TL;DR:
1. A vote on the Cosmos Proposal #69 is underway to decide whether or not to enable smart contracts via deploying CosmWasm on the Cosmos Hub.
2. Supporters of Gnoland, including ourselves, are voting ‘NoWithVeto’ on Proposal #69, as running WASM on the hub has the potential to “increase the surface area for attack by an order of magnitude”.
3. A snapshot of $ATOM holdings will be taken on May 19, 2022 to be used for the #exitdrop of $GNOTs.
Intro
On April 29, 2022, a Cosmos Hub forum user @okwme has initiated an on-chain vote for Proposal #69 on behalf of Interchain Berlin. As its title suggests, Proposal #69 advocates the inclusion of CosmWasm in the Rho Upgrade. CosmWasm is a pluggable smart contract module for the Cosmos SDK, meaning that if Proposal #69 were to pass, developers would be allowed to deploy smart contracts directly on the Cosmos Hub.
Soon after the proposal was submitted, Jae Kwon (the founder of Cosmos) has announced that the snapshot date of $ATOM holdings to be used for the #exitdrop of $GNOTs has been moved from July 4th to May 19th.
In this post, we’re going to explore the controversy revolving around Proposal #69, our take on the proposal, and Jae’s plans for the Exodus to Gnoland.
Governing the Cosmos Hub
For rookie Cosmonauts, we’ll first explain how the governance system works on the Cosmos Hub. The on-chain governance mechanism exists on the Cosmos Hub for “passing text proposals, changing consensus parameters, and spending funds from the community pool”. Simply put, $ATOM holders get direct exposure to the operations and management of the Cosmos Hub. Basic rules of the Cosmos Hub governance are as follows:
1 Vote is granted for each $ATOM staked to an active validator. There are 4 different voting options. All of these options count towards the quorum.
- Yes: The voter approves of the proposal.
- No: The voter disapproves of the proposal.
- NoWithVeto: A stronger indication of disapproval that has the power to override the outcome of the votes. If more than ⅓ of total votes excluding ‘Abstain’ votes vote for this option, the proposal gets rejected.
- Abstain: The voter remains a neutral stance towards the proposal.
Anyone is allowed to submit a proposal with a deposit. The proposal enters the voting period of 14 days once the minimum deposit of 64 $ATOMs is reached. Note that anyone can contribute to the deposit to present their support. Generally, deposits are returned to the depositor upon the completion of the vote, but 3 cases exist in which deposits get burned:
- The proposal fails to reach 64 $ATOMs in deposits before the deposit period of 14 days expires.
- The total number of votes is less than 40% of all staked atoms (the quorum).
- The proposal gets vetoed from ⅓ of the total voting power voting ‘NoWithVeto’.
Unless delegators vote manually, they inherit validator’s votes. Manual votes from delegators have the power to override the validator’s vote. Voters may also change their voting option during the voting period.
To sum up, a proposal must meet 4 criteria to pass.
- A minimum deposit of 64 $ATOM has been made within the deposit period.
- 40% of the network’s voting power has voted.
- More than 50% of participating voting power has voted ‘Yes’.
- Less than ⅓ of the voting power has voted ‘NoWithVeto’.
Here’s a diagram of the process for visual learners:
Proposal #69
Now that we’ve learned how governance works on the Cosmos Hub, let’s take a closer look at Proposal #69. Submitted by Billy Rennekamp, Product Lead at Interchain Berlin, Proposal #69 seeks consent of $ATOM holders to “include CosmWasm on the Cosmos Hub in v8-Rho upgrade targeting Q2 2022.”. As briefly explained in the intro, CosmWasm is “a smart contracting platform specifically built for the Cosmos ecosystem”. The status-quo of the Cosmos Hub only allows for facilitation of transactions of arbitrary data (most commonly tokens) between zones.
Generally, the default stance of most parties involved in a blockchain ecosystem is to welcome more features and functionalities being added to the chain. However, as one can see from heated discussions on the Cosmos forum and Twitter, things are looking different for the Cosmos Hub.
You might be wondering, “What’s the big deal with adding smart contracts on the Hub, and why are the largest stakeholders of Cosmos arguing over it?”
For lost and confused Cosmonauts, we’ll break down the pros and cons of adding CosmWasm to the Cosmos Hub as objectively as possible (despite our bias as Gnomes).
[Pros]
- Integrating CosmWasm will open up opportunities for aspiring projects to build on the Cosmos Hub — NFTs, DeFi platforms, DAOs, and much more will flourish on the Hub.
- Smart contracts on the Cosmos Hub will lead to more use cases of $ATOM, such as Liquid Staking.
- CosmWasm on the hub will be “governance gated”, meaning that for a developer to deploy a contract on the Cosmos Hub, passing a governance proposal is required as a safety check to protect the hub from malicious or spammy code. This structure ensures that the Cosmos Hub stays relatively safe compared to other permissionless smart contract platforms.
[Cons]
- Smart contracts can potentially clog the hub, which will increase the cost associated with IBC transfers of zones connected to the Cosmos Hub, or worse, delay/halt them.
- The simple design of the Cosmos Hub, as per its core philosophy, ‘Hub Minimalism’, keeps it secure, consistent, and stable unlike other so-called “performant” blockchains. Adding WASM “increases the surface area for attack by an order of magnitude”. We have seen Juno halt for 3 days due to a smart contract bug. CosmWasm is relatively new tech with unknown, potential bugs that can threaten the security of the Cosmos Hub. A bug on the hub that targets contracts of Pegged PoW tokens or Liquid Staking could result in a cascading effect in connected zones, causing catastrophe across the Cosmos Ecosystem.
- Enabling CosmWasm will require validators to learn how to audit Rust codes on top of Go — again, an additional layer of complexity.
It’s clear that both sides present valid arguments, which explains why Proposal #69 has become one of the biggest controversies on the Cosmos Hub since its birth.
The Exodus
Jae Kwon, the creator of the Cosmos Hub and concept of Hub Minimalism, has announced that he will lead those whose ideas are aligned with his, out of the “corrupted” Cosmos Hub to Gnoland, if Proposal #69 were to pass. This potential Exodus has been named the #exitdrop. Although its branding might change if the proposal were to get rejected, it doesn’t change the fact that all eligible $ATOM holders will receive an airdrop of $GNOTs. Therefore, we’ve organize the information shared with the community so far for those who’re keen to know what to expect from the #exitdrop.
[Date of Snapshot]
May 19, 2022 (21 days after the beginning of Proposal #69 to track the bonded $ATOMs used to vote)
[Eligibility]
- All $ATOM holders who have not voted ‘Yes’ on Proposal #69 will be eligible for the #exitdrop.
- As per the information shared so far, delegators who override their validators’ ‘Yes’ votes are eligible, and there are no minimum requirements of $ATOM holdings.
[Distribution Plans]
- 66.7% of the total supply will be airdropped to eligible $ATOM holders.
- ICF’s #exitdrop portion will be allotted to DAOs on Gnoland.
- Supplies reserved for $ATOMs locked in IBC channels (LP’d on Osmosis, Crescent, JunoSwap, etc.) will be released once the respective zone communities create a provable audited distribution given the snapshot date.
- A bonus *may* apply for those to vote ‘NoWithVeto’.
- Around 20% (subject to change) of the total supply will be the “Founder” supply.
Conclusion
At the time of writing, here’s how the votes for Proposal #69 are spread out with a Turnout of 33.80%:
- Yes: 14.1%
- No: 73.0%
- NoWithVeto: 9.1%
- Abstain: 3.8%
So far, it seems Proposal #69 will most likely fail to pass unless a majority of voters change their mind and switch to ‘Yes’ (which is highly improbable).
Now that we’ve gotten all the public information out of the way — you might be asking us, “What’s your take on Proposal #69?”
Well, as we’ve hinted from the image above, we voted ‘NoWithVeto’.
The ideal future of multichain that we envision at Onbloc aligns with the pure hub-and-spoke model with Hub Minimalism as the core philosophy. We believe that the sole purpose of a hub should be the facilitation of interchain transactions between zones, as securely and cost-effectively as possible.
Adding CosmWasm to the Cosmos Hub will not only congest the network, but also cause the functions of hubs and zones to overlap. Hubs aren’t meant to compete with zones, but instead secure them. Instead of trying to add more features to the hub, the Cosmos community should look to funding alternatives, such as zones that are dedicated to bringing additional utility to the Cosmos Ecosystem. Persistence and Quicksilver provide Liquid Staking of $ATOMs, Osmosis and Crescent feature DEXes to provide interchain liquidity, and Juno provides CosmWasm smart contracts — what people want on the Hub can be done on Zones.
In essence, we believe that the Cosmos Hub should focus on doing what it’s meant for: Connect zones and validate interchain transfers to create a secure, interwoven “Internet of Blockchains”.
On a final note, if things go sideways, bear in mind that everyone is invited to join the Exodus to Gnoland.
Disclaimer
Onbloc shall not be liable for any form of loss resulting from your actions based on information provided in this post. This content should not be construed in any manner as investment advice.
