[Proposal ##][LAST CALL 07/21/2023] Launch Duality on Replicated Security

Great proposal and the 500K number seems reasonable given comps (neutron and stride) which were also reasonable. I think Duality could do well especially as essentially the first spot CLOB app chain and being 100% aligned with cosmos hub on day 1 should be a driver of value to the hub.

Easy yes.


Unsure how we are supposed to onboard the next chain and keep paying server costs, salaries, etc

Any more RS patnership before at least EOY would be harmful to our current validator set.
We are still waiting for data from Stride and Neutron onboardings.

On the opposite side it seems that none cares since we opened up even more our validator set.

Now some validators are asking tangible and immediate help from the community.

Soft opt out is not a solution.

The community should focus on governance and token spread.

we get this question a lot, so much so that we added it in the FAQ: ref: What’s in it for Duality Labs?

to us this direction makes perfect sense: Create as much value as possible first and everything else is secondary. this is how a lot of trad-tech companies operate too. It’s important to have revenue, but we won’t capture any value before we’ve demonstrated PMF, created a ton of value, and have the full support of the community.

These things play out over the long term, so on the short term we’re focusing on improving the tech, growing the ecosystem and trying our hardest to materialize the vision we all share for what true, open and incentive-alligned markets and DEFI can bring to the world


Validator fixed cost were our biggest concern going into this and has been ever since Replicated Security was announced. I’ve heard a lot of approaches aimed towards mitigating this from a lot of teams working in and around cosmos.

The cosmos HUB needs to orient around long term value aligned product growth, and instead of pausing until the perfect technology is shipped, we should keep growing, demonstrate PMF and incentivize all relevant teams to solve these issues with more urgency.

Open communication and feedback like this is extremely important. we need to protect the validator set while growing the HUB. We just started an open discussion with relevant parties on telegram. Please feel free to join Telegram: Join Group Chat


I share these concerns and they’ve arisen frequently. It’s also good to examine them from a couple of different angles.

The first part of this reply seeks to do that. It contains 1) a survey of existing discussions around the concern, 2) the problem space, and 3) the path to a meaningful outcome (which in turn illustrates the problem space).

A survey of discussions

For anyone browsing here that wants a quick survey of past discussions about this:

Problem Space

All of the above conversations propose different aspects or solutions of the problem, but in short it can be summed up as:

  • cosmos Hub’s winning bet is to on-board as many high quality consumer chains as it can. The protocol has a long-term time preference (in the sense that it needs time to compete and capture market share + find PMF)
  • validators face fixed-cost burdens for running consumer chains. Validators have a short-term time preference (in the sense that they need to immediately sustain their businesses)

the path to a meaningful outcome

In response to this, it’s worthwhile to note that:

  • solutions (if one is needed) can be worked on in parallel to expanding the shared security umbrella of the Hub
  • it’s very important that validators concerns are heard and accounted for, but this design space needs to be explored from the viewpoint of a variety of stakeholders in the system (the risk is that this can turn into a political situation. Coordination must be placed as the highest priority to mitigate this and find a meaningful path forward that accounts for everyone’s diverse and sometimes contradictory concerns)
  • it’s important to the Hub and its attractiveness as a security provider to have a fertile and welcoming environment for consumer-chwin onboarding. This helps it capitalize on the early mover advantage it has a shared security provider in an increasingly competitive market space over similar offerings.
    • Paradoxically, despite increased short-term costs, it will be better for validators in the long run if the Hub excels and gains market share. This may be correlated with the amount of consumer chains the Hub onboards, and the Hub can keep winners and off-board those chains that aren’t succeeding as more data rolls in.

Very happy to see this initiative and will continue the convo in there


• The liquidity on Neutron from the Community Pool is not NTRN it’s stATOM-ATOM
• Liquidity providing with LSTs is more profitable than superfluid liquidity providing, as the LPs receive the entire staking yields as opposed to some fraction determined by a discount factor. This is why Duality will be doubling down on a partnership with Stride.
• Duality should work with the allocator not against it! When the allocator is live, it’ll be possible to facilitate the collaboration. I definitely wouldn’t think of the community pool spend and interchain allocator as mutually exclusive.

You’re right on all three, I have mix things with ntrn indeed. And regarding the allocation, if you request 500k atom be staked and then deposited in LPs with stATOM/x then I see the point ! I would simply recommend to state that more clearly in the final proposal. This may sound like a tiny bit of information but to me that changes the whole economic equilibrium and therefore now I understand the vision you pursue.

I would be curious to know a bit more on the type of relationship you would see fit with the allocator. Could be very interesting indeed but I’d love to hear that from you !


Good feedback regarding communication about the community spend proposal.

There should be a separate, more comprehensive community spend proposal coming over the next week or two.

With respect to the allocator : I actually have a call with them (Timewave Labs) today regarding that exact question ! Will get back to you with more info afterwards.

Thanks for being constructive.

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Well having a liquid staked based DEX which use ICS to inherit the economic security of the said liquid staked asset, it’s certainly a thing that will offer interesting economics without requiring internal incentive mechanisms. It’s a winning strategy if you can figure out to attract external protocol based development to remain up to the general crypto innovation (decentralized orderbooks, programmable LP management for MM,…) I’m curious to see what you have in store. I read that you were “under-promise over-deliver” and I start to feel like you, indeed, have a lot going on behind the surface on that front ! I’ll try to reach out to you on telegram to have a more in depth discussion about automated AMM curve control and professional market making features

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Please reach out, excited to connect !

Yes. Yes. And another time YES!

I don´t see anything more that should be discussed. This needs to go to governance asap!

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So suppose we made a mistake with stride now we don’t want to keep making the same mistake. What is the basis of giving this much amount to any project? At least stride has a working business model. But that’s not the point, I have a very simple question what are the basis of giving this much amount and if anyone replecates the same proposal would we say yes?

Totally understand your concern and hopefully this clarification can help.

The liquidity in the community spend proposal is not being given away (or even spent), the community pool is just liquidity providing in the pool and collecting swap fees from the liquidity. 100% of the gas fees and MEV goes to ATOM stakers and 100% of application fees from the LP position go to the community pool. When the community pool can withdraw the funds, it goes back to the community pool.

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just to clarify the amount is not given, it is an LP owned by the cosmos HUB and can be withdrawn at any time back to the community pool. And since Duality doesn’t take any fees all value accrued from this position will be accrued to the community pool.

The reasons for it are described above but can be summarized as

  1. bootstraps a cosmos HUB owned protocol
  2. alleviates HUB validator costs by increasing volume → transaction fees
  3. bring value back to ATOM
  4. expedite the process of making the Cosmos HUB a core piece of liquidity infrastructure

If I am not mistaken, technically we cannot control the multisig with gov it is the people who we have to trust to return the Atom. Correct me if I am wrong.

But my major concern is What criteria we are setting to receive (for the time being) these huge amounts. It seems, just because they are using the ICS we are entertaining them. We should act differently, Cosmos Hub is enabling the app chain thesis without maintaining app’s own validator set for that tradeoff cosmos Hub stakeholders (validators/delegators) are getting the fee share. Now only on the basis that they are adding a utility to Atom (fees) we should start giving them these huge amounts?

Now suppose a proposal from existing dex (sifchain/kava/umee/) to use Atom as the only method of fees but they need to deepen the pools with the Atom. will we be in favor of that? although this is a better case bacue it also avoided the Validator overhead but I would say no.

@nicholas @Elijah

Totally understand your concerns here are some clarifications that might help :

If I am not mistaken, technically we cannot control the multisig with gov it is the people who we have to trust to return the Atom. Correct me if I am wrong.

The Multisig is made up of the top validators on the Cosmos Hub. While it’s not perfect and we specify that we are working on better solutions, you already trust these same people when transacting on the Hub.

What criteria we are setting to receive (for the time being) these huge amounts

The criteria that people vote on is whether it benefits the Hub. The case made in the proposal is that by using community pool funds to temporarily LP, the Hub benefits because it :

  1. generates swap fees for the community pools (and staking fees if it’s an stATOM pair)
  2. all MEV fees captured by the network accrue back to the Hub
  3. the community pools still owns the funds (they are not being given to the chain)
  4. would bootstrap a replicated security chain (a part of the ATOM Zone)
  5. all gas fees created go to stakers and validators

Now suppose a proposal from existing dex (sifchain/kava/umee/) to use Atom as the only method of fees but they need to deepen the pools with the Atom. will we be in favor of that?

ATOM stakers and validators don’t receive fees from activity on Sifchain, Kava or Umee as long as they’re not replicated security chains (and part of the ATOM Zone). The Hub would not receive fees from gas and MEV in these cases, and in some cases they’d have to split some of the application fees with the other applications. This would also not contribute to bootstrapping the ATOM Zone.

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I have spoken about this on Twitter already, but Duality has set the bar for how a consumer chain aligns itself with the Hub. I am FOR this proposal. 500k ATOM is more than worth it, but we want to make sure the POL ATOM on Duality is used in the most capital efficient manner to generate revenue for the Hub.

While this could be changed via governance, I’d like to encourage the community to consider burning all ATOM used on Duality and only take in swap fees/MEV revenue.

@nicholas @Elijah whats the plan on dynamic swap fees (volatility fee)? Is this something we can expect at Duality launch or will there be static fees for each pool?


You could design a vault on top which changes the spread (fee) dynamically on top of Duality. We tried to avoid using oracles in the core design throughout the process though to allow the complexity to be built on top instead of inside the protocol.

That said we’re working on some ways to manage the liquidity in a capital efficient manner that won’t be live on launch. As for burning, why is burning better than internalizing the fees and growing the community pool? It’s probably in the best interest of the community pool to become sustainable overtime in order to fund future development and growth so keeping the rewards would make sense to me.


Very nice proposal!
I don’t see any conflict of interests!

But, can we exclude CEXes validators (Coinbase, Binance) from getting rewards?

That’s a fair point! I see tx fees trending towards zero over time for all applications and think it could be a good way in the interim to capture value across all ATOM tokenholders instead of just ATOM stakers. It’d be a good way to counterbalance some of the Hub’s inflation and create even more scarcity in the liquid markets.

With that being said, as inflation comes down with increased stake rates and a relatively underfunded community pool, it probably does make more sense to direct most of the revenue back to the community pool to fund future dev and growth.

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