- 2023-09-20 Created initial post
This proposal seeks to ratify the following motions:
- Authorize the Neutron DAO to execute a proposal to trustlessly transfer ~42,727,950 unclaimed NTRN tokens to the Cosmos Hub community pool. This requires instantiating specific smart-contracts to register an Interchain Account on the Cosmos Hub, transferring the tokens over IBC and executing a
- Adopt the following rules for how the Cosmos Hub network, governance and community may use or deploy these tokens to ensure long-term alignment between Cosmos Hub and Neutron:
- Do no harm: The Cosmos Hub, its governance and community pledge to only use or deploy the NTRN tokens in ways that do not harm the Neutron network or DAO.
- Cooperation: The Cosmos Hub, its governance and community pledge to use or deploy the NTRN tokens in ways that benefit both the Cosmos Hub and the Neutron network and DAO.
The following items summarize the voting options and what they mean for this proposal:
YES: You authorize the Neutron DAO to perform the steps required to trustlessly transfer unclaimed airdrop tokens to the Cosmos community pool and vote in favor of adopting the “Do no harm” and “Cooperation” rules to guide the future use of the NTRN tokens.
NO: You do not wish to authorize the Neutron DAO to perform the steps required to trustlessly transfer unclaimed airdrop tokens to the Cosmos community pool and/or do not support the adoption the “Do no harm” and “Cooperation” rules.
ABSTAIN: You wish to contribute to the quorum but you formally decline to vote either for or against the proposal.
NO WITH VETO - A ‘NoWithVeto’ vote indicates a proposal either (1) is deemed to be spam, i.e., irrelevant to Cosmos Hub, (2) disproportionately infringes on minority interests, or (3) violates or encourages violation of the rules of engagement as currently set out by Cosmos Hub governance. If the number of ‘NoWithVeto’ votes is greater than a third of total votes, the proposal is rejected and the deposits are burned.
The terms of the security agreement between Neutron and the Cosmos Hub, as defined in Prop 792, include the transfer of unclaimed tokens from the NTRN airdrop to the Cosmos Hub.
As of the end of the claim period, a total of ~27,272,050 NTRN has been claimed. This can be verified using the Airdrop Contract’s
total_claimed query (see here on Celatone). As a result, 42,727,950 unclaimed NTRN tokens are earmarked to be transferred to the Cosmos Hub.
Unlike traditional accounts, to receive tokens, the Community Pool (CP) requires a specific
FundCommunityPool message which cannot be triggered directly over IBC. To perform the transfer, a simple “vehicle” smart-contract on Neutron is therefore required. This contract leverages the Interchain Transaction module to register an Interchain Account on the Cosmos Hub, transfer the tokens over IBC and execute the
If this signaling proposal is approved, and once the vehicle contract has been instantiated, an executable proposal would be submitted to the Neutron DAO to perform the transfer. The executable proposal would include updating the airdrop contract’s recipient address to the vehicle contract’s address and triggering the transfer function to deliver the tokens to the CP on the Cosmos Hub network.
The 42,727,950 unclaimed airdrop tokens will grant the Cosmos Hub’s network, governance and community considerable influence over the consumer chain. They represent roughly 4.2% of the total supply of NTRN, roughly 28% of the circulating supply and would equate to roughly 50% of the voting power on the network if fully bonded (see FAQ section).
To ensure the tokens are used in a long-term aligned way and set a positive precedent for large tokens allocations and tokenswaps within the ATOM Economic Zone, this proposal seeks to ratify the following two rules. Their application should include but not be limited to the examples provided below.
- Do no harm: The Cosmos Hub, its governance, and community pledge to only use or deploy the NTRN tokens in ways that do not harm the Neutron network or DAO.
This clause seeks to ensure the use of caution and consideration towards the consumer chain when deploying its native assets.
For example, “dumping” large amounts of tokens into public liquidity such that the price would be significantly affected should be avoided - if the Cosmos Hub wishes to reduce its exposure to the asset, it should do so in ways that minimize the impact on other LPs, the DAO’s finances and the project’s momentum. This would also maximize the returns for the Cosmos Hub by minimizing slippage.
Less obvious examples could include applying caution when deploying NTRN tokens to obtain voting power in the Neutron DAO: if implemented naively, doubling the voting power without actively participating in governance could make it challenging or impossible for the DAO to reach quorum on proposals, therefore crippling its operations.
- Cooperation: The Cosmos Hub, its governance and community pledge to use or deploy the NTRN tokens in ways that maximizes the benefits to both the Cosmos Hub and the Neutron network and DAO.
This clause seeks to ensure that the tokens are used in a collaborative and mutually beneficial way.
For example, if the Cosmos Hub wished to deploy the tokens as liquidity on a DEX, or deploy them as collateral for a loan, it should do so on an instance of a DEX or Credit protocol deployed on the Neutron network, so that the Hub’s deployment of NTRN tokens also contribute to the liquidity and growth of Neutron’s ecosystem. This would also benefit the Cosmos Hub as it would support the growth of its consumer chain, the price of its native asset and the revenue it generates for the Cosmos Hub.
Overall, the Do no harm and Cooperation clauses are intended to be common sense, and seek to be mutually beneficial rules for the Cosmos Hub and Neutron. Explicit support from the Hub’s governance should help increase alignment within the AEZ and set a positive precedent for rulemaking on the Hub, to pave the way for more advanced future agreements between the Cosmos Hub and consumer chains.
A balance of 42,727,950 unclaimed NTRN tokens, valued at approximately $18,000,000 at the time of writing, are now allocated to the Hub. Since the initial funding to Neutron was valued at approximately $500,000 at the time, funding Neutron’s development generated a 3500% “return” for the Cosmos Hub’s community pool:
As of the time of writing, if all unclaimed airdrop tokens were staked in Neutron governance, the Cosmos Hub would represent ~50.27% of the voting power.
The Cosmos Hub’s share of the voting power could decrease over time as the circulating supply of NTRN and the total amount staked increase, unless additional tokens are acquired. Given the maximum supply of NTRN (1,000,000,000), the minimum share of voting power the Hub Community could have is 4.2%. This is extremely unlikely as it assumes that every single NTRN tokens would be bonded in governance.
Due to technical limitations on the Cosmos Hub, there is currently no technical solution to allow the Cosmos Hub to maintain ownership over the tokens while participating in Neutron governance. To address these limitations, contributors at Hadron and Timewave have developed actionable solutions to allow the Cosmos Hub to wield voting power while retaining direct ownership. These solutions are expected to be presented in separate governance proposals to the Cosmos Hub.
There has been a number of recent discussions about productive deployment of the Hub’s treasury asset:
- @Noam published an article detailing objectives and strategic considerations for the Hub to strengthen itself and the AEZ.
- It was followed by actionable suggestions from @Stride, including “Deploy[ing] a meaningful amount of NTRN/ATOM liquidity to Astroport Neutron.”
- NTRN liquidity from the Hub could be combined with Neutron’s Voting Vault architecture to provide voting power to ATOM stakers.
- The Cosmos Hub could borrow some amount of funds on Mars on Neutron with a very high collateralization ratio to safely obtain stablecoins and other tokens which could be paired with ATOM or NTRN to complete its Liquidity-as-a-Service offering.
The design space for mutually beneficial deployments of the token is wide, which provides an exciting opportunity to future collaboration and growth within the AEZ.