Intent-centric Automation Cosmos SDK module on Cosmos Hub: Enabling orchestration of Interchain actions and more
Greetings Cosmos Hub Community!
We’re excited to introduce the Intent-centric Automation (IA) Cosmos SDK module. The IA module enables condition-based automation of Cosmos messages on connected IBC chains. This module allows for coordination and orchestration of interchain actions in an effective, permissionless and trust-minimized manner.
We have been researching and developing automation logic in Cosmos SDK module code since 2021. We are currently developing our automation module to become a generalized framework for handling all kinds of intent-centric blockchain actions. We want to get the community’s perspective on the idea of launching the IA module on the Cosmos Hub. Therefore we encourage you to bring up your thoughts, feedback and any questions you may have.
Our definition of intent-centric automation is a combination of an intent: a clearly formulated or planned purpose and automation: an automatically controlled operation. In crypto, we want to perform such actions with no counterparty risk and in a permissionless and decentralized manner.
The goals of adding the IA module to the Cosmos Hub are to enable intent-centric triggers for blockchain calls, enable interchain coordination directly on the Cosmos Hub and drive ATOM value.
The module offers advanced features like chain-agnostic and interdependent intent triggers, allowing for scheduled actions in the future. In the IA module, a trigger has its own generated “trigger account address”, which can be granted execution rights, allowing a stronger kind of automation. This means that protocols and their end-users can automate complex workflows without locking tokens into an Escrow or Vault account.
We identify the following use cases that are unlocked by the IA module:
|Time-based trading strategies
|Automated payroll services
|Auto-reinvest after un-bonding
|Scheduling governance proposals
|Auto-compound on any validator
|Lotteries and time-based rewards
The IA module enables actions to be conditional, whereby the actions can depend on execution results. For example, a protocol user could set up a sequence of actions such as swapping ATOM for USDC on Osmosis and then paying for a subscription that is settled on Ethereum using the Axelar bridge with General Message Passing. The IA module unlocks these use cases natively in a Cosmos SDK module, abstracting smart contract logic. This mitigates smart contract risks and saves computational resources. Hence, protocols and end-users can automate complex workflows in a seamless manner.
- Wallets like Keplr and Leap could integrate into the IA module to allow for scheduling payment. Thus allowing the wallets to become similar in functionality as banking applications in traditional finance.
- Staking protocols like Lido, Swell, and EigenLayer could integrate into the IA module for automated token restaking, yielding additional returns. Auto-compounding, traditionally managed by external Vault and Escrow smart contracts, is decentralized and trustless when outsourced to the IA module. Stride, a Cosmos liquid staking Appchain, incorporates auto-compounding through a time-based function. EVM-based staking protocols can now achieve reliable and predictable auto compounding of staked assets, enhancing network security and user confidence.
- Cosmos Hub Atom Alignment Treasury (AAT) presents a novel use case, allowing governance to execute portfolio management logic such as daily ATOM-to-TOKEN swaps to ensure a constant 10% TOKEN portfolio allocation in the AAT. The IA module offers a generic and trustless approach, making it an easy-to-integrate and complementary solution for automating the AAT. The IA module allows any account, including an AAT account, to create and update triggers. AuthZ grants can be used to perform trustless automated actions for the AAT account, eliminating the need for external smart contracts for performing automation logic. The IA module can also be used for swap streaming to mitigate price impact on DEXes. In this case, the AAT module can act as an agent that expresses trigger conditions, and the IA module can then execute these triggers.
- Large digital asset issuers like Circle could optimize liquidity across ecosystems by integrating the IA module. Scheduled token burning on one chain can trigger automatic minting on another chain and vice versa. This reduces smart contract and counterparty risks in a trust-minimized manner.
- DEXs like Uniswap could enhance reliability by integrating the IA module for auto-rebalancing, DCA swaps and for processing limit orders. Auto rebalancing of Concentrated LP tokens minimizes impermanent loss, improving overall liquidity and protocol stability. A trigger with granted permissions initiated from Cosmos Hub can enable these time-based executions to take place without intermediate vault contracts. Thus, this improves efficiency and increases reliability compared to alternative solutions.
Decentralized scheduled task execution is facilitated by bot networks, addressing challenges of server-based setups and central points of failure. Tasks are registered on an on-chain smart contract, with often the first successful bot claiming a reward. Inefficiencies arise with multiple bots executing transactions simultaneously, increasing network congestion and gas costs. Additionally, critics highlight issues like rewarding agents on a first-come basis, leading to centralization as unprofitable agents exit. In addition, having arbitrary trigger addresses pose limitations, requiring additional smart contract logic for privileged execution, thereby increasing the complexity of an automation workflow.
In CosmWasm blockchains, smart contracts can run with privileges. These can leverage BeginBlocker and EndBlocker functions for scheduling block-based execution. Several chains have integrated this. This feature may seem similar to the IA module, but the system is permissioned. Privileged smart contracts demand more computational resources per execution. Running trigger engines inside smart contracts increases gas costs for users and makes such a system less flexible. Running a trigger engine inside a virtual machine has fixed computational costs, as a check for scheduled executions needs to be performed on an recurring basis. Thus, this also impacts potential fee revenue of such a solution.
With recurring executions, blockchains have to find a balance for time-based executions and general transactions in terms of blockspace usage. Hence, we also find a necessity for governance for measures like limits per block and fee settings. The IA module offers a protocol-neutral, permissionless platform with integrated governance parameters, allowing the community to find the balance between blnetwork usage and fee revenue.
We have specified 2 main governance parameters for fees:
- Fixed Fee per execution: To prevent network congestion. Revenue is directed to the community pool.
- Flexible Fee per execution: To compensate for computational resources. Revenue is directed to validators and their delegators.
The project would drive Cosmos Hub and ATOM value in the following ways:
Scheduling Actions: The IA module abstracts the complexities of repeated transactions away from users. The IA module enables conditional automation of both protocols and user assets, empowering protocols and their end-users to control their assets without the need for manual transactions, Escrow or Vault contacts. As more protocols leverage this automation, the demand for ATOM tokens to access and utilize the module increases, contributing to the appreciation of the ATOM token value.
Increased fee revenue: Through the governance mechanism, Cosmos Hub can set fees and implement measures to prevent network congestion. By initially charging higher automation fees to deter spam and ensure network efficiency, the module incentivizes users to hold and stake ATOM tokens to benefit from preventive measures against network congestion. This fee mechanism creates a direct connection between network usage and ATOM token demand, positively impacting the token’s value.
We anticipate that the introduction of the IA module will have a substantial impact on Cosmos Hub fee revenue, potentially increasing it by a significant margin from its current level. Presently, the Cosmos Hub community pool generates an annual transaction fee revenue of approximately 60,000 ATOM tokens (Token Terminal).
Assuming a fixed fee of 1 ATOM per execution, with a trigger integrated into 20 host-chain protocols for daily executions, additional revenue would reach up to 7,300 ATOM tokens annually. This is equivalent to $73,000 at a rate of $10 per ATOM. For local triggers, primarily catering to recurring payment needs, a fixed fee of 0.1 ATOM per execution could be set. With around 4,000 weekly executions, the annual community pool revenue would grow by 20,800 ATOM tokens annually. This amounts $208,000 at a rate of $10 per ATOM. These combined estimates suggest the potential for an additional $281,000 in revenue for the community pool annually.
Interchain Coordination: Actions can coordinated between different protocols on different chains. By enabling permissionless automation and fostering interoperability with Ethereum and other EVM chains, the IA module expands Cosmos’s horizon. Through integration with Cosmos chains over IBC as well as EVM protocols, Cosmos Hub can become a platform for orchestrating automated actions.
We believe that the Intent-centric Automation Cosmos SDK module would be a valuable addition to the Cosmos Hub. It unlocks new use cases by enabling permissionless automation of local Cosmos Hub actions as well as actions on connected chains.
What do you think of adding the IA module to the Cosmos Hub? We are curious to hear your thoughts and gather community feedback on this topic.