ATOM-OSMO : A rational step-by-step alignment proposition

[Govmos]

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This discussion mirrors the original post we shared on the Cosmos Hub forum. We’ll be monitoring both platforms for feedback, so please feel free to share your thoughts on either forum.

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We have taken the time to thoroughly assess this complex matter, allowing a few days to gather various community feedback and carefully separate the political motives from the rational arguments. In this post, we will share our review, provide context, and include links for those who wish to delve deeper into the implications of these movements, both in the short and medium to long term.

Short-term Strategy:

Currently, we are in the initial phase where discussions are active and opinions are being shared. A few contributors have distinguished themselves by providing valuable information and concrete propositions. At Govmos, we believe it is crucial to focus on the how—to craft well-considered proposals and allow the community to vote. While opponents may be vocal, their lack of substantial contributions often reveals underlying political motivations.

We stand firm in our belief that the community should have the final say. To achieve a well-informed decision, we must first gather viable proposals, merge them to reach a consensus among active participants, and then proceed to votings. Drawing lessons from the ATOM 2.0 experience, we advocate for an iterative approach, avoiding “all-in-one” propositions and instead proposing a step by step plan, whilst we emphasize on the cohesive larger plan.

Mid-term Strategy:

Once the best ideas have been consolidated, the initial focus should be on the economic aspects, followed by governance and technical considerations. For a successful integration of Osmo and Atom, it is essential to first define the desired level of integration: Do we seek a financial merger, a governance merger, or a technical merger? These elements build upon each other in that specific order, making financial alignment the logical first step.

1. Financials:

To explore the optimal path for financial alignment between Osmosis and the Hub, we believe that both communities should consider leveraging existing tools like the InterChain Security (ICS) agreement. Given the close involvement of both parties, a TOP-N deal aligns well with the merger request. At Govmos, we believe the Hub is not yet mature enough in its product offerings for a full-scale merger, although we have previously envisioned this as part of the Hub’s long-term mandate (reference: this post). For now, establishing a well-balanced Partial Set Security (PSS) agreement between the Hub and Osmosis would be a prudent first step towards deeper integration, with an iterative approach.

The next step could involve even stronger alignment through a liquidity swap agreement using a covenant system, as designed by @Noam and Binary Builders. This concept, proposed as part of the Atom Alignment Treasury, was successfully funded through this proposition. Osmosis appears to be an ideal candidate for such a program.

2. Governance:

Once financial and economic alignment is achieved, the focus should shift to governance alignment. There are multiple options to explore, and existing feedback has already highlighted key considerations, such as the need for faster voting durations for Osmosis. This stems from the inherent differences between security and liquidity aspects, suggesting that maintaining two independent voting systems with adjustable parameters is essential. This approach is fully compatible with our recommendation to use PSS. Should the community agree to it, we could then consider enhancing an alignment treasury with governance capabilities, allowing the Hub to participate in Osmosis governance and vice versa. This is a promising area of exploration.

3. Technicals:

Finally, after achieving financial and governance agreements, we can consider the technical integration, which would entail a full-stack alignment with the Hub. This would involve a complete merger of Osmosis into the Hub, including a 100% revenue share and full governance by ATOM holders. Such a merger would offer significant liquidity efficiency benefits but would require a fully functional liquid staking ecosystem within the Hub to be viable. It is crucial to remember that liquidity and security are fundamentally different, with liquid staking offering a hybrid form that balances both properties, albeit with some trade-offs. We suggest postponing a full merger until the Hub has established a solid and fully operational liquid staking ecosystem.

Long-term Strategy:

In addition to these steps, we advocate for a long-term strategic vision. To provide context, we reference @ebuchman’s (Cosmos Hub’s co-founder) vision, which outlines the phases of Cosmos—“initiation,” “integration,” and “illumination.” According to Buchman:

“The dawn of Integration is marked by the distinction of the security of the Cosmos Hub, and its realignment with the growth of the broader interchain ecosystem.”

This integration phase was initiated by the launch of interchain security, particularly the ICS v2 update brought by the recent PSS deployment. As of now, we find ourselves at the core of this integration phase, expanding both the economic and political influence of the Hub within the interchain, while continuing to decentralize as we scale and integrate with more partners (reference: Collaborative Finance thesis).

At Govmos, we fully endorse this vision and believe that the integration of Osmosis with the Hub is a crucial step towards realizing this long-term vision.

CONCLUSION:

In summary, we recommend beginning with a “short-term” approach that prioritizes gathering community feedback and ideas, consolidating the proposals of those actively contributing, and progressing step by step. We suggest a mid-term strategy focused on financial alignment, starting with a TOP-N PSS agreement to initiate revenue sharing while maintaining governance and technical independence. We also propose creating an Alignment Treasury in parallel to further solidify the relationship beyond revenue sharing, with independent votes for each initiative.

Only after successful financial integration should governance and technical alignments be pursued, as these are expected to occur further down the line. For now, we encourage focusing on financial integration while keeping the mid-term strategy in mind.

Finally, we advocate for educating the community on the long-term vision of the Hub as a collaborative coordinator within the Interchain. With successful integrations like this one with Osmosis, and hopefully many others, we can conclude the integration phase and move towards the next chapter in the interchain’s history.

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Thank you for reading,
we look forward to the community’s feedback on our propositions.
Govmos (the governance arm of the PRO Delegator’s Validator).

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Sources to extend reading on the subject:
https://ebuchman.github.io/posts/phases-of-cosmos/
https://forum.cosmos.network/t/essay-cosmos-hub-the-first-democratic-state-of-capital
https://forum.cosmos.network/t/cosmos-ecosystem-a-permissionless-b2b2c-network

[BullBear]

To put this prop by Pro Deligators in context, I will copy my replies on Cosmos Hub forum to this forum because the arguments that I make are very relevant for the Osmosis community. And then I dont have to give a reply to this prop two times. This will give I think a somewhat more ballanced start of this discussion here on Osmosis forum.

BullBear on this forum and Pookybear on Cosmos forum are the same person, I messed up my username a bit with the signing up.

[BullBear]

Pookybear

I see a lot of Cosmos hub cheerleaders in the beginning of this discussion. Lets take a step back before discussing all ways to get a merger done and see the bigger picture.

Cosmos hub is partnering with Elys Network DEX in the near future. Whats up with that and at the same time start talking about a “merger” with Osmosis??? “Lets merge with Osmosis and at the same time set up a new DEX that does exactly the same thing as Osmosis already does but is completely under our control!” I very much question the motivation behind a “merger” prop.

Osmosis is going in a totally different direction then Atom with a very good dev team, expanding outside cosmos to be a dex including BTC etc, towards 0% inflation and completely revenue driven operating modus with a fixed max supply that will probably be reduced by 30%. Now this prop wants Osmo to merge with inflation driven Atom, with incompetent government, hugely misused comm pool and with unlimited supply.

Cosmos prop #952 is at this moment under voting. This “merger” discussion/prop is a distraction.
If disfunctional Cosmos hub gov cant even get the 2017-2023 financial reports published, talking about a “merger” with actually functioning Osmosis is imho extremely arogant.

Cosmos hub, first get your gov/inflation/comm pool/tokenomics shitshow (the reason why Cosmos hub is falling behind) cleaned up before Cosmos hub can be regarded as a trustworthy partner to any other chain, let alone starting to talk about a “merger”.

Until then I regard any “merger” prop as a hostile takeover proposition.
Especially in the light of the Cosmos hub/Elys Network Dex partnership in near future.

Disclosure: I hold both Osmo and Atom

post 2 on Cosmos hub Forum:
Pookybear

As you can see in the disclosure under my previous post, I hold both Atom and Osmo. I fully support a greater cosmos vision to help go up against Eth and Sol.

Thinking to accomplish that with a Cosmos hub Osmosis “merger” is a wrong line of thinking. Cosmos hub cleaning up its mess is the only way for Cosmos to compete with Eth and Sol. Any “merger” talk without first cleaning up is distraction and hurting Cosmos.

Maybe you should ask yourself what is the reason behind this sudden emerging of “merger” talks. It is not like this has never been discussed before.

I care about the health, sustainability and growth of Cosmos ecosystem. I have my doubts that ppl talking now about a “merger” and enthoustasticly tunnel vision planning out the details to make that happen also do…

Take a step back and look at the bigger picture. Talk about a Cosmos hub Osmosis “merger” is not in the best interest of Cosmos ecosystem…
Especially not in light of the upcomming partnering of Cosmos hub with the new Elys Network DEX.

post 3 on Cosmos hub forum:
Pookybear

@Govmos

At Govmos, we believe it is crucial to focus on the how—to craft well-considered proposals and allow the community to vote.

That is the point, isnt it? Before any focus on how, the first MAIN question that needs to be answered is: Is it healthy and beneficial for Cosmos ecosystem, as well as Cosmos hub and as well Osmosis to have a merger. The answer for me to that question as I have argued with reasonings in my posts is a resounding: NO
Ofc the community has the final say with vote, who is arguing that it is not? Very suggestive…
Forcing through a vote without addressing the MAIN issues…hmmm, do you really want a vote that is informed about WHY and not only HOW??? I actually doubt that. Look at your own post and the OP…

From the start tunnel vision to only and exclusively HOW completely supresses any discussion on the MAIN question that needs to be answered first.

@Govmos

While opponents may be vocal, their lack of substantial contributions often reveals underlying political motivations.

This again supresses any discussion on the MAIN question. As you can verify: my previous posts have been about 1/5 of your post. Indeed, while you are very vocal, your lack of substantial contribution on the MAIN issue reveals your underlying political motivation.

I see for example that you voted “No” on prop #952…
One of the arguments I make is that Cosmos hub needs to clean up its gov mess before it can be a trustworthy partner for any chain, including Osmosis.
Unfortunately I dont see any reaction from you to that. This is unfortunate and a shame.

@PaulEdward

Community Resistance: Manage resistance by ensuring transparent communication and involving key stakeholders in the decision-making process.

Technical/gov/toconomics etc I am sure it is possible and there will be not that much discussion about HOW to do it. That can be worked out as you show. The “Manage resistance” is therefore to avoid at all costs and supress/ ignore discussing the MAIN question. Managing resistance is very anti democratic and leans to dictator behaviour. Just force it down the throat by insisting only discussing HOW shows very political motivation… I expect better from Cosmos hub.

@Govmos

Long-term Strategy:

This integration phase was initiated by the launch of interchain security

The integration phase is the long term argument you give for “merger” with Osmosis… You are saying out loud that it is the purpose of interchain secutiry to merge with every cosmos chain? If this is not the case then this argument for “merging” with Osmosis is just propaganda. Inter chain security in NO WAY demands that chains are merged into Cosmos hub. It IN NO WAY demands that Cosmos hub and OSMOSIS merge and is also IN NO WAY a logical conclusion from interchain security.

@Govmos

while continuing to decentralize as we scale and integrate with more partners

This is a contradiction. decentralize… and intergrate, (that is in your words: MERGE) with more partners…(remember that this argument is used by @Govmos to push through a merge with Osmosis).

Seeing how you insist on only tunnel vision on HOW and supressing and by all means ignoring the MAIN issue that has to be addressed first I see your post as confirmation that this prop is indeed intended to be a hostile take over prop. I am very very disappointed in this behaviour.

Unfortunately I now have to copy my posts also to Osmosis forum because you have very prematurely already put the prop discussion on the Osmosis forum without even attempting to address the MAIN issue here in Cosmos hub forum. This again shows the dictator like and hostile take over attitude which frankly disgusts me.

Summery of these posts: I urge Osmosis community to think VERY carefully about this proposal/ the reasons it is brought up and weigh carefully the benefits and/or drawbacks for Cosmos ecosystem and Osmosis. and on basis of the arguments given I advise to REJECT it.

[Govmos]

We would like to address some key misunderstandings in your reasoning.

First and foremost, it’s crucial to distinguish between contributing constructively to the community by developing proposals and simply pushing an agenda. Our primary focus is on how to present something meaningful to the community, ultimately allowing them to vote on it. This is where you, along with other opponents, can rally your support and vote against it if you so choose.

The essence of our approach is not about passing proposals by any means necessary. If the community votes against a proposal, we will accept that outcome and move on. Our commitment to generating ideas and content is driven by the goal of facilitating community decision-making, not by political motivations. Unfortunately, your stance appears to be more about opposing the creation of content rather than engaging in the democratic process.

It’s important to recognize that attempting to prevent people from working on ideas or proposals is fundamentally counterproductive. You seem to suggest that we shouldn’t even explore the possibility of a merge, but the reality is that you can’t—and won’t—stop people from pursuing initiatives you disagree with. We are committed to being part of the solution by producing content and facilitating discussions, while you seem focused on obstructing progress. We will always stand on the side of constructive action, as it is far more productive than merely attempting to tear down what others are building.

[BullBear]

@Govmos

your stance appears to be more about opposing the creation of content rather than engaging in the democratic process

I am adding to the creation of content by asking the reasons why and by doing so am engeging fully in the democratic proces… very harmfull framing here supressing democratic discussion…very unfortunate.

@Govmos

It’s important to recognize that attempting to prevent people from working on ideas or proposals is fundamentally counterproductive. You seem to suggest that we shouldn’t even explore the possibility of a merge, but the reality is that you can’t—and won’t—stop people from pursuing initiatives you disagree with.

I in NO WAY attempt to prevent or suggest that we shouldnt even work on ideas, or proposals also merger ideas. This is very harmfull framing that you do here… Very disappointed in that…

I argue that we first have to address the MAIN issue: What are the reasons behind this prop and is it beneficial for also Cosmos ecosystem and Osmosis. I am very sure as I explained that the HOW it can be done is fairly easily agreed upon. Now again you completely suppress the discussion about the MAIN issue that is the elephant in the room. Very undemocratic, harmfull.

pls provide a quote from my posts that I suggest that no one can explore the possibility of a merge… Exploring the possibility is first getting the foundations and reasons right before jumping to HOW. That is exactly what I explore and give arguments for in my posts…

… I am waiting for the quote…

When Cosmos hub gets its issues in order, the MAIN issue here, I am not even sure that I would not want a merger in future when this is beneficial for all involved…

I have no intention, whish or motivation what so ever to stop anyone from doing, working on or adding to the discussion anything they want. With all the framing you do that I pointed out, I am not sure that you have the same intention…

@Govmos

We are committed to being part of the solution by producing content and facilitating discussions, while you seem focused on obstructing progress. We will always stand on the side of constructive action, as it is far more productive than merely attempting to tear down what others are building.

Again the nasty framing… Asking and arguing the reasons why IS being part of the solution, supressing that is obstructing a solution…I have not seen any constructive action on the MAIN issue from you and about the “tearing down what others create” …As you can read I have in no way commented on any of the HOW that is created in this thread. Accusing of tearing down others work while this is in no way the case… again that nasty framing…

Ofc if this goes on chain a vote will be there and the outcome will be that. No one has ever had any idea that this would not be the case…

@Govmos

you can’t—and won’t—stop people from pursuing initiatives you disagree with

I never had the thought that I could, or the wish or motivation to do that… this particular…nasty framing here…

[JohnnyWyles]

Thank you for the insightful post Govmos!

One issue is that people consider a proposal going to chain already having gathered community support.

The forum period aims to gather initial reactions and iterate on ideas to make a proposal more palatable to pass, which leads to the majority of proposals passing. However, unpopular forum proposals can, and have, gone to chain and passed and vice versa.

Until a proposal goes to chain there is no indicator of whether there is actual stake supporting a proposal. This is one method by which Commonwealth was a superior forum platform as it had token gating. The pseudo-replacement for this is community reputation - if you participate regularly in a community, you likely have an interest in its success, but this does not scale with actual stake amount.

Personally, I am against the idea of a merger for many reasons, but your breakdown of the different types of mergers makes each area easier to analyze. I could see Osmosis potentially doing some Financial merger through an ICS agreement. Since our major expense as a chain is security, this would tie in to the more extensive tokenomic discussions. i.e., if Osmosis can get the same or greater security and node operation criteria from Cosmos Hub for less than is currently paid to validators, then it would make sense to become an ICS chain.

It would need further analysis, but initially, I don’t believe it does due to the Osmosis validator requirements and the likelihood that the Cosmos Hub would want more than the existing payment to enter an ICS agreement.

Citing Neutron offering 25% of revenue and Stride offering 15% of revenue followed by a required increased payment of non-circulating NTRN to provide financial support as well as calls for the Stride share to be renegotiated despite having significantly higher yield.

Source: DataLenses

[kill-dill]

Thank you for sharing. Your proposal is very detailed but im yet to hear what Osmosis would benefit from this.

Osmosis has a more thoughtful and stable track record of governance than Cosmos. Osmosis is lightyears ahead in terms of revenue with a clear path to growth and profitability ahead of it.

Integration and exchange of services is mutually beneficial. Diluting osmosis governance or revenue by merging with cosmos is not necessarily right for osmosis and OSMO holders.

My OSMO votes for what’s best for Osmosis, not what’s best for cosmos.

[LeonoorsCryptoman]

Thanks for taking the time to create this post @Govmos

I am with @JohnnyWyles on this one; I also don’t think it would be like 1+1 = 3 for merging the Hub and Osmosis. The Hub is very much contested on many fields whereas Osmosis is kinda stable. Ofcourse it is not reflected in the tokenprice (yet), but on average there is not much against the Osmosis team. And that is completely different with the Hub team (read: ICF).

So maybe there are some fields which are beneficial, however, the reputation is one of the foremost things which I would consider especially with the path Osmosis is taking to become Cosmos-ecosystem agnostic and bigger than only the Cosmoverse.

[Govmos]

@JohnnyWyles

Personally, I am against the idea of a merger for many reasons, but your breakdown of the different types of mergers makes each area easier to analyze.

This was the sole purpose of our post, not to influence in the merger decision but to offer a comprehensive solution IF the community wanted to explore a more practical step-by-step approach with different integration levels. It certainly did not reject the hypothesis to refuse all of it and therefore reject all steps altogether.