[Proposal ##][DRAFT] Acquisition and Merger of Osmosis into the Cosmos Hub aka COSMOSIS

Hub Proposals Community Spend
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Executive Summary

Proposal: Acquisition and merger of Osmosis into the Cosmos Hub.

The Cosmos Hub and broader Cosmos ecosystem are entering a new phase. After years of sovereign experimentation and expansion, it is increasingly clear that stack usage alone does not guarantee economic gravity for the Hub itself. Recent ecosystem contraction, highlights the need for action in strengthening ATOM’s direct economic foundations.

Osmosis is battle-tested infrastructure that has operated continuously since 2021. It has reached operational maturity, with established revenue, durable adoption, and deep integration across Cosmos. It represents proven, trusted, revenue-generating DeFi infrastructure that can operate at scale.

This proposal consolidates that mature infrastructure under ATOM governance. By integrating Osmosis into the Cosmos Hub, we eliminate redundant security costs, concentrate capital formation on the Cosmos Hub, and establish direct value accrual for ATOM from ecosystem activity.

Rather than maintaining parallel centers of gravity, this merger embeds the ecosystem’s primary liquidity engine directly into the Cosmos Hub. It aligns security, liquidity, and governance around a unified economic framework, and strengthens ATOM’s role as the Schelling point asset of Cosmos.

Background and Rationale

Strategic Rationale

The Cosmos ecosystem expanded through sovereign experimentation. Independent chains were launched to explore new verticals, test modules, and develop their own token-governed systems. This model fostered innovation and diversity across the ecosystem.

However, this has not translated into direct economic gravity for the Cosmos Hub itself. The Hub today lacks a substantial, recurring, attributable revenue stream. While sovereign experimentation remains valuable, the next phase of Cosmos requires stronger economic alignment at the center.

Over the past year, many parts of the ecosystem have slowed or shifted strategic direction. This contraction includes projects like Noble, Mars, Wormhole, Axelar, Milkyway, and Sei amongst many others. This has highlighted the importance of reinforcing durable economic foundations within the Hub.

Cosmos Labs is leading the effort in re-growing the Cosmos ecosystem through an enterprise-focused strategy, to bring major institutions and their higher-value capital flows onto the stack.

However, as recognized by governance through recent tokenomics discussions and RFPs, it is vital to ensure that ATOM will economically participate in that growth. Today, there is no clear, legible mechanism by which increased enterprise adoption or capital issuance translates into on-chain value accrual for ATOM.

And so, a central question emerges: how does ATOM economically participate in ecosystem growth?

Across multiple market cycles, asset exchange has demonstrated structurally recurring fee generation driven by trading activity. Within Cosmos, ecosystem growth has historically driven liquidity and revenue into Osmosis as the primary exchange venue.
As Cosmos expands through enterprise and institutional adoption, a liquidity venue is still the most effective point of monetization. This is especially important because unlike with transaction fees, liquidity revenue scales with capital flows rather than user count, a dynamic that is especially relevant in an institutional and enterprise-oriented ecosystem.
At present, the Cosmos Hub has no direct exposure to such a liquidity engine. Acquiring Osmosis creates a clear and legible way to align ecosystem growth with ATOM’s economic surface area. Ownership of the primary ecosystem DEX provides direct, attributable fee revenue to ATOM governance.

Furthermore it provides additional functionality that the Cosmos Hub currently lacks. Having a central liquidity venue will strengthen the Cosmos Hub’s ability to execute cross-ecosystem interoperability initiatives by aligning liquidity, routing, and capital coordination into a single chain. An integrated exchange becomes a key differentiator between the Cosmos Hub and other successful monolithic L1s, such as Ethereum and Solana. Enterprise integrations benefit from built-in liquidity and price discovery infrastructure if they decide to issue assets such as RWAs or native tokens.

Why Osmosis

Osmosis has operated as the primary liquidity venue for Cosmos-based assets since 2021. Over multiple market cycles, it has maintained continuous operation and has evolved into a mature, production-hardened exchange stack.

The Osmosis modules represent battle-tested DeFi infrastructure, including routing logic, pool management, concentrated liquidity, and integrated revenue capture mechanisms. These modules have been extended and refined over several years in live production environments.

Osmosis has long been one of the core pillars of the Cosmos ecosystem since its inception, and remains so today. Although many exchanges have attempted to overtake Osmosis as the central liquidity venue of Cosmos, none have succeeded. Osmosis is the only one that has demonstrated longevity and maintained its market dominance within Cosmos, reflecting strong user trust. The Osmosis brand and frontend are well known across the crypto space. By integrating its modules and liquidity into the Cosmos Hub, that central role becomes directly embedded within the Hub itself.

In 2025, Osmosis generated approximately $5.5M in revenue. With its projected core maintenance costs being low (~$550k per year), Osmosis operates at a multiple fold net profit. This profit can be used as a real revenue stream for ATOM holders or to reinvest into further growth initiatives of the Cosmos Hub.

There is clear alignment and overlap between the communities of these two chains. Cosmos Hub validators represent approximately 66% of voting power on Osmosis, and those same validators comprise approximately 30% of voting power on the Cosmos Hub. Maintaining separate security domains duplicates operational overhead. Consolidation reduces fragmentation and increases net capital efficiency under a unified ATOM-governed framework.

Cosmos was designed for sovereign experimentation, and that experimentation produced Osmosis. Cosmos architecture also supports modular recomposition when independent systems mature. Osmosis has reached that stage of maturity and presents a structural opportunity for consolidation within the Hub.

Post-Merge Identity

Following integration, the Cosmos Hub expands its role from governance coordination towards capital coordination, actively shaping its own role at the center of the Cosmos ecosystem.

The Hub would integrate mature, revenue-generating infrastructure that already operates within the Cosmos ecosystem. Security, liquidity, asset issuance, and governance would operate within a unified economic domain under ATOM governance.

This direction is consistent with the trajectory of recent governance decisions that expand the Hub’s functional surface area:

  • Enabling Permissionless CosmWasm (#1007)
  • Enabling TokenFactory (#1010)
  • Migrating Stargaze to the Cosmos Hub (#1017)

These decisions demonstrate a pattern of integrating execution capabilities directly into the Hub when strategically advantageous. The integration of Osmosis follows this same principle: consolidating mature infrastructure rather than introducing speculative new functionality.

By integrating Osmosis, the Hub becomes a platform where developers deploy applications, assets are issued natively, and economic activity is anchored. Tokens issued via TokenFactory, enterprise assets bridged through IBC, and ecosystem-native applications all gain direct access to price programmability, liquidity, and routing within the same economic domain.

The result is a Cosmos Hub that:

  • Secures infrastructure.
  • Hosts liquidity.
  • Supports asset issuance.
  • Facilitates capital formation.
  • Maintains interoperability across external ecosystems via IBC Eureka

The Cosmos Hub should stand alongside chains such as Ethereum and Solana as an L1 that is central to its own ecosystem, while uniquely serving as the connective tissue between ecosystems via IBC.

Migration Details

Tokenomics

All circulating OSMO excluding the Osmosis Community Pool’s undeployed OSMO will be eligible to convert to ATOM during a defined six-month window. This currently represents approximately 665.1M OSMO.

The conversion rate will be 0.0355 ATOM per 1.998 OSMO. This is based on the 30-day TWAP of the ATOM:OSMO price on March 11, 2026 (the time of public forum proposal).

Using current pricing as reference, the maximum theoretical ATOM required for full participation would be approximately 11.82M ATOM.

Importantly:

  • The Cosmos Hub Community Pool currently holds ~10.11M ATOM.
  • This means approximately 85% of the required ATOM is already funded.
  • The remaining ~1.75M ATOM represents ~0.35% of total ATOM supply.
  • This is equivalent to less than two weeks of staking emissions.

The additional ATOM required will be minted one time during the same upgrade that integrates Osmosis modules into the Hub. No ongoing emissions or structural inflation changes are introduced by this proposal.

The conversion window will remain open for six months. This provides ample time for active users while establishing a clear endpoint. Any unclaimed ATOM at the end of this period will be returned to the Cosmos Hub Community Pool.

DEX Migration

The merger follows a single-chain architecture where Osmosis DEX functionality is redeployed into the Cosmos Hub. In the end state, the Hub becomes the sole execution environment for the DEX. All modules run natively on Hub validators, controlled by Hub governance.

This approach does not involve a state-level chain merge. Instead, Osmosis modules are cleanly redeployed onto the Hub through a standard Cosmos upgrade process.
Modules that will be migrated include:

Once the Osmosis core modules are deployed on the Cosmos Hub, the app.osmosis.zone frontend will be repointed at the Cosmos Hub deployment. The Osmosis deployment will be accessible via legacy.osmosis.zone.

On the frontend, existing users will have a wizard that enables them to easily:

  • Transfer their assets on Osmosis to the Cosmos Hub
  • Withdraw liquidity positions from Osmosis pools and redeploy them on the Cosmos Hub
  • Convert their OSMO to ATOM (during the 6 month window)

Migration is user-driven and not automatic. This minimizes systemic risk and preserves user control.

The Osmosis Foundation team will lead technical implementation and delivery, including:

  • Module deployment preparation
  • Frontend migration tooling
  • Validator support during upgrade

Liquidity Migration

The Top 50 Osmosis pools (based on volume and liquidity) will be recreated on the Cosmos Hub deployment with equivalent parameters at launch. These pools represent the majority of ecosystem liquidity and trading activity.

Users of app.osmosis.zone will be prompted to migrate via a frontend process which walks through each migration step to migrate liquidity to the Cosmos Hub.

Following governance approval, the Osmosis Grants Program (OGP) will coordinate with known liquidity providers and market makers to seed initial liquidity on the Hub deployment.

Identified liquidity sources include:

  • ~$2.5M controlled by the Osmosis Community Pool
  • ~$6.3M currently held by known partner teams

Participation from these parties will be voluntary and structured under new ATOM-based incentive agreements as needed.

No assumptions are made that all existing liquidity will migrate. But the integration is designed to maximally preserve active liquidity, provide clear migration pathways, and minimize fragmentation during transition.

Historical activity data indicates that a majority of user-owned liquidity remains active:

  • 61% has interacted within the last 90 days
  • 79.25% within 365 days
  • 94.15% within 730 days

These figures exclude protocol-owned liquidity and contract-owned positions and apply across both Concentrated Liquidity and legacy pools. While past activity does not guarantee migration, it demonstrates sustained user engagement and reduces the risk of immediate liquidity abandonment.

Osmosis Growth

The Osmosis Grants Program (OGP) will be re-mandated under Cosmos Hub Governance and will take full stewardship in operating Osmosis. Responsibility for all maintenance, development, and growth will transfer accordingly.

The OGP currently holds approximately $1.2M in assets. Additionally, the Osmosis Community Pool holds approximately $3.8M in non-OSMO assets. These non-OSMO assets will be transferred to the OGP to fund post-merge operations. With this funding, the OGP will have the resources to fund maintenance, development, and growth of Osmosis on the Cosmos Hub for at least 6 years.

Assets such as the Osmosis IP and the Osmosis Frontend will transfer ownership to the OGP, which will continue to operate, develop, and maintain it in perpetuity under Hub mandate.

As they have done under their mandate for Osmosis, the OGP will produce regular updates on its holdings and activities. Because the OGP will be under the mandate of Cosmos Hub Governance, its assets can be clawed back to the Cosmos Hub Community Pool by governance vote.

Applications

Third-party Osmosis contracts and applications will not be automatically migrated. Individual development teams can choose to redeploy on the Hub.

The Cosmos Hub has permissionless CosmWasm deployment as of Proposal 1007 and the addition of Osmosis liquidity and modules to Cosmos will improve the environment in which developers can develop contracts. Permissionless CosmWasm on the same chain as a DEX means atomic DeFi apps will be possible on the Hub.

The CosmWasmPool module will be redeployed on the Cosmos Hub, enabling additional pool types to be deployed fully integrated into the Osmosis poolmanager once whitelisted by governance, and benefit from integrated routing in exchange for additional revenue collection by the Cosmos Hub.

Conclusion

This proposal consolidates mature, revenue-generating infrastructure that already operates within the Cosmos ecosystem into the Cosmos Hub’s economic domain.
Osmosis operates profitably with recurring fee generation and mature infrastructure developed over five years of production use. Maintaining parallel security domains duplicates expenditure and fragments liquidity. Integration aligns security, liquidity, and governance under a single framework while reducing structural inefficiencies.
For the Cosmos Hub, this introduces a substantial recurring revenue stream and expands its functional surface area into capital formation and settlement. Native liquidity strengthens enterprise positioning, interoperability initiatives, and asset issuance capability.

For the wider Cosmos ecosystem, this represents modular evolution: sovereign experimentation followed by strategic consolidation when maturity and alignment justify it.

Rather than maintaining parallel centers of gravity, this proposal concentrates proven infrastructure where it can most effectively strengthen ATOM’s long-term economic relevance.

Stakeholders are asked to evaluate this disciplined consolidation with Osmosis to make the Cosmos Hub the unified center of security, liquidity, and capital coordination within the Cosmos ecosystem.

Change log

  • 2026-03-11 Created initial post
18 Likes
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Osmosis is the cosmos powerhouse, and it was my first Dex experience in crypto, alongside many others. As an Atom holder, I’ve been eagerly waiting for this moment and it’s finally here. It’s meant to be.

10 Likes
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before anything else, this is a little confusing actually :slight_smile:

4 Likes
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@highstakes good catch. Fixed in the text.

5 Likes
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This is a no brainer yes for ATOM holders, as a DEX has been sorely needed.

This is a no brainer yes for OSMO holders as well.

Up until now there hasn’t been a true center of gravity in this web of SDK blockchains, and while there were many chains, it often just felt like the same bit of liquidity sloshing around while projects slowly inflated themselves to death. Osmosis was the premier DEX of cosmos, and this sloshing around certainly leads to swap volume but at some level it also depends on a steady stream of capital entering the eco.

And with ATOM pivoting towards institutions and potentially capturing an inflow of capital, Osmosis being at the epicenter via a merge with ATOM will be one of the first and most important beneficiaries.

3 Likes
6

Another day, another golden parachute.

I never supported the stargaze proposal, and I also don’t see a convincing case here. This looks like a large value transfer from the Cosmos Hub to another token ecosystem without a clear business case for ATOM.

Osmosis may be valuable infrastructure, but that alone doesn’t justify an acquisition funded by ATOM holders. The proposal explains why Osmosis is good — not why this is a good deal for the Cosmos Hub.

Before something of this scale is considered, the community should see a clear business case and how value actually accrues back to ATOM.

If the Osmosis DEX generates $5.5M per year, why is selling it to the Cosmos Hub a better deal for Osmosis than simply continuing to operate it independently?

6 Likes
7

A big yes to this proposal !

2 Likes
8

what comes around goes around =)

9

YES!!! We are a validator on both networks and are totally in favor of this prop. It will help both communities, both tokens, and the institutional clients the Hub is courting. LFG!

1 Like
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Why would you want to have everything on the Hub, and make the blockchain do more and more things as time goes by?

You can approach it in a different way if people really want Osmosis to be CosmosHub:

  • Stop OSMO inflation
  • Make ATOM the main coin of Osmosis blockchain. The chain already supports multiple currencies as fees, switch it to exchange fees to ATOM and distribute it to validators and delegators
  • bring liquidity from outside the ecosystem via CosmosHub IBC connection
  • think about burning OSMO to get ATOM or find the right tokenomics for people to switch from OSMO to ATOM in a fair way (Both have fat community pools to use).
  • Make ATOM (IBC denom) the staking coin on Osmosis, let people decide where they want to stake it: for a slice of the inflation or for a slice of the DEX fees
  • A simple “Deposit to DEX” would be enough for someone to have his coins moved from the chain to the trading area. People already do it on centralized exchanges.

And the list can continue. Sit down and find a way to let the DEX be a separate environment that can be IBC limited, halted in case of disaster, permissionless/permissioned CosmWASM, and so on.
Let the trading engine be a trading engine, separated from the Hub, which should be the main entry point for other ecosystems and for users in the entire Cosmos.

These are just ideas from the top of my head. A better way can be found for this to happen and keep the 2 chains independent.

6 Likes
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Very interesting and have been working with Osmosis since day 1 and will continue to not only see this through but also have StreamSwap itself as a way to make $$ right on Cosmos Hub along with the rest of the liquidity ops.

All the best to team Osmosis & Cosmos Hub along with the apps on Osmosis!

2 Likes
12

This is one of the worst proposals I have ever seen.
Back then, they claimed the Hub was useless and wanted to kill off ATOM.
Now, just like Stargaze, they are begging for an acquisition.
It’s yet another dead project trying to use $ATOM holders as exit liquidity. This proposal makes absolutely no sense; things that deserve to die should just be allowed to die. If the OSMO token is headed to zero, let it happen on its own—don’t try to drag ATOM down with it now that nobody wants it.

2 Likes
13

I spent 1 dollar to buy 1osmo myself. I think the merger is very unfair to me. Now it’s either a merger or a good thing. How to introduce money into Cosmos is the biggest thing. The merged atom still can’t get value, and the emissions exceed the value obtained. The price of atom is still falling. Unless there is a new way to get value, the price of atom will go up, no However, the merger is equivalent to procrastinating the extension of life, which is useless.

2 Likes
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Technical clarity should remain a priority

Over the years, Osmosis has evolved into a complex system with many layers of optimizations specific to its DEX architecture.

If a merger into the Cosmos Hub were ever to happen, many community members would likely see it as an opportunity not simply to move the existing stack, but to simplify, modernize, and refactor parts of the architecture.

At the moment, the proposal does not clearly address several important technical questions:

Would such a migration involve refactoring or simplifying the current DEX architecture, or would the existing codebase simply be ported as-is? You mentioned existing modules, but can you clearly bring us some informations.

Who would be responsible for maintaining and evolving the codebase long-term? You mentioned on the TG 4 OG members but who are they ?

Would development continue with a focus on new innovation and features, or would the priority mainly be maintaining the current system? Acquiring a DEX only makes sense if it continues to innovate and actively develop. Cosmos Hub doesn’t need a DEX that stays in maintenance mode; it needs one that keeps pushing innovation and performance.

For many contributors, a migration would only make sense if it improves the long-term technical trajectory of the DEX, rather than simply relocating it.

Cosmos Hub aims to improve its performance by reducing technical debt, such as deleting ICS implementations and potentially reducing the validator set. Adding the Osmosis codebase on top of Gaia could instead become a burden and slow down this effort toward higher performance ?

9 Likes
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I’ve always wanted to see some tighter form of consolidation between Osmosis and the Hub. Osmosis has always been a key economic hub in the Cosmos Network. Past efforts at consolidation never went anywhere, but with the broader contraction in the ecosystem, it feels like a good time.

While Cosmos transformed the landscape of how people build blockchains, our own chains have languished. Hopefully this proposal can be a step towards some revitalization. The Cosmos stack remains one of the best, but the ecosystem has always suffered from fragmentation. We should be making an active effort at consolidation.

I’d love to see a stronger Hub, with a great integrated DeX, and a booming dev ecosystem. However, I understand that Cosmos Labs priorities have rather been on enterprise adoption of the stack. As enterprise adoption materializes, I’d expect a strong liquidity Hub to be an ideal complement.

5 Likes
16

As a OSMO holder I am voting a firm NO on this proposal.

1. Parasitism, Not Innovation: For years, the Cosmos Hub has struggled to find a sustainable value accrual model for ATOM. Attempting to fix this now by swallowing the ecosystem’s most successful DeFi product is a sign of surrender, not leadership. The Hub should develop its own revenue streams rather than seizing them from Osmosis.

2. Killing Sovereignty: The core ethos of Cosmos has always been sovereignty. This merger turns a fast-paced, innovative DeFi laboratory into a bloated, bureaucratic module within the Hub. It will stifle the very innovation that made Osmosis a market leader.

3. Predatory Conversion Terms: The proposed exchange rate forces massive losses on long-term supporters who stayed through the bear market (my average entry is 0.134). We are being asked to swap a high-upside asset for a “heavy” ATOM at a rate lower than the current market price.

4. Conflicting Mandates: ATOM’s role is security and interoperability. Osmosis’s role is risk and trade. Merging these distinct domains creates systemic risks for the entire ecosystem.

The Hub needs to evolve by providing unique services to the Interchain, not by cannibalizing independent projects to bail out its own tokenomics.

3 Likes
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As one of the core devs at Osmosis, I’d love to see the Osmosis DEX and liquidity ported to the Hub, I support this proposal. A more tightly coupled Hub and DEX could be what’s needed to kickstart to a more community driven hub! New contracts for CosmWasm pools, leverage the liquidity for new protocols, new markets, honestly could be a great win for all. I definitely expect some teams are already drafting some smart contracts as well speak!

7 Likes
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Get it on the Hub lickety-split

1 Like
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Proposal is basically a golden parachute for devs leaving. Should have tried to merge at higher prices years ago as yelled into the void a billion times.

That said, the hub does need a dex imo.

Just need to find the right number and be sensible about it.

4 Likes
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@sunnya97 First of all I have to say that I know you since back in 2017/18 and I was always impressed by your knowledge. But as a Cosmos Hub validator I have to be critical and think about the best interests for the Cosmos hub

The first question is, the projected maintenance costs mentioned are estimated after the migration to the Cosmos hub or in 2025? Because if it is in 2025 as others have said wouldn’t make sense that you are trying to sell a very profitable company. Please clarify whether this cost estimation refers to 2025 or after the migration to the Cosmos hub and a much more detailed breakdown of these costs is needed

Currently, there is not enough liquidity to exit around $20-30 million in OSMO with minimum price slippage. Certainly, using the ATOM in the community pool for this exit at no slippage is of great benefit for Osmosis but I fail to see the benefit for ATOM holders, the validators and the overall community? For the ATOM community the use of Osmosis would be the same currently or in the Cosmos hub so no benefit here. The only benefit would be that net profit you mentioned but we are waiting for more clarity about those maintenance costs mentioned. Moreover, the net profit in a specific year is no guarantee at all of that net profit constant for the long term, it is very possible that the net profit could reduced or even become a loss. Therefore the risk is for the ATOM community, while no risk for the OSMO community since all would exit with zero slippage via the full ATOM community pool. There are already projects and ideas for the community pool that could bring a yield for the Cosmos hub, so emptying the whole community pool for the benefit of the Osmosis community again I don’t see clear benefits for the ATOM community.

As a reference, in October 2023 Stride presented a similar proposal to convert entire STRD supply to ATOM, this thread is the 3rd in the Cosmos hub history by number of replies so very relevant to check this discussion: https://forum.cosmos.network/t/convert-entire-strd-supply-to-atom

StreamSwap in constrast doesn’t have a token, they are a token launchpad so this I see as a benefit for the Cosmos hub to integrate a token launchpad. Some small amount from the community pool could be used to fund the further maintenance and development of this token launchpad

2 Likes