COSMOS NEWS: ATOM, NAM, TIA, DYDX & MORE!!

Hi Cosmonauts! ⚛️
Welcome to the Cosmos ecosystem news roundup, here are the top stories in Cosmos in the 1st half of March:

COSMOS HUB AND CONSUMER CHAINS: Implications and analysis of the minimum 5% fee enforcement and the upcoming partial set security

NAMADA: The Namada mainnet launch in just a few weeks, when will NAM transfers be enabled? Which pilots and crew members are winning the Shielded expedition?

DYDX v4: Review of the ongoing STRD airdrop for stDYDX holders

OSMOSIS: Incentivization of wstETH and other updates

KUJIRA: NTRN liquidity now on Kujira and upcoming release of SONAR wallet

CELESTIA: Stride becoming the first rollchain and major projects using Celestia for data availability

SEI: Overview of the upcoming Sei v2 upgrade

PERSISTENCE: stkATOM new automated delegation strategy and launch of stkSTARS

SECRET NETWORK: A collaboration with Lava network & supporting a better crypto policy and regulations

AKASH: New high-performing GPUs available at the lowest cost in the market

OTHER ECOSYSTEM NEWS: Lava network milestones and updates

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 v15 upgrade will happen on the 20th March. A major highlight of this upgrade will be the enforcement of the minimum 5% fee for all validators. Previous governance proposals to enforce a minimum 5% fee before the launch of replicated security were rejected, but last year a signalling proposal to add the minimum 5% fee was approved although it wasn’t implemented yet. Since the launch of the Cosmos Hub in 2019, many validators chose a 0% or very low fee to attract delegators, and several validators with a fee from 0% to 1% attracted many delegators. After the v15 upgrade on the 20th March, this strategy will no longer be possible and it will be interesting to see what the reaction will be of those staking with validators with a current commission below 5%. For those staking with 0% fee validators, to keep receiving the same yield as before they would need to liquid stake ATOM to earn the staking rewards and the additional yield by LPing or other DeFi activities. The estimation is that this won’t happen fast but gradually over several months when delegators realise about the new minimum 5% fee. For validators with a fee below 5%, if their delegators stay they will be able to increase their revenue, however there is a risk they will lose delegations. Also, delegators may start considering other factors to choose validators like uptime, governance participation, technical or community contributions rather than a 0% fee, since most validators will have a fee between 5% and 10%. Given that around 42% of the Cosmos Hub staked ATOM is with validators with a fee below 5%, this enforcement of a minimum 5% fee is significant and will likely lead to important stake distribution changes in the Cosmos Hub. What is clear is that many validators were attracting delegators with a 0% or 1% fee, and since they will now have a 5% fee, they will stop attracting delegators just based on a low fee and will need to focus on other strategies to attract delegators. To highlight again, 42% of the staked ATOM in the Cosmos Hub, almost half, or a total of around 104 million ATOM is staked currently with validators that have a fee below 5%. Even if just around 5% of this 104 million ATOM chooses to liquid stake to earn additional yield, the ATOM TVL of Stride for example would more than double.

With the upcoming launch of the more flexible Partial Set Security, some projects are announcing that they will join the Cosmos Hub as consumer chains like Elys Network. When replicated security launched, there wasn’t any historical data about revenues from consumer chains, so Neutron and Stride joined shortly after the launch of replicated security. However, when the high costs and negligible revenues from consumer chains became obvious, no additional projects joined as consumer chains since validators were unlikely to approve them. A similar situation is likely to happen where the first few consumer chains joining the Partial set security will be approved but again it is important that they bring revenue to Cosmos Hub stakers and validators. Even if governance proposals for partial set security consumer chains will be easier to pass, if no revenue is received after approving a few new consumer chains the previous situation with full replicated security might happen. For consumer chains it is great to benefit from the security of the Cosmos Hub and be subsidised by Cosmos Hub validators, but they need to think and present what value and revenues this will bring to Cosmos Hub validators and stakers.

Namada

The Namada Shielded Expedition (SE) continues to test and fix bugs before the upcoming mainnet launch, likely to happen in April. From February 28th until March 8th the SE was halted until an elusive bug was finally found. Namada uses cometBFT and IBC, but it doesn’t use the Cosmos SDK, instead Namada is built from scratch in rust which means that it is normal to find some bugs during the incentivized testnet and this is the goal of the testnet. A hardfork was also implemented to release a large number of validators that had previously been jailed. The SE is expected to end around the end of March with a one week warning before the confirmed end day. Then the mainnet launch is expected in mid-April, although transfers of NAM won’t be available until the last phase of the initial launch sequence.
Something interesting is that the SE was expected to last around 3 weeks, meaning until around the 21st February, however it will likely last at least one month more than expected. The implications of this is that validators and crew members have a lot of time to complete different S class tasks that in just 3 weeks they wouldn’t have been able to complete. So what does this mean? Basically, validators and crew members don’t compete with each other, but they have their own pool of points. However, as more validators for example complete each S class tasks the points are shared amongst more validators and hence diluted. A major change that happened in the ranking was regarding the S tasks about vulnerabilities or explorers and tools. Initially, a few validators found a vulnerability or built an explorer and they jumped directly to the top 10 of the ranking. However, as more validators built explorers or found vulnerabilities the points diluted very fast. The snapshot of the ranking that you see here, shows mostly validators that found a vulnerability. Apart from the 1st ranked validator, for all the others the points are very similar which means that it will be very competitive until the end of the Shielded expeditions to decide the final winners.

dYdX v4

Remember that there is a 150k STRD airdrop for the holders of stDYDX. Since the airdrop went live, snapshots have been taken daily for 120 days. If you hold stDYDX, the amount of STRD that you will receive will depend on how much stDYDX you held and for how many days out of the total of 120 days. The airdrop is still ongoing so you can qualify by liquid staking your DYDX. Stride also provides a tool to check your airdrop allocation compared to other stDYDX holders. After the 120 day period, the STRD will be distributed pro-rata according to the different scores. The TVL of both stDYDX and Persistence’s pStake stkDYDX has continued to grow since the launch. In dYdX v4 rewards are received in USDC, so Stride and pStake greatly simplify restaking the rewards with their liquid staking solution.
dYdX v4 has achieved new milestones and it is now the largest DEX with significantly more volume than the previous v3 version on Ethereum. This means that the largest DEX in the world is powered with Cosmos tech and they migrated successfully from Ethereum to Cosmos. Hence, many projects in Ethereum may choose now to follow dYdX v4 and migrate to Cosmos for the many advantages over Ethereum that dYdX identified.

Osmosis

Grayscale announced the Dynamic Income Fund, which is actively managed and focused on multi-asset staking. From a total of nine crypto assets in the portfolio, a total of four which is almost half are Cosmos ecosystem assets. Amongst the Cosmos assets OSMO is included, the other three Cosmos assets being ATOM, TIA and SEI. This indicates both interest and trust of large institutions in Cosmos ecosystem assets and staking opportunities.

Osmosis launched with Neutron and Axelar a canonical wrapped version of Lido’s stETH given the growing demand. To incentivize wstETH on Osmosis a total of 1 million AXL tokens have been allocated and live on the LP pool 1431.

Kujira

Kujira announced that the next release of Sonar wallet mobile app will allow users to invest early in protocols launching on Kujira. Kujira decided on this release given the increase in demand for teams wishing to raise on PILOT, with two completed sales on PILOT so far. Kujira mentioned that the results for the teams funded and the community have been great.

The treasury swap deal between Neutron, Kujira and MantaDAO has been executed successfully. Thanks to this swap, around $575k of NTRN liquidity is now on Kujira with a MNTA pair and another USK pair. This deal brings closer together and further aligns the Kujira ecosystem with Neutron and hence the Cosmos Hub ecosystem since Neutron was the first consumer chain to join the Cosmos Hub.

Celestia

A rollchain is an L1 chain that posts data to Celestia. Stride will be the first ever rollchain, but what are the benefits of becoming a rollchain and what does it mean?
Stride will add the new Rollchains module and then Stride data will be available on Celestia and hence all Celestia rollups will be able to permisionlessly access Stride data. The implication of this is that the integration of stTIA on rollups will be both safer and easier. While Stride will be a rollchain using Celestia for data availability , they will still continue to use Interchain security as a Cosmos Hub consumer chain.

Caldera announced that inEVM went live and this was possible in collaboration with Injective and by leveraging several projects such as Celestia for data availability, LayerZero for interoperability and Hyperlane for bridging. This is a major breakthrough since inEVM is the first ever EVM with composability across Cosmos and Solana. Ethereum developers have now unprecedented access to Injective’s user base and global network, benefiting from Injective’s lightning fast speed, almost zero costs and Ninja community while offering their dApps as well across Ethereum and Solana.

Sei

With the Sei v2 upgrade, developers will be able to perform an upgrade to their applications and tokens using pointer contracts and precompiles that will allow users to interact with existing Sei applications and with any token on Sei with any Ethereum wallet, and hence supporting both CosmWasm and EVM. This means that ERC-20 or ERC-721 token standards will also exist on Sei. There is an issue with pointer contracts though, since they cannot enable users to interact with an existing Sei app with an EVM wallet and a second feature called a precompile is also required.

Persistence

pStake launched a new liquid staking token, stkSTARS, on March 7th, and this follows the recent launch of stkDYDX. pStake has ambitious plans to reach a total of $1 billion TVL and the goal is to achieve this by capturing as liquid staking tokens 10% of staked ATOM, OSMO and other existing pStake liquid staking tokens. Moreover, pStake is monitoring major upcoming launches like Namada to launch liquid staking support also for these new projects. Similarly to Stride, pStake is getting ready for the Namada mainnet launch since it is expected to be the most important mainnet launch in crypto in 2024.

pStake announced the launch of their new automated delegation strategy for stkATOM. This strategy selects validators and calculates their weights in an automated way which constantly rebalances the weights according to the parameters. These parameters include a voting power between 0.05% and 5%, a commission between 5% and 10%, a 90-day uptime above 95% or a governance participation in the last 6 months above 60%. Also, validators need to be at least 180 days in the active set to be considered, as well as no slashing events in the last 180 days. A validator bond from 0.1% to 20% is also required. This automated delegation strategy enhances decentralization by considering the voting power for the delegation weights, it also encourages better performance, uptime and governance participation.

Secret Network

Lisa Loud, the executive director at the Secret Foundation met Hester Peirce during ETH Denver. Hester invited Lisa to suggest her ideas to improve crypto regulations and policy. Remember that we have a focused section in our videos about crypto regulations and compliance updates since mid-2023 so make sure you review all this content to get some great ideas to share with Lisa for Hester Peirce!

Great news since Secret Network will collaborate with Lava network by using Lava as an RPC aggregation layer. Lava network is a top project focused on decentralised RPCs. Lava network is solving the problem of a lack of decentralized and reliable standard for accessing blockchains. Thanks to this collaboration, Secret network developers will have a decentralized and robust access point to the network, thus enhancing performance and consistent availability.

Akash

Great news for Akash with new NVIDIA H100s and A6000s available for the next twelve months and at the lowest price available on the market. There is an ongoing provider incentives pilot program, so there are many more upcoming batches of new GPUs. Regarding the prices, the hourly pricing for H100 is $1.49, for A100 80GB is $0.79 and for A6000 $0.49. For high-performance GPUs, these prices on Akash are amongst the most competitive prices globally. Akash has had an impressive growth recently, at the peak of the previous bull cycle AKT reached a marketcap of around $400 million and it is now approaching almost $1.5 billion with top liquidity in exchanges like Kraken and an upcoming merit-based listing on Coinbase.

Other ecosystem news

Lava network is progressing and the mainnet is approaching. Apart from the announced partnership with Secret Network, Lava is also collaborating with Leap wallet. In addition, several milestones have been achieved such as over 4 billion relays and over 170k wallets that are earning Magma points. Moreover, there was a governance proposal made to Archway for incentivized public RPC. It is important to mention that Lava network and other great Cosmos ecosystem projects have been building non-stop during the last long bear market for the last 2 years and we covered these projects many times in our previous videos. The Cosmos ecosystem is growing now at an exponential speed and the combined value of all Cosmos projects is the 2nd largest overall in crypto just below Ethereum.

Crypto regulations & compliance news with MME

SEC will decide derivatives trading on spot Bitcoin ETFs on April 24

The United States Securities and Exchange Commission (SEC) — the federal agency responsible for regulating and overseeing the securities industry in the U.S. — announced in multiple filings for various exchanges that the SEC will decide on April 24 whether to greenlight derivatives trading on spot bitcoin exchange-traded funds (ETFs).

On March 6, the SEC decided to extend the deadline for comments on a “proposed rule change to list and trade options” on Nasdaq International Securities Exchange’s iShares Bitcoin Trust.

The SEC also extended the deadline for Cboe Exchange, Inc. to respond to a “proposed rule change to list and trade options on ETPs that hold bitcoin” and for Miami International Securities Exchange LLC to respond to a “proposed rule change to list and trade options on exchange-traded fund shares that represent interests in a trust that holds bitcoin”.

On January 25, all three exchanges submitted their applications to the SEC seeking approval to list options on bitcoin ETFs. March 10 marked the first deadline for the SEC to make a decision under U.S. securities laws, giving the regulator a mandated 45-day window to either reach a final conclusion or delay the decision.

By choosing to defer, the SEC has effectively triggered another 45-day period, using the maximum 90 days allowed by law to conduct a thorough review and reach a final decision. This extended timeline, as indicated by the SEC, will culminate in the announcement of the final decision on April 24. The deliberate extension underscores the SEC’s regulatory diligence in navigating the complexities of approving options for bitcoin ETFs and reflects the importance of these financial instruments in the evolving landscape of digital asset investing. Investors and market participants are eagerly awaiting the outcome, given its potential implications for the broader crypto market and the regulatory framework surrounding cryptocurrency-related financial products.

FCA updates position on cryptoasset Exchange Traded Notes for professional investors

The UK’s financial regulator Financial Conduct Authority (FCA) said in a press release that it “will not object to applications from Recognized Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed exchange-traded notes (cETNs)”.

These offerings will be available only to professional investors, including investment firms and credit institutions that are authorised or regulated to operate in financial markets.

Exchanges are required to maintain appropriate controls to ensure orderly trading and provide adequate protection for professional investors in respect of cETNs. They must comply with all the requirements of the UK Listing Regime, including those relating to prospectuses and ongoing disclosure. The FCA believes that with a longer trading history, exchanges and professional investors can better assess whether cETNs are appropriate for their risk appetite. Despite this, the FCA maintains its view that cETNs and crypto derivatives are not suitable for retail investors and maintains the ban on their sale to such investors. The FCA emphasizes the high-risk nature of cryptoassets and urges investors to be prepared for the potential loss of all funds invested. In addition, the FCA is actively working with government, international partners and industry stakeholders to develop the UK’s regulatory framework for cryptoassets and to promote international standards in this evolving space.

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. Remember that the Namada Shielded Expedition is still ongoing and the Namada mainnet launch is expected around mid-April in just a few weeks. Namada will likely be the most important mainnet launch in crypto in 2024, providing for the first time privacy as a service for the whole crypto ecosystem. Thank you so much for reading and I’ll see you Cosmonauts very soon in the next episode!

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