I believe TFM (Luna affiliate, if i’m not mistaken) aquired MapofZones a while back. Could easily be wrong though.
Under new management, can it not be that there’s possible conflicting interest in advertising Cosmos Hub Atom vs. putting other products more or less aligned with their motives on their aquired “top shelf?”
Either way, yes, it’s great to see IBC doing well regardless, despite most of us collectively here rooting for the success of Atom.
I don’t think that’s the case. It’s just that IBC is growing far beyond ATOM. Newcomers like Noble (USDC), DYDX, Celestia, Sei are all generating more IBC traffic than ATOM. Something like Noble (USDC) is becoming far more central than ATOM because USDC is already widely used as money. Which means each chain will create its own bridge to Noble and then Noble ends up acting as the Hub for transactions instead of ATOM. The same could be said for Celestia (TIA) as “modular money”.
The concept of “money” is all about what token merchants accept and customers can deliver easily. US dollars are the de facto global money right now so a US dollar based hub would surpass ATOM almost immediately and that is what we see. Other tokens that acquire medium-of-exchange qualities faster would also eclipse Cosmos Hub as IBC hubs.
Ironically, I think as ICS and PSS become used more we’ll actually see even more chains jump ahead of ATOM as they acquire more trust through Cosmos Hub’s validators (lNeutron and Stride are good examples). Turns out the Hub-and-Spoke business model where ATOM is the prime transactions hub of the interchain is just not gonna transpire in reality in the interchain economy. You will have multiple hubs and all of them bigger than ATOM. The dreamers (like Jae) were wrong again. And that is the main reason why the inflation model for the ATOM token needs to revised. ATOM is not going to be the prime venue of interchain transactions and thus it can’t generate the collateral for a high inflation token.
¯_(ツ)_/¯
Hi, @Vixcontango.
Agreed regarding the need to revert/revise ATOM’s inflation. Without trying to deviate from the initial post of this thread, in respect to @MAGA, thankful to see IBC’s adoption grow, including the adoption of Noble.
Hopefully, down the road, they can adopt ICS2b to not only become its own sovereign/centralized hub, alongside acquiring trust through the Hub’s VaaS, but contribute back to ATOM through fees (since we’re collectively here to see ATOM succeed, long term. At least, I hope). Atom should not be viewed as money, anyway! ツ
USDC may be widely used, and I wish Noble all their success, but most users will come to see central bank digital currencies are simply a rebrand of the existing system most of us, if not all, are trying to imminently decouple from. For those in favor/could care less RE centralization, “more power to ya,” I guess.
Look, I used to think the same. I believed the Hub should focus on its strengths, with Neutron handling smart contracts. I figured trying to make the Hub a generic L1 would lose out to Ethereum and Solana.
But it turns out, I was probably wrong. Neutron hasn’t gained much traction, but the Cosmos Hub likely would. As I mentioned, the incentives just don’t align for developers excited about ATOM to build on Neutron.
I fully agree that the Hub’s biggest strength is attracting devs and users who believe in the appchain thesis. But there’s a path dependency; we likely need to get a few things right at the L1 level before fully committing to ICS. If we “Solana-fy” the Hub and make it appealing, ATOM’s price likely doubles the next day, we’d attract fresh devs, and have a shot at reviving ATOM.
The thing is, Solana won. We ran the experiment in production, and users and investors made their preference clear. This argument of “we can’t do that because they already did” is like being in a struggling nation sticking with communism while watching America’s GDP soar and saying, “We can’t ‘Americanise’ because they’ve already done that.” The novelty doesn’t matter—what works, works. ATOM already has 100s of thousands of wallets, and new users will be drawn by the potential upside.
But I feel like I’m repeating myself. Let me ask you - what’s the next best option for ATOM? It’s clear to me, and many others who aren’t here daily, that the current path for Cosmos isn’t working.
Yeah, the 5 people that are censored by USDC can certainly go through ATOM instead, but if you want ATOM’s price to go up a lot, that’s not big enough of a market for that. The ATOM price we are talking about now is the one in US dollars since that is the standard. ATOM is getting pummeled in US dollars because US dollar inflation is far lower than ATOM’s. And not to mention, ATOM’s price is at absolute rock bottom vs BTC. BTC is $60K today. it was $3K in 2019 when ATOM was listed on Coinbase for around $5. In 5-6 years, ATOM’s price remains roughly the same while BTC 20xed.
Both Neutron and Stride are higher on the IBC transaction list than Cosmos. Yes, if ATOM had the IBC transactions of Neutron and Stride, it probably trade 2x higher (around $10), but again these aren’t Solana like gains. Solana is running a shitcoin casino very well and there is a lot of speculative capital in it betting that it will be the 3rd coin to be institutionalized (ie get futures product and ETF) after BTC and ETH. At some point these guys will dump and for the most part after that you have head-to-head competition between ETH and SOL for the big bucks in which SOL is favored because it is faster but ETH is more reliable. I don’t see any other monolithic chain being able to dislodge these “first mover” advantages.
The unique benefit of Cosmos tech is being able to create custom validators that make certain things better. That is why big apps like DYDX and AKT abandon ETH, its L2s and don’t pick Solana - because they can’t customize what validators do. Using Cosmos SDK they can do that. But ultimately to benefit from those apps you have to invest in the apps themselves - ATOM can’t benefit from that. These apps can’t use the Cosmos Hub validators in a ICS scenario.
Ultimately Cosmos ecosystem is a stock pickers market, not an index investment like ETH or SOL. I have always viewed ATOM more of an income investment than a growth opportunity and I perfectly ok with its inflation design but sometimes the Fed throws curveballs and if you don’t react, ATOM price goes down a lot and negates the income benefits.
I don’t think there is much that you can do to change these dynamics.
Many people have proposed before to make IBC transactions payable in ATOM by default and making ATOM the currency of the interchain (of IBC transactions). Most people investing in ATOM thought that a few years ago only to find out that this is not the case. ATOM can also require the ICS chains to pay for transactions in ATOM. At least the Atom Economic Zone to make its transactions in ATOM. I think there is quite a few changes that can be made to benefit ATOM. But even if they are made success might not come.
Polkadot is a chain that has shared security with DOT, all cross chain transactions are paid in DOT and yet DOT is in the same muddle as ATOM.
Unfortunately, I don’t think there are easy answers here. One thing folks need to realize is that it is not 2019 anymore, L1 thesis isn’t new kid on the block and VCs and big investors aren’t blindly throwing money at it in search of solution of the Ethereum’s high fee problem. It is 5 years later, all the technology approaches to lower smart contract fees have been tried out and the landscape is pretty clear. The Solana 10x after the FTX fiasco over the past year was probably the last obvious 10x in the L1 space. Sorry to be a party pooper but that’s my view right now. There is a ton of L1 infra out there now (Polkadot, Cardano, Algorand, Near, Aptos, Sui, Binance, Avalanche, Dfinity, Sei) and a lot of it is sitting unused. If you are a smart contract developer, you have 10 empty chains to pick from.
Agree. It just doesn’t benefit ATOM at all.
ATOM as an “IBC token” is a bad idea, won’t work. Agree with you there.
Right - that’s my point. There are hardly any crypto communities with organic traction - it’s really just Ethereum, Solana, and Cosmos.
Let me put it a different way: the downside of my proposed changes is low, and the potential upside is high.
The downside is low because CosmWasm isn’t that risky, and it doesn’t really matter if the Hub occasionally halts, Solana and Ethereum both had bugs in the early days. Lower block times marginally increase hardware requirements, but it’s a small fixed cost (the hardware requirements of ICS are way higher than faster block times). Lowering ATOM’s APY is not risky; in practice most stake won’t unbond and the Hub will remain secure.
The potential upside is high, because unlike the other ecosystems you mentioned, Cosmos Hub does have a passionate community. It could really take off as a smart contract platform.
Investors love to bet on asymmetric bets like these.
It sounds like you’re bearish on ATOM, but do you really think my proposed changes would make things worse? And what if they actually do make things better, in a big way?
The effective business and technical leads for Cosmos Hub are @Youssef and @jtremback.
Please comment.
Cosmos tech chains TVL is about $2 billion, if you add Binance, the total is about $7 billion, a bil or two behind Solana. Cosmos tech conciously favors security and scalability over decentralization. In other words, both ETH and SOL customers value decentralization - ie a hedge fund on Solana may experience losses because of halt but Solana has 800 validators in different jurisdictions and if somehow 600 of these validators censor him, he can still make a transaction with the other 200 validators. In Cosmos, investors don’t have this level of confidence in the censorship resistance. I personally think Cosmos Hub in particular is decentralized enough, but then again I am not a dude in Dubai plunking $500 million on it. The fact of the matter is that Tendermint consensus is ultimately social consensus - not mathematical consensus - and big investors are unwilling to plunk big dollars in the hands of Cosmos Hub or other Cosmos validators.
So your dreams of Cosmos being Solana or Ethereum are somewhat not based on reality. The technology is dramatically different from Sol or ETH. In the space of the blockchain trillema that Cosmos tech occupies, the valid business case is app chains. This is a team of people that has a great app, great brand and at this point they don’t want to pay rent to SOL or ETH, want to keep all the money to themselves by also owning the infrastructure (ie the validators). To use a real analogy, SOL and ETH are rental apartments where college graduates go to live while they are apprentices in some company and work to save up some money to buy a house. Then after 5-10 years of toiling they get enough savings to buy their own house. Cosmos is for home owners. ETH and SOL are for renters. SOL is for suburban renters (ie community college graduates working in a wood toy factory) whereas ETH is for big city renters (duders that work for JP Morgan on Wall Street).
You keep trying to fit Cosmos into the ETH and SOL paradigm and that’s not possible. It’s just a different technology.
I personally went overweight ATOM a couple of years ago because I really like the shared security product that Ethan outlined and now with PSS and Babylon this vision will come to fruition in its entirety this year. This was a product that was missing in the blockchain industry - people being able to launch chains on established validators like the ones in the Cosmos Hub and being able to customize their security budget based on the chains economic capabilities. In the Cosmos space, the biggest problem was the high cost of setting up your validators, then achieving some decentralization which essentially limited the usage of the stack to only big projects like DYDX or garage efforts like Juno. Cosmos didn’t have a offering in the middle which I think it needs for the tech to succeed better. In other words, Cosmos wasn’t just for homeowners but for McMansion homeowners. Cosmos couldn’t be used by young families in starter homes (1200 sq ft) or teenage kid families in 2,500 sq. ft. homes. PSS and Babylon will bring this market to the Cosmos Hub.
I am not bearish on ATOM. I am just cutting my allocation from overweight to proper weight as I think I have better opportunities in front of me. Tremblack and Yossef are definitely great guys and doing a good job, but no matter how good they are, 10% inflation makes ATOM a income investment. I don’t think ATOM price will move meaningfully until its inflation design is reconsidered - Cosmos Hub real product is ICS, not interchain hub and ICS can’t feed 10% inflation forever. At some point in ATOM 2.0 there was proposal to revise the ATOM supply schedule to do a Monero tail emission and I think that has more of a chance to rescue the ATOM price than any product beyond ICS.
As far as your suggeston to roll Neutron and Stride into ATOM, technically that is already the case. Economically however it is not because only about 20% of Neutron fees fall down to ATOM. So ATOM only captures only 20% of the NTRN growth. And that is generally the ICS design - capture a small part of a big pie. The problem is that the pie is not big (at least not yet). If the pie is not big, then ATOM will have to buy out NTRN and thus force all NTRN transaction to be in ATOM . There were proposals to do this with Stride last year that didn’t go anywhere as the buyout would have hurt ATOM shareholders.
If ATOM is going to do ICS, it can’t afford chain halts as potentially hundreds of other chains will depend on it. As such it can’t afford to be a smart contract chain (ie Neutron). Plus there are different types of smart contract chains based on the execution engine. Neutron is a web assembly (ie Rust based) smart contract chain. The most popular smart contract language is Solidity on the Ethereum Virtual Machine. That is where $100 billion of capital is deployed.
Introducing halting and breaking ICS for a Rust based execution engine that doesn’t have the confidence of Wall Street and basically has de minimus TVL deployed to it, doesn’t look like a smart strategy to me. And that is why Cosmos team isn’t doing it. If you put such a proposal on chain (put Neutron on ATOM), it will get rejected 80% by ATOM holders. With the current ICS model, Cosmos Hub can host not only Neutron today, but EVM engine tomorrow, a MOVE engine the day after tomorrow and whatever comes afterwards. The current technical design of ATOM is far more fault proof and extensible than what you are proposing.
Cosmos hub a deja subit un arret tandis que neutron et stride continuaient à produire des blocs, il me semble que le hub peut s’arreter plusieurs heures sans aucune repercution sur les consumer.
A confirmer
How’s that been going?
This discussion seems like a waste of time, as your view of what the Cosmos Hub should be is stuck back in 2019, and you don’t seem open to changing your perspective. The reality is that the Cosmos Hub needs to take drastic action, or it’ll be irrelevant by next year.
My proposal is low-risk, high-upside, and actionable. It’s a plan that would make me want to hold the ATOM token. I don’t, today.
I think I was pretty clear that the problem with the ATOM price is the high inflationary schedule, not the token’s utility. If there is anything that needs further fixing, it’s the inflation. And potentially buying out Neutron and Stride to add the utility you want.
The Cosmos Hub is not stuck back in 2019. In 2019, it didn’t have ICS, nor did it run Neutron on top of it. ATOM had far less utility in 2019 than today.
In any case, nobody is stopping you from entering a proposal on chain. Enter it and see how it goes. In 2022, there was a proposal #69 to include CosmWasm and it got rejected with 63% NO vote. If you run this proposal today (2 years later, not 5 years later), it will be rejected by even higher percentages especially after the chain halt a couple of months ago.
OK
I’ve shared my view of the problem, as well as a proposed solution
Good luck
What exactly creates a direct value for the atom token? Just asking for a friend…
As far as i remember, some inflation adjustments could have led to split the chain a few month ago… i really don’t think its those 10% that could be blamed for ongoing selloffs.
Also some twitter people start accusing Akash and Injective for extracting value out of cosmos, looks like they are jealous about their growth in utility and price compared to atom…
Maybe its time to overhaul some central dogma of the atom chain purpose
The original vision for ATOM’s long-term utility was as a central IBC hub. Instead of chains creating connections between each other directly, they would create connection through the Cosmos Hub and connect that way with 2 hops. So instead of having N squared pathways, you would have N pathways only and they would all go through ATOM. For the first 3-4 years that was the case, but then came Terra, Osmosis and more recently Celestia and Noble. Since they were all having more activity on them, the various chains started using them as central pathway. Now ATOM is like 7th or 8th IBC hub and going down the ranking and as such not benefiting from the growth of IBC.
Now ATOM’s utility is the shared security offering (ICS), which hasn’t been completed yet. It’s speculative to what extent it will generate value for ATOM - the vision for that is that ATOM would get 20-25% cut of the chains that run on top of it (small cut of a big pie), but the big problem here with that vision is that big apps like OSMO, DYDX and AKT want to customize the functionality of the validators whereas in ICS you get the cookie cutter ATOM validators. In other words, the big apps (the big pie) will not run on ICS. They might start on ICS, but when they get big, they will run their own validators like DYDX, AKT and OSMO.
How big is the “big pie” really? As it stands, ATOM can’t find ICS clients among the biggest Cosmos SDK chains like DYDX, AKT and OSMO.
That means that ICS may have to pivot to a model of “big cut from a small pie” and I am not sure how competitive that is vs Solana. App can grow on Solana and then move to Cosmos SDK when they are big enough. ATOM already has Neutron running on ICS which has identitical offering to Solana but is not getting traction yet.
In any case, 10% inflation is really high bar to meet long term. ATOM’s current tokenomics of 7% min infaltion and 10% max inflation is not a proposition for anyone to put their savings in. US treasuries are giving you 5% so you are looking at 12% to 15% hurdle when investing in ATOM - in other words ATOM has to grow 15% per year indefinitely to win out against 5% cost of money. You are making a bet on some unproven business prospect which may or may not turn out (startups fail at 90% rate) so the odds generally are severely not in your favor.
Is it unfeasible for non-ICS chains (AKT, DYDX, OSMO, …) to support Cosmos by paying a fee or do regular buy-back?
The more I read, the more it seems certain projects extract a lot of value without giving back anything
It’s unfeasible because you can’t enforce that. The software has long been free and open source.
If IBC fees were paid in ATOM, then growth of IBC chains would have accrued value to ATOM. But as it stands right now, that is not the case. And I am not sure it can be done, because the code is FOSS (open source).They can copy the code and override the fee setting.
Hi @vixcontango and @tknox35
There have been cases when a software previously open source licensed (there are different OSS licenses) changed its license model. One example is Terraform ( HashiCorp | The Infrastructure Cloud Company ) and an article What the Terraform License Change Means for DevOps
We strongly believe in the value of openly sharing source code and enabling practitioners to solve their problems, building communities, and creating transparency. HashiCorp provides feature-rich products to the community for free, and that development is made possible by our commercial customers who partner with us. By shifting to this license, HashiCorp can better manage commercial uses of our source code and continue to invest in our thriving community of practitioners, many of whom are contributors, in a manner that will not impede their work.
It is my perspective and I may be wrong. Other chains can copy, change the code and break the license. It is strange for chains such as DYDX, etc. to not give something back.
I do think chains like DYDX and AKT give back in sponsoring some interchain development. But their community pools and treasuries can’t just buy ATOM if ATOM has huge inflation and may not be a good place to invest - just from fiduciary perspective. I didn’t mention in the above paragraphs that ATOM’s annual volatility is around 100% and that also increases the expected return quite a bit. The real numbers are ATOM needs to beat 40% in annual return to be a good investment given its volatility profile vs the cost of money now. So ANYONE that has any background in asset management and finance will have huge concerns before plunking in big dollars. ATOM’s biggest problem is that it doesn’t appeal to institutional investors as an investment asset - and if you ask Jae Kwon - that is by design. He doesn’t want ATOM to be owned by the “Wall Street cartel”, but by his friends.
To be honest with you, I have no idea why ATOM was ever listed on crypto exchanges. It never should have been listed - Jae should have made this token a private placement and generally prohibited secondary listings on established exchanges in order not to embroil outsiders in his scheme. As it stands right now, you have a securities issuer in Jae who raised money in ATOM, but is not doing anything to accrue value to ATOM, you have a whole bunch of retail investors getting fooled with false marketing because they think ATOM has value accrual mechanisms similar to ETH and it doesn’t, and the most likely outcome at some point will be lawsuits (originating by ATOM token holders or by the SEC) and the token getting delisted from major exchanges at least in the US.
People should be aware that the SEC has already sued Coinbase for listing ATOM and they have made the allegation that ATOM is a security in that lawsuit. If the SEC wins this case, or even if they don’t win it but more specifically manages to prove that ATOM is a security, Coinbase and Kraken will be forced to delist it. The SEC managed to get Binance to delist XMR, so if they make it a point, they could delist ATOM from Binance as well. This delisting can come out of nowhere at any time.
Ethan is trying to rescue this very precarious situation with ICS, but I am not sure how successful that effort will be. I like the offering (it was missing before) but the value accrual situation with ATOM (the token’s utility) still isn’t great. People should not forget that ATOM 2.0 proposal came with a proposal to cut ATOM’s inflation severly and make it have only a small tail emission like Monero (XMR) - basically it would have made ATOM almost a fixed supply token like most other tokens that use the Cosmos SDK (for example, AKT and DYDX have fixed supply of tokens).
What got approved in the end was the development effort, but the inflation issue is still hanging out there.
