A little bit of chit-chat
Penumbra founder, Henry de Valence, was on the Zero Knowledge Podcast this week, hosted by our very own Anna Rose. They discussed his vision for the Cosmos shielded zone and how Penumbra privacy features introduce a new paradigm for DeFi and the interchain ecosystem. You can listen to the podcast episode here.
The IBC protocol made its first step in the enterprise sector. The Japanese Mitsubishi UFJ Trust and Bank will adopt this technology for cross-chain payments between Corda and Quorum, supported by Datachain. The integration will be possible thanks to the LCP network, a proxy for light client verification to realise trust-minimised cross-chain bridges that support Cosmos' IBC.
Tl;dr: Cosmoverse ⚛️
Undoubtedly, the biggest event of the week within the Cosmos ecosystem was the Cosmoverse conference in Medellin. Spanning three days, it heralded many important announcements from key ecosystem players. Below we try to summarise the most important points, but if you want to watch the entire conference, you can do so here.
Atom 2.0: For months, Cosmonauts have been waiting for the announcement of a mysterious new idea for the Cosmos ecosystem, the ATOM 2.0. The vision for upgrading the ATOM, the native staking token of the Cosmos Hub, was laid out by several core contributors to the ecosystem, such as Ethan Buchman and Zaki Manian. The timing for the upgrade comes from the booming Liquid Staking market, which will unlock great financial freedom to stakers, who otherwise had their ATOM bonded securing the network. The road to making the ATOM a reserve value for the community will consist of:
Funding the growth: The new vision for the Hub also brings the need for financing public goods, infrastructure, and business development efforts. This will be achieved in two phases: transition and steady state. The transition phase will last 36 months since the community adopts the new monetary policy. During the first nine months, the issuance of ATOM will increase significantly, reaching 10,000,000 a month and then progressively decreasing until it reaches the steady phase of 300,000 ATOM per month.
A change in the security subsidy: During the transition phase, the security subsidy (staking rewards) will continue to be distributed at the same rate as normal. However, it will drop 10% per month until it ceases and the revenue coming from Interchain Security covers the staking rewards organically.
New revenue streams: with Interchain Security launching in January, the Cosmos Hub will begin a new phase of participation in the greater Cosmos ecosystem. Besides providing security to Consumer chains, the Hub will also have one more layer to generate revenue for its stakeholders. The Interchain Scheduler is presented as "a secure block space market"; in other words, an MEV market that will generate revenue for the Hub.
More economic coordination: All these efforts to make the Hub economy sustainable will have a mechanism that will be in charge of allocating the funds to fuel the ecosystem's growth. This will be the role of the Interchain Allocator. Combined, the Scheduler and the Allocator will create a flywheel of growth and expansion of the Cosmos Network.
This new policy has not been enacted and is up for discussion on the Cosmos Forum.
Mesh Security: As the Interchain Security narrative gains steam within the ecosystem, Sunny Aggarwal, Osmosis co-founder, unveiled the concept of Mesh Security. This feature will be possible once the ICS v3 is deployed and will allow any sovereign Cosmos chain to be both a provider or a consumer chain, creating a mesh effect and highly interconnected network, boosting security, and potentially increasing economic gains for stakers.
Zero Knowledge coming to Juno: During his talk, Jake Hartnell, Juno co-founder, gave a series of updates about the network and their approach to creating a series of subDAOs to manage the growth and operations of Juno. However, he also pointed out a nascent trend of zero-knowledge applications being born, such as Webb protocol, Vectis and Juno Juicer. Also, he pointed out that there's work on creating IBC private transfers.
Net steps for IBC: The IBC panel touched on the importance of this protocol layer to the ecosystem's growth. Susannah Evans, IBC Project Lead, pointed out that the next phase of IBC is the expansion to other ecosystems such as NEAR or Polkadot. Federico Kunze Kullmer offered that the next frontier was to add instructions on the IBC transfer to perform an action once it arrived at its destination, improving the user experience for the users of the whole ecosystem.
Bitcoin security in Cosmos: a new service is currently in the testing phase, and it's Bitcoin security level for Cosmos chains. This new paradigm of security will be offered by Babylon Chain, which will be in charge of timestamping transactions on the Bitcoin network. This would have many benefits, including fast unbonding periods (currently, they can have up to 3.5 hours of unbonding), boosting the censorship resistance of chains and bootstrapping new networks.
Neutron update: The first consumer chain that will launch after ICS is available, Neutron, unveiled some updates to their governance roadmap. Starting with a centralised approach to managing grants, bounties, etc, it will then transition to a primarily decentralised environment and hopefully a fully decentralised blockchain that implements minority protection policies such as Quadratic Voting.
Working for regulation innovation-friendly 🤝
As we approach a more regulated environment within the blockchain industry, organisations must play a significant role in educating regulators to craft a responsible framework that protects the users but allows for innovation. One of those organisations is Adan, which focuses on the European Union, and recently posted a proposal on the Cosmos Hub forum asking for funding to continue its endeavours.
As detailed in the proposal, they are looking to hire a European Affairs Officer to ramp up their operations in Brussels, as they have been focusing in the past on France alone. The amount is 15,000 ATOM, and they described their task for the coming 12 months as follows:
Monitor upcoming legislation and regulations, such as MiCA, TFR, and the remainder of the AML package.
Contribute to elaborating regulatory frameworks surrounding topics like DeFi, NFTs, the environmental impact of crypto, etc.
Establish strong positions on European crypto companies' issues (e.g., access to banking and insurance) and convey them to policymakers.
Sensibly educate on regulatory proposals which fail to capture the unique properties of crypto-economic models and risk hindering innovation (e.g., regulating DAOs as legal persons in the traditional sense).
As deliverables, they agree to publish a six and 12-month progress report.
Airdrops List
A little bit of intergalactic music for you (Ethan’s rap)
Wrap Up
If you like our newsletter, share it with your friends so they can be also on top of the latest and the greatest (and sometimes not so great) of the Cosmos ecosystem.
In the meantime, feel free to follow us on Twitter @zkvalidator and visit our website to stake with us.