Cosmos ⚛️ August 2019 Network Analysis

Quick Takes

  • Cosmos rewards decreased from 10.59% to 10.30%; inflation from 7.64% to 7.56%
  • Upgrade: Cosmos Hub 3 launch target is September 24, 2019
  • Cosmos Hub 3 will enable governance to spend the community fund
  • IBC (Cosmos Hub’s reason for existence) should bring transaction fee rewards
  • Nearly 73% of the ATOM supply is staked
  • 148,992 ATOMs are locked in the community pool (until Cosmos Hub 3)
  • Interchain Foundation delegated 7.31M ATOMs across 45 validators
  • Voting power more equally distributed, likely from ICF’s 7.31M-ATOM delegation

You can find July’s network analysis here.

IBC is coming

Currently, stakers rely almost entirely on inflationary block rewards as an incentive to stake. IBC (Inter-Blockchain Communication) will enable stakers to earn transaction fees as assets move through the Cosmos Hub to and from connected zones.

It may be too soon to mention IBC in a network analysis, but I think it’s important: IBC is the Cosmos Hub’s reason for existence, and it’s on the horizon. Christopher Goes released the IBC spec here and discussed its operation here.

7.31M ATOM delegation by the ICF (Interchain Foundation)

The Interchain Foundation (ICF) delegated 7.31 million ATOMs to 45 validators on August 14, 2019. The average was ~158,500 ATOM, with a range of 33k to 300k per validator. Sixteen validators received 300k ATOM delegations, 21 received 100k ATOM, and seven received 33k ATOM.

One validator received an oddly specific delegation of 1917.141111 ATOM..

You can read more about ICF’s delegations here.

Changes to the Cosmos Hub

‘Cosmos Hub 3 Upgrade Proposal A’ successfully passed, signalling that the Cosmos community approves of the high level changes proposed for the upgrade to Cosmos Hub 3. The Cosmos Hub testnet was upgraded to Gaia-13006 on August 20, 2019, for mainnet testing and preparation.

Figment Networks is currently in the process of co-ordinating the final upgrade proposal. There have been a few bumps in the road that have contributed to our learning. We are targeting September 24, 2019 as the date for the launch of Cosmos Hub 3.

Cosmos’ cousin, IRISnet, successfully and smoothly executed an on-chain upgrade today — a feature that we hope to see on the Cosmos Hub roadmap.

Cosmos Hub 3 will introduce several new features, including:

1. Activate the Community Pool — enable governance to spend funds from the community pool (full proposal) 2. Don’t Burn Deposits for Rejected Governance Proposals Unless Vetoed — if a proposal gets rejected without being vetoed, the deposits will be returned to the depositors (and if a proposal fails to meet quorum, its deposit will still be burned) (full proposal) 3. Notification for Security Critical Hard Fork at Block 482100 — critical security vulnerability in the codebase for the Cosmos Hub (additional info) 4. Increase Max Validator Set Size to 125 — (full proposal)

The Cosmos SDK will also enable creating and voting on governance proposals that modify on-chain parameters without halting or forking the network, as well as the spending of community funds. Last I checked (thanks to B-Harvest), there are 148,992 ATOMs locked in the community pool.

Key Metrics

ATOM supply inflation continues decreasing

As of August 20, 2019, the Cosmos Hub had a bond ratio of ~73%, which is 6% above the target bond ratio of 67%. Inflation will continue decreasing (at a rate of 13% per year) toward a minimum of 7%. At the time of writing, Cosmos’ inflation is 7.56% and rewards are 10.30% (by my calculation).

Thanks to the Lunamint bot!

7.31M of the newly-staked ATOMs came from Interchain Foundation’s delegations. The number of newly-minted ATOMs is in keeping with the monthly average of~1.4M. By my calculation, 3.83 ATOMs are minted each block, 0.08 ATOM of which goes to the community pool.

Voting Power Inequality

In the past month, the voting power of the bottom 90% of Cosmos Hub validators has increased by 1%, and (provided that their delegators don’t override) they hold 48% of the Cosmos Hub voting power. This is likely related to the Interchain Foundation’s distributed delegations, in which 7.31M ATOMs were delegated to 45 different validators.

The red, dotted line is what an equal distribution of voting power among all 100 Cosmos validators would look like. The blue line shows the Lorenz curve for Cosmos validators on July 19, 2019, and the green is a snapshot of August 20, 2019, yellow being April 19, 2019 (right before transfers were enabled). Circles refer to the 50th data points, while triangles represent the 75th data points, and the diamonds represent the 90th data points.

These are items that I think are important. I’d be grateful for new ideas and additional key metrics, and how to collect them, particularly if that can be done automatically.

Questions? Feel free to ask using the comments section below.

Hopefully you found this useful. Feedback is always welcome! I’m on Twitter.