How Can Cosmos Hub Capture IBC Value?
I. Three Possible Approaches to Capturing IBC Value
From the most elegant to the least elegant:
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Capture +++ (Elegant and Sustainable)
Cosmos Hub becomes an Interchain Security (ICS) provider, securing consumer chains in exchange for payments in ATOM. This creates continuous demand for ATOM and reinforces the Hub’s central role without introducing economic friction. -
Capture-Extraction ±+ (Balanced but Less Seamless)
Cosmos Hub implements IBC routing fees, taking a small percentage from transactions passing through it. While this generates revenue, it may incentivize some chains to bypass the Hub. -
Extraction — (Intrusive and Risky)
Cosmos Hub imposes a tax on IBC flows or captures part of the transferred value through coercive mechanisms. This discourages adoption, pushes chains to avoid the Hub, and undermines its neutrality.
II. Why Approach 3 is Impossible & What Alternative Exists?
Approach 3 (forced extraction) is not feasible because IBC is open-source. Chains can simply establish their own direct IBC channels, bypassing Cosmos Hub entirely and making any taxation attempt ineffective.
A more viable alternative is for the Hub to become a key IBC infrastructure provider, acting as a guardian of light clients and a maintainer of relayers.
III. Cosmos Hub as an IBC Infrastructure Provider
- Hosting IBC Light Clients (Capture +++)
Cosmos Hub could centralize the hosting and maintenance of IBC light clients, ensuring their security and availability.
Mechanism: Chains would pay in ATOM or another token for Cosmos Hub to host and secure their light clients, offloading a major technical burden.
Benefit: A stable revenue source and a stronger role in IBC infrastructure.
- Professionalizing IBC Relayers (Capture-Extraction ±+)
Currently, IBC relayers operate on a voluntary basis, which causes reliability issues. Cosmos Hub could establish a structured relayer marketplace, ensuring consistent service quality.
Mechanism:
Cosmos Hub could stake ATOM to guarantee reliable relayer services.
Chains using these relayers would pay usage fees, monetizing the infrastructure.
Benefit: A more robust and reliable IBC network while capturing value for the Hub.
- Cosmos Hub as an “IBC Finality Layer” (Capture +++)
Cosmos Hub could also serve as an IBC finality layer, recording state checkpoints on-chain to secure IBC transactions.
Mechanism: Chains submit finalized state updates to Cosmos Hub, which anchors them on-chain in exchange for registration fees.
Benefit: Increases IBC reliability and reinforces Cosmos Hub as the ultimate validator of cross-chain transactions.
IV. Capturing IBC Value via ICS and Cross-Chain Governance
A more subtle and sustainable approach is to accumulate as many tokens as possible through ICS and redistribute their governance power to ATOM stakers.
- Accumulating Consumer Chain Tokens via ICS
With ICS, Cosmos Hub secures consumer chains in exchange for rewards in their native tokens. The key idea is not to sell these tokens but to strategically hold them.
IBC Impact: Many of these chains depend on IBC for liquidity and utility, meaning Cosmos Hub captures indirect IBC value through its governance holdings.
- Redistributing Voting Power to ATOM Stakers
The core concept is to turn these accumulated tokens into governance influence through a dedicated governance interface (e.g., a wallet that allows stakers to vote through the Hub).
Cosmos Hub becomes an interchain investment DAO, actively influencing the governance of the chains it secures.
Network Effect: The more chains it secures, the more influence and assets it accumulates, strengthening ATOM without selling assets.
- Towards an On-Chain Investment Fund
This mechanism could evolve into a decentralized treasury where ATOM stakers decide how to allocate funds and influence the ecosystem.
Compounding Effect: By supporting strategic projects, Cosmos Hub fosters IBC adoption while maximizing its own economic influence.
Conclusion
Instead of trying to tax IBC flows directly (ineffective and bypassable), Cosmos Hub can capture value by:
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Monetizing IBC infrastructure (light clients, relayers, finality).
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Accumulating governance tokens through ICS and using them for strategic influence.
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Creating a virtuous cycle where ATOM becomes a key economic player without selling assets.
This approach reinforces Cosmos Hub’s sovereignty, positions it as the economic heart of Cosmos, and allows it to capture IBC value organically and sustainably.
Just an idea.
Guinch