Summary
This post presents the results of the first session of the Cosmos Citizens’ Assembly. The question asked to the participants was: What process and principles should drive adding and removing chains to the Atom Economic Zone (AEZ)? The text is the product of the discussions of the group and was adopted by consensus. It presents a set of draft recommendations to be discussed with the community. After a phase of feedback of circa 3 weeks, this text will be transformed into a final set of recommendations during a second session of work.
In the coming days, we will publish a second post focusing on the process which led to these results. The second post will detail the work done by Missions Publiques and RnDAO to prepare and implement the first part of the Cosmos Citizens’ Assembly. We will share the link to that second post here asap.
UPADTE: HERE IS THE LINK TO THE REPORT: [Report] Cosmos Citizens’ Assembly - Pilot - Intermediary report
We are happy to get the feedback and comments from the community to feed the second session of the Assembly in order to propose a final set of recommendations.
Preamble
This document aims to outline the principles used to assess the eligibility and continued value that projects looking to join the ATOM Economic Zone will follow. It is both a framework to pave the decision-making process of the collective AEZ, as well as provide guidelines for success for those projects aiming to join the AEZ. It was produced through a deliberative process. We share this proposal with the community for feedback. We will have a second session of work to improve this proposal.
Principles guiding the AEZ
During the first plenary, we discussed a set of principles we would consider key to the Atom Economic Zone. We discussed and prioritized the following list. Each participant could distribute up to 3 points on the initial set (see note):
- Purpose and utility (8): Producer and consumer chains should be aligned in their purpose and there should be value, utility, or a common goods dimension to creating a new chain. It should provide a real-world application. If something is of central importance to the AEZ, it should be considered (LSDs, NFTs, Dex).
- Economic incentives (7): The balance between the cost of security and return on investment for validators should be long-term positive. There should be a clear value (monetary or other) in return for ATOM stakers. The AEZ should prefer to use ATOM for operations.
- Moral alignment (7): There should be an alignment to avoid more conflict. It should be for the benefit of the majority and not only the minority and support the vision of the ecosystem.
- Tokenomics compatibility (6): This compatibility should be ensured to avoid inflationary pressure and the risk of overwhelming ATOM.
- Technical alignment (2): The group considered technical as very important but as a prerequisite to any collaboration. The technical ability of the team should be strongly assessed, their technical alignment with the rest of the hub can be looser in order to support innovative technical designs without tight restriction.
- Understandability (1): This principle refers to the fact that the onboarding, management, and offboarding process should be easy to understand. The group saw this as an important element but also as a prerequisite, hence not the top priority. Understandability also refers to the fact that the solutions proposed by the chains need to be easy to understand for the cosmonauts (purpose / how the solution intends to solve something).
Onboarding
We focused on the onboarding process in working group A. Those results were then reviewed by the other part of participants from working group B and from the plenary. The group decided to postpone the discussion on “who is reviewing” to session 2.
Overall Principles
We agreed on the fact that there should be a detailed process to onboard a new chain, based on templates/guidelines & tutorials for onboarding. Further, communication should be kept open.
We considered that the guiding principles should be the same for new chains (not yet built) and existing chains (already working, just connecting to AEZ), while making space for a differentiated concrete process on some aspects like tokenomics, or alignment.
Phase 1: Complete the “Request to Join AEZ” template: Purpose and value proposition
The following questions have multiple acceptable answers, and they should be addressed in the first template to support Cosmonauts’ understanding of the proposal:
- What is the AppChain, its purpose, its value proposition, and its motivation to join AEZ?
- Is the project viable for all parties involved?
- How does the chain consider the added value of AEZ for its security?
- Why propose to join the AEZ as an appchain, rather than deploying a smart contract to an existing smart contract chain within the AEZ, which might help reduce some infrastructure and validator costs?
- How will the chain benefit from the AEZ?
- How can it be beneficial for the Hub, the validators, and the chain? (example: ComposableFi)
- What are the possible conflicts? How to resolve them?
Phase 2: Motivation and value discussions
Following the first template proposal, the chain and the community should enter in a series of AMAs and community sessions (the candidate chain community and Atom community).
The candidate chain should clearly provide a summary of the discussions, issue resolution, and a report outlining the onboarding process. Ideally, we propose to create a presentation shared with the community.
Phase 3: Complete the second iteration of the “request to join” template: Tech and financial analysis
Following the first round of discussion, the chain should prepare a more detailed proposal consisting of the following bricks and key questions:
- Finance analysis: What is the tokenomics modeling, is it fair on competition? (Imagine Archway wants to join, but Neutron is already on it and has a similar offer), how to justify competitiveness?
- Tech analysis: Is anything missing in terms of tech? Is it secure for the hub to host? What happens if a chain secured by the hub is down?
- Offboarding Methods: What are the metrics that will be monitored after onboarding? What will be the metrics that will trigger concerns? What is the worst-case scenario and how to handle/mitigate it?
- Simulation: The chain should simulate the state of the AEZ for validator & community before and after onboarding
One of our discussions revolved around the question of a group of dedicated paid people to do financial and tech analysis of the new prospective chain. This discussion was not solved and will be a topic in session 2. We welcome feedback on this.
Phase 4: Forum Proposal and AEZ Review
Once the full template is ready, the candidate chain should publish a forum proposal and enter a phase of community review with the community holding AMAs, and community sessions. The focus would be to explain the economic alignment and parameters and allow AEZ members to raise their concerns and red flags. The tech analysis is a prerequisite to this step to identify the missing pieces to implement the solution.
This process would allow the chain to revise the forum proposal and write the final formal proposal.
Phase 5: Onchain vote
Once the chain feels that the proposal is mature enough, it should publish it as a full Governance Proposal and go to an onchain vote.
Phase 6: Governance proposal follow-up
If the proposal passes, the chain moves to the technical onboarding and the management process. If the proposal fails, the process can loop back to phase 4 for improvements and further discussion.
Managing Chains
After having explored the onboarding process, we focused on the ongoing relation within the AEZ and the way it could be organized. The work started by identifying key principles before reviewing the different areas of monitoring, the tools that could be used, and how this process could improve.
Overall Principles
We agreed on the following core dimensions of the monitoring, related to different kinds of metrics:
- Economic performance.
- Technical dimension: This encompasses the technical performance, a series of minimum requirements for chains that should be updated. This should ensure that security is optimized and risk is minimized.
- Contractual dimension: A process of making sure that the “contract” covering the chain’s technical roadmap and commitments is respected.
- Governance: The monitoring should aim at ensuring good governance. It should allow chains to follow the evolution of the AEZ, could be the responsibility of the Interchain institutions, should ensure continued alignment, and help with finding a fit. It should keep the relationship as decentralized as possible.
Beyond this, we agreed that not all chains can be described by the same metrics so a degree of flexibility will be needed.
Monitoring of economic metrics
The economic metrics have to be adapted to the nature of the chain (e.g. defi vs smart contract). They could encompass the following dimensions: Transaction volume, TVL, Active wallets, # contracts deployed, on-chain activity, Integration with other ecosystems, codebase, userbase, and revenue for Validators.
The economic performance could be monitored in terms of the price of the token of the partner chain in relation to the ATOM token. This would allow monitoring if the chain is underperforming or overperforming the Hub in relative terms rather than in absolute terms.
Monitor the amount of extracted value vs added value.
Monitoring of qualitative metrics
The second dimension of monitoring aims at capturing a more qualitative set of criteria: Chain performance, reputation, respect of the Roadmap, open source code, Level of nurturing and mentoring from the AEZ to the consumer chains, and Fit into the community.
Monitoring of technical metrics
In that domain, we identified two key metrics: first a monitoring of possible known vulnerabilities in the chain binaries, and secondly, if the safety of 1 chain could affect the safety of the hub itself.
Tools for monitoring
In terms of tools, we identified the following avenues:
- Having an explorer, like mintscan to see chain metrics
- Having regular reviews of the advancements, as not everything can be dynamic
- A Review SubDAO
- A system for validators to have an input on performance and be part of the review
- A monitoring of the revenue
- A system to follow treasury management
- A report every 3 months: This report should cover all dimensions of monitoring: economics, technical, qualitative and focus on risk management.
Finally, the group explored a number of ways to improve the monitoring itself. It pointed out that user acquisition strategies and growth hacks could help make the management phase better.
Offboarding and conflict resolution
In the final part of the work, we discussed the topic of a partner chain leaving or being required to leave the AEZ. Because there has been no experience with offboarding yet, we have not proposed a detailed process. However, we started by outlining the likely reasons, on both sides, for a split. Then we discussed the general principles and approach that should be followed. The specific process for this has not been drafted, but if there is feedback that it is important, we can take up this work in Session 2.
Why would a chain leave?
- The chain becomes bigger than Cosmos: Much of the value that the AEZ provides is the scale of security work and the size of the token holdings. For a small chain, the size of the treasury protects against attacks. If a partner chain becomes bigger than Cosmos Hub, then it may no longer need the security.
- The economics are no longer beneficial: Either because the chain has not achieved enough revenue, or because the costs of AEZ make the chain not profitable, the economic conditions cannot sustain the relationship.
- The chain has found a better option: A better ecosystem, or one with a different technology or direction that the chain prefers.
- The chain sees AEZ as not delivering on their commitments: Even if the relationship provides value, they may believe that they are being taken advantage of, they are not getting the growth they expected from joining AEZ, or AEZ made commitments that they are not fulfilling.
- The chain is no longer aligned with the AEZ vision: They may have had a change of vision, or they see AEZ heading in a direction they don’t agree with. Or they may believe the conditions are too restrictive and they want sovereignty.
- The chain may feel unable to resolve conflict: Politics. Conflicts of interest, disagreements with the community.
Why would AEZ want to remove a chain?
- The economics are no longer beneficial: Either because of low adoption and activity, the chain’s performance, or because the cost structure is not making the chain profitable for Cosmos to support. The chain is putting the AEZ at a greater risk than its “value” for the community / AEZ members.
- The chain is no longer aligned with the AEZ vision: The chain is heading in a direction AEZ doesn’t agree with or is creating unnecessary conflict in the community, or violates an agreed upon Code of Conduct.
- AEZ sees the chain abusing the ecosystem: If the chain is being predatory or parasitic on other chains in the ecosystem, or if they created a conflict of interest.
- AEZ sees technical or security issues: Technical issues could be unmet goals or unexpected difficulties in meeting the roadmap. Security issues might be the extraction of value due to exploits from the partner chain.
What principles should drive resolving conflict in AEZ?
We consider that clear onboarding agreements and effective monitoring will resolve many concerns without ending in offboarding. The general principles we see are:
- Clear & visible boundaries: the onboarding proposal should have clear goals and boundaries set.
- Ongoing communication: Regular check-ins should monitor satisfaction, and there should be regular meetings that would prevent conflicts from escalating. All parties should remain available for conversations.
- Small spaces for resolution: When complex issues arise, such as technical issues and evolutions of the roadmap and prioritization in both teams, the conversation should be held in a smaller group. The AEZ should establish a council with other AEZ members, or a group in charge of dispute resolution, to avoid having “too many cooks in the kitchen”. Only then hold a governance vote.
- Thought, not emotion: discussions about conflict remain professional, using expert opinions and concrete evidence.
- Good skills and methods: AEZ should develop templates for resolution, practice non-violent communication, and perhaps call GravityDAO.