Hello @MAGA ,
Thank you for sharing your thoughts on the state of the Cosmos Hub and recognizing its strengths and weaknesses. To provide some perspective, we will elaborate on your statements and propositions.
To share some context to this review, we would like to emphasize that we have been Cosmos contributors since 2020, we have team members working at all levels of the technology stack, infrastructure (we operate the PRO Delegators’ validator), governance (with the Govmos Initiative account you’re reading now), technical support to project, and financial & strategy advisory for teams.
Through these various interactions with the Hub, we have developed a thoughtful vision of its strengths and weaknesses. While our analysis reveals different conclusions, we will share a summarized version of it, hoping to provide additional perspective for you and other readers of this thread.
Strengths
You correctly pointed out that the Hub’s community is great. You mentioned we have survived multiple crises, and we agree. On the technical side, the Hub has managed to deliver on the 2017 promises and beyond. The adoption is significant, and the pace is still strong. Cosmos is one of the rare ecosystems that has managed to grow adoption through the bear market without requiring millions of dollars in external incentives. We believe today’s crisis is just another one, with a different shape. This one might only be price-related as people constantly question the value capture of the Hub, and we will later explain why this might be an illusion and a trap to avoid.
Weaknesses
People often call the Hub’s governance its greatest weakness, and you did too. Some mention the constant power struggle and internal ego battles, gripping the system to evolve too slowly compared to others. We entirely disagree. The criticism we see is similar to people complaining about government inefficiencies compared to the private sector. Nevertheless, real-world economics prove that government is needed and that centralized control is detrimental to societal prosperity. Despite being praised for profit-making, the private sector is terrible at managing complex public affairs.
The Hub is arguably a public entity, and we should praise the power struggles and dramas, reflecting a working democratic system with multiple unaligned participants. This requires consensus to progress, a slower and less efficient model than centralized governance. Many cryptocurrencies operate centrally like the private sector. They do not share the properties of decentralization, yet people compare them with the Hub. Always remember that anything moving fast is generally centrally controlled. We should be honored to be slow-moving and lack a single vision. Embrace decentralization’s weaknesses, as there is no way to be decentralized without degrading execution speed and adding committees.
External Factors
Whilst researching for potential real causes of the Cosmos Hub’s lack of performance, we have uncovered a few things you didn’t mention and are worth pointing out.
First, we need to stress the importance of the disastrous aftermath brought by the Terra collapse, which has damaged both the reputation of Cosmos and the ecosystem’s liquidity. Tokens available on CEXes (mostly ATOM at that time) were used as a proxy to exit the illiquid supply of Luna. Most people tend to forget that THIS event liquidated most ATOM traders and brought us below the critical $11 support that triggered the rally to $40 earlier. To this day, the ATOM price has failed to recover and still hovers around that critical threshold.
Secondly, the range we formed since that day follows the exact pattern of a Wyckoff accumulation: a sudden drop with enormous volatility followed by a flat structure below a critical technical level with volumes and volatility dropping significantly.
This pattern involves a significant psychological impact on inexperienced traders and investors, as described in the renowned book associated with that strategy. This pattern has a reputation for falsely implying a bearish sentiment, forcing assets to be transferred from weak, impatient, and speculative hands into more methodical and patient, strong hands.
According to this mechanic, we would currently experience the “spring,” which is the culminating point of bearish sentiment, corresponding to the bottom of the structure. If we are correct, this is where the last transfer of value will happen before the structure reaches final completion as volume raises back up along with prices. This is the point of “maximum pain” inflicted on weak hands, so we are not surprised to see posts like yours mentioning the impending death of ATOM. We see quite the opposite.
Conclusion
To summarize, we have reasons to believe that the bearish sentiment the community is experiencing now is testimony to the violence of psychological impacts involved by a two-year-long Wyckoff accumulation. This would explain why we have one of the most adopted technology stacks in the blockchain industry while we experience one of the highest levels of pain on price.
We would even argue that the recent speculative pump in early 2024 has only worsened this sentiment, as some tokens, arguably more centralized, have seen significant price gains while ATOM remained locked in the accumulation scheme. This has led the dominance of ATOM to fall to historical lows, driving all the questioning from the community about the future trajectory. We shall not let private securities and artificial pump-and-dump schemes be compared to true decentralized blockchain technologies.
Overall, we think this is all just good old market psychology. People look at the price, feel the emotion, and create all sorts of ideas about what could explain the depression. Reducing inflation has often emerged as the guilty cause of ATOM’s price death spiral. We see no evidence of such a spiral, just a Wyckoff spring inflicting maximum psychological pain. In reality, trading volumes are extremely low (indicating that capital isn’t moving), a sign of Wyckoff maturity. You argue that block time should be lowered to match competitors. The Hub doesn’t need that, it is a security hub with instant finality blocs, not a fast execution layer-1. Permissionless CosmWasm isn’t needed either; we have Neutron for this. You also mention the price reflects a lack of product-market fit, whereas we see dozens of consumer chains reaching out to launch with the new Partial Set Security upgrade. To us, the Hub has only vegetated since the Terra’s collapse, never really recovered, awaiting to deliver the ICSv2 which is the market fit product of the hub. Now that we have it, the best is yet to come; we should wait until the last weak hand capitulates and true legitimate adoption kicks in. If we are correct, volumes should start to rise again, along with prices and real legitimate adoption. Be patient, padawan!
On behalf of the Govmos Initiative, we hope this reading was interesting to you, if you want to support our volunteer job, you can delegate to our reference validator service PRO Delegators.
