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
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!
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.
just to clarify the amount is not given, it is an LP owned by the cosmos HUB and can be withdrawn at any time back to the community pool.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
- bootstraps a cosmos HUB owned protocol
- alleviates HUB validator costs by increasing volume → transaction fees
- bring value back to ATOM
- 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.
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 :
- generates swap fees for the community pools (and staking fees if it’s an stATOM pair)
- all MEV fees captured by the network accrue back to the Hub
- the community pools still owns the funds (they are not being given to the chain)
- would bootstrap a replicated security chain (a part of the ATOM Zone)
- 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.
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.
this will make ATOM into a farming token like all the other DEXs & odds are it will be abused by devs/validators holding big bags from last cycle looking for exit liquidity.
If the hub is trying to become a meme, what better way is there than voting to turn it into another in the pile of cosmos DEXs?
No response to this? @Elijah
Hey !
Sorry I didn’t see this earlier. I do work for Duality Labs. For titles - we try to deemphasize titles at Duality Labs, but I am a founding member and work on product and research.
Totally understand your concern, but think there are some misconceptions.
There are no farming incentives being requested.
The only request is that the community pool uses assets that aren’t currently being utilized to LP. The community pool would still be entitled for the liquidity that makes up the LP position and the rewards it generates.
Farming typically implies inflationary rewards, however there would be no inflationary rewards in this case.
so you are asking for an unsecured loan the size of the community pool? why not coin the hub FTX2.0?
by farming i mean a repetitive process of harvesting liquid tokens (atom’s CP) in exchange for some intentionally/unintentionally useless inflationary token.
it makes no sense to risk the stability of the hub to be just another DEX in the haybale of DEXs.
Thank you for the proposal. Will check it thoroughly.
Our concerns about long term validator sustainability and therefore decentralization of the Cosmos hub have not yet been lifted but this proposal is exactly for which ICS was intended.
Horizontal scalability and Risk separation at its finest.
Lavender.Five will support this proposal and will dedicate additional time and resources to duality in the form of emergency multisig participation.
Totally understand your concern. To clarify though :
so you are asking for an unsecured loan the size of the community pool?
- There is no unsecured loan. A loan implies Duality would have ownership over the funds and be able to use the funds at will, while being required to pay them back after some time frame. This is not how the liquidity injection works though. Noone at Duality Labs will custody the funds at any point, nor will they be able to use the funds at will. The funds would only be used as described in the proposal with no participation from Duality Labs and the funds go back to the community pool afterwards.
- As for the size. 500K ATOM is not the size of the community pool. The community pool has more funds and this is only a fraction of those. It’s also worth noting that the community pool still has rights over the temporarily LPed funds so they are not being stripped from the community pool.
by farming i mean a repetitive process of harvesting liquid tokens (atom’s CP) in exchange for some intentionally/unintentionally useless inflationary token.
- There is no useless inflationary token being exchanged for ATOM in this proposal. ATOM would be liquidity provided, and the community pool would receive the swap fees from that liquidity provision.