There is only one way of democratic voting and that is 1 person = 1 vote. So 1 wallet = 1 vote. Only then can the vote be fair. Not that the more tokens someone hold, the stronger his vote is, for example when the team holds the majority of tokens and overrides retail.
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If ATOM price goes to $2 tomorrow, STRD will go close to zero, as it derives most of its value (80%) from ATOM.
Thus, it is fair to say that STRD is a leveraged bet on ATOM.
Stride is a leveraged play on all cosmos, not Atom.
Every investment is the present value of futures cash flows. You have 9 more tokens generating cash flows that could perfectly go parabolic any time + 2 titans confirmed (DYXD + TIA) + plenty more that will be added over time, Atom is just 1 of them.
You Just need one of them being 10% of the supply doing x10 to surpass Atom TVL on stride in a blink. And that is a pretty likely scenario in a bull. Thats why is absurd to value Stride based on current revenues / TVL.
And thats the magic of stride. You dont risk on one asset, is a index token of cosmos. Atom could fail and stride still could be insanely huge.
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For me it’s finally an argument that make sense for this merge : ATOM doesn’t have strong PMF so we should add a new feature to the hub: be the issuer of liquid staking for the whole ecosystem
So we sacrifice STRD holders because we think it’s more important for the whole ecosystem that the hub have a better narrative, revenue and overall visibility
But don’t say it’s about decentralisation in your first post
But in order to continue to scale Stride, its contributors aspire to enhance Stride’s decentralization even further.To help make Stride protocol as decentralized as possible, the entire STRD supply could be converted to ATOM, making ATOM the governance token for Stride
Stride holders doesn’t get anything from it, just a compensation but it’s for the greater good of the ecosystem
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Post your balance sheet, or stop with the grift
Please see number 4. in my above post
Stride is worth maybe 500k. It can be forked, for 6x less cost. Let me know boyos. Dev lab ready, and fired up.
Terrible deal, can create a stride for less than 200-300k. The users and LP will come. Its not worth 70m.
Every thing that is a spoke connected to the hub, is just a leveraged atom trade.
WE have tons of empirical data to prove this now. An entire cycle. Atom finances all the proejcts, and all projects dump for Atoms to service their debt. Only atom can discharge debt. Atom is the least ‘toxic’ asset and the least distressed asset.
Do it then. Quicksilver, persistence and Eris tried it aswell.
If is as easy as spend 200K and you have another stride, I encourage you to do it.
You could replicate literally all chains for that quantity of money, but there are things money cant buy.
CONTEXT:
First of all we would like to thank the involvement of so many parties in that discussion. Of course we expect that situation to create a lot controversies along the way. But at the heart of the question, at Govmos (the governance arm of PRO Delegators’ validator), we believe that this matter is more financial than political.
ANALYSIS:
Merging or acquiring two cryptocurrencies is a complex process that involves legal, financial, technical, and strategic considerations. While traditional finance M&A can serve as a source of inspiration, it’s important to note that cryptocurrencies operate in a unique and evolving regulatory environment. We also emphasized in a previous topic the likelihood to see the Hub evolve into a decentralized bank. We also shared a model of regular banking businesses in this other post.
CONCLUSION:
In our current context, the merger and acquisition between Stride and the Hub holds significant importance. This marks a crucial test for the Hub’s governance, examining its collective intelligence in orchestrating this operation to benefit both parties. We anticipate numerous future M&A endeavors, and envision the Hub as a central player offering M&A services for the broader Cosmos community in the near future. Thus, it’s imperative to showcase our capability to handle this transaction with the utmost professionalism.
Looking ahead, we anticipate the formation of a proficient sub-DAO dedicated to M&A tasks. However, presently, we lack this specialized resource. To assist the community in navigating the upcoming steps, we’ve provided a detailed breakdown of the typical M&A process:
- Preliminary Due Diligence: a. Conduct initial due diligence on both cryptocurrencies, evaluating their technology, user base, team, market positioning, financials, and legal status. b. Identify synergies, risks, and potential challenges associated with the merger or acquisition. That’s the phase we are currently in with this post and some people have produced quite some good posts going exactly in that direction.
- Letter of Intent (LoI): a. Draft a non-binding Letter of Intent detailing the intent, structure, and terms of the proposed merger or acquisition. b. Include a confidentiality clause and an exclusivity period during which negotiations take place.
- Conduct Comprehensive Due Diligence: a. Engage in in-depth technical due diligence to evaluate the underlying blockchain technology, smart contracts, security measures, and scalability of both cryptocurrencies. b. Review legal documentation, compliance with regulations, intellectual property, and any potential liabilities. c. Assess the financials, including revenue models, operating expenses, token economics, and funding history.
- Valuation and Negotiation: a. Engage financial and legal advisors to assist in the valuation of each cryptocurrency and negotiate a fair exchange ratio or purchase price. b. Consider using various valuation methodologies such as discounted cash flows, comparable company analysis, or precedent transactions.
- Definitive Agreement: a. Draft and negotiate a definitive agreement, detailing the terms and conditions of the merger or acquisition, including the structure, timeline, and any conditions precedent. b. Include representations, warranties, covenants, and indemnification clauses to protect the interests of both parties.
- Regulatory Compliance: a. Ensure compliance with applicable laws and regulations governing mergers, acquisitions, and cryptocurrencies in the jurisdictions involved. b. Obtain necessary regulatory approvals or licenses, if required.
- Integration Planning: a. Develop a comprehensive integration plan outlining the integration of technologies, teams, operations, and user bases to realize synergies and maximize value. b. Consider how to handle token swaps, community engagement, and communication strategies.
- Closing and Implementation: a. Complete the transaction as per the terms of the definitive agreement, ensuring all conditions precedent are satisfied. b. Transfer assets, update databases, and execute any necessary technical changes to implement the merger or acquisition.
- Post-Merger Integration and Monitoring: a. Oversee the integration process, addressing any challenges, and ensuring a smooth transition. b. Continuously monitor the merged entity’s performance and make necessary adjustments to achieve the desired goals and outcomes.
PERSONAL NOTE:
We will do our best to assist the community in every steps along the way. Our experience in risk management & financial modeling will be especially tailored to support the community in “phase4”. We would also incentivize anyone in the community with connection to someone with previous experience in M&A to take a stand and bring that knowledge to us.
Thanks for reading ! If you like our job, you can support by delegating to PRO Delegators Validator
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I’m surprised you guys aren’t yet thinking in the opposite way. Feedback has been quite unilateral on the negative side.
I don’t know who could have possibly brought that up, but let’s go back to… Cosmoverse 2022.
A very well intentioned group of people want to reform the Hub around their ideals and present them to the public. Big point of contention : This involves minting atoms to bootstrap ICS chains. ATOM 2.0 has since been rejected while a lot of us desperately want the Hub to massively reduce inflation and stabilize its supply.
Then Stride comes in at Cosmoverse 2023 (why does it have to be on the big stage…), knowing that the community pool is nowhere near large enough to acquire a chain like Stride, proposes to (well maybe, probably, surely) mint atoms with a fork to buy them out.
Do you see now how that is such a bad look ? It is ignoring history and the current mood in the community. You bypassed your own community to announce it on a public stage. I hope you guys now understand this was obviously not the right place, as it should have been learned last year.
Nobody is against wealth creation, but the window of opportunity when the Hub could have acted in such a way was years ago.
Consumer chains need to be given the opportunity to create their own wealth and the Hub can help create it, but it can’t give it.
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Everyone should take Ethans Mimbres class. Beautiful stuff
So normally when you would do a merger/acquisition the purchase price would be in a stable currency such as US Dollars. We all know the US Dollars are worth what they claim to be because USD is king. This is proposing to get the currency in something other than US Dollars so it brings into question the other asset.
Why is ATOM valued at $2B? What revenues are there that give it this much value? Why should stride holders accept this over valued coin as currency?
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Firstly, I want to start with two disclaimers: I am a core contributor to pSTAKE Finance and the Persistence Ecosystem. I don’t hold STRD, and I hold ATOM.
Time and again, in various shapes and forms, we find ourselves discussing the age-old question: ATOM or Cosmos: What should the Hub incline more towards? I feel the proposed acquisition of Stride is another extension of this infamous riddle.
This reply comes a few days after this idea was proposed at Cosmoverse as I wanted to take a step back, comprehend, and flush out things in an unbiased way (as much as possible). These are my personal thoughts as a Cosmos Ecosystem participant, builder, and ATOM holder for ~4 years.
Should the hub be credibly neutral?
Let’s go back a few years to early 2021. With Gravity DEX, we asked and debated questions about whether the hub is credibly neutral and whether it should remain so for the betterment of Cosmos. Should the hub choose ATOM or Cosmos, the ecosystem? In the end, Gravity DEX did not launch with ATOM as its governance token. Through ATOM stakers, the hub took the stance that it should remain credibly neutral.
This helped strengthen products and chains such as Osmosis, which has played a crucial role in onboarding users and liquidity to Cosmos. I personally don’t think Osmosis needed any help from the Hub to do this but the Hub’s credible neutrality did in fact help Osmosis.
But imagine a world where the hub wasn’t credibly neutral back then. Would things have been different? I think so. Today, the Hub might have had a DEX that generates revenue for ATOM stakers, driving value to ATOM. But would that have been the best for Cosmos? I don’t know that for sure. But the fact remains that Cosmos had Osmosis championing it, which helped the ecosystem onboard users and many builders into the ecosystem. Competition also fostered growth.
Fast forward to 2023. With the launch of ICS, the Hub is no longer neutral. Consumer chains are selected by ATOM holders who evaluate chains on the basis of what they are building and their chances of success, which would eventually drive revenue to the Hub, and ATOM token holders => Chains that choose ATOM.
I don’t think the Hub should be credibly neutral. While neutrality helps grow Cosmos, it doesn’t help ATOM and its token holders.
STRD Acquisition: Choosing ATOM or Cosmos?
This proposal puts the Hub at yet another crossroads with Cosmos. This time, it goes beyond deploying a protocol or CosmWasm. This time, it sets a clear precedence within and outside Cosmos.
If ATOM is used to acquire STRD, the hub makes a clear statement that it is willing to acquire certain products that ATOM holders believe may succeed. I feel this is not a flawed approach by any means. If anything, this should help increase the demand for ATOM. But if this goes through, it is essential to understand that Stride becomes the Cosmos Hub’s liquid staking offering and NOT the de facto liquid staking provider of Cosmos.
In line with this, I ask the following questions. The questions are not intended to dive into the specifics of this proposal. These questions intend to clarify the stance that we, ATOM holders, would like to take when it comes to positioning the champion of the ecosystem: Hub or Cosmos.
Decentralization
Is the goal for the Hub to help Stride achieve decentralization or to acquire products that generate revenue for ATOM stakers? One may argue that it is both. I believe an acquisition does not seem to be an idea that helps achieve that.
Do other LS providers compete with the Hub? How is that good for the decentralization of the Hub if its favored choice is itself? Liquid Staking providers should look to decentralize themselves in a way that goes in hand with the broader ecosystem. I believe this ‘decentralization’ of Stride by the Hub acquiring comes at the cost of the (potential) centralization of cosmos liquid staking.
Decentralization can be achieved in many ways such as dual governance, or even to the extent that ATOM governs Stride entirely.
Revenue for the Hub
Are there better ways for the hub to generate revenue without taking such a giant leap? I would argue that using ATOM from the community pool as POL on different products within Cosmos to generate revenue is a better way to start looking at revenues. Example: Deploy ATOM to stATOM-ATOM on Osmosis to earn x% in STRD and OSMO incentives. Do the same with other products in Cosmos. Deepen ATOM liquidity within Cosmos, earn revenue, accrue value to ATOM, and help the ecosystem grow.
Is it best to acquire an existing project for $50-100M or perhaps start slow with betting on a few projects that intend to deploy as ICS chains that use ATOM as the governance/primary token? I believe this is what the AADAO is already working towards. We should look at the results and ROI of these things before making such big bets.
Who exactly wins?
It is important to think about who this deal benefits more. While most people seem to think this is a win-win situation, I take a more conservative stance. What if this is a lose-lose deal for the Hub and STRD holders? STRD holders believe in the potential of the project and thus hold STRD.
For the Hub to extract value equivalent to $50-100M, this deal should reflect that either with the market cap of ATOM growing or the staking rewards for ATOM increasing. The question is, do we think ATOM staking rewards would increase? Would potentially inflating ATOM supply to acquire STRD reflect ATOM’s market cap positively or negatively?
Alignment
With promising chains like dydx, Sei, and Celestia joining Cosmos, the general consensus and Stride contributors’ thoughts here seem to be that the Hub should have a ‘USP’ that ensures it is not overtaken by them in terms of being a leader, by overall hold in Cosmos and market value.
The same folks also argue that if Stride becomes a major LST provider for these, it will bring a lot more revenue for ATOM stakers. My question in the context of liquid staking is, would these chains, in the first place, want to align with what is essentially their competition? Would these chains want to have ATOM governing their validator sets? Would these chains be okay with the fact that the Hub could acquire one of their competitors at some point in the future and have a potential conflict of interest? ATOM becomes a sovereignty risk to these chains.
I can only assume here as I cannot speak for these chains, but I don’t think so. I think this makes ATOM and its acquired products compete with other chains in Cosmos. I am not suggesting this is bad, but it’s something to think about.
Final thoughts
If Stide Labs is concerned about decentralization, they could easily use ATOM as the token that governs the Stride protocol without burning STRD and merging into ATOM. Would it affect the utility of STRD? Sure. But if the goal is to achieve decentralization at the cost of the STRD token and its token holders, I don’t think it is a very far-fetched alternative.
If Stride Labs is highly aligned with the Hub’s vision and wants to contribute to it, I encourage them to find other ways to do that instead of the Hub effectively paying a huge premium for acquiring talent (and I mean it when I say it, the Stride Labs team is indeed incredibly talented, but not worth the amount of money we are talking about here).
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Thanks you very much for your point of view. Appreciate more post about why this is a crazy idea that should stop and less about how to achieve to do it when both parts dont want it.
For some reason the main point since inception of the post was to achieve decentralization in order to be a trusty LSD provider and be better in the eyes of other protocols.
Right now, as a ex Atom investor, I could only see 1 things regarding governance:
Is totally flawed to the point where 1 simply tweet of 1 person bribing to get what he wanted giving extra airdrops totally changed the votes from yes to No/No veto in a blink.
This was repeated in other ocasions, less absurd, but same result. is clearly heavy influenced by bad actors that harmed the eco in multiple ocasions, and for some reason, they are still here.
If Stride reason to do this is heavy impacted by gaining trust due better governance, they should simply work to make their own independant governance more decentralised (IMO is already just by being less exposed to the cartel). Boost your bonded ratio to 20 to 50 by increasing your real yield (will happen naturally), regaining trust, and taking meassures to incentivice a proper distribution of delegations. That is, in any case, way more decentralised than Atom is.
Is REALLY important in order for LSDs to succeed to have a bunch of alternatives like we already have helping themself. We dont want a monopoly, so merging is a terrible idea. You can’t tell your investors what the default alternative is, since you would create massive problems in the long term.
Nobody.
Clearly Stride holders dont want it (even tho, instead simply voting and stopping it from going ahead idea state, we are all losing our valuable time)
And Atom holders would never accept a quantity that would make Stride holders vote yes, so nobody win keeping this debate. Both Atom and Stride tokens are being suppresed. One for the lost of trust and the other for the potential dilution.
And in any case, how we get a fair price for stride holders? Due this announcement alone Stride lost 20% of the value (for now, because if this unnecesary fud keep going, will be worse for both parts), so in any case to be fair we must take the market cap the exact day of the announcement, because the price was artificially suppresed due devs horrible proposal.
Closing
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This move DON’T increase decentralisation. If something, destroy neccesary competition between LSD providers and make it worse.
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There are a lot of changes Atom need to do on a fundamental level to thrive. This is not one of them.
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Is too late to do a move like this. In any case, is a huge dececision that should have been made before the launch
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If you really want to see the things on a higher level, simply ask you the easiest question. If stride holders will vote no, and Atom holder don’t accept a fair price for stride holders, why keep going with this show? Both parts need a solid yes, so just the first part of the question is enough to forget this.
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You should really start from the question above and close this topic ASAP to keep focusing on what matter. So please. Instead making valuable people wasting more time on AMAs and engaging with this post simply launch a stride prop in order to vote no and stop this.
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In my opinion Hub should have a realistic goal and try to purchase up to 33% of all STRD tokens to better align and connect two great projects now&going forward.
STRD yield + staking rewards should go to Hub’s CP and then be automatically distributed among ATOM stakeholders. ATOM stakeholders should develop UI to vote in STRD governance
How do you value the Cosmos Hub? If you use this method the Cosmos Hub valuation would also be very low.
Stride gets to be the canonical liquid staking protocol for the Hub. So its cash out now for STRD holders or wait to compete with Lido and anything else in the future. Imho, liquid staking tokens tend to be fickle; so from a long term perspective I see sense.
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I think 90% of Cosmos PoS market is going to be ATOM as chains are forced into AEZ.
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I think STRD holders are overly bullish on STRD and bearish on ATOM when its the same thing. I think this is a good deal, ATOM is still bluechip. The product can expand a lot with the teams working together. Most of the STRD value is based on ATOM and it will be going forward as other Cosmos chains get cannibalized by the Hub through ICS or mergers.
I can see how ATOM holders might be hesitant to mint ATOM, I think that is also fine as it is backed by equal amount of STRD (USD value).
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I think STRD holders are overly bullish on STRD and bearish on ATOM when its the same thing.
I think its the opposite. I think the market is overly bullish on ATOM while overly bearish on Stride when its the same thing. There is no reason for ATOM marketcap to be $2B. Why is that valuation correct and why should stride holders accept ATOM at that valuation?
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