Value Alignment Proposal: ATOM & USDN (Noble Dollar)

Hub Proposals Signaling/Text
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Montagu from Citadel One here,

Thanks to the Noble team for putting this up.
The way I understand it, Noble is proposing to build a governance-controlled distribution module that will direct yield accrued from all USDN held on the Hub towards ATOM-aligned initiatives.
Some thoughts:

  • Does this make sense for the Hub?
    If approved, the proposal will ( unofficially) crown a canonical stablecoin on the Hub. And considering the upcoming permissionless VM, the drawbacks exceed the benefits as it will disincentivize other stablecoins from expanding/ launching on the Hub.
    Take Tether’s USDT as an example: with a VM, there is a chance of seeing native USDT on the Hub. But that won’t happen with governance backing another stablecoin.

  • Why would anyone choose to give away yield and hold USDN on the Hub?
    The only scenario I could think of is if Apps building on the Hub adopt USDN over other stablecoins such as USDC for collateral/ settlement/ LPing… In which case accrued yield should be fully redirected to Apps instead as incentives.
    Apps are the ones bearing the cost here, in term of adoption, liquidity as well as additional trust assumptions ( Wormhole and m0) so it makes sense that they capture most, if not all, of the upside.

To sum up, adopting a canonical yield-bearing stablecoin for a chain and redirecting the yield to the right actors is a powerful mechanism ( see Initia adopting Ethena’s sUSDe) but it makes the Hub opinionated.
That being said, if this is approved we need to make sure the yield goes to the right actors: the Apps.

1 Like
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I want to follow up and say that I am EXTREMELY excited about USDN, and think it has a shot at being a massive accelerant to the Cosmos Hub. All these options of where the yield go are better than having no yield - as it is with most other stablecoins - and Noble has been an incredible partner to work with.

Highly in support of this idea and proposal in general, and we at the ICL will put in effort to make sure USDN is deeply engrained in Hub DeFi.

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23

I am very excited about your proposal to give value to ATOM.
However, if all the yields are currently used for burning, etc., there will be no incentive for us as individuals to send USDN to COSMOS Hub, and it will not actually work. As mag has proposed, a mechanism to distribute it to each position seems realistic.
Alternatively, I think it would be good to convert some of the surplus funds from community pools, etc. into USDN and use the revenue from that as the source of funds. Of course, this is just my amateur opinion, as I don’t know anything about the current financial situation or legal issues.

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First and foremost, we commend the team for taking meaningful steps toward deepening integration with the Cosmos Hub. At Govmos, we’ve been closely following Noble’s expansion and believe the time has come for the project to realign with the broader Cosmos vision. With shared security models evolving into product-based alignments, it is entirely logical to see Noble offering USDN through the Hub. The offer to share yield presents a pragmatic foundation for such an agreement.

On Yield Distribution:

From our standpoint, defining a destination for the yield at this early stage is premature. Proposals to buy back, allocate, or redistribute yield are certainly worth exploring—but they lack sufficient context and data for effective decision-making today. We strongly recommend postponing any final decision on yield distribution until enough empirical data is available to guide the process quantitatively.

On Political Implications:

That said, the proposal also carries some political assumptions that deserve to be addressed. As @JohnMontagu rightly noted:

“Adopting a canonical yield-bearing stablecoin for a chain and redirecting the yield to the right actors is a powerful mechanism (see Initia adopting Ethena’s sUSDe), but it makes the Hub opinionated.”

To avoid ambiguity on this critical point, we urge that the proposal explicitly clarify that USDN will hold no privileged status over any other stablecoin. More broadly, we believe the Hub must remain neutral and not align itself with any single currency—especially not a fiat-backed one.

Capital vs. Currency:

ATOM stands as a prime collateral asset, offering independence from fiat systems and centralized control. At Govmos, we maintain that ATOM represents a superior on-chain form of capital—yield-bearing, censorship-resistant, and free from political influence.

We’ve long advocated for a clear separation between money and capital as a foundational principle of a resilient financial system. In this light, we support the role of fiat-backed stablecoins as transactional currencies, but we do not endorse any framework where such assets are elevated to capital instruments or intermediaries in the ecosystem.

Let’s not lose sight of the fact that ATOM is both sovereign and productive, while fiat-backed stablecoins are, by design, politically tethered. We urge the community to protect this frontier and build a system where decentralization isn’t just a narrative—but a structural reality.

Thank you for reading,
Govmos
pro-delegators-sign

4 Likes
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  1. Whether it is for compliance purposes or to facilitate integration between different ecosystems or to attract resources to promote USDN/ATOM, we should first establish that the decision-making authority for such benefits should be performed by the DAO. This is the most consistent with the logic of multiple parties and the direction of compliance. So it may make the most sense to have one contract address hold the proceeds until the ATOM VM is up and running.
  2. we can confirm in the ballot proposal that all distributions of USDN proceeds will have at least a corresponding percentage to USDN holders. There could even be a vote to confirm this, followed by a vote on the transfer of USDN proceeds to the ATOM DAO.
  3. Other different ATOM ECO chains could then initiate an ATOM proposal on how the proceeds of the USDNs that need to be distributed to be retained on their chain should be distributed and voted on by the ATOM pledgers. Subsequent similar proposals and presentation of data could be done using a separate web tool.4. In this way, the governance function of the ATOM, like the DA, is instrumentalized, and the cost of using this governance/hosting function is the value provided directly or indirectly to the ATOM ECO or Chain.
    And this structure is perfectly suited to meet the needs of different chains, and to meet the needs of any group of USDN holders/ATOM developers/future DeFi Builders, etc.: - 1. At the first tier, it is up to the ATOM pledgers (and future USDN holders) to vote together to determine and adjust the most fundamental USDN holder-other party release ratios and rules, implemented by the USDN team, which ensures compliance and decentralization, attracts all parties to use USDN as the most central value medium and for building, including users and protocol developers, and brings direct external value introduction to ATOM.
  4. At the second level, other ecosystems and protocols are each concerned about how many USDNs they have locked up, and then initiate a reasonable governance solution, which is voted on and updated by ATOM Holders as the decision makers.