Youssef thanks for taking the time to respond to the community’s questions, much appreciated! Re your answer to Question 11 on development funding, I am curious why the ICF is not providing the required funding? I have asked this question numerous times on Twitter as well as on the forum, and no one has answered. The ICF’s very mission is to support the Cosmos ecosystem isn’t it? The ICF was allocated ~26 million ATOM during the ICO, and collected all the the ETH and BTC contributions. Is that funding now all gone? There has not been an assets update for over a year now.
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Hey @cryptocat thanks for your feedback.
I don’t have a definitive answer to your question. The only thing I can tell is that ICF has funded a lot of initiatives over the years and cannot be everywhere.
Hello all, my name is Harry. First of all, I would like to thank everyone coming together on the forum with the questions and subsequent replies from the WP team.
The engagement by the community is tremendous, appreciate every input for shaping the new vision of ATOM.
I would like to ask a couple of things to get more clarity:
//ICS, the most awaited and hyped protocol will be the major new source of revenue for the ‘Distribution’.
How exactly would ICS work? I know there is nothing set in stone yet but to get a perspective since we are going to heavily rely on it as revenue -
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How much would the consumer chains be charged approximately? (Will it be fixed or subject to vary?)
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Who will validate the consumer chains?
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How much approx would each factions of the Distribution( delegators, validators and community pool) will get from the revenue earned
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Will there be a contract or consumer chains can cancel the security lending anytime?
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If they do cancel, would there be a counter-measure?
// “ As an additional safety measure, during the transition phase no more than 10% of the Cosmos Hub Treasury can be deployed within a 21 day period.”
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Seemingly self explanatory but still requires clarity. If, for instance, 2% of treasury is deployed and there still is 8% left for the period of 21 days. On 21st day the 8% is deployed and on 22nd, ( when the period resets) another 10% is deployed, which is 18% in two days. There should be a buffer period between two consecutive deployments of more than 5%
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Will there be a code for it?
// “ Governance should set a single ATOM floor fee, while the base fee is algorithmically priced in response to demand.”
- Is the discussion for this, part of the charter?
// Covenant : “One protocol sets parameters and deposits the funds into a covenant. If the other protocol has any issues with the original parameters, they may establish and fund a new covenant with updated parameters. This process repeats until a covenant is fully funded, at which point the deal terms are active.”
- If I understand it correctly, it reduces the voting time we see in governance proposals. Would the terms/contract be discussed on forums before it goes live?
As good as low time period sounds, my concern is lack of clarity may pass ‘not the best terms’
Or
If the terms have passed, would there be an option to modify it, if later you feel it’s not the best?
Thank you for taking the time to read my questions. Excuse me if any of the questions have already been addressed, would appreciate if directed to the source if so.
Harry
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I agree with you. The proposal and inflation rate and allocation going to the treasury is a very bad economic model. This will result in a direct transfer of value from current Atom holders / stakers into the treasury. Furthermore, it’s not considering the risks of liquid staking via impermanent loss. Also, at what rate will ICS fees be a viable substitute for staking returns / rewards?
The inflation rate built into the 36-month plan is not realistic. It’s much too high and what is the justification for needing so much funding? Instead of locking the community into a 3-year funding scheme without a clear spending plan. Why can’t the treasury be funded on a 6-month basis by providing some type of spending plan and associated budget that gets approved by the community?
The treasury should operate on a “funded as-needed” model. Why does it need $500 million sitting in its coffers? It should only need to maintain a funding budget that aligns with its 6 to 12-month spending plans. If it needs more funding, the treasury can go back to the community with a new fiscal year spending plan and seek approval.
How about considering other ways of funding the treasury that is not directly dilutive to existing holders / stakers. Why can’t the treasury sell T-bonds to liquid stakers to fund Treasury projects and assess taxes on liquid staking returns from Defi protocols and from other non-T-bond investments? T-Bonds can be issued for specific projects with defined goals and objectives and limited durations for a specific ROI. T-bonds can then be auctioned and traded on secondary markets to provide liquidity to the holders. So they can hold them or sell them as desired.
Inflating the Atom token into the depths of oblivion is not the right solution. Too much value is being directed into the treasury without any planning, oversight, or control mechanisms.
I will vote No on this proposal in its current form.
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Curious about what everyone thinks of the issuance scheme below which I think would address community concerns over dilution, while also funding the Treasury and decreasing ATOM inflation. Starting with the baseline security subsidy, we decay total issuance by 5% every month. Each month, 35% is allocated to the Treasury, the rest to validators. By month 12, 10.8mm tokens are with the Treasury.
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Thank you for all the time and effort involved in the new whitepaper. Interchain Security is an exciting addition to the Cosmos Hub, which will add value. I have wondered how dual mining in POW would translate to POS, and Interchain Security seems to be a great solution with great possibilities.
Regarding issuance, I think it is important to jump-start and support the development of this new vision, but in the long run, it should also protect validators and ATOM holders. It makes more sense long term to fund the Treasury based on performance and not at a fixed rate. Having a large treasury before the system is self-sustaining, which may or may not happen, would not be beneficial. I suggest issuing 10 million ATOM to the Treasury in the first month. Afterwards, Treasury would be funded as a percentage of Issuance and Interchain Security, with the majority going to Distribution. The Issuance model could still be reduced to lower inflation and, in the future, could be changed to be deflationary based on Interchain Security’s performance.
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The 10.8 million is much more digestible than the 55.2 million that is being proposed in the WP.
They could have greatly simplified the WP by just saying that they would like all Atom holders to contribute 14% of their total Atom holdings into the treasury over the next 36 months. Or even easier just have everyone send 14% after the proposal passes and get it over with.
Embedding the transfer within the context of inflating Atom is just a smoke and mirrors show. If people understood the basic concepts of “Nominal Value” versus “Real Value” then they would reject this proposal. This fixed transfer scheme is bad governance. No accountability, no oversight, and no protections for the holders.
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“I get the sense that they don’t care what the community has to say. It looks like they will try to push their proposal and rely on the general ignorance and lack of understanding of the community about what they are pushing.”
I have seen literally the opposite from all parties who wrote the white paper. This is not helpful or productive rhetoric.
Just one of many examples, from like an hour ago in Telegram:
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But it is very frustrating the speed that this proposal is moving forward without a comprehensive understanding of its full economic implications. This is a major shift in Atom tokenomics and it deserves to be more thoroughly vetted. Other options and ideas should be discussed and explored so that the best ideas rise to the top.
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Here’s an alternative that makes the hub stronger through conservatism. "ATOM ONE" Constitution Proposal
Fundamentally, the point of the hub, and even IBC and ICS is to enable experimentation off chain. If the ideas for ATOM2.0 are good, they can be experimented on first off chain so we have a chance to understand them better before moving anything to the hub. Litecoin to Bitcoin.
Furthermore, anything that can be off the hub, should be off the hub. A minimal hub is less threatening to ecosystem participants. A maximalist hub will drive away adoption from zone customers.
Bitcoin had the sense to limit its functionality and not adopt a turing-complete VM. It only ever made incremental changes to its functionality, making it widely adopted as a safe crypto asset.
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My experience in the crypto world is quite limited, but I am quite experienced in traditional finance.
The equivalent of atom 2.0 to a publicly traded company would be a capital increase equivalent to almost 20% of the total capitalization (depending on the number chosen, slightly higher or lower, as Jacob proposes even more dilution).
For a company to issue 20% of its shares and sit on that ridiculous amount of cash without a purpose would be a horrible decision. The same applies at ATOM.
Why dilute all the investors without a defined reason?
On the other hand I’ve read proponents say it’s not dilution since all that printed cash is ours. That is simply untrue. It’s as easy as going to the real economy with the welfare check or any rollup company that issues as little as 1-2% each year. It’s quite remarkable how much worse the company’s fundamentals get when they get an investment wrong with such a small dilution, let alone 20%. Without a PERFECT management margins start to decrease so do ROCE. Air money is never free.
When cash is not a scarce resource it makes decisions worse when it comes to using it, and in the case of being too abundant, it makes it impossible to effectively find investments that are truly worthwhile.
I do not understand this obsession with printing money just for the sake of it. It is basically imitating the behavior of the finance we supposedly want to overcome.
It is perfectly compatible to maintain a healthy ecosystem with sufficient funds without the need to create huge hyperinflation without any defined purpose, especially when we are already at this stage of maturity.
As a maximalist investor in cosmos I hope that other less aggressive avenues will be taken, because otherwise it will make me doubt my portfolio.
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I 100% agree with this statement! Devs should listen to the community! I think 5-10MIL atoms will be enough to fund all the projects for 10 years!
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Yes, I have read the proposal for a Constitution. I agree a constitution is needed. I have also viewed the Atom 2.0 Governance Debate on YouTube. This discussion helped to clarify some of the significant gaps in the WP. The authors of the WP need to integrate the discussion topics from this video into the WP. If they expand on the topics covered in the video, I would be more receptive to the proposal.
But, I still believe that the authors of the WP do not make a convincing case for why the Treasury needs 55 million Atoms.
The Letter that is presented with Proposal #78 also has a lot of valid points that also need to be addressed by the authors of the WP.
The Interop
Hey All,
I accidentally put this first in Jae Kwon’s forum post about an Atom ONE Constitution, but wanted to put it in this discussion as well for visibility.
Here are my overall thoughts on ATOM 2.0 and where the community should go from here.
- The entire WP should not be voted on in its entirety. There are way too many moving parts, and I agree with Jae’s sentiment that DAO governance controls are not mature enough to handle such a large treasury. While other ecosystems outside of Cosmos have launched $500M+ ecosystem development funds, those funds are raised by private capital and this past cycle has shown that they have led to little value to the communities they serve, even with good intentions.
- My prior experience has been in Business and Resource Planning dealing with multi-billion dollar and multi-year infrastructure capital plans, and there is definitely some lessons learned from corporate governance and accountability. Corporations go through yearly reviews of future 1yr, 5yr, and 10yr plans and earmark funds for projects with some estimates that have varying degrees of accuracy depending on how far out the project is. This is something, in my opinion, every DAO in the crypto space is lacking. Typically you see a large pot of money sitting in DAO treasuries that are then tapped into based on proposals reactively coming to the community to vote on with not enough time to truly flesh out. While I dont think the Cosmos Hub needs a 5-yr plan due to the fast moving nature of this space, I do think the community absolutely needs at least a 1yr plan (for now, eventually 3yr+ as this process matures) on what treasury funds should be spent on and how much each project should be (+/- 10% accuracy - this can change, but an accuracy threshold should be baked into the Constitution). Maybe the ICF takes ownership of additional funding for projects that cost beyond the estimate + accuracy threshold. This puts onus on the ICF to hold these project accountable on behalf of ATOM holders from a scheduling and cost perspective since they will also have skin in the game to pay for any overages beyond the estimated amount.
- Interchain Allocator + Scheduler should be voted on and passed. The Cosmos Hub is the ideal coordinator to take advantage of cross-chain MEV, and the ATOM is the ideal reserve currency of a multi-chain world especially with Hub minimalism being a key differentiator from other PoS chains. The Hub needs to monetize its position in the Interchain, and I think at this point one could easily argue its even time for the Hub to compete without giving up its Hub minimalism vision. The Hub has given so much to the Cosmos eco, and besides early ATOM holders, the Hub itself has not received anything in return.
- I dont think large capital is necessarily waiting for a concrete monetary policy for the Hub with a known inflation schedule. In my opinion, large capital allocators are waiting for the Hub to accrue value through Interchain Security so it can quantify the market opportunity. I actually think they would rather a known bottoms-up yearly budget that the Hub could mint directly into the treasury at the end of every year to spend on future projects. Eventually, a % of revenue from Interchain Security, Scheduler, Allocator (and any additional future cash flows) should go into the treasury to fund growth opportunities without the need for inflation.
- Please no more forks or tokens. This is the last thing the Hub needs imo and adds more social and economic complexity (look at Rune’s Endgame Proposal with MakerDAO, as an example, which plans on creating more tokens to incentivize better DAO coordination. IMO it is very complex without clear benefits. Lets work within the confines of the ATOM).
Looking forward to seeing how the conversation goes from here!
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I am writing a post with my thoughts on it. Draft is here and welcome any comments and feedback: Thoughts on ATOM 2.0 - Google Docs
Tried accessing it, but tells me I need to ask for permission.
Ah sorry. I had posted the wrong link. Corrected now.
It seems like that a significant portion of the community does not comprehend the ramifications of the proposal (regarding the financing of the treasury), either because of ignorance or because of hype that it all be worth it (which could still be true in the long run).
The current voting of proposal 78 says it all. Although I have to admit that the headline of the proposal did not help the cause…
It is sad because this ecosystem had so much promise, but I am not willing to be exposed to such risky and vague handling of funds, especially one of such magnitude. I understand that a competitive budget is important to attract competent developers and that in high quantity, especially if we are competing for the same software engineers as other big protocols, but 55M ATOM are just way too much. And all this without any concrete governance for these funds in place… We are told that these details will be ironed out in the future and that the council will, of course, act in the interest of the stakeholders, but that is equivalent to me to the aforementioned “trust me bro, gimme the money, and we will handle the rest”-narrative.
The irony is that it is claimed how important it is to vote on this white paper as a whole but the most important aspect for me as a stakeholder, things like governance, checks and balances for the requested funds are left incredibly vague, leaving stakeholders heavily exposed. The unnecessary complexity of the financing does not help either. I do not want to presume ill intent, but such proposals invite bad practice at the expense of stakeholders, at the least.
I will vote for this proposal in its current form with a NO (VETO)
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Thanks for your thoughts. There are many good points here, here’s some feedback for the first 3 points. Looking forward to hearing others’ thoughts.
I disagree with this stance, particularly because each component of this proposal is connected with every other component. The proposal is as much a call to action as it is an agreement to make changes.
Have you seen Page 21, “A Forum for Sovereign Interoperability”? That proposes a framework for addressing the accountability concern. Additionally, it seems like it would be beneficial for you to propose a council which would have the authority to construct such a plan.
Why would you want the ICF to do this rather to have a new organizational arm of the Cosmos Assembly do so?
I saw @JD-Lorax mention elsewhere “Imo when it comes to future Cosmos Hub growth and advancement:
ATOM 2.0 > ICF/Ignite/AiB”. I interpreted that as, Cosmos Assembly > AiB / ICF. This is in line with what I said above about delegating the authority to a council to make the changes you propose.
I agree with this sentiment, but there still needs to be a strong governance mechanism for the interchain allocator. The proposal in its current form providers that context.
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