[Proposal #792][ACCEPTED] Launch Neutron on Replicated Security

[KJINC.io]

LFG! Can’t Wait.

[trembeley]

Sounds great! Can’t wait for $NTRN

[carrot]

LFG to the team, congrats !!

Concerning transaction fees :

• do you have an adoption table that forecast amount of fees depending of the usage compared to other blockchains.
• Is the 75% left of the MEV revenue and fees for the Community pool, team or users ?

Very excited about this

[Spaydh]

The remaining 75% accrue to the token and network Treasury (the Neutron equivalent of the community pool).
@carrot @Rakesh_sj @mr.hyunh

[Spaydh]

1. As the proposal mentions, further information will be provided as soon as possible.
2. I don’t remember any such requirement being voted on. Requiring consumer chains to have inflation weakens the value proposition of Replicated Security and is not desirable in my opinion. Neutron’s design doesn’t feature inflation, but it includes an allocation to the hub that grows over time since the hub is the only community to continuously receive NTRN tokens via tx fee and mev staking rewards (the rest is burnt). In my opinion, a growing share of a deflationary asset is more valuable that a stable or decreasing share of an inflationary asset.

[Noam]

Thanks for the answers Spaydh! Looking forward to reading more about the economics!

[lexa]

@waqarmmirza and @Spaydh - some governance archival work for you guys

I’m wondering if this is the idea being referenced (this is from the text of Proposal #72) (emphasis mine).

Key Attributes of a Consumer Chain

• Majority of gas fees go to developer DAO: On this type of consumer chain, gas fees are paid in Atoms. For example, 25% of the gas fees are sent to the Cosmos Hub validators and delegators for securing the chain, and the remaining 75% go to a DAO supporting the development of the consumer chain.

I don’t think this was intended as a ‘requirement’ of consumer chains so much as a speculation about what a consumer chain might be, so that people had the context to vote on an ICS-related proposal before many of the core features had been designed or developed (May 2022).

There was also something in the appendix text of Proposal #187:

How should validators think about revenues and costs?

There are multiple ways a consumer chain could remunerate the Cosmos Hub validators:

1. Transaction fees: By default, 25% of the consumer chain fees will be distributed to the provider chain. This number can be set differently for each consumer chain. Note that validators also have control over the minimum fee they are willing to receive.

2. Token inflation: If the consumer chain has a token, they can allocate a portion of the inflation to the Cosmos Hub validators and delegators (in other words, “continuous airdrops”).

3. Application fees: If the consumer chain doesn’t have a token, a percentage of the swap fees, usage fees etc. can be distributed to the provider chain as well.

But this was part of the FAQ/discussion, not what was voted on.

As far as I know, Neutron’s proposed compensation scheme is better than anything that’s come up in Hub discussion. A 25% share of gas fees (including a deflationary asset) and 25% of the MEV revenue and a genesis allocation feels pretty sweet to me. I’m looking forward to hearing more about the genesis allocation when it’s ready to share!

[waqarmmirza]

Thank you once again, @lexa. I had actually mistaken the FAQ section for a part of the proposal(Although I think this is some sort of commitment, this is only me). I do appreciate their good intentions and the generous sharing model they have proposed.

Regarding the Whole ICS discussion, it seems that adding more utility for ATOM and the entire ecosystem was a priority. While a one-time major payment of NTRN with subsequent fees may not be as suitable, a continuous airdrop would be more appropriate.

But I will wait for their genesis allocation details, for further comments.

[heejin]

Fully support neutron!
and I have a question about Replicated Security. Should the inactive validator also running the consumer chain such as neutron? to ready for when the validator go to active from inactive status.?

[BuilderBot]

Are you planning on building a DEX on Neutron yourself or would this not be part of the Neutron team but others building on top of Neutron?

[wassie]

GATA DAO Support this proposal to onboard Neutron, Waiting for details on genesis allocation.

[Bro_n_Bro]

still can not find token distribution info, any update on this?

[mr.hyunh]

Thanks for the answer. Any details you can share on how fees will accrue to tokenholders? Will tokenholders have to stake/LP and claim fee rewards or will there be some kind of rebasing model?

[ala.tusz.am]

Token Allocation Amounts and Method

Hey! Can you clarify what you mean by token distribution info? Do you mean

1. how exactly the tokens will be paid out to ATOM holders?
2. what quantity of tokens will be paid out?

For 1 (for ATOM stakers), tokens will accumulate in the same way that ATOM rewards do, and then delegators / validators just need to claim them, just like claiming normal staking rewards.

For 2, the proposal has this:

@Neutron

An initial security agreement between Neutron and the Hub was set by Proposal 72 : in exchange for providing security to Neutron, the Hub would receive 25% of its transaction fees. To better align incentives, Neutron proposes to also share 25% of its MEV revenue:

• Transactions fees: Transactions fees protect the network from spams and can be paid in ATOM or NTRN. Native USDC may be added shortly after launch. Transaction fee revenue scales with user and application adoption.
• MEV revenue: Neutron will be running on a version of tendermint that features a blockspace auction, enabling searchers to bid for specific bundles to be included by block producers at the top of Neutron’s blocks. MEV revenue scale with activity, volume and TVL, and bids are denominated in NTRN.

As a result, if/when Neutron is launched on Replicated Security, the Cosmos Hub will receive and share additional rewards with ATOM stakers and validators denominated in NTRN from transactions fees and MEV bids, as well as extra ATOM from transaction fees.

and

@Neutron

To give thanks to the Cosmos Community for its support and ensure the long-term alignment of both networks, the genesis state attached to this proposal will contain an allocation to the Cosmos Hub’s validators and delegators.

Further detail about the proposed launch plans for Neutron and any eligibility requirements, will be provided in a subsequent article which will be shared here.

All calculations for the proposed airdrop have already been made, there is no need to take any on-chain action.

[Bro_n_Bro]

sorry, might be a bit confusing

actually meant for Neutron token distribution/allocation (community, founders, airdrops etc)

[effortcapital]

they’re releasing it before the prop goes up for vote. This is the first draft of the prop and the token allocation will be public shortly (probably next 1-2 weeks).

[0xFables]

Excellent proposal. Well done Neutron team, congrats on making it here.

The importance of this section from the problem statement can’t be understated:

@Neutron

• The economic security of Cosmos smart-contract platforms is low, increasing risk for TVL-intensive applications and bottlenecking growth.

Unlike most new L1s, Neutron launches with clear product market fit from the jump: give developers and protocols from other ecosystems a smart contract platform to build on that can leverage all of Cosmos’s unique cross-chain infrastructure (ICT, ICQ, IBC, etc) without needing to bootstrap their own appchain validator set and worry about long-term L1 economic sustainability.

There’s already proof points for this need: blue chip Ethereum protocols (like Lido) already have research posts on their gov forums that highlight the value in leveraging Neutron to expand into the Cosmos ecosystem.

So not only does Neutron unlock the design space for the types of cross-chain applications to be built (interchain money market, interchain “quantum” DEX) but it also gives the sidelined power dapps outside of Cosmos ecosystem a way to get into the interchain without worrying about economic security or creating their own appchain from scratch.

Long term, this sounds like >1.45% of value to me. Supportive.

[Spaydh]

The relaxed slashing/jailing requirements for consumer chains for now means that validators should have enough time to spin up their consumer chain nodes without too much risk of getting jailed for missed blocks. Still, if your validator is close to getting into the active set, you should definitely be monitoring its status

[Spaydh]

We built the platform so that others can build applications like DEXes easily and securely
In the early days of the network, we may contribute to the development of a few applications which we think will be critical value-adds, but in general, we expect other teams to build applications on Neutron

[BuilderBot]

validators should have enough time to spin up their consumer chain nodes

can you elaborate on that please. Once 2/3 are running, how much time does the rest have? Is it a few hours, days, a week?