Thanks for the link!
I don’t see any benefit for OSMO holders in that discussion.
The current proposal to burn 50% of OSMO taker fees will offset some of the current Osmosis inflation. Further proposals will hopefully reduce our inflation further while targeting key pairings to increase volumes in, resulting in a path to Osmosis becoming net deflationary and fully self-sustaining.
This alternative token model for the Cosmos Hub relies on revenue offsetting inflation for the secondary token which would be providing the staking rewards for ATOM holders.
Before any inflation cuts, Osmosis has an inflation of 9.83% of its 220m market cap, which would be partially offset by the protocol revenue of ~18k a day.
Source: Data Lenses
Cosmos hub has an inflation of 10% of its 2.2 billion market cap as well as having a revenue substantially lower than Osmosis of ~2.5k a day:
Source: Data Lenses
In other words, Osmosis would need to earn around 30x its current revenue to offset the inflation of the Cosmos Hub, making this “natural balance against inflation” reliant on two things:
- Osmosis increasing revenue - for which there is no clear advantage in this proposal.
- Cosmos Hub’s Inflationary staking rewards falling - which does not rely on any Osmosis alignment to achieve.
To address the specific benefits that @Guinch_Roze lists, I believe these also come back to the Cosmos Hub providing security at a reasonable cost, making it desirable for chains to join PSS.
Enhanced Security → Osmosis will no longer need to rely on its own validator set but will instead benefit directly from Cosmos Hub’s robust security. Less risk, more reliability.
This is potentially good, but Osmosis currently has sufficient security compared to assets secured, and becoming a consumer of PSS should be competitive with other additional security sources or native payments. Giving up 100% of revenue would need to come with significant other advantages.
Optimized Liquidity → With Cosmos Hub as its infrastructure, no more fragmented pools, more opportunities for LPs, and dramatically improved capital efficiency.
There is no liquidity on the Cosmos Hub.
Ultra-Fast Interchain Transactions → No more costly relayers between Osmosis and Cosmos Hub. Interchain swaps become instant and feeless between the two.
This only impacts Osmosis <> Cosmos Hub (and technically Cosmos Hub <> Osmosis <> SEI), which only accounts for 19% of cross-chain transactions. (Range Flows)
An Even Greater Role for OSMO → OSMO is not disappearing. It is evolving. It can become the interchain transaction token, a fundamental asset in the IBC economy.
It is already a fundamental asset in the IBC economy as one of the most liquid onchain assets.
A Stronger ATOM, a More Useful OSMO → ATOM can focus on its role as the ultimate security token, while OSMO becomes an essential transactional asset for the Cosmos economy.
This links back to the first point, which is whether ATOM is the ultimate security token and whether Osmosis needs this for the cost.