After careful review, Cosmos Labs does not support the Hydro proposal in its current form.
For the past year, we have communicated transparently and consistently to the Hydro team that we do not support additional major allocations of community pool resources to Hydro without additional private funding.
The disagreement here is not marginal. It is foundational. The amount requested, representing more than seventy percent of the Community Pool, is economically disproportionate and inconsistent with principles of prudent and diversified treasury stewardship. An allocation of this size would materially constrain our community’s capacity to support other emerging or potentially higher impact initiatives. While Cosmos Labs could reasonably consider supporting a substantially smaller request (for example 500,000 ATOM or less), the current proposal exceeds what we believe should be our shared concentration risk tolerance.
More broadly, we believe that projects within the Cosmos ecosystem should demonstrate independent commercial viability by securing external funding alongside any community support. We have previously shared this perspective with Hydro, but to date we have not seen an update on efforts in this direction.
In our opinion, reliance on the Community Pool as a sole or primary funding source sets a concerning precedent. The Community Pool should exist to help strong teams and credible projects accelerate existing growth - rather than as an exclusive funding backstop for projects that may not otherwise be self-sustaining.
Below we provide some additional background on Hydro’s funding to date which may help contextualize our views on the current proposal.
Funding History and Context:
Funding for Hydro dates back to October 2023.
Since that time, Hydro has been supported through multiple, overlapping funding proposals and funding channels/entities, often without clear separation, attribution, or consolidated public accounting.
Hydro originated while incubated at Informal Systems under Proposal #839. That proposal authorized $5.7 million USD for 2024 Hub development, structured as 30 percent ATOM and 70 percent USDC, in addition to 100,000 ATOM in performance bonuses, priced at approximately $7 per ATOM.
To date, there is no clear or auditable breakdown demonstrating:
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How much of the $5.7 million was attributable specifically to Hydro,
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How funds were allocated by product line, team, or deliverable, or
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What portion of shared Informal or Hypha resources were dedicated to Hydro.
This is an example of the lack of clarity that prevents the community from evaluating and approving proposals of this magnitude with confidence.
2024–2025
Hydro’s funding and support expanded further in 2024 and 2025 through additional proposals:
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Proposal #955 re-routed Cosmos Hub Protocol Owned Liquidity deployments to Hydro.
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Proposal #986 - “Funding Hydro development and integrations in 2025,” resulted in Hydro receiving:
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180,000 ATOM, valued at approximately $6.50 per ATOM, and
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Approximately $290,000 in surplus funds carried over from Proposal #839, explicitly described as bootstrap capital.
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Notably, Proposal #986 also understated the extent of Hydro’s AADAO funding, stating that Hydro had received only $75,000. This representation is incorrect. In reality, Hydro related initiatives received more than $417,000 in AADAO funding.
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AADAO Funding: During the Q4 2024 AADAO reporting period, total grant authorizations amounted to $1,899,086. Of this total, $417,882 was allocated to Hydro related initiatives, representing approximately 23%of all AADAO funds approved in that quarter. These allocations spanned the full Hydro stack, including:
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Protocol level integrations,
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Front end and user experience tooling such as vote aggregators,
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Security and monitoring infrastructure,
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Governance tooling, and
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User facing applications.
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Proposal #991 (March 2025) the Hub authorized an additional deployment of Community Pool USDC via Hydro. An “excess” allocation of 57,530.40 USDC from the Cosmos Hub Community Pool was again directed to Hydro.
*If any of the amounts or figures above are incorrect please do rectify.
Hydro has been afforded repeated and substantial opportunities to establish sustainability, operational discipline, and independent viability. To date, those outcomes have not been demonstrated as evinced by their current proposal and for that reason, we cannot support it.
We share these views in the spirit of constructive discussion and with respect for the community’s governance process. As always, we encourage open dialogue and thoughtful consideration from all ATOM holders.