The ATOM Wars: a new strategy for liquidity injections

Introduction

Hello, I am from pryzm.zone, a platform that lets you split your assets into principal and yield tokens. We are interested in the idea of the ATOM wars, a platform for governance and liquidity, but we have a different approach that we think is better.

For context, pATOM and yATOM are the tokens that you get when you lock your ATOM tokens on pryzm.zone. pATOM is the principal token, which means it keeps the same value as your original ATOM tokens. yATOM is the yield token, which means it represents the interest that you earn from locking your ATOM tokens. You can use pATOM and yATOM for different purposes, such as trading, staking, governance, or liquidity. You can also convert them back to ATOM tokens at any time.

For a simplified version of how Pryzm works, please see our twitter post titled - How to trade your future yield with Pryzm: a simple analogy with trees and fruit

Pryzm has a pGOV module that lets you vote on Cosmos Hub proposals, monetize your voting power and could easily facilitate a credibly neutral market place where users can trade their voting power. It is live on mainnet shortly and currently live on our testnet. You can see the detailed module documentation here: docs.pryzm.zone/pryzm-core/Modules/pgov/

Liquid Voting lets you have a say in how the original chain of your staked assets works. When you stake your assets on PRYZM, you give up your voting rights on the original chain. But Liquid Voting gives them back to you by copying the proposals from the original chain to PRYZM. You can vote on PRYZM using your cAssets and pAssets, and your votes will be sent to the original chain.

Leveraged Voting means you can vote more than your actual share of assets. For example, suppose Pryzm has 100 ATOM staked but only 5 people who have pATOM, decide to vote. Then each of them can vote as if they had 20 ATOM, not just one. This way, they have more influence on the outcome of the vote. This democratizes voting and means validators aren’t left with deciding votes.

A possible implementation for the ATOM wars could be to create a contract or module that lets users lock their pATOM for defined periods of time and awards them voting power multiples as per the original proposer’s suggestion. The votes are aggregated and then implemented by pATOM. Protocols and blockchains seeking to lobby the aggregated locked pATOM can then airdrop tokens to pATOM holders or, if their token is not live, award points to the pATOM holders in lieu of tokens, to be later redeemed for tokens.

Main Body

Our solution has several benefits:

  • It uses the existing Cosmos infrastructure and standards, such as the IBC protocol, ICA, ICQ, the Cosmos SDK, and the ATOM token. It does not need any new tokens or platforms.
  • It is secure and decentralized, without any centralized oracles.
  • It is scalable and efficient, without any extra costs or delays. It also keeps the value and the utility of the ATOM token.
  • It has a clear mechanism for distributing, inflating, and feeing the pATOM and yATOM tokens, based on the pryzm.zone refractor module.

We think our solution is more aligned with the Cosmos vision and values, and we invite you to join us in testing and deploying it. We welcome any feedback and suggestions on how to improve our solution and make it more compatible and complementary with the Cosmos Hub.

We would also highlight that to align with the Cosmos Hub, we have several other features that will benefit ATOM holders and we strongly believe that we will can significantly increase utility and revenue for ATOM holders.

  • We are having restaking of ATOM to secure our chain.
  • ATOM will be a gas token.
  • We will have native liquidity pools on our chain enabling trading of yATOM, pATOM and cATOM
  • ATOM could be a base asset in our liquidity pairs if governance approves.
  • We are increasing ATOM utility by enabling tokenizing and monetizing of future yield.
  • We are decentralizing ATOM by removing validators’ voting for unvoted LSD tokens.
  • We are enabling LSD holders to vote on ATOM governance proposals and giving them leveraged voting power (as above)

Conclusion

Thank you for your attention and consideration.

6 Likes

We need more Atom utilities and either Lst or Rwa
And decrease inflation

very good ,ATOM will be platform that lets you split your assets into principal and yield tokens .

1 Like

I think pryzm is a nice project, I follow you from Terra.
You mentioned that those who are not active leave their power to those who have already voted, levereged voting.
Instead of just giving voting power for free, why not sell unused power with a bribe system, Convex style?

That way those who deposit atoms on pryzm, if they vote are worth what they have decided
otherwise they get a passive yield

I generally understand the essence of this design, which is to distribute the income received from third-party projects to long-term pledgers who are willing to lock up for longer!

This is essentially for the benefit of long-term pledgers. The interests of long-term pledgers have increased, but this will not bring more pledgers. After all, you have to lock for a long time!

So why not switch it up and exchange these rewards for ATOM and destroy them?

I don’t know if there is any misunderstanding
Everyone can easily participate in voting. This is called governance.

If you still need to learn some tricks before you can get started, this is called a game.

Will this be EOS second in the long run? There is still much to learn in the future. It can be quite difficult to use, causing users to flee.

The success of a project lies in how many people will use it and whether it burns currency to reduce inflation.

2 Likes

ATOM stakers who choose to liquid stake is because they want more liquidity and not be locked in the unbonding period of 21 days, and also to earn additional DeFi yield on top of staking rewards. Why would those wishing to avoid a 21 days lock-up period choose to lock-up their tokens several months or one year? Even if you use the LSM as you mentioned, the LSM is just a regulation for liquid staking providers so you will be working with different liquid staking providers and it is the same issue. You expect a subset of ATOM stakers avoiding a 21 days lock-up period to choose an even longer lock-up period of months or a year?

stATOM holders benefit from staking rewards, liquidity and additional DeFi yield. Would this small APR from the community pool by locking stATOM for months be worth more than the liquidity and potential DeFi yield?

Since I don’t think you want to increase the inflation, if those locking for longer periods will get more rewards, those with the 21 days unbonding period will receive less rewards. Moreover, locking tokens for months or a year increases the risk significantly so for tokens holders to choose this the rewards increase would need to be very significant which seems unlikely. This is because inflation has already been reduced, so if rewards are significantly reduced for those staking with the 21 days unbonding period they may decide to unbond to search other staking opportunities, decreasing the bonding ratio and the security of the Cosmos hub.

2 Likes

hey @Thyborg - thanks for this proposal, and for trying to keep pushing the Hub forward, bringing benefit to the Cosmos Community. While I like the concept, I do have some serious concerns and some additional questions:

This seems like you’re prioritising speed to market over the security of users’s funds. Forcing people who want to participate in ATOM wars to take exposure to a single Liquid Staking Provider is a step in the wrong direction. It translates to this:
“If you’re not willing to take exposure to stATOM, you’re not allowed to vote anymore in where liquidity gets deployed”.

I like the idea of ATOM-wars, but LSM is the way to go on this. If not the LSM, then at least offer the user to choose the LST he’s using.

In prop 853 there is a clear form of revenue sharing back to the Cosmos Hub, so in a way, this ‘customer’ is already paying. With statements like this, it would be more interesting to see what an expected ROI on these liquidity provisioning arrangements is. What’s a fair price for this service which is acceptable to both provider and consumer?

Not sure about everyone else, but for me ‘relatively safe’ when it comes to locking my tokens for 1 year is not good enough. Even if Stride is a consumer chain, a bug in their code can put the entire ATOM-wars at risk.

Final question: what’s the suggestion when it comes to providing a front-end for this? How are ATOM-holders actually expected to participate in this?

Thanks in advance for clarifying.

8 Likes

I like this idea. ATOM War sounds making community exited.

But I cannot agree with the point that acceptable tokein to vote is only stATOM. I’ve been delegating ATOM, not using LSD servises. I hope I’m one of the member of Cosmos Hub community as far as delegating ATOM. But if acceptable token in Atom War is only stATOM, I don’t have any right to vote to spend fund from community.
So, for me, it doesn’t sound making profit to ATOM and ATOM holder, it sounds more like making profit to Stride, recommending to use Stride.

4 Likes

Really appreciate the idea and work done for this proposal. We need this kind of spirit :slight_smile:

Few questions:

  • Isn’t Astroport about to lunch their Xastro Wars with similar concept? (once they fully migrate the governance module from Terra to Neutron network)

  • Maybe I misunderstood “liquidity injection” but is it only related to pooling on DEX ? (create pools, add liquidity to pool, boost pool rewards).

  • Does this not over advantage Pool users at the expense of native stakers ? For the ones whose stake long term 90% of their bags natively and participate to governance through voting, why should I liquid stake for pools I don’t use?

Overall I like the idea but I fell like the Hub should focus on governance on future consumer chain integration rather that pool liquidity injection only and let this kind of events happened on the Dex itself.

  • Which makes me think, could we not use this concept to create a vote on the ICS/PSS side only ?

Vatom to specifically vote on which consumer chain are integrated. It separates the regular on-chain governance with the consumer chain integration. Reading the other post on PSS, several concerns were about where those proposals should be done, and this Vatom votes could be perfect for that purpose.

As a native staker, not really interested on additional risk (pooling), a space where I can vote on consumer chain integration alone could convince me to liquid stake more ATOM with lock period.

I think the Hub really needs an AEZ dashboard with stats & graphs from Mintscan (validators power, votes stats…etc) and dedicated tabs for consumer chains governance, Atom War vote, DAO… etc

2 Likes

sorry i stopped reading when you said Curve/Convex model was good, and the risk level acceptable.

i don’t like it.

Thank you for sharing your ideas and design! We find this discussion highly valuable for the community. Sharing alternatives will contribute to refining the ATOM Wars design.

Just a couple of simple questions:

  • Is your design just for the Hub? or will it be a governance platform for any chain?
  • Your design also sounds like a vote aggregator. Do you think it could be built on top of the ATOM Wars?

We understand your concern. It’s essential to highlight that our design allows for system updates (or even complete removal) through standard governance procedures. This means that if any single entity gains substantial control, the community retains the authority to take corrective actions.

We appreciate your collaboration with the discussion!

There is demand for liquidity, as indicated by Prop 853 and Prop 858. We understand that there are uncertainties about the willingness to pay for short-term liquidity (however, recall that the liquidity stays with a particular project until there’s a better offer). The marketplace aims to figure out what price people are willing to pay for this. Based on market feedback, we may decide to extend the duration of the fund allocation.

Many thanks for sharing your points of view!

There is already concentration of voting power. The proposed scheme aims to increase voting power only among long-term committed participants. Yet, as you rightly pointed out, larger, committed players might have advantages over smaller ones in deciding the number of ATOMs to lock up for extended periods. We think that the rise of vote aggregators (see DAO Wars) might address and balance this disparity.

At Informal, we have consistently worked for the benefit of the Hub, contributing to initiatives such as Replicated Security, Partial Security, and now ATOM Wars, among others.

Many thanks for sharing your ideas!

You raised a valid concern. However, it’s essential to acknowledge that not all ATOM holders are comfortable with adopting a liquid staking protocol and engaging with DeFi. For those holders who prefer not to expose themselves to DeFi, the option to utilize their stATOM for the ATOM Wars will be available.

Your insight is accurate. The proposed concept may be beneficial if there is a push for an additional reduction in the inflation rate in the near future. We believe that implementing such a scheme might offer a method to decrease the inflation rate while minimizing the negative impact on the rewards for token holders committed to long-term locking periods.

1 Like

It can be used for any chain that we support. Our initial plans are to launch with the main zones of Cosmos, Osmosis, Injective, and Terra, but we could expand to more if there is demand from users. Listing of assets is permissionless, so anyone can propose any yield-bearing asset.

I think our solution would eliminate the need for anything additional to be built. I also believe that it is a good solution to have this on a closely related but independent chain, to preserve the integrity of the HUB.

1 Like

and how has that translated into positive impacts onto the chain?

Many thanks for your comments!

The design aims to directly benefit ATOM Wars participants (via bids) and indirectly all ATOM holders (via PoL)… We intend to allocate 100% of PoL revenues and 10% of bid-related revenues to the community pool. The utilization of these funds is a topic for ongoing discussion. Some of the funds may be reinvested to sustain and expand the scheme, while alternative options like burning ATOMs may be also under consideration.

Many thanks for sharing your ideas!

Initially, we are opting for stATOMs to expedite system testing, as integrating LSM shares would require a more extended timeframe.
We intend for deployment on Neutron, alongside a restricted liquidity bucket. We believe this approach doesn’t compromise the security of the hub. Overall, we advocate for a faster testing and iteration of ideas and designs within the Hub.

Our framework incentivizes competition among projects. The market will decide which is the price that a project has to pay for liquidity injections.

The stATOM-based design is a temporary solution. We aim to launch the design based on LSM shares as soon as possible. Once launched, this will facilitate the conversion of locked stATOM into locked LSM shares. Consequently, users won’t need to remain exposed to stATOM for a full year if that is their chosen locking period.

Many thanks for you comments!

Pooling on Dexs is just one possible use for the liquidity injections. In practice, there are no restrictions on the types of projects that can request funds. For example, lending, borrowing, stableswaps, stablecoin minting, superfluid staking, staking are all potential use cases. Recall that since each project must include a description of how it will use the ATOMs, voters are the ones who decide which projects are worthwhile.

in fact, the scheme is exclusively designed for ATOM stakers. They will enjoy additional rewards if they decide to participate. Those with tokens in liquidity pools cannot participate in the ATOM Wars.

Extending the ATOM Wars into other decision processes is something we are considering. The onboarding of ICS chains, funding proposals, DAOs members election & firing would be interesting new use cases.

Yes, AstroWars are also inspired by Curve Wars, as we are doing.

1 Like