I can understand the Bitcoin allocation to continue to fund efforts in the event of an isolated Cosmos turndown, but the Ethereum reserve makes no sense. $ETH will not hedge against $BTC downturns. Additionally, the ICF still has $72 million in fiat available, enabling sustained operations for a significant period of time!
The $ETH reserve should be converted to $ATOM. $ATOM can use the price benefit, staking that $ATOM will improve network security, and it is a vote of confidence that the ICF has $ATOM’s best interests at heart.
If partner chains like Elys are including $ATOM in their treasuries, there is no reason to not support the price action ourselves, as it supports all that support the Hub. In summary:
ICF has $72 million in fiat to sustain ops for significant period of time.
ICF has $72 million in $BTC as a hedge against $ATOM-centric volatility
$ETH is not a hedge against $BTC volatility
The ICF therefore has no economic requirement to keep it’s massive $ETH reserve
From points 1-4, the $ETH funds should be converted to $ATOM to support network security and price action.
Definitely hear what you’re saying. I think the ICF would want to avoid active trading, but could incorporate your idea, if it was more popular than converting all ETH to ATOM, by the ICF establishing a predetermined % crypto allocation for it’s portfolio.
For example, $ATOM has to be 50% of the portfolio, and BTC 25%, ETH 15%, 10% for other IBC tokens.
I also think none of ICFs portfolio positions should exceed its ATOM holdings value. Exceeding value shall be used to buy $ATOM, call it buybacks if you like.
Definitely! ICF should be prioritizing monetary support of $ATOM. Why is 72 million in cash plus so much in other cryptos needed? What is their annual expenses?
As ATOM continues to tank down the market cap rankings, this is the opportune time to actually take action instead of sitting on our hands and bolstering other cryptos.
I fully support the proposal to convert the ICF’s Ethereum holdings into ATOM. From a portfolio risk perspective, ETH does not provide effective negative correlation or hedging against Bitcoin volatility, especially given Cosmos’ exposure.
With ICF’s operational capital sufficiently secured in fiat and Bitcoin as stabilizing assets, there is economic room to optimize treasury asset allocation by strengthening demand for ATOM through direct purchases and staking. This would not only increase buying pressure in the market but also enhance network security by raising the staking rate, thereby mitigating security risks.
Quantitative analysis indicates that converting the $44 million ETH reserve into ATOM, at current market prices, would enable ICF to acquire a substantial number of tokens, increasing staking participation and reducing circulating supply, potentially producing a positive medium- to long-term price impact.
This strategy also aligns ICF’s economic interests with consumer chains that have integrated ATOM into their treasuries, such as Elys, fostering synergy and confidence throughout the Cosmos ecosystem.
Implementation recommendations include:
Conducting purchases gradually using Dollar Cost Averaging (DCA) to minimize market impact.
Utilizing existing automation modules like Stride or CosmWasm for efficient purchase and staking management.
Providing regular reports to the community and stakeholders on economic impact and staking rates resulting from the execution.
Therefore, reallocating ETH reserves to ATOM represents a strategic move to enhance Cosmos Hub’s economic stability and network security, while demonstrating ICF’s confidence in the ecosystem’s future.
I am personally against selling all the ETH of the ICF. ETH being a yield-earning asset, it is important in my opinion that it also holds some. I think a sales split of 10% in BTC and 30% in ETH would be balanced. And from the moment the ICF holds so much % of ETH or BTC, automatic swaps should be programmed to maintain a certain portfolio ratio. Initiate regular delegation campaigns to deserving validators outside the top 30. Always ensure that ICF does not hold more than 20% of the supply by taking a margin to avoid any classification by the SEC as a security.
To what extend do we have control or anything to say in regards of ICF holdings? I don’t think we could trigger Txs from regular governance proposal ? I like the idea of the ICF, doing a DCA on ATOM but AFAIK this is just us talking about other people money ? And they could completely ignore all of this..
with ICL that is dedicated to the HUB, ICF sould at least be a little more attentive and listen to the HUB community. The smart move for ICF would be to work more closely with its community. Stop ignoring needs and problems and start listening for solutions.
