Making the Hub an Investment fund for the interchain

[Victor118]

Transforming the Cosmos Hub into a Strategic Interchain Investment Fund

Problem: Strengthening the Hub’s Economic Utility

The Cosmos Hub currently serves as a security provider via Interchain Security (ICS). However, its role in capturing long-term value remains limited.

The ICS Challenge: Unrewarding Consumer Chains?

Today, many consumer chains generate little to no revenue, meaning that Cosmos Hub validators are essentially making a long-term bet on their success.
The problem? If these chains become profitable and their token become enough capitalized, they may leave ICS, leading to a net loss for the Hub.
As a result, the Hub provides the infrastructure for launching chains but without guaranteed long-term benefits.

Solution: A Decentralized Interchain Investment Fund Managed by Governance

To secure sustainable economic growth, the Cosmos Hub could become an interchain investment fund, strategically accumulating and holding tokens from IBC-connected blockchains—including those not using ICS.

Goals of the Interchain Fund:

Diversify the Hub’s Holdings: Holding tokens from multiple blockchains reduces dependence on ATOM alone and enables the Hub to economically participate in the success of other chains.
Generate Revenue: The accumulated tokens can be staked via Interchain Accounts (ICA), generating staking rewards for the Hub.
Increase Governance Influence: By holding tokens from ICS consumer chains and IBC-connected chains, the Hub can help steer governance decisions toward outcomes that align with ATOM holders’ interests.
Reduce ICS Exit Risk: By holding a stake in consumer chains, the Hub benefits from their growth and can incentivize them to remain within ICS rather than seeking alternative security models.
Even if a successful consumer chain leave ICS, the cosmos hub by holding tokens continue to benefit from it

How Would It Work?

• Token Accumulation
  • Tokens can be acquired through swaps on interchain DEXs (Osmosis, Astroport, etc.), via incentives for ATOM-stakers, or through strategic partnerships with ICS chains.
• Decentralized Management
  • The fund would be managed through on-chain governance on the Hub, with ATOM holders voting on asset allocation and management.
• Staking via ICA
  • Staking these assets would be done via Interchain Accounts (ICA), allowing the Hub to benefit from staking rewards while maintaining full control over token distribution.
• Active Governance Participation
  • By holding governance tokens of consumer chains, the Hub could influence key decisions—such as ensuring long-term alignment with ICS and ATOM stakeholders’ interests.
• Optimizing Positions
  • The fund could implement allocation strategies (e.g., delegating to key validators, balancing between liquidity and staking, or adapting to market conditions).

What Are the Benefits for the Cosmos Ecosystem?

An Economically Active Hub: The Hub becomes more than an IBC router—it evolves into a strategic economic actor.
Financial Sustainability for ICS: The Hub mitigates the risk of consumer chains leaving by ensuring long-term economic ties through token holdings.
Additional Revenue Streams: Staking rewards from diverse assets can finance Hub initiatives without inflating ATOM’s supply.
Strengthening Interchain Collaboration: By accumulating tokens, the Hub gains an economic and governance stake in the success of IBC-connected chains.
Atom will become an interesting asset for its impact in terms of voting power and not only for its yield

[Guinch_Roze]

is it a remaster of the AAT, Atom Treasury? And as an investor and staker of Atom, I would like to have voting power over consumer chains through this investment fund. Is that possible?

I am in favour of this vision ! need to go deeper.

[Guinch_Roze]

Accumulate as many tokens as possible through consumer chains and redistribute voting power accordingly to stakers.

No more useless dust.

A governance interface through our own wallet: “vote through the hub’s investment fund.”

No selling pressure on the Cosmos tokens accumulated in exchange for voting power on their chain. Economic virtuous cycle.

[Guinch_Roze]

add IBC routing feature directly on the hub and allow multiple fee tokens BUT keep the fees on the hub’s investment fund and vote.

ex: add Skip Go app on the hub.
accumulate fees, then vote or burn or both.

[Victor118]

Yes AAT module was thought for that , but I just would like to see what community think about this idea without technical considerations

[Guinch_Roze]

It would be, for me, a REVOLUTION for Cosmos Hub to use such a system. Considering it as an investment fund across the interchain is a major asset that places Cosmos Hub back at its center. This could create a virtuous economic cycle where all chains align with Atom, and Atom aligns with the other chains.

[Victor118]

I hadn’t thought about it, but indeed the voting power accumulated give a voting power per atom staked
On the other hand, the particularity of PSS is to allow to delegate to validators according to the rewards obtained by consumer chains
In your case, no matter who you delegate to, you will have voting power via the tokens potentially earned by other validators

[Guinch_Roze]

Huge feature !

First, I expect there to be a lot of opinions on this topic in the forum, as I believe it could be a game changer for the role of Cosmos Hub and ATOM within the interchain.

First, does the community fully understand the stakes of this first-class feature?

Second, we should dive deeper into the technical aspects—how it could be built, implemented, by whom, and within what timeframe.

Third, I would like to see active participation from the Keplr team and the foundation to provide the necessary technical arguments regarding the impact on the user interface.

I also expect Keplr to be more active on Cosmos Hub and to become a cornerstone in aligning ATOM. We need a wallet to rule them all, and they are positioned as a leader.

[Tagu]

No brainer ! Would support such initiative

I like Keplr a lot, however, I don’t think I already saw them participate in any form in Atom governance on this forum. I have seen so many times replies saying "this should be implemented at the front end level (ig Wallets), but never seen any contact or proof of any kind of synergy between Keplr or leap here. Hope the new interchain team can improve this part

Tagu

[Moo_Pop_sMo]

I don’t think we should do this with cosmos hub community pool.

I made a suggestion on X yesterday about something close to what you suggested above.

My suggestion is about building a community VC Dao which has to vote and fund various teams of builders and projects launchîng on the cosmos hub. Thèse projects must be checked by ICF or any trustful concil to prevent rugs and rats .

This will work as a CoinList ICO

the investment projects will be validated by ICF then will be submitted to a vote by the DAO in order to choose which of these projects will be presented for fundraising.

Once the project is validated, there will be a public fundraiser which will require locking 50/100 atoms in the dao to be able to participate and have the possibility of investing between 100 and 1000$ and more for the largest. the details will be developed later like fixing the number of needed atoms to lock but you understand the principle.

these projects will be entirely financed by the DAO and with a % participation from the ICF why not ?.

Their sole mission will be to add value to the cosmos hub by launching it on the hub and even if they launch in PSS they will never be able to leave because they are held by the community.

the need to lock atom tokens to participate in these community ICOs will greatly increase the demand for the atom token.

allow the community to benefit from deals which are normally only reserved for institutions that use us as exit liquidity, will attract a huge number of users and we will subsequently be able to finance very large-scale projects while enriching the ecosystem and the community.

as the ICO tokens will be received by the community, we retain control of the governance of the projects that have been financed.

a lot of things still need to be thought about but I think the community should support the development of the HUB in this way. My English is not great so don’t hesitate to modify and improve my ideas and share them with important people in the ecosystem because unfortunately very often we are not listened to because we are not engineers.

[Guinch_Roze]

Cosmos Hub : Le Banquier et Gardien de l’Interchaîne

“Connecte-toi à moi, je te connecterai à tout. Je sécuriserai tes jetons en ne les vendant jamais. En échange, je prendrai un siège à la table des décisions de ta chaîne.”

Imagine un grand pont intergalactique reliant des dizaines de planètes . Chaque planète veut commercer, échanger des ressources et se développer, mais elles ont besoin d’un pont sécurisé et fiable pour éviter les attaques et les accidents.

Cosmos Hub fournit ce pont et la sécurité nécessaire via Interchain Security. Mais il va plus loin :

Il te connecte à tout : chaque chaîne qui s’intègre à lui bénéficie d’un accès direct à l’écosystème interchaînes.
Il protège ton jeton : les actifs captés ne sont jamais vendus, assurant un alignement économique à long terme.
Il gagne un siège dans ta gouvernance : en échange de cette protection et connectivité, Cosmos Hub obtient une influence stratégique sur l’évolution de ton écosystème.

Ainsi, Cosmos Hub ne se contente pas d’être un fournisseur de sécurité. Il devient le banquier intergalactique, un acteur stratégique qui finance, protège et façonne l’avenir de l’Internet des Blockchains.

[viv]

I actually like this proposal, we tried to do something like this pre-ICA.

I think cosmos hub was initially ideated to act as a central layer connecting other chains, but atom alone definitely cant pull it off from the economic perspective.

[Quentin]

Introduction:

Those who know me are aware of my strong bias in favor of the Hub. To me, the Hub is a de facto democratic state due to its decentralized governance by stakers and other parameters. However, you also know that I find this system particularly anarchic if it is not properly structured, especially through a constitution.

From a conceptual standpoint, I completely agree with you, you have perfectly designed the interchain relations of the Cosmos Hub by leveraging the power of the community pool, its influence, and its governance. I truly believe this idea deserves further development. However, I am convinced that relying on direct governance is not a good approach at all.

Problem: A Conflict Between Two Visions

Two fundamental ideas are in opposition here:

1. Ensuring logical voting within each chain: To guide decision making effectively, it is essential to understand the mechanics of different external chains. Voting “yes” simply for the sake of voting is not a viable strategy. Instead, the Hub should be seen as a political actor within the various chains, capable of providing constructive criticism both positive and negative on ongoing proposals and voting accordingly after thorough analysis.

2. Representing the Cosmos Hub stakers in other chains: This vote should also reflect the political vision of the Hub’s stakers. This means that each staker must take a position to ensure a coherent representation of the Hub’s ambitions across the entire ecosystem.

These two principles appear contradictory. In reality, stakers cannot always base their opinions on rigorous analysis due to a lack of time and dedication. As a result, the Hub’s governance in other chains could become arbitrary, serving primarily as a direct representation of stakers without necessarily ensuring informed and logically constructed decision making.

Solution: Indirect Representation of Stakers

To reconcile these two visions, a compromise must be found that balances representativity and efficiency. In international relations, states generally rely on representatives (diplomats), who are appointed either directly or indirectly. I propose adopting a similar approach for the Hub.

A Diplomatic Body Dedicated to Interchain Governance

The management of the Hub’s funds and interchain votes should be entrusted to experts with governance and strategy skills in other words, to genuine diplomats of the Cosmos Hub.

To ensure their legitimacy, these diplomats should be selected either directly or indirectly by the stakers. In my view, this would require the adoption of a constitution defining clear nomination rules. These experts should not be chosen arbitrarily their skills must be recognized, and they should receive formal support from representatives already elected for other general representation missions.

Once designated, these representatives should also be subject to an on chain vote to validate the tacit agreement of the stakers regarding their role and legitimacy.

Conclusion: Striking a Balance Between Efficiency and Democracy

Through the principle of representation, it is possible to achieve a fair balance between efficiency (decision making based on expert analysis) and democracy (active participation of stakers in the selection process).

[Guinch_Roze]

ATOM and its Connected Chains: Mutual Alignment for a Strategic and Thriving Ecosystem.

Problem: Strengthening economic cooperation between the Hub and its partners.

The Cosmos Hub currently serves as a security provider via Interchain Security (ICS). However, its role in long-term value capture remains limited and struggles to make itself attractive compared to its competition.

---

The ICS Challenge: Unrewarding Consumer Chains?

Today, many ICS consumer chains generate little or no revenue. This means that Cosmos Hub validators are essentially making a long-term bet on their success.

The problem? If these chains become profitable and sufficiently capitalized, they can leave ICS, resulting in a net loss for the Hub.

As a result, the Hub provides the necessary infrastructure for launching chains but without guaranteed long-term benefits.

---

Solution: Transforming the Cosmos Hub into a Strategic Interchain Investment Fund

The goal is to ensure sustainable economic growth and turn the Cosmos Hub into an active and strategic economic player by accumulating and holding tokens from multiple chains connected to IBC, whether they use ICS or not.

---

Economic Model of the New Cosmos Hub

Interchain Investment Fund

Objectives:

Asset diversification: Accumulate tokens from different chains to reduce dependence on ATOM and enable the Hub to participate economically in the success of other chains.
Revenue generation: The accumulated tokens can be staked via Interchain Accounts (ICA) to generate staking rewards for the Hub.
Increased influence: Use these tokens to participate in the governance of other chains and align strategic decisions with the interests of Cosmos Hub.
Reduction of ICS exit risk: By holding a stake in consumer chains, the Hub benefits from their growth and can incentivize them to stay within ICS rather than seeking alternative security models. Even if a successful chain leaves ICS, the Hub, holding its tokens, continues to benefit.

How would it work?

Token acquisition via:

ICS chain rewards.

Strategic partnerships with ICS chains.

Hypothetical customs fees on IBC value capture.

Governance: The allocation and management of assets are decided by ATOM stakers through on-chain voting.

Staking via ICA (Interchain Accounts): Generating yields while maintaining full control over allocations.

Position optimization: Dynamic allocation based on market trends and the Hub’s strategic interests (AI agents).

---

Multi-Asset Staking Model (MAS)

Principle:

Allow ICS chains to stake their own tokens alongside ATOM, while setting a maximum staking parameter for other tokens to favor ATOM (e.g., 20%).

Advantages:

Increases the Total Value Locked (TVL) of Cosmos Hub, thus strengthening economic security over time.

Diversifies assets securing ICS, making the model more robust and attractive for partner chains.

A commitment to not selling captured tokens fosters alignment and incentivizes collaboration.

---

ATOM Buyback: A More Incentivizing Model for Staking

An ATOM buyback mechanism could be more effective in incentivizing staking and rewarding stakers.

How does the ATOM Buyback work?

Value capture: The Cosmos Hub earns revenue in the form of IBC fees, ICS rewards, or other economic sources.

Using revenue to buy back ATOM: Instead of burning these revenues, they are used to purchase ATOM on the market.

Redistribution to stakers: The repurchased ATOM is distributed exclusively to stakers, increasing their effective yield.

Virtuous staking cycle:

A higher yield encourages more ATOM to be staked.

More staked ATOM means increased network security.

Selling pressure on ATOM decreases, promoting price appreciation.

Impact of Buyback on the ATOM Economy

Direct rewards for stakers → Makes staking more attractive, increasing network security.
Reduction of floating supply → Fewer ATOM available on the market, creating upward price potential.
Economic alignment → Revenue generated by the ecosystem directly benefits stakers.
A more effective alternative to burning → Instead of merely reducing supply, ATOM is revalued by redistributing it to engaged participants.

---

What Are the Advantages for the Cosmos Ecosystem?

An economically active Cosmos Hub: It becomes more than just an IBC router, but a strategic and influential player.
Financial security for ICS: The risk of chains leaving is reduced thanks to long-term economic alignment.
New revenue streams: Staking rewards and asset management fund the Hub’s development while reducing selling pressure on ATOM.
Strengthened interchain collaboration: The accumulation of tokens gives the Hub economic and political weight within the ecosystem.

---

Conclusion: A Reinvented Cosmos Hub

The Cosmos Hub must evolve from a simple security provider to a strategic interchain investment fund.

This model enhances its attractiveness, stabilizes ICS, reduces ATOM’s selling pressure, and increases its influence within the Cosmos ecosystem.

It’s time to give the Hub real economic power! \

ATOM becomes the ultimate weapon: the ultimate capital, the premier investment fund, and the spearhead of governance for the Internet of tomorrow.

[jacobgadikian]

I think I prefer that the hub be an investment fund for the hub

[Victor118]

I completely agree. I believe governance should also evolve to optimize decision-making while remaining under the control of the global governance.

[Guinch_Roze]

@Noam you should consider it for your work… that was your idea. and it is a great idea.

[Guinch_Roze]

If the Hub were to have a native DEX, we could potentially accumulate certain tokens from the broader interchain ecosystem and invest them in an investment fund. This could be used to participate in governance (or not just for that) but also to develop the liquidity pools of this DEX or enable DeFi functionalities directly from the Hub… just an idea.

[Guinch_Roze]

How can we effectively and intelligently utilize ICS rewards and the various tokens captured by the Hub to stimulate its growth while also protecting it from any net loss if one of its partners were to leave ?

[vixcontango]

Horrible idea. Hard NO.