COSMOS CRYPTO NEWS: ATOM PARTIAL SET SECURITY, AKT, OSMO, DYDX & MORE!!
Hi Cosmonauts! ⚛️
Welcome to the Cosmos ecosystem news roundup, here are the top stories in Cosmos in the 1st half of May:
COSMOS HUB AND CONSUMER CHAINS: Partial Set Security and Vote Power Tax proposal
NAMADA: Community concerns about the Shielded Expedition
DYDX v4: Upcoming CosmWasm integration
OSMOSIS: v25 upgrade overview
KUJIRA: Awesomwasm hackathon tracks
CELESTIA: Rollkit overview
SEI: Several ecosystem updates and events
PERSISTENCE: Launch of stkXPRT
SECRET NETWORK: Selected projects of Q2 grants
AKASH: Mainnet 11 and Akash Accelerate 24
OTHER ECOSYSTEM NEWS: Onomy exchange launch and Lava foundation fundraising
Focused sections about the Cosmos hub and consumer chains Stride and Neutron, Namada, dYdX, Osmosis, Kujira, Celestia, Sei, Persistence, Secret Network, Akash and Crypto regulations and compliance updates with MME
All this and much more in this episode, and now for today’s top stories:
Cosmos Hub and Consumer Chains (Neutron & Stride)
The Cosmos Hub v16 upgrade was successfully implemented on the 15th May and the next upcoming v17 upgrade will be very important since it will introduce Partial Set Security (PSS). PSS as you can see here will offer potential consumer chains a lot more flexibility compared to Replicated security. Existing consumer chains Neutron and Stride will become Top N=95% chains, but still with the 5% soft opt-out. After PSS is implemented, the top 95% of validators by voting power will experience no change, but the bottom 5% validators currently validating Neutron or Stride will need to send an opt-in transaction for each chain to continue validating. So while currently Neutron and Stride benefit from 95% of the Cosmos Hub security, meaning 100% minus the 5% soft opt-out, with PSS they will benefit from 90% of the security since it will be 95% minus the 5% soft opt-out.
However, we previously saw potential consumer chains such as Noble delaying the launch because they acknowledged and were concerned about the additional costs for validators with no additional revenue for running Noble. Existing consumer chains, in fact the first consumer chain Neutron, was providing negligible revenues to validators since the launch. We, Cosmic Validator, took the initiative and suggested using a part of the unclaimed NTRN from the airdrop and sent to the community pool as revenue for validators and this was successfully implemented. So, while it is great to offer more flexibility and options to potential consumer chains, the core problem is still the lack of revenues for validators. Because if Stride and Neutron couldn’t yet provide any significant revenues to validators, it seems unlikely that some new consumer chains will bring more revenue than Neutron or Stride.
Neutron started already to provide the vesting NTRN to validators but mentioned that they will transition to a monthly payment model for the validators with over 95% uptime for each month. This will lead to some NTRN remaining and the plans are to use these NTRN to reward great performance such as over 99% uptime and other contributions that add value to the Cosmos Hub and consumer chains.
There is an idea in the Cosmos Hub forum to actually solve the economics unbalance problem for consumer chains, this idea is called the Vote Power Tax and is being proposed by EffortCapital. In summary, the VP tax could help both solve the revenue issues of validators running consumer chains and also the centralization of voting power in the Cosmos Hub. The idea is to use a formula to tax validators based on their voting power meaning the more centralised and larger the voting power, the higher the tax. This tax collected would then be equally distributed to all the Cosmos Hub validators. Thanks to this, all the Cosmos Hub validators could validate over 6 consumer chains. The reason to launch Partial Set Security was precisely because replicated security had a high barrier of entry since validators, seeing the example of Stride and Neutron, didn’t want to run more consumer chains without revenue. However, with the Vote Power Tax idea PSS wouldn’t even be needed, because many consumer chains could join as replicated security benefiting from 100% of the security of the Cosmos Hub, because all the Cosmos Hub validators thanks to the Vote power tax distributed to all, would have enough resources to validate many consumer chains.
While the VP tax proposal in the Cosmos Hub forum is a signalling proposal, the implementation would be straightforward, just input in the formula the updated values of voting power and self-bond for validators to calculate the tax for each and then distribute the collected tax equally for all. What the VP tax will do is not only help scale quickly replicated security and PSS to many consumer chains but also reduce the centralization of the Cosmos Hub constantly for the long-term. In summary, if the VP tax is implemented the benefits for the Cosmos Hub will be the following: increase significantly the security of the Cosmos Hub with a more decentralised validator set, attract more consumer chains given the higher security offered and incentivize all validators to run all consumer chains, essentially providing 100% security to all PSS consumer chains. The only ones who might oppose this proposal are the few largest validators thinking only short-term about themselves rather than the best for the Cosmos Hub which actually would also be the best for them in the long-term. But given the recent implementation of the minimum 5% fee, many validators who used to have a low fee of around 1% or 2% now had a major increase in revenue, so the VP tax would be a negligible difference so they should definitely support this proposal. We fully support the VP tax idea and hope that it will be implemented very soon.
Namada
Following the auditing of the vulnerabilities and protocol improvements submissions after the Shielded Expedition ended on 11th April, only one protocol improvement was approved for Gnosed and six vulnerabilities were approved, for Gnosed, Mandragora, Zenode, Hkey, CryptoSJnet and Namada guru. For most of the rest of validators they have similar points in the C, A and S categories, so the category B of uptime and governance became very important because since for the other categories the points were so similar, uptime or governance could make major differences in the final ranking. A total of 55 validators, including pre-genesis and post genesis managed to achieve over 95% or over 99% uptime but this wasn’t easy. To achieve this uptime many validators had little sleep many days, had to delay or cancel trips or events, some even mentioned having to suddenly stop with the car during a long trip because of some alerts. In summary, achieving the uptime task was very challenging and required a lot of effort and consistency for months. In contrast, the governance category was the opposite. There were many spam proposals or validators creating dozens of spam proposals to try increasing their governance participation percentage. Also, many created scripts to vote the same automatically for all proposals without even reading the proposals. Many validators thought that the spam proposals would not count of course for the competition and focused on the official and important proposals.
Then those inexperienced and not SE-100 validators who didn’t manage to achieve the uptime started to provide inaccurate reasons of why the uptime category should be removed. The evidence and proof that the reasons they provided were invalid can be summarised as follows. Their reasons presented are to justify that post genesis validators couldn’t really compete and achieve uptime. If this was true, then no post genesis validator would have achieved the uptime, however a total of 13 post genesis pilots achieved the uptime task meaning that it was possible also for post genesis validators to achieve the uptime task. Despite this, Gavin asked the Anoma Foundation to remove the uptime category and this had serious consequences. First of all, this heavily penalised the top performing validators while rewarding instead spam proposals voters. Also, this had a huge impact in the final results, many top performing validators who were going to finish in the top 10 or top 25 lost their prizes with the uptime roid points removed and some low performance validators that just voted and created spam proposals won instead the prizes supposed to be for the other performant validators. A bounty was suggested for those who achieved the uptime task but many complained about this, because the difference in prizes from the top 25 or top 10 for example is around 500k NAM tokens while the bounties could be maximum around 10k NAM tokens.
There were also serious concerns about some post genesis validators, in particular Hkey. This post genesis validator who was not selected in the SE-100 and who also got jailed during the Shielded Expedition started a malicious campaign to damage other validators for his own benefit. Firstly, he tried to invalidate most approved shielded apps claiming that only his shielded app should be approved and he continued pushing the Shielded Expedition team for weeks. He also tried, via private messages, to invalidate some approved vulnerabilities tasks after the auditing and the Namada team had to share publicly on discord their private reply explaining why they would still keep some vulnerability tasks approved despite the continuous insistence from Hkey to invalidate them. Hkey with others was also heavily involved in trying to convince and manipulate the Shielded Expedition coordinators to remove uptime, since they didn’t achieve uptime. Overall there is a great disappointment in the community and from long term contributors from the actions and events just described so we hope the concerns will be listened to and fixed.
dYdX v4
dYdX announced the upcoming integration of CosmWasm which is great news since the dYdX Chain orderbook will be unlocked for DeFi protocols, not only on dYdX but cross-chain. This integration will also bring more interoperability to the dYdX chain.
Binance announced that the DYDX token has been fully integrated on the exchange and deposits are open.
Antonio, the previous CEO of dYdX Trading, announced his transition to President and Chairman. The previous chief strategy officer at dYdX Trading, Ivo, became the new CEO.
Osmosis
The Osmosis v25 upgrade was implemented bringing several new features. The top of block auction mechanism leverages Skip Protocol’s Block SDK to improve the processing of transactions and provides a new revenue stream for Osmosis and more efficient pricing within the Osmosis ecosystem. Also, the burn mechanism was introduced with the goal of burning the OSMO, ATOM and USDC accumulated by the Protorev built previously by Skip Protocol. After the v25 upgrade a total of 1.3 million OSMO were burnt.
Smart accounts are also a highlight of the v25 upgrade. Thanks to smart accounts the trading experience has been improved because now instead of having to sign every transaction when placing new trades, just with one click the trading is easier and more automated and this works even when using hardware wallets. Smart accounts also allow support for several devices and keys and you can easily revoke access to certain devices if you lose a device for example. Moreover, to create new accounts users can use Face ID, touch ID, passkey or other popular authentication methods. Advanced security is also introduced with smart accounts, for example for high-value transactions you can add a 2FA verification. Several consensus improvements were also added with the v25 upgrade, for example the block time was reduced from 3 seconds to 2.5 seconds and the calculation of gas prices was also improved.
Kujira
The Awesomwasm hackathon will be in Berlin from 28–30th May and Kujira will be one of the main tracks of the hackathon together with Neutron. In particular, there will be three separated tracks for Kujira.
The Present track focus will be on extracting and displaying data in a user friendly format and integrating with Kujira dApps such as FIN or GHOST.
The Analyze track will focus on analyzing gathered data to create for example asset management strategies for ORCA liquidations or USK minting portfolios. This track will also focus on developing tools for back-testing market data.
Finally, the compose track will focus on integrating and automating interactions between Kujira’s core dApps. The prizes across the three tracks are in total $25k in KUJI tokens.
Celestia
The Celestia Infinite Space Bazaar hackathon started on April 2nd and finished on the 17th May, with the submissions deadline on the 17th at 4pm UTC.
Rollkit, the first sovereign rollup framework was announced. The advantages of Rollkit are the combination of the ease of deploying a rollup and the sovereignty of a Layer 1, in other words Rollkit allows to deploy any VM or application as a sovereign blockchain in seconds. Amongst other options, for modular DA Rollkit leverages Celestia, for VMs Cosmwasm and several sequencing and validity modes are also provided. Since Rollkit is built with the Cosmos SDK, it is possible to benefit also from IBC or Skip protocol tools such as Block SDK or Slinky.
Sei
There was an NFT fundraiser in the Sei ecosystem to support with the Taiwan earthquake. A total of 8.5k SEI were raised and this was actually the largest NFT fundraiser in Sei history.
Ether.fi is the largest liquid restaking protocol and it was announced that it joined the Sei ecosystem as the first liquid restaking token (LRT). Liquid restaking protocols allow liquid staking tokens to earn additional yield. Ether.fi offers a liquid staking token that supports staked ETH.
On the 14th May there was an event in Singapore organised by Sei and Nansen. This event focused on the advantages of Sei for traders and developers. Nansen is a leading on-chain analytics and research platform used by top crypto investors.
Persistence
Persistence announced the launch of stkXPRT, the liquid staking of XPRT tokens. Users can liquid stake XPRT on pSTAKE and then the stkXPRT could be used for example in the stkXPRT/XPRT LP on Dexter. The launch of stkXPRT was a great success, just in 24 hours after the launch a total of over 770k XPRT were liquid staked with pSTAKE and shortly after a new milestone was achieved with over 1 million XPRT liquid staked.
Secret Network
The selected projects for the Q2 round of grants were announced. Also it was mentioned that the Q3 round will begin in late July or early August and that projects interested can already start applying. On May 20th the HackSecret 3 hackathon began and it will run for one month. The selected projects for the Q2 round of grants were the following. Satoshi’s Palace, which is a decentralized casino with integration of Secret VRF for randomness to ensure fairness. Another selected project is PampIT, which is building a token launch platform on Secret with the goal of enabling the launch of privacy-preserving SNIP-20 tokens in just a few clicks. Another project selected is called PrivCast and it is using Secret to provide private polling for the Farcaster project which is a decentralized social network built on Ethereum. Some additional projects selected are Synexis and several research projects like Delayed Write buffers to help solving storage access patterns for Secret tokens, WebSocket Multiplexer which is creating an events multiplexer service to allow wallets and frontends to immediately reduce the loads being put on Secret query nodes. Other research projects selected are Secret HEAPS which is an L2 storage mechanism hosted outside the enclave for Secret contracts and SNIP-250 reference implementation to supersede the SNIP-2x token implementation.
Secret network also announced a partnership and integration of Secret’s confidential computing layer with Linea, which is a developer friendly zk-Rollup powered by ConsenSys and an innovative L2 scaling solution. The advantage of this collaboration for Linea is accessing decentralized confidential computing tools, documentation and support.
Akash
Akash Accelerate 24 will happen on May 28th in Austin. This event is special because it will be the first full-day Akash summit gathering the Akash community. Registrations are open for Akash Accelerate 24, and in the event there will be presentations, panel discussions and networking.
Akash successfully implemented the upgrade to Mainnet 11. The highlights of this upgrade were updating AuthZ to improve managing and tracking of authorized AKT and another highlight is the simplification of the grant process for deployment.
Other ecosystem news
The Onomy exchange launched with the ONEX/NOM pair with additional listing and tools upcoming. We are also happy to announce that we recently joined Onomy as mainnet validators.
In 2023 the company building Lava protocol raised $15 million in a seed round. Now the Lava Foundation announced a raise of $11 million before the upcoming airdrop and mainnet launch. The Lava Foundation has been recently formed and it is the first time that it is publicly introduced. The funds raised by the Lava Foundation were via a simple agreement for future tokens or SAFT.
Crypto regulations & compliance news with MME
Tornado Cash Developer Alexey Pertsev Sentenced to 64 Months in Prison by Dutch Court
Alexey Pertsev, the Russian developer associated with the crypto mixer Tornado Cash, was sentenced to 64 months in prison by a Dutch court after being found guilty of laundering $1.2 billion between July 9, 2019, and August 10, 2022.
Brief reminder of the facts:
•August 2022: The U.S. Treasury Department blacklisted Tornado Cash for allegedly facilitating money laundering activities and illegal activities.
•August 2022: Following the U.S. Treasury Department’ sanctions, Alexey Pertsev was arrested and jailed in the Netherlands.
•November 2022: A Netherlands court ruled that Alexey Pertsev must remain in jail until at least February 20, 2023, declaring him a flight risk.
•April 2023: Alexey Pertsev, was released from jail but remained under house arrest until his trial.
•May 2024: Alexey Pertsev was convicted of money laundering to 64 months in prison by the ‘s-Hertogenbosch court in the Netherlands.
•May 2024: Following the guilty verdict on May 14, 2024, Alexey Pertsev has filed an appeal.
Regulatory Consequences: The trial has captured significant attention as it addresses the legal responsibilities of developers in decentralized projects. Among other things, the judge has tackled the following questions :
•Is Alexey Pertsev liable for the action of the Tornado Cash’s smart contract?
According to the judge, yes. The judges found Alexey Pertsev and his co-founders responsible for Tornado Cash’s actions as they were:
oThe inventors / creators of Tornado Cash: He explains that they have created the GitHub pages and contributed most to Tornado’s source code. In particular, Alexey Pertsev has developed the source code for Tornado Cash’s pools, user interface and relay software.
oThe performers of Tornado Cash: He outlines that they have acted as Tornado Cash’s directors and presented themselves as such to third parties and the media.
As such they are responsible for the operation and consequences of Tornado Cash. The judge highlights that the autonomous, immutable and unstoppable nature of smart contracts does not constitute an exculpatory factor.
•Is the liability transferable to the DAO?
The fact that Tornado Cash has started to operate as a DAO does not change anything as among other, Alexey Pertsev and his co-founders kept 30% of the tokens, granting them a substantial control.
What’s next — This decision has already been appealed by Alexey Pertsev and must be confirmed. Whatever the final decision will be, it will have a major impact on the future management of the decentralized structures
Conclusion
And that is all for today’s Cosmos ecosystem bi-weekly review so if you enjoyed it Cosmonauts remember to click that like button, subscribe button and bell icon too. Also let us know below if you have any comments or feedback, we are always listening to your feedback to keep improving the videos. Thank you so much for watching and I’ll see you Cosmonauts very soon in the next episode!
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