A little bit of chit-chat
Nym is unveiling a $300 million Innovation Fund this November to support the development of privacy-preserving applications and infrastructure. The fund aims to finance, mentor, and bring promising ideas to venture capitalists for potential investment. Nym's new fund, according to their claim, aims to challenge the existing surveillance model of the internet by supporting projects that champion privacy using the Nym mixnet. Those interested can apply through the official Innovation Fund website starting November 2023.
A halving for ATOM?
A new proposal has surfaced suggesting an adjustment to the max inflation parameter on Cosmos, aiming to reduce it to 10%. The rationale behind the proposal is based on observations indicating that the Cosmos network might be overcompensating stakers, with months of high inflation not significantly affecting the staking rate. This change is anticipated to foster the Liquid Staking Module adoption and possibly direct users towards platforms like Mars, Inter protocol, and Levana for better yields. While the proposal directly deals with an inflation parameter change, it's crucial to note that it will impact the community pool's growth rate, suggesting the need for an additional proposal to address the community pool take.
The Cosmos community has had mixed reactions to the proposal. Some argue that a reduced inflation rate would elevate the importance of DeFi, making it more attractive for users. They contend that a lower 'risk-free' yield could spur more participation in lending on platforms like Mars or liquidity provision on Osmosis.
On the contrary, others assert that the essence of $ATOM lies in its ownership and operation by stakers, emphasizing the importance of a high staking rate for IBC security. They believe that the current inflation serves as a penalty for those not staking and provides essential protection against potential hostile takeovers. Another perspective vehemently opposes the proposal, pointing out that it may disproportionately affect smaller validators, increasing their operational challenges. Critics are concerned about rushing changes without thorough consideration and the potential consequences for the broader ecosystem, especially given the significant roles validators play.
A tweak
Osmosis is considering a change to its tokenomics. A proposal published on the community forum suggests automatically staking internal OSMO liquidity rewards to a user’s preferred validator set during a future software upgrade. Currently, OSMO liquidity rewards mainly go to Supercharged pools. These rewards accumulate over time, eventually requiring a claiming transaction by the user. But, as swap fees have risen due to efficient liquidity positions, Osmosis fee subsidies have dropped below one. This shift implies that liquidity providers earn more from swap fees than from OSMO incentives. Consequently, OSMO rewards have transitioned from being a primary reason for liquidity provision to directing where additional liquidity might be needed most.
The new tokenomics approach aims to address an observed trend. Historically, Osmosis governance has hesitated to give OSMO incentives to non-OSMO pools, fearing that liquidity providers would quickly sell their OSMO rewards instead of reinvesting them. By adding a bit of friction to this process, the proposed change ensures that the choice of how to use OSMO rewards becomes more deliberate. Liquidity providers would be incentivized to engage actively with Osmosis, potentially leading to developmental improvements that enhance the platform. Furthermore, if these providers experience losses, the new system would allow them to unstake and sell their rewards to cover those losses.
Validator Set Preferences is another significant element introduced in v15 of Osmosis. Users can now select their preferred validator set, ensuring an even distribution of staked tokens among various validators. If users don't choose a set, the system defaults to their current staking distribution. And for those who haven’t staked any tokens, the proposal introduces a vesting period for liquidity rewards, equivalent to the staking period. The target date for these changes to be implemented on-chain is set for 30th October 2023.
A little bit of ZK content
Wrap Up
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