Hello Cosmos Community!
I’m Jelena Djuric, founder of Noble. It has been so exciting to see the energy and positive feedback from the Cosmos community around the launch of native USDC. There are currently over 22 million USDC issued on Noble and we expect that number to grow significantly in the coming months, particularly as the dYdX Chain begins the migration, enabled by CCTP, of significant collateral from Ethereum to Cosmos. Noble’s goal is to see the IBC ecosystem become a hotbed of activity, with many novel use cases and appchains recognizing both the value and power of the Cosmos stack and the benefits of native stablecoin and RWA liquidity. We have been so encouraged by the positive reception and support Noble has received from other Cosmos appchains around the launch of USDC, including Osmosis, Kujira, Sei and many others. It’s been gratifying to see native USDC become a catalyst for some in the broader crypto ecosystem to recognize the significant benefits of sovereign appchains and IBC.
As many of you are aware, Noble’s integration into replicated security, or “ICS v1”, has been an item on the roadmap since the chain’s conception. We initially proceeded with caution in ICS integration given changes to the protocol’s slashing mechanism; however, these concerns were addressed and our integration plans have been fully on track over the last few months. That said, in order to facilitate the launch of the Noble chain in advance of full ICS integration, a genesis Proof of Authority (“POA”) validator set was put together, which consisted of a subset of 20 Cosmos Hub validators. This interim set up provided Noble with a high level of chain stability and security while setting the stage for a relatively simple and straightforward ICS migration. It was the full intention of the Noble team to adopt ICS before the end of the year and we have taken many steps around the integration process. For example, we integrated the ICS protocol into Noble and worked closely with the Hypha team to put together a comprehensive plan for testing the migration before it was set to reach mainnet. Further, we’ve worked extensively with Noble’s POA validator set on multiple upgrades and have run a successful persistent testnet to ensure the reliability of the Noble chain. That said, we now believe it would be best to delay ICS integration for Noble and the reason for this post is to provide transparency to the community on the reasoning in this regard.
Noble is early in its development and, in the absence of a native token for the network, relies entirely on transaction fees to drive validator and staker compensation. Currently, Noble’s model prioritizes low transaction fees in order to facilitate liquidity migration to the Cosmos ecosystem and to encourage payments use cases that compare favorably to other blockchains from a user cost perspective. Noble intends to be cost competitive with platforms that are native asset issuers of USDC and other well adopted stablecoins and RWAs. Outbound IBC transactions are where the majority of transaction fee revenue for Noble is expected to accrue given users’ familiarity with exchanges and other platforms that charge an exit or withdrawal fee. As an IBC out transaction represents a form of “exit” from Noble, this is a natural point of capture. That said, Noble’s current model aims to ensure as little friction as possible given its stage of development, the priority given to user experience and its goal of proliferating native assets throughout the Interchain.
As a result, given Noble’s fee model under current volumes and near term projections, Noble’s integration as a consumer chain would mean that ICS validators would be operating at a loss out of the gate. While various factors might change with respect to the overall market conditions within the cryptocurrency ecosystem, figures so far demonstrate that current volume would not meet the profitability standards for all 180 Cosmos Hub validators. We think the risk is high that either Noble is not accepted to replicated security at this time or, potentially even worse, Noble joins ICS and is viewed as a failure due to validators not being able to cover their costs. We want to protect Noble as well as the broader Cosmos community against this very significant risk.
To be clear, ICS continues to be on Noble’s roadmap but a key precondition is that Noble, Hub validators and ATOM stakers are set up for success from an economic perspective. This includes, among other things, additional assets being issued on Noble (which the Noble team is working hard to deliver) and more work on an optimal fee model which strikes the right balance between user experience and appropriate stakeholder compensation. Ideally, Noble is mature enough to be admitted to the AEZ some time in mid-2024. Although timing is impossible to predict and circumstances always change, this is a target the Noble core team is striving for internally. We believe it is prudent to give ourselves, our users and our stakeholders more time to assess a feasible and sustainable economic model that takes into consideration various incentive structures within the general blockchain ecosystem and does not necessarily rely on a native token in the near term.
To conclude, I want to personally extend my thanks to community members who have supported Noble and the launch of native USDC - it has been so gratifying to see the burgeoning liquidity and excitement around the Interchain! Noble remains aligned with the Hub and we are looking forward to working to hit the milestones around ICS acceptance in 2024.