In a nearly unanimous vote which concluded on Tuesday, Cosmos’ community members staking the ATOM token approved a proposal to launch the next major upgrade to the Cosmos Hub.
The v9-Lambda upgrade will establish the first version of interchain security (ICS) — also known as replicated security — a service the Cosmos Hub will provide to a new generation of consumer chains in the Cosmos ecosystem.
Those consumer chains, in turn, will bring value to the Cosmos Hub, according to proponents — such as Zaki Manian, co-founder of Iqlusion.
“The right way to think about ICS is it’s in the family of staking primitives, like Eigenlayer: What Eigenlayer is to Ethereum, ICS is to Cosmos,” Manian told Blockworks.
The network upgrade — expected to go live March 15 — was approved by over 99% of voters comprising about 58% of ATOM staked, which is seen as a vote of confidence in the network, according to the pseudonymous general manager of Neutron, Spaydh.
“We expected it to be successful, but we didn’t expect how well received it was — it was a bit of a landslide,” he said in a Tuesday interview as the voting period neared its end.
Neutron is a smart contract platform that will likely be the first consumer chain to make use of the new ICS feature.
The project, Spaydh said, finalized the incorporation of a non-profit foundation today, and the foundation will formally submit a proposal to Cosmos governance in early April to launch its chain.
If all goes to plan, Neutron should be live in the second half of April.
“We’re kind of like pioneers or guinea pigs, depending on how you see it,” he said.
With interchain security, the Cosmos Hub loans out its validator set — and the security provided by bonded ATOM — to a consumer chain, which accordingly avoids the need to bootstrap its own validators for security. In exchange, the Cosmos Hub receives a fee.
“In the long term, we should be aiming for projects that are going to be successful and large enough in scope that they can support themselves based on fees themselves,” Spaydh said.
Manian has thought a lot about value accrual for the Hub, going back to his involvement in the development of the tokenomics revamp known as ATOM 2.0, which the community rejected in a governance vote last November, but is now being incorporated in a more piecemeal approach.
“From a fee-revenue-to-market-cap point of view, ATOM is one of the worst chains,” Manian said. “The Cosmos ecosystem is thriving, but ATOM [is not].”
And while ICS is a step in the right direction, “[it’s] not the most important thing happening in Cosmos this year,” he said.
That honor goes to derivatives exchange dYdX and Circle’s USDC stablecoin, which, if successfully onboarded, has the potential to replace the liquidity lost in the collapse of Terra USD (UST) in May 2022.
Terra, a separate chain built using the Cosmos SDK, was a boon for Cosmos, as it provided an IBC-compatible stablecoin, which Cosmos lacked.
USDC can be a catalyst
The launch of USDC on Cosmos was originally intended to come with the launch of a chain using ICS, Noble.
But in a setback for the ecosystem, the Noble team backed off, opting instead to start out with a limited permissioned validator set under a consensus system called proof-of-authority.
Manian and Spaydh are both optimistic that Noble will eventually see the adoption of ICS as necessary. “In no one’s eyes is proof-of-authority a long term solution,” Manian said.
In the meantime, there are other milestones to worry about, such as the migration of liquid staking platform Stride, which has said that it will become one of the first consumer chains.
“Let’s see ICS in production,” Manian said. “It is fantastic that Neutron is launching. It’s fantastic that Stride is going to do this migration.”
Down the road, he said, Noble will be able to reconsider adopting ICS closer to the time that dYdX is ready to launch its version 4 app chain on Cosmos.
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Source: https://blockworks.co/news/cosmos-greenlights-interchain-security