[PROPOSAL #72][ACCEPTED] Bringing Liquid Staking and DeFi to the Cosmos Hub with Interchain Security

Not trying to assume the worst, but was the whole point of this to fund Lido?

I would appreciate things like this just being more upfront. I feel like there’s a push behind the scenes to make Lido happen specifically and I wish there was just transparency behind that.

I have indifference on the Lido LS Whitelist especially if we’re doing to fund this, but I do see the value in using community funds to help consumer chains. Maybe we use this in sort of a venture arm, or another way to continue having bootstrap funds as time goes on.

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Please correct me if I am wrong, this proposal will decrease staking rewards because 75% of fees will be redirected to a DAO?

Also, which validators will provide liquid staking? Is it Lido and then we validators must turn our wallet keys over to Lido? If so, not sure this is a proposal we can support at Blocks United.

Hi there. We have only pre committed a portion of these funds (50k) to the P2P team for a DeFi Hub which would host the Lido liquid staking protocol. The rest of the funds would go to blue chip projects on a discretionary basis. If there is not sufficient demand, the unused funds would be sent back to pool.

Obviously, everything is on chain and the funding committee would share all funding updates to the community when/if they arise.

Hey BlockUnited, afaik:

  1. This proposal does not change the staking rewards you’re earning for validating the Cosmos Hub itself. If it passes, it will not reduce these staking rewards, on the contrary, it may increase them:
  • Currently, Cosmos Hub validators get: Cosmos Hub staking rewards (ATOM)
  • If this proposal is accepted, Cosmos Hub validators will get: Cosmos Hub staking rewards (ATOM) + 25% of the tx fees collected on the DeFi Hub (DeFi Hub token)* + 25% of the tx fees collected by other Consumer Chains launching with funding from this proposal (in their token).
  • The final name has not been announced yet
  1. Liquid Staking is built on top of the existing set. This means any validators is free to decide whether or not they want to participate in liquid staking. There is no penalty for not participating, but there is an incentive (more delegations) to do so. Participating to a liquid staking protocol such as Lido does not require handing over your validator’s wallet or private keys. From an on-chain perspective, the main difference is that your validator’s public address has been added to the Validator Registry at the smart contract level. The liquid staking protocol then makes delegations to your validator on behalf of users. In exchange, the protocol expects you to maintain a high performance and governance participation rate.

Hope that helps, let me know if something is unclear :slight_smile:

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Are you with the Lido team?

Can you confirm whether or not there is a whitelist controlled by Lido and how a validator gets on that whitelist?

Lido’s exact validator selection method for potential Lido on Cosmos deployment is not finalized yet. This proposal is not about Lido, it’s about funding an interchain secured cosmwasm zone.

I like this proposal, but there are a few reasons why I must vote NO. These are my concerns and I hope they can be addressed:

Redundance of DeFi hub: I have read P2Ps article and their plan for the DeFi chain and I must say it is very similar if not the same as Quicksilver (probably even Persistence, not sure about this one). So my question is, should we be earmarking 50k ATOM to bring a functionality that will already exist ? What is the benefit of giving this 50k grant to P2P, when the added utility seems very little? Are there any problems that the Core devs see with Quicksilver or the others that I’m not aware of? I would be much more comfortable supporting a project like Quicksilver with the grant who seems to have more emphasis on decentralization. I agree that competition is good, but then P2P should compete without the grant.

Which brings me to my next point: I think this proposal can be split in two. One, to approve funding for ICS projects and potentially the DeFi hub (which I would very much support!). And the second, where we can decide who could build the DeFi hub. Maybe there are other projects/concepts out there for a DeFi Hub/ liquid staking solution that we are not aware of. And giving away 50k to P2P just because, doesn’t convince me.

Maybe P2P, Quicksilver, Persistence and others can compete for the grant? Similar to Osmosis’ proposal to choose their canonical bridge. I think liquid staking and DeFi are big and welcome additions to the Hub, don’t want to hand it over without being sure. I hope my concerns are taken well and am looking forward to have them addressed. :slight_smile:


Does this proposal give ATOM tokens to the liquid staking provider? Will it be Lido? Lido v1 does require validators to send their wallet NFTs to a smart contract. V2 supposedly does not require that.

Here are a few answers to the questions we at P2P were receiving while discussing the proposal:

Is P2P getting 150k ATOM?

Proposal 72 is asking for 150k ATOM in total, but only 50k ATOM will go to P2P to build Neutron, a permission-less, Interchain-Secured CosmWasm platform for Interchain DeFi. The rest will be distributed by the proposal’s multisig (which includes Zaki, Jack, Jelena and David Feiock) to other projects launching on Neutron or on their own Consumer-Chain.

  1. Isn’t that a lot? Why can’t the projects fund themselves?

50k ATOM (~$400k at current prices) sounds like a lot, but it is a tiny amount when compared to the overall cost of bringing a platform such as Neutron to market, which P2P will cover. The ATOM grant remains important: it is an indication of the community’s support for the project.

  1. Is Lido going to receive ATOM?

No, Lido will be funded separately by the Lido DAO. It will not get ATOM from Prop 72.

  1. How will staking rewards for ATOM stakers be affected by Prop 72?

Prop 72 offers to collect 25% of the transactions fees generated on Neutron and other Consumer-Chains funded via the proposal. These fees will be paid out to ATOM stakers and delegators as a reward for securing Neutron and other Consumer-Chains. Neutron and other Consumer-Chains will keep the remaining 75% of the transactions fees to fund their continued development. This means that the more successful Neutron and other Consumer-Chains are, the more rewards ATOM stakers will get.


@jelena @sacha and I have prepared clear and simple responses to many of the community’s questions through an FAQ.

Here is the link: https://hackmd.io/@ssaintleger/prop-72-faq

The goal here is to help governance participants understand the proposers’ arguments clearly and dispel misinformation.

Hope you find our attempt useful as you vote!


Thanks for putting all of this information together, great work!


Hi, this is Jacob from Notional here.

We’ve chosen “abstain” as our position on 72, but strongly welcome p2p, lido, neutron, quicksilver, and any legit liquid staking provider.

The reality of our conversations with various groups is that we now feel that liquid staking is inevitable, that 72 should have really been majority about liquid staking, and that it’s most likely that 72 should simply have affirmed that we were building neutron, and sent payment directly to the p2p validator’s wallet.

I have all kinds of questions about neutrality and what have you but the situation with liquid staking is relatively clear: it is going to happen and it will happen best if there are numerous liquid staking participants.

So it’s going to be our policy on ongoing basis to look for governance proposals that directly pay out to their principles. For example in this case that would mean that the payment goes directly to the P2P validator instead of to an intermediary multi signature. I remain strongly convinced that the cosmos hub should fund consumer chains and that in order to do so in a way that allows the nearest possible tracking expand and mapping of spend to results for the holders of the atom, proposals need to be smaller than this one. With that said, the reality of the situation is pretty clear to me: we do need (multiple) liquid staking providers.

Liquid Staking not actually a concept that I am super crazy enthusiastic about but here’s the thing, the Cosmos is a root of yield and because we are a root of yield, if we don’t build it in ways that we find acceptable for the net work, others are going to build it. I don’t like making lesser of two evils arguments but I think that the commercial appeal of liquid staked assets to users will be extremely great, to the point that if there was no decentralized solution for it, centralized exchanges could threaten the cosmos.


  • We’re abstaining from 72 because it wasn’t specific enough and it isn’t the precedent we’d like at Notional.
  • We’re strongly and clearly affirming that we feel that Neutron will benefit the hub.
  • We’re strongly and clearly affirming that we support the notion of the hub investing on behalf of atom holders via the community pool.
  • We’re acknowledging Joe Dirtay’s concern about inefficiency of gov spend, and will endeavor to move cosmos gov more towards a results oriented style featuring due diligence and tracking of results.

Hi, this is Jacob from notional with another update about consumer chains on the hub.

My advice to Lido / p2p, if they wish to continue down this path, is that they really, really carefully watch what they say.

For example, you could get smacked around with the hub’s huge CoC or dumped on by the interchain foundation’s favorite validators:

If you were to question the destruction of the marketplace for validation on the hub by the interchain foundation, this might happen:

The gentleman threatening me since I “tweeted too much” during prop 69 – is the first interchain employee that I approached about my concerns about the random string validator.

I tried to pave the way for greater safety for consumer chains on the hub, and that was shut down too:

As you are likely aware, Neutron will have a hard dependency on the cosmos hub. It is absolutely possible that there could be an issue with the hub’s code, that can affect neutron.

In my experience, if you want your commentary on code to be treated with any sort of parity – well, frankly, my experience is that it simply will not be. That is why no one outside of Interchain, GMBH is contributing directly to the repo at GitHub - cosmos/gaia: Cosmos Hub

it’s hell and has been taken over by politicians unconcerned with the hub’s engineering needs.

I support neutron, and I hope that there’s not confusion on that. If the political risk of operating on the hub is too great, there are a number of other chains in cosmos, who would gladly support you to our last breaths if you wished to deploy there – or even, on both.

Point being, and please just take this for what it’s worth better watch what you say.

Better not tweet too much.

Better not be critical of the hub or the policies surrounding its operation, stuff like that.

Since there is a hard dependency on the hub for Neutron, I assure you, neutron could get hurt in all of this.

I think Cosmos Hub as a community and the by-side organisations has proven thoroug the last five years that there’s an unwavering vision for interchain, dedication to push out great systems - and that all despite the internal conflict in the community and between key contributors. I think that being under Cosmos Hub’s governance umbrella is a good place for us.

Just so you know I’m not actually referring to the hubs governance umbrella which you’re probably right is just fine. I am referring specifically to the code management practices used on the hub .

Just so you know, the hub could be an ideal place for neutron. But right now I don’t think that it is. Reason being, the software development team does not listen. If you go to them with concerns, they may literally instead of trying to address your concerns or even conversing with you say that you have violated the code of conduct for the cosmos hub which is sprawling and vague.

“better not tweet too much”- you mean, like, incessantly? Like 500 times/day in long threads on everyone in the ecosystem’s tweet replies? Directly @ing everyone your current daily fixation is even tangentially related to?

Your style is not productive for good faith discourse is the real problem.

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so strange how issues like this:

and this

keep being made about myself. They aren’t. Good day anon.

In the Twitter spaces hosted my cryptocito Jelena and the Neutron devs said the chain would use ATOM as its native token and thus be accretive for ATOM’s value. That was an important fact for us, because the proposal read like a validator trying to launch their own chain/token, get rich and have community funds pay for it.

This morning on Twitter i saw that Neutron is launching their own token, which seems to be the opposite of what we were told. Will you please help me understand where I’m wrong?

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I think there’s a confusion here between “native token” and the token used to pay gas fees. Here is what the proposal says, which is what was discussed during the Twitter Spaces:

This is what the token we announced is for :slight_smile:

So far, gas fees on Neutron are slated to be paid in ATOM tokens only. This drives some value to ATOM but also results in a much worse UX. Imo, a better solution would be to allow fees to be paid in any token and swap 25% to ATOM to distribute to Cosmos validators and stakers. This would result in the same amount of lasting value accrual and a much better UX, which is why I think it’s worth discussing as a community.

In any case, Neutron is bringing smart-contracts and activity under the purview of the Hub, meaning it allows the Hub to capture revenue that would otherwise go to other chains, tokens and validators. The more successful Neutron is, the more value accrues to the Hub!

Edit: double posted by mistake, deleted the second post

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Yes, governance token. Right.
How does using ATOM as the gas token result in a much worse user experience?