back ATOM on the market.

The purchased ATOM could then:

  • be burned to create scarcity,
  • be staked to strengthen the economic security of the Hub and generate yield for stakers,
  • be redistributed to consumer chains as an additional incentive.

The idea is to create continuous buying pressure on ATOM, generate a virtuous economic circle, and reinforce economic alignment between the Hub and consumer chains.

Governance:

  • Should this mechanism be mandatory?
  • What portion of revenues should be allocated to buying back ATOM (e.g. 10%, 25%, 50%)?

Timing and Automation:

  • One-time purchases or DCA (Dollar Cost Averaging) to limit market impact?
  • Should specific modules be developed to automate these operations? Implementation via Stride Dex? Intento?

Exploring hybrid models where chains can choose:

  • The portion to be paid in ATOM,
  • The portion in stablecoins,
  • The portion in native tokens.

In the new vision where the Hub is not merely a security hub, but a home for the interchain economy, my view is that we must refocus value into the native token of our home, namely ATOM.

That’s why, personally, I’m in favor of hard-coding economic deals between chains aligned via ICS. Of course, nothing prevents fully sovereign chains from deciding on their own economic strategies that favor ATOM.

Thank you for your participation. Let’s keep bringing interest and value back to ATOM.

Guinch

14 Likes
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Support & Feedback on the Proposal

I fully support this proposal. By using ICS revenue to buy back ATOM, we not only create continuous market demand but also strengthen the economic alignment between the Cosmos Hub and consumer chains. This creates direct, sustained value for ATOM holders.

Revenue Allocation Suggestion

I recommend a hybrid mechanism—e.g., allocating 30% of ICS revenue for regular ATOM buybacks. This provides meaningful buying pressure without placing operational strain on consumer chains.

Automation & Execution Strategy

Implementing automated DCA (Dollar Cost Averaging) on a weekly or monthly basis would help minimize market impact. This could be executed through existing tools such as Stride, Intento, or a CosmWasm module governed by the Hub.

Use of Purchased ATOM

A balanced approach for utilizing the purchased ATOM might be:

50% burned to create long-term scarcity,

30% staked by the Cosmos Hub treasury to enhance economic security,

20% redistributed to participating consumer chains as an incentive.

Preserving Chain Sovereignty

While I agree with formalizing value flows back to ATOM, I suggest maintaining optional participation (opt-in) for ICS chains to avoid discouraging adoption. Hardcoding economics should be balanced with flexibility.

Next Steps

A practical roadmap may include:

  1. Simulating the economic impact of periodic ATOM buybacks (e.g., via a testnet or sandbox model).

  2. Drafting a prototype automation module.

  3. Launching a pilot program in collaboration with an existing ICS chain such as Stride or Neutron.

Thank you for initiating this important discussion. Refocusing value into ATOM is critical as the Hub evolves into the economic core of the interchain.

3 Likes
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I think Neutron is no more an ICS chain, but Elys is (PSS)

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You are right, neutron still appears on forge because there was a bad execution of a proposal to remove neutron from ICS

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What bothers me a bit about the buyback mechanism automation is that — since the Cosmos Hub doesn’t have a DEX — it would make the Hub dependent on another chain to execute it.

But honestly, I’d much rather get paid in ATOM than the random dust we’re getting today.

That’s why I’d rather let chains figure out how to acquire ATOM and pay for PSS themselves, rather than implementing a buyback mechanism on the Cosmos Hub side.

1 Like
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So ask PSS chains to pay rent in Atom, in return, the hub could allow them to obtain financing, discounts on certain products labeled “cosmos hub”, CP grant… An idea to allow better economic alignment between them. Correct?

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Is there any data about how much buying pressure we are talking about? How many ICS chains are there and how much revenue can they generate?

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data explorer are broken for ICS incomes.

CL wants to shutdown ICS….As long as they don’t clearly state who will continue to improve ICS and support its development, I don’t think an explorer would agree to elaborate on this topic.

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Here’s how I see the issue with ICS (or PSS) and its tokenomics:

In my opinion, there’s a fundamental problem with how ICS was designed.
It was meant to allow new chains to launch without having to worry about their own security, by paying the Hub what they can afford based on their revenue.

The issue is that many of these chains want to use PSS precisely because they can’t afford to pay validators in the first place.
So whether they use PSS or not, they still remain unable to compensate validators properly.

To me, there should be two possible models for joining the PSS:

  1. Permissionless access:
    In this case, the chain must pay a rent in ATOM, where the rent amount depends on the number of validators involved.
    We’d need a mechanism to determine that price, but the key point is that validators must earn enough revenue to justify securing the chain.
    Maybe the price could be set directly by the validator itself, depending on the chains.

  2. Governance-approved access:
    Here, the chain goes through Hub governance, meaning the Hub chooses to be linked with this chain.
    In that scenario, the chain either transfers a significant portion of its token supply to the Hub’s community pool,
    or it uses ATOM (or an LSD of ATOM) as its native token.
    In this case, the Hub itself funds the validators involved — though again, the exact mechanism needs to be defined.

So in short:

In the first case, PSS works like a SaaS model priced in ATOM.
In the second case, it becomes an investment made by the Hub into a chain it wants to support.

3 Likes
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Hi @jtremback

I’d really appreciate your perspective on this topic, given your experience at Informal and your deep knowledge of ICS.

What key problems or limitations do you see with the current PSS model?

What areas of improvement or evolution do you think are most important to make the system more sustainable in the long run?

What kind of economic model around ICS would make sense in your view for the Hub, the ICS chains, and the validators alike?

Finally, what do you see as the main implementation challenges that should be anticipated to make such a model reliable and robust in practice?

You’re surely aware that Cosmos Labs has mentioned the possibility of abandoning this approach altogether, what’s your opinion on that?

Your input would be extremely valuable to move this discussion forward.

Regards

1 Like
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I don’t think there is much value in ICS anymore, only some revenue from Stride.

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If ICS were improved, we could have had Noble, Akash, Sei, and many others in PSS chains. Is there no value in offering economic security to such chains?

1 Like