This post aims to gather feedback from PSTAKE token holders regarding the proposal to share 15% of pSTAKE’s total revenue generated from ATOM liquid staking with the Cosmos Hub and to waive any fees for staking ~350k ATOM on pSTAKE. This proposal is part of the Cosmos Hub forum proposal titled 'Allocate 600k ATOM to pSTAKE for the growth of ATOM Liquid Staking.’ Read the full proposal here.
On October 24th, I initiated a discussion on the Cosmos Hub forum to allocate 600k ATOM from the Cosmos Community Pool to pSTAKE for the growth of ATOM liquid staking. This proposal has sparked a conversation about utilising ATOM (capital) to align various chains and ecosystems, strengthening ATOM’s position as the centre of the Cosmos LSTfi ecosystem, and diversifying the Cosmos Hub Community Pool’s exposure to ATOM LSTs, all while generating significant revenue for the Hub (with stkATOM staking rewards, swap fees on DEXes, 15% of liquid staking revenue from pSTAKE, and positive contributions to the revenue through Neutron).
This proposal creates a distinctive win-win situation for both the Cosmos Hub and pSTAKE Finance. I firmly believe that this proposal will play a pivotal role in driving greater adoption of stkATOM within the Cosmos ecosystem. It accomplishes this by creating new use cases, enhancing peg stability with increased liquidity on decentralised exchanges, fostering alignment with the Hub and the ATOM Economic Zone, all while simultaneously generating revenue for the Cosmos Hub.
What is pSTAKE requesting from the Hub?
The pSTAKE team requests 600k ATOM from the Cosmos Hub Community Pool for the growth of ATOM liquid staking with stkATOM across Cosmos DeFi protocols as follows:
- Liquid Stake 350k ATOM with pSTAKE
- Use 250k ATOM for LPing on Dexes paired with the liquid-staked ATOM
Find the exact specifics of the ATOM allocation split here
What does pSTAKE offer to the Hub?
The pSTAKE team recommends two significant actions:
- Waiving all fees for the Community Pool on the 350k ATOM being liquid staked with pSTAKE.
- Sharing 15% of its total revenue generated from ATOM liquid staking with the Cosmos Hub Community Pool.
It is crucial to note that pSTAKE’s revenue sharing with the Hub is contingent on the Community Pool providing liquidity and its duration to pSTAKE Finance.
The average quarterly staking APY will be calculated, and any fees generated on the Community Pool’s liquid-staked (350k) ATOM will be reimbursed and transferred to the ATOM Community Pool by pSTAKE on a quarterly basis.
15% of the ATOM liquid staking revenue generated by pSTAKE will be regularly directed to the Cosmos Hub Community Pool on a quarterly basis.
While elevating the Cosmos network, this proposal carries profound implications for pSTAKE:
- Alignment with the Hub
pSTAKE has been dedicated to ATOM liquid staking, introducing stkATOM v1 in early 2021 and non-custodial stkATOM v2 in January 2023. Our strong alignment with the Hub will have a positive impact on this relationship. To further strengthen this alignment, I’ve proposed pSTAKE shares 15% of its ATOM LS revenue with the Hub for utilising ATOM from the Community pool for the hub providing liquidity-as-a-service. I have also proposed pSTAKE waive any fee charged on liquid staking 350k ATOM from the community pool as a part of the proposal.
This initiative empowers ATOM as Interchain Money, fostering growth throughout the Cosmos ecosystem and harmonising incentives among protocols within and beyond AEZ. I also hold the view that the ATOM Economic Zone encompasses economic activity around ATOM, extending beyond Replicated Security. You can explore more about my perspective here.
- stkATOM growth and adoption
a. Enhances stkATOM’s Appeal
The proposed allocation of 350k ATOM from the Community Pool for the minting of stkATOM will make a substantial contribution to the growth and adoption of liquid staking. This allocation will boost the demand and liquidity for stkATOM, fostering its expansion within the Cosmos ecosystem and beyond.
Given pSTAKE’s presence across multiple chains, it’ll help to onboard new users from diverse networks like BNB and soon Ethereum. This, in turn, further propels the growth and traction of ATOM liquid staking.
b. Deepens stkATOM liquidity across Cosmos DeFi use-cases
The proposed Cosmos Hub protocol-owned liquidity is poised to deliver a substantial boost of approximately ~282% to stkATOM’s liquidity within the Cosmos ecosystem. This upgrade will lead to more efficient trading and encourage the utilisation of the Cosmos Liquid Staking Module (LSM) and LSTs. This will enhance user experience and solidify stkATOM’s role as an ATOM LST.
c. Strengthens stkATOM:ATOM peg health
stkATOM liquidity will play a pivotal role in maintaining a robust peg, ensuring a harmonious relationship between the protocol’s redemption rate and the market rate of stkATOM. In essence, a resilient stkATOM peg will contribute to a healthier liquid staking ecosystem, fostering increased user confidence and further driving the adoption of stkATOM.
d. Introduces new stkATOM use-cases
50% of stkATOM’s liquidity is proposed to be seeded on Astroport’s deployment on Neutron, the DeFi Hub of the Cosmos Hub. The introduction of a new stkATOM/ATOM pool on Neutron will establish a robust stkATOM presence in the neutron ecosystem. The enhanced stkATOM liquidity on Neutron will unlock potential opportunities for stkATOM within the Neutron DeFi ecosystem, such as enabling stkATOM as collateral on Mars Protocol. Learn more about ‘Why Astroport’ here.
Additionally, a discussion is currently live on the Agoric forum to onboard stkATOM as collateral to mint IST, a prominent decentralized stablecoin within the Cosmos network. This integration aims to diversify collateral options and promote the wider adoption of IST. Learn more about its advantages here.
These new use cases and the potential for increased yields are poised to enhance stkATOM’s distribution throughout the Cosmos ecosystem. As a result, we anticipate greater utilization and a surge in traction.
Your participation in this discussion is of utmost importance, as the fate of this proposal relies on your input. We firmly believe that this proposal presents a mutually beneficial opportunity for both pSTAKE Finance and the Cosmos Hub. Sharing 15% of the revenue generated from ATOM Liquid Staking with the Hub and waiving fees for the liquid staking of 350k ATOM is a fair proposition.
Please note: The 15% share of ATOM liquid staking revenue will be allocated to the Hub only for the duration of the 600k ATOM liquidity allocation.
We are eager to hear your views on this proposal and will be actively answering any questions or concerns you may have. After considering all the pertinent feedback during this discussion, we will proceed to submit an on-chain proposal to pSTAKE’s snapshot space for voting by PSTAKE token holders.