We have taken the time to thoroughly assess this complex matter, allowing a few days to gather various community feedback and carefully separate the political motives from the rational arguments. In this post, we will share our review, provide context, and include links for those who wish to delve deeper into the implications of these movements, both in the short and medium to long term.
Short-term Strategy:
Currently, we are in the initial phase where discussions are active and opinions are being shared. A few contributors have distinguished themselves by providing valuable information and concrete propositions. At Govmos, we believe it is crucial to focus on the how—to craft well-considered proposals and allow the community to vote. While opponents may be vocal, their lack of substantial contributions often reveals underlying political motivations.
We stand firm in our belief that the community should have the final say. To achieve a well-informed decision, we must first gather viable proposals, merge them to reach a consensus among active participants, and then proceed to votings. Drawing lessons from the ATOM 2.0 experience, we advocate for an iterative approach, avoiding “all-in-one” propositions and instead proposing a step by step plan, whilst we emphasize on the cohesive larger plan.
Mid-term Strategy:
Once the best ideas have been consolidated, the initial focus should be on the economic aspects, followed by governance and technical considerations. For a successful integration of Osmo and Atom, it is essential to first define the desired level of integration: Do we seek a financial merger, a governance merger, or a technical merger? These elements build upon each other in that specific order, making financial alignment the logical first step.
To explore the optimal path for financial alignment between Osmosis and the Hub, we believe that both communities should consider leveraging existing tools like the InterChain Security (ICS) agreement. Given the close involvement of both parties, a TOP-N deal aligns well with the merger request. At Govmos, we believe the Hub is not yet mature enough in its product offerings for a full-scale merger, although we have previously envisioned this as part of the Hub’s long-term mandate (reference: this post). For now, establishing a well-balanced Partial Set Security (PSS) agreement between the Hub and Osmosis would be a prudent first step towards deeper integration, with an iterative approach.
The next step could involve even stronger alignment through a liquidity swap agreement using a covenant system, as designed by @Noam and Binary Builders. This concept, proposed as part of the Atom Alignment Treasury, was successfully funded through this proposition. Osmosis appears to be an ideal candidate for such a program.
Once financial and economic alignment is achieved, the focus should shift to governance alignment. There are multiple options to explore, and existing feedback has already highlighted key considerations, such as the need for faster voting durations for Osmosis. This stems from the inherent differences between security and liquidity aspects, suggesting that maintaining two independent voting systems with adjustable parameters is essential. This approach is fully compatible with our recommendation to use PSS. Should the community agree to it, we could then consider enhancing an alignment treasury with governance capabilities, allowing the Hub to participate in Osmosis governance and vice versa. This is a promising area of exploration.
Finally, after achieving financial and governance agreements, we can consider the technical integration, which would entail a full-stack alignment with the Hub. This would involve a complete merger of Osmosis into the Hub, including a 100% revenue share and full governance by ATOM holders. Such a merger would offer significant liquidity efficiency benefits but would require a fully functional liquid staking ecosystem within the Hub to be viable. It is crucial to remember that liquidity and security are fundamentally different, with liquid staking offering a hybrid form that balances both properties, albeit with some trade-offs. We suggest postponing a full merger until the Hub has established a solid and fully operational liquid staking ecosystem.
Long-term Strategy:
In addition to these steps, we advocate for a long-term strategic vision. To provide context, we reference @ebuchman’s (Cosmos Hub’s co-founder) vision, which outlines the phases of Cosmos—“initiation,” “integration,” and “illumination.” According to Buchman:
“The dawn of Integration is marked by the distinction of the security of the Cosmos Hub, and its realignment with the growth of the broader interchain ecosystem.”
This integration phase was initiated by the launch of interchain security, particularly the ICS v2 update brought by the recent PSS deployment. As of now, we find ourselves at the core of this integration phase, expanding both the economic and political influence of the Hub within the interchain, while continuing to decentralize as we scale and integrate with more partners (reference: Collaborative Finance thesis).
At Govmos, we fully endorse this vision and believe that the integration of Osmosis with the Hub is a crucial step towards realizing this long-term vision.
CONCLUSION:
In summary, we recommend beginning with a “short-term” approach that prioritizes gathering community feedback and ideas, consolidating the proposals of those actively contributing, and progressing step by step. We suggest a mid-term strategy focused on financial alignment, starting with a TOP-N PSS agreement to initiate revenue sharing while maintaining governance and technical independence. We also propose creating an Alignment Treasury in parallel to further solidify the relationship beyond revenue sharing, with independent votes for each initiative.
Only after successful financial integration should governance and technical alignments be pursued, as these are expected to occur further down the line. For now, we encourage focusing on financial integration while keeping the mid-term strategy in mind.
Finally, we advocate for educating the community on the long-term vision of the Hub as a collaborative coordinator within the Interchain. With successful integrations like this one with Osmosis, and hopefully many others, we can conclude the integration phase and move towards the next chapter in the interchain’s history.
Thank you for reading,
we look forward to the community’s feedback on our propositions.
Govmos (the governance arm of the PRO Delegator’s Validator).
Sources to extend reading on the subject:
https://ebuchman.github.io/posts/phases-of-cosmos/
https://forum.cosmos.network/t/essay-cosmos-hub-the-first-democratic-state-of-capital
https://forum.cosmos.network/t/cosmos-ecosystem-a-permissionless-b2b2c-network