Change log
- 2025-04-04 Created initial post
Summary
This signalling proposal intends to garner the support of ATOM holders to integrate USDN into the ATOM economy via “composable yield” which allows the Cosmos Hub community to direct yield programmatically to value-accretive activity.
Background
Noble has been a critical part of the Cosmos ecosystem since our inception in March, 2023. We have brought billions of dollars of transaction volume of native stablecoins to the Cosmos ecosystem, including Circle’s USDC, and most recently Noble’s own yield bearing stablecoin, USDN. Currently, Noble accounts for ~40% of all inflows to the Cosmos ecosystem.
Noble’s mission is very simple: to empower blockchain developers to build scalable applications by providing seamless and safe access to native stablecoin liquidity. In the last year, Noble facilitated over $6.5 billion in volume in the Cosmos ecosystem.
Most recently, we launched Noble Dollar ($USDN): a USD-pegged stablecoin collateralized by short-term U.S. treasury bills via the M^0 Protocol. USDN currently yields an estimated 4.2% APR with over 55 million USDN currently issued and outstanding on Noble. We expect IBC functionality to be available for USDN in the next few weeks and, as part of this rollout, we want to bring USDN to the Cosmos Hub in a way that promotes ATOM value accrual and alignment.
The Interchain economy continues to grow, with new appchains launching every month, and seamless interoperability among appchains via improvements to IBC, such as IBC Eureka. Very importantly, the Cosmos Hub DeFi community is only now starting to emerge as a viable ecosystem of many applications, all powered by ATOM. In this proposal, we seek to inspire the ATOM community to take a bold step in adopting a plan for ATOM value accrual leveraging the unique and composable properties of USDN.
Proposal Details
Integrating USDN into the ATOM economy is the most effective means of distributing yield to important ecosystem constituents - chain builders, validators, end users and token holders - with ATOM alignment. USDN’s product is “composable yield” which allows the Cosmos Hub community to direct yield programmatically to value-accretive activity. This leads to a virtuous flywheel where ATOM value benefits from initial USDN liquidity, setting the stage for increased ecosystem investment (or a wealth effect) that attracts more USDN liquidity and in turn more value to ATOM.
In the next few weeks, Noble will launch IBC functionality for USDN. As a result, any Cosmos blockchain can leverage USDN, a composable yield stablecoin, for its ecosystem and direct native yield in a flexible and programmatic way. For the Cosmos Hub community, we propose that yield derived from USDN held on the Hub directly benefits ATOM stakeholders. In this proposal, we will outline three potential methods for achieving this:
- Direct USDN yield to a distribution module
Any yield accrued from USDN on the Cosmos Hub is directed to a distribution module that automatically directs yield to ATOM stakers. If approved by the community, the Noble team would work to implement this distribution module to this specification.
- Use USDN yield for continuous buying and burning of ATOM
Any yield accrued from USDN on the Cosmos Hub is used as part of a regular auction to buy and burn ATOM. If approved by the community, the Noble team would work to implement this model into an ATOM-aligned DEX.
- Create a limit order for ATOM below a market price threshold to buy and burn ATOM
Any yield accrued from USDN is used to open a limit order for ATOM at a price that is below the prevailing market (e.g., a 20% discount). This would entail the implementation of a system in which purchase liquidity is mobilized to provide downside protection during periods of market turbulence, with the added benefit of burning those ATOM that are sold at prices incongruent with the broader market. This option provides a more novel mechanism for coordinating benefits to ATOM stakeholders from USDN yield. If approved by the community, the Noble team would work to implement this model into an ATOM-aligned DEX.
Conclusion
We strongly believe that an ATOM value accrual mechanism from USDN yield will be value enhancing for Cosmos Hub stakeholders and further supports reinvigorated enthusiasm for ATOM and the Cosmos Hub. USDN is a product that the Noble team has been working on for some time and we are excited to finally bring the benefits of USDN in a way that promotes ATOM alignment via the flywheel that brings increased liquidity, growing application activity and large value accrual to ATOM stakeholders.
Forum post link
IPFS link
Governance votes
The following items summarize the voting options and what it means for this proposal:
YES - You approve the proposal to bring value accrual to ATOM from USDN yield.
NO - You do not approve the proposal to employ adoption of USDN by the Cosmos Hub to bring value accrual to ATOM from USDN yield.
NO WITH VETO - You indicate that this proposal either (1) is deemed to be spam, i.e., irrelevant to Cosmos Hub, (2) disproportionately infringes on minority interests, or (3) violates or encourages violation of the rules of engagement as currently set out by Cosmos Hub.
Abstain: You wish to contribute to the quorum, but you decline to vote either for or against.