Cosmos Labs has selected Gauntlet as the quantitative research partner for the ATOM tokenomics redesign initiative.
This decision was reached after review of 9 proposals and numerous back and forth iterations with many of the vendors that were shortlisted for the process. To learn more about how the selection process took place and why Gauntlet was selected, please see this article.
The research effort was kicked off this week and is now underway. We welcome any questions and discussion on the SoW, and are looking forward to the first research outputs!
Scope of Work
Note: The following is a direct copy-paste of the mutually agreed upon scope of work between Gauntlet and Cosmos Labs, derived from Gauntlet’s original proposal in response to the RFP.
This proposal outlines a commercial framework for Gauntlet to provide Data-Driven Tokenomics Research and Quantitative Validation for the Cosmos Hub. We propose a 16-week intensive retainer designed to meet the high-stakes requirements of the Cosmos Labs mandate: transitioning ATOM from a staking-centric model to a sustainable, enterprise-ready economic engine.
The engagement will comprise three phases, including an extensive data and holder research initiative to inform further analysis. We will analyze the current purchase/sale landscape of ATOM to identify specific sell-pressure origins (stakers vs. traders) and simulate how changes to inflation or fee structures will impact various stakeholder cohorts. By leveraging Gauntlet’s quantitative expertise, we will provide the Cosmos Hub with the empirical “proof of concept” needed to drive social consensus and finalize a redesign that balances network security with long-term ATOM value accrual.
Objectives
The primary goal of this engagement is to evaluate and validate the next generation of ATOM tokenomics. We will leverage Gauntlet’s quantitative research expertise to provide data-driven feedback that strengthens the relationship between the Hub’s security and its economic utility. Our objective is to ensure that ATOM’s design effectively drives key metrics: staking participation, interchain liquidity, and sustainable revenue for the Hub.
Specific objectives include:
-
ATOM Token and Holder Analysis: Review the existing economics of ATOM within the context of ATOM holder cohort behavior (validators, retail, investors, etc.) alongside existing ATOM tokenomics (inflation, utility, etc.). This includes creating a framework to analyze transfer behavior, buyer motivations, sell pressure, post-purchase behavior, and the effect of historical tokenomic events on each cohort.
-
Monetary Policy & Inflation Reform: Conduct quantitative research on ATOM’s distribution and emission schedules. We will drive prioritization toward a final recommendation for a sustainable inflation framework, balancing the need for validator/staker incentives with the goal of reducing long-term dilution and reaching a “steady state” supply.
-
Mechanism Model Development & Security Floor Analysis: Transition the approved economic design into a comprehensive quantitative model, explicitly accounting for the shift from a circular staking-inflation model to an enterprise-ready, fee-based revenue model. This includes developing a “Security Floor” framework to calculate the minimum Staking APR required to maintain budget resilience against market volatility. We will also model yield and bond ratio elasticity and conduct quantitative benchmark cross-analysis against peer networks (e.g., Near, Avalanche) to validate supply management strategies.
About Gauntlet
Gauntlet is a DeFi-native quantitative research firm specializing in treasury and risk management, incentive optimization, and mechanism design. Gauntlet uses battle-tested techniques from the algorithmic trading industry to help protocols manage risk, optimize revenue, and design better incentives. Our simulation models inform parameter decisions for protocols of all sizes, covering over 25% of aggregate DeFi TVL.
Our mission is to enable blockchain ecosystems to realize their full potential by creating software and technology to measure and accelerate growth, enhance ecosystem efficiency, and bolster the overall utility for their users. We specialize in optimizing incentives, refining fee structures, and implementing optimal ecosystem control policies. Our services enable platforms to first quantify growth and then maximize ecosystem utility. Gauntlet helps use onchain financial structures to grow ecosystems safely.
Key Principles
-
Quantitative-based approach: Utilize historical data, performance metrics, and real-time market conditions to inform sustainable growth strategies.
-
Economic balance: Joint optimization of growth programs, parameterization, and incentives to ensure ecosystem resiliency.
-
Predictability: Analyze past and present data to understand incentive performance across different ecosystem verticals.
Scope and Deliverables
Note: All deliverables below should include a commitment of up to 10 key person hours for Gauntlet to assist in public communications surrounding the research process and output with the Cosmos Hub community and other stakeholders, as needed.
Phase 1: Empirical Data Diagnostic & Holder Research (9 Weeks)
Objective: Conduct primary research to map the ATOM economic landscape. We will move beyond theory to provide a definitive audit of how capital currently flows through the Cosmos Hub.
-
Work:
-
Onchain Data Ingestion: Stand up dedicated data pipelines using provided Cosmos APIs to ingest historical ATOM ledger data, mapping flows between the Staking Module, Community Pool, and Inter-Blockchain Communication (IBC) channels and offchain venues such as Centralized Exchanges, Custodians, etc.
- Requirements from the Cosmos side include a list of data dependencies, existing API and data streams, and validation of data availability during initial onboarding.
-
Stakeholder Cohort Mapping: Segment the ATOM holder base into categories (e.g., Genesis stakers, institutional validators, liquid staking providers, and high-velocity traders).
- Incorporate existing Cosmos cohorts with data-driven cohort observations to provide a comprehensive picture of stakeholder cohorts for further behavioral analysis.
-
Sell-Pressure Attribution: Quantify the exact proportions of supply expansion vs. sell pressure. We will determine how much emission is being compounded vs. liquidated to fund validator operations or profit-taking.
-
Post-Trade Behavioral Analysis: Analyze the “path to participation” for new ATOM buyers. Do they move toward staking, DeFi (e.g., Osmosis/Stride), or passive holding?
-
Baseline Assessment: Analyze current Cosmos Hub staking economics (inflation schedule, bonded ratio targets, validator revenues, delegator yields).
-
Quantify security spend relative to chain value (e.g., issuance as % of market cap, real yield after dilution).
-
Assess sources of sell pressure (validator OPEX, delegator behavior, reward liquidity).
-
-
Security Demand Exploration: Define security requirements under different threat models (cost-of-corruption, minimum viable stake).
- Identify over- or under-spending regimes under current parameters.
-
-
Deliverables:
-
ATOM buy and sell pressure and cohorts report - Comprehensive data driven report on the cohorts of ATOM holders with analysis on trading behaviors. In addition, the report should highlight:
-
Aggregated cohort trading behavior data over time
-
A list of the top 100 addresses by ATOM holdings per cohort
-
A list of influential addresses and statistically significant movements of ATOM
-
Cohort reactivity to specified chain or market events (e.g., Prop 848)
-
Any other items surfaced during onboarding
-
-
Phase 2: Mechanism Design and Mechanism Model Development (7 Weeks)
Mechanism Design
Objective: Define an updated security and revenue model for Cosmos staking with the goal of reducing overall inflationary spending while avoiding token sell pressure and maintaining robust economic security for chains.
-
Work:
-
Mechanism Design Exploration: Design alternative issuance and reward mechanisms (e.g., lower steady-state inflation, adaptive issuance, revenue-first rewards).
-
Explore security funding, including redistribution and burn/redirect mechanisms.
-
Evaluate staking lockups, reward smoothing, or delayed rewards to reduce immediate sell pressure.
-
Consider validator incentive alignment (commission structures, fixed vs variable rewards).
-
-
Deliverables
-
Mechanism Design Proposal
-
Concrete designs for updated inflation and reward mechanics.
-
Explicit tradeoff analysis (security, yield, decentralization, governance risk).
-
Cohort impact analysis (i.e., how do we expect the cohorts identified in phase 1 to be impacted by the proposed design, and how can we best mitigate that impact?)
-
Mechanism Model Development
Objective: Transition from the approved recommendation and mechanism to a complete model, including variable and discrete design mechanics accounting for the impacts of moving ATOM from a circular staking-inflation model to an enterprise-ready, fee-based revenue model.
-
Work:
-
Security Floor Analysis: Develop a framework to determine the minimum required Staking APR to maintain the Hub’s security budget remains resilient against market volatility.
- Model how required security scales with market cap, on-chain activity, and shared security adoption.
-
Yield & Bond Ratio Elasticity: Build a model to predict the “Security Floor” - calculating the minimum required APR.
-
Benchmark Cross-Analysis: Conduct a quantitative side-by-side comparison with similarly positioned networks (e.g., Near, Avalanche) to evaluate their supply management success.
-
-
Deliverables:
- Security/Yield Elasticity Model: A predictive framework correlating emission rates with staking participation.
Gauntlet Team & Staffing Plan
Rei Chiang (CTO) - Rei worked at Uber Advanced Technologies Group, building marketplace simulations for self-driving vehicles and real-time driver incentives. Prior to that, he spent five years in the HFT industry as a portfolio manager and quant trader at GETCO and 3Red, specializing in market-making strategies for fixed-income and commodity futures. Rei received his B.S. in theoretical math and computer science from MIT.
Gabe Pohl-Zaretsky (Director of Applied Research) - Gabe has a quant finance background working in high frequency trading at Jane Street before joining Gauntlet in 2020. At Gauntlet, Gabe has spent the past 5 years building out the Applied Research team and worked with a multitude of systemically important protocols across DeFi including Arbitrum, Uniswap, Eigenlayer, and Morpho.
Udai Parathaneni (Lead Data Scientist) - Udai has spent the past year leading the design and development of the Applied Research team at Gauntlet for key ecosystem clients. Prior to Gauntlet, he worked as a banker at Citi Bank and TD Bank, where he was responsible for developing credit models for credit cards and mortgages. He also worked as the Engineering Lead at Teller Finance, a DeFi lending protocol. Udai has a Bachelors degree in Engineering from the Birla Institute of Technology and Science, as well as a MBA from Columbia Business School.
Otar Sepper (Staff Data Scientist) - studied theoretical physics at NYU and UCLA, researching emergent phenomena and symmetry breaking in strongly correlated quantum systems, with a focus on triplet superconductivity under ultra-high magnetic fields. He later worked in industry, beginning as a machine learning generalist and leading large-scale recommender system initiatives at L’Oréal that powered personalized product matching across global markets. Most recently, he has worked in quantitative finance, developing portfolio construction strategies using language model embeddings to identify semantic-driven asset clusters. His career bridges deep scientific inquiry with applied machine learning and data-driven decision systems
Disclaimer
Cosmos Labs has been engaged by the Interchain Foundation (ICF) to conduct research on, and an assessment of, how best to support the health and long-term sustainability of the Cosmos Hub and the wider ATOM ecosystem. This work is focused solely on analysis, research, and community-oriented recommendations. Nothing in this process should be interpreted as financial advice, an effort to influence the market for ATOM, or any intention to manage, promote, or affect the price, value, or trading behavior of ATOM. This work does not treat ATOM as a security, nor should any part of it be understood as implying future value, returns, or investment expectations. The views and proposals developed through this engagement are for the benefit of the ecosystem and do not create obligations or responsibilities for either Cosmos Labs or the ICF.