I believe the discussion around a stronger alignment between Osmosis and the Cosmos Hub is legitimate. The Hub probably needs to find more effective ways to capture value generated across the ecosystem, and Osmosis has clearly played an important role in providing liquidity and economic activity within the interchain over the past years.
However, the current structure of the proposal raises several questions. The scale of the commitment requested from the Hub — particularly the near-total use of the ATOM community pool — appears to be a very significant bet given the remaining uncertainties around liquidity migration and the sustainability of the projected revenues.
The community pool took years to build and remains one of the few strategic tools available to the Hub to support its development, fund new initiatives, and help the ecosystem evolve over time.
We can also recall that proposals involving a large use of the community pool — such as what was previously discussed around Hydro — raised significant concerns within the community and were ultimately not adopted, which in my view was a healthy outcome. It highlights how sensitive and important the prudent management of this capital is, not only for the Hub itself but also for validators and ecosystem participants who contribute to its security and long-term development.
In this context, one question seems particularly important: if the community pool were to be largely mobilized for this operation, how would the Hub still be able to support other initiatives or help foster the ecosystem’s growth in the coming years?
Injecting another partial idea into the discourse.
What matters for evaluating the success of an Osmosis <> Hub merger is not liquidity or volume. What matters is spreads
If spreads relative to Binance are at the same level as today post merger or tighter than the merger was a success. If they are worse, the merger failed.
Hey, I want to clarify my understanding of “feedback given”.
In my calls with Barry, Mag and Robo on the merge, contention on price did not come up. In fact, we were verbally expressed positive sentiment from CL that this could occur with only a small mint for an at market cap acquisition. We got to a text draft that the CL team was in favor of, and was going to convert into a slide deck and present it to the ICF board. The final ICF board conversation is a black box to us, but we know we got to economics and details that CL team was in favor of presenting to the board, and if approved by the board we’d begin talking to community ~immediately. The technicals and economics of the merge remain substantively the same since the conversations.
CL reported to us that the ICF board was that they said no, and that it was primarily not for reasons that are specific to Osmosis, and instead on your end. We were communicated that it was in regards to the fact that CL needs to focus and demonstrate delivering on enterprise/fintech integrations. And that you’re not sure how this will relate back to the community, but the ICF board wants to focus on enterprise, rather than ecosystem. We prefer not to publicly share private conversations, but the precise response can be clarified if needed.
The only actual feedback we got was that the ICF board was unclear on “how to significantly grow liquidity, due to its reflexive nature with token prices in the ecosystem.” We were not given the opportunity to speak with them, and you made it clear there is no intention for further conversation. There are numerous answers to this, from BD deals that were not possible before, tie-ins into enterprise growth for volume flowing through the hub. As Robo has communicated publicly, a major goal of Cosmos Labs’s commercial efforts is to increase ATOM-powered issuance and tokenization efforts. We believe that this can, in fact, drive more liquidity and activity on the DEX.
We were not told anything about cost or concerns with where we ended on operational lift. In particular the cost being too high was not mentioned, and we had draft iterations discussed with this very clearly being brought up, and the precise mechanics for the funding discussed. The proposed mint mechanic was agreed upon, The operational lift was also not communicated as a concern, especially as the brilliant folks to solve operations along with funding and oversight being provided. The merge codebase already has been worked on, compressing all technical timelines.
What component of this proposal has changed since our conversations with you, Mag and Robo? All technical feedback communicated in January, and put into writing for the February board conversations is incorporated. This remains consistent. The implementation of the merge code per that is near done.
At one point we were told that if we wanted to move faster we could proceed without waiting for the ICF board process, just that it wouldn’t have CL support.
I say all of the above to set this record straight. Happy to move on to talking about the substance of the proposal, as I get it. Opinions change over time, but “these criticisms” did not come in private.
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Prices
Some feedback has framed the proposal as if the Hub were “overpaying” for Osmosis by referencing traditional acquisition multiples. While that framework is useful in certain contexts, it does not fully reflect how crypto assets are valued in practice.
Both ATOM and OSMO are publicly traded assets whose market capitalizations already encode market expectations about future growth, risk, and utility. Applying traditional discounted cash flow or private acquisition multiples to only one side of the transaction, while valuing the other side at market capitalization, creates an inconsistent framework.
If both assets are valued using the same market-based standard, the question becomes much simpler: is allocating approximately ~3% of the Cosmos Hub’s market capitalization to consolidate the ecosystem’s primary liquidity venue a worthwhile strategic move?
Osmosis is not an unproven project — it is the longest-running and most widely used DEX in the Cosmos ecosystem, with a multi-year track record, established brand recognition, and persistent user trust. Framed in those terms, this proposal is not an outsized acquisition, but rather a relatively modest strategic allocation of the Hub’s economic resources to internalize a piece of infrastructure that already plays a central role in the ecosystem.
Liquidity
Another concern raised is that if liquidity fails to migrate to the Hub deployment, it could leave the Hub competing with the legacy Osmosis chain for liquidity. That framing misunderstands the structure of the proposal.
Under this proposal, the Cosmos Hub does not simply launch a new DEX and hope liquidity follows. It acquires and governs the Osmosis DEX infrastructure itself. That means the economic rights to the legacy DEX belong to ATOM governance. Whether liquidity sits on the initial Hub deployment, remains temporarily on the legacy Osmosis chain, or migrates over time, the relevant infrastructure and resulting fee flows are still brought under the ATOM-governed framework.
In other words, the Hub deployment is not competing against the legacy — ATOM holders own and earn from both.
We also note that the proposal already provides strong evidence that Osmosis liquidity is actively managed, not abandoned. 73% of all user-owned liquidity has interacted with the protocol within the last 6 months, suggesting that migration behavior will be high. All community engaged market makers and institutional LP’ing would move over quickly.
I’m new to the cosmos hub ecosystem and have just recently participated in staking in other projects. After reading quite a few comments, both for and against, I’m not sure where I stand on the merger issue as I don’t really understand what the merger looks to accomplish. I’ll admit, it’s a bit over my head. So, I guess my first question being an decent ATOM staker is, how would the merger directly effect ATOM’s APR and appreciation potential. It was these 2 aspects that grabbed my attention as I believe i has others, which helps in the growth of the ecosystem. Anything that would diminish either of those would not help the cause.
We appreciate the effort that went into drafting this proposal and starting a discussion around deeper integration between Osmosis and the Cosmos Hub. At a strategic level, we believe the idea deserves consideration.
Osmosis has become the main liquidity venue of the Cosmos ecosystem. Bringing that infrastructure closer to the Hub could strengthen the economic role of ATOM and reduce fragmentation across core services. From that perspective, the direction of the proposal is understandable.
However, the financial structure currently proposed appears significantly overvalued and lacks the level of professional review that would normally be expected for a transaction of this magnitude.
The conversion mechanism would allow circulating OSMO to migrate into ATOM based largely on recent market pricing. In practice, this places most of the financial risk on ATOM holders while providing OSMO holders with a relatively clear liquidity exit. For a transaction that would require issuing a meaningful amount of ATOM, the valuation framework presented feels too light and deserves a much deeper analysis.
More broadly, full token mergers between two sovereign chains with very different supply distributions are extremely difficult to structure in a way that feels fair to both communities. Attempting to solve this immediately through a large-scale token conversion may simply be the hardest path.
A more realistic approach might be to focus first on operational integration. Aligning development efforts, coordinating the infrastructure roadmap, and gradually bringing Osmosis contributors into the broader Hub strategy would already go a long way toward strengthening the relationship between the two ecosystems.
If that collaboration proves effective over time, deeper financial alignment could always be revisited later. In our view, technical and operational integration should come first. The financial structure can follow once the value creation becomes clearer for both sides.
Been reflecting on my perceived hesitancy by the voting bloc to spend from CPs. My opinion here: this situation is very different from, “run the finances like you run a household.” We’re all in a grand experiment together, to see if a community chain is a thing worthwhile for all involved. While it may sound judicious, I believe defaulting to “protect the CP don’t spend it or don’t spend much” is anachronous and borrowing too much from trad thinking.
A couple years ago we saw a few CosmWasm chains crop up and gain excitement. Builders (who didn’t get anything from genesis) decided to build ideas on these small chains. There were CPs, and for a decent period of time, the token prices meant those pools had serious coin to spend and offer support. But I think it’s easier to debate in favor of frugality rather than spending. But some things aren’t easy to tease out.
Seasoned and first-time founders, while grateful for the smaller grants, found that their efforts and rewards didn’t make a tremendous dent in their runway. So instead of building it becomes more like politics where you’re begging VCs and funds to believe in you, and nearly every call I had they’d bring up, “so what about plans to go outside of Cosmos?” Not as a diss but because they had the tx volume and stats right there. It was a grind, and I had private conversations with founders about how to handle aggressive VCs demanding a pumped token, and how to professionally deal with that with, “no.” It sucked, and meanwhile we watched the fat treasuries sit there, because it’s always easy to say, “it’s fiscally responsible to spend very little.”
Fast-forward to now, where some of those chains had token prices go bust or mostly bust. Not trying to flame, this is just semi-recent history. Now, I don’t want to imply there’s always boom and bust, and a bust is coming, that’d be fuddy. But remember, there’s nothing keeping a CP valuable forever, or a token price valuable forever. If you don’t spend, there is a very real risk that over time the CP’s value can simply not be worth much anymore. We can look back a couple years and only imagine the lasting impact for builders and the ecosystem, had there been more tangible support, before those pools shrunk into obsolescence. They could have made a massive impact.
It’s easy to say this in hindsight, of course, but a lot of us saw this firsthand. Stacked treasuries but mostly arguing about props bringing up spending, and after enduring forum blowback the founders only get a couple months of runway. But that only applies to “new builders with a solid idea” not Osmosis with the insane, indisputable track record. They’ve been Atlas holding the Hub over their heads, so spend like a community chain should.
Being stingy on spending from CP isn’t like, a horrible way to think. And it’s defensible, like if you’re hanging out with your MBA friends. But this isn’t business school, nor is it similar to managing household finances. Community pools are meant to be spent. It’s fine if you disagree, I get it.
I think the Cosmos Hub community has moved past the phase of simply trying to prevent spending from the community pool. Today, the real question is how to spend it effectively and how to support multiple projects or teams at the same time.
A proposal that requires 110% of the community pool effectively limits us to a single project, and even requires exceptional inflation to fund it.
The negotiation should instead focus on reducing the requested amount, leaving room for other teams and initiatives to apply for funding. This would allow multiple projects to reach the community pool and deploy in parallel, which ultimately strengthens the ecosystem.
I support the merger and I won’t mind if the atom community pool is mostly used for this.
Tho I have some issues with the proposal to mint more atom out of thin air to pay for this. There should be another option. Maybe osmosis community pool or part of their revenue can be used to swap some of the osmo to atom, they could buy some atom with their usdc/btc whatever to help with the conversion for example.
Also; the osmosis dev’s are known to relentlessly dump their osmo token for the past months/years. I’m kinda worried they will swap their osmo to atom and immediately dump it all causing huge sell pressure on atom. Would it be possible to have a lock up period on the atom? Especially for the dev team wallets who will gain huge amounts. Or maybe buy them out with usdc instead of atom to avoid huge sell pressure? Pay them from osmosis community pool and blacklist their wallets from swapping to atom maybe even?
I honestly don’t know the best way forward but something has to be done. I like the idea, I want the merge to happen, but without minting extra atom & without too much risk of massive atom dumping after the swap
Agree with this take. Members have been encouraging Osmosis to join the Hub for years. Now the ecosystem is all but dead and Osmosis wants cash to dip.
Read the context, I said blacklist from swapping their osmo for ATOM specifically after buying them out with USD, blacklist not to be taken literally here
The only goal of this whole ecosystem is to milk retail so builders can build. There is no community, and has not been for some time. If you read this proposal and think it’s meant to help the hub and its investors then I think you are mistaken.
I get what you’re saying, and I agree with the principle behind it. An actively utilized CP is better than simply having it sit dormant.
But there is more than a fine line between spending CP on a valuable project and blowing the entire thing on a single (and depreciating) protocol while also needing to mint extra Atom outside the standard emissions.
Why can’t Osmosis migrate the infra without merging the tokens?
Reduced risk for everyone with very similar reward strucutres.
Having both protocols building on the same chain will concentrate building and growth initiatives which is great for developers & partnerships. At this point staying as separate chains isn’t beneficial to either community as The Hub has DeFi bootstrapping friction (which it needs for IBC assets) & Osmosis is trying to get out of a maintenance mode and has additional integration/partnership friction by being a standalone chain. Personally as a dev trying to find a home in Cosmos through the chaos, I’d love to have a DeFi environment on The Hub, & Osmosis + OGP would be a strong lead for that.
Cosmos Hub is taking a lot of risk in this initial proposal by “bailing out” OSMO holders on top of taking on technical integration risk and liquidity migration risk. OSMO holders are going to continue arguing about the conversion rate which will only make ATOM holders more hesitant to agree to this “merger”.
My proposal is that there can be a technical merge only. No M&A purchase of OSMO from The Hub. No deleting OSMO (something that may hinder future OSMO growth anyway, see the end). This benefits both parties by moving the merger forward without having to make any payments or cement any token prices for either party.
To build on the previous partial pount, I think deleting OSMO could hinder future growth. Aerodrome is launching on Ethereum soon and has been successful with their persistent emission model. Membrane v2 is also using a persistent emission model. If the future of DeFi incentives and competitiveness requires a token or at least some lever to route revenues, Osmosis will have no lever to do so, hindering potential growth for both Osmosis and The Hub’s DeFi.
Full disclosure: I’m the founder of Ark Protocol. We’ve built cross-chain NFTs and contributed in more than 3 years in Cosmos, key contributors to core standards like cw-nfts and cw-ics721. I’m not active in Cosmos anymore, have nothing to gain from writing this. There’s something I need to say:
Accountability
Mag and Barry founded Skip. In Dec. '24 ICF acquired Skip - for an undisclosed sum. Rumors says around $20M each for both, the community has the right to know, when both claiming this proposal is too expensive.
Those same founders are now the ones questioning how others want to use CP funds? Imho that’s bold - looking at how much collateral they/CosmosLabs have created since:
