- The Cosmos ecosystem is still thriving despite the bear market and low Adam prices.
- The ecosystem is focused on improving cross-chain user experience and creating a seamless interchain network.
- Effort Capital attended the Cosmosverse event in Istanbul and highlighted the strong presence of developers and active community members.
- The Cosmos ecosystem is seen as the most underrated among major ecosystems in the space.
- Effort Capital emphasized the need for better interoperability solutions in the Layer 2 space, as current solutions like Optimism and Arbitrum lack interoperability.
- Effort Capital expressed excitement for the future of the Cosmos ecosystem, especially with upcoming developments in user experience and the launch of native USDC transfers.
- Effort Capital also mentioned the focus on bringing liquidity from Ethereum and Bitcoin into the Cosmos ecosystem and the efforts being made to create an on-chain economy for Bitcoin.
- The Interchain Foundation (ICF) has a significant amount of funds allocated to Atom, Bitcoin, and Ethereum.

- The Interchain Foundation (ICF) has a significant amount of funds, including $280 million split between Atom, Bitcoin, and Ethereum.
- The Cosmos ecosystem is active, but a killer use case is needed to attract more users.
- DYDX, a decentralized exchange, is seen as a potential catalyst for liquidity and developer growth in the Cosmos ecosystem.
- The potential merger between Stride and Cosmos Hub was discussed at Cosmoverse, with Stride proposing to be acquired by Cosmos Hub to scale its liquid staking protocol.
- There is debate over whether Atom or USDC would be the preferred asset for Stride if the merger goes through.
- The idea of a stablecoin as a base token for a blockchain is questioned, as some believe a blockchain can thrive with a stablecoin as its base token.
- The merger between Stride and Cosmos Hub is causing controversy and discussions in the Cosmos community, with different viewpoints on the benefits and drawbacks of the merger.
- It is suggested that a middle ground solution, such as a treasury swap, may be more feasible than a full acquisition.

- The speaker discusses the issue of buying out tokens in the context of the Stride project.
- They raise questions about whether tokens should be bought out at fair value for average holders, team members, and investors.
- The speaker mentions the importance of liquidity incentives and the Stride community pool.
- They suggest that buying out tokens would require minting a significant amount of Atom.
- The speaker highlights the potential revenue and future prospects of Stride, including partnerships with DYDX and Celestia.
- They discuss the value and benefits of liquid staking tokens.
- The speaker acknowledges the risks and uncertainties associated with token buyouts and emphasizes the need for closer alignment between Stride and the hub.
- They express their opinion that it may not be the right time to pursue token buyouts for Stride.

- The illiquidity of the Stride token is a concern for team members and investors who want to capture profits.
- One suggestion is for the Cosmos Hub to buy out the Stride team at a discount, allowing them to exit liquidity while still benefiting from the asset's upside.
- The Stride token is seen as overvalued because it is mostly a repackaged form of Atom, the Cosmos Hub token.
- The introduction of the LSM and the entry of DYDX could change the dynamics and reduce the dominance of Atom in Stride.
- If the merger goes through, the Cosmos Hub token holders will have influence over other ecosystems' validator sets.
- The perspective on the merger differs for Stride holders (against) and Atom holders (in favor).
- Axelar is proposing reducing inflation and implementing a burn mechanism for its Axel token.
- They also suggest an opt-in cross-chain validation service and leveraging ZK-like clients for cost reduction in the long term.
- These proposals could potentially lead to deflation and reduced supply overhang for the Axel token.

- The speaker discusses the concept of tokens as equity and distinguishes between base layer money and application tokens.
- They argue that small protocols should reinvest profits in growth rather than distributing them to token holders.
- The speaker suggests burning tokens as a form of stock buyback, but also emphasizes the need for funding development and marketing.
- They propose bringing fees into the treasury, OTC-ing a portion of them to teams with a vesting schedule, and using stablecoins for various purposes.
- The speaker acknowledges the importance of considering token prices and market conditions when determining inflation rates.
- They discuss the potential profitability of crypto protocols and the possibility of stock buybacks or cash flow distribution to token holders.
- The speaker mentions the temporary pause of ThorSwap operations due to an alleged North Korean exploit and the involvement of ThorChain as a bridge for the funds.

- The founders of a protocol are facing allegations that their system helped the Lazarus group move and launder funds, causing outrage among some people.
- A security expert suggests that there should be a middle ground between full decentralization and government control, using incentives to support good actors and deter bad actors.
- The ability to blacklist certain contracts or wallet addresses from interacting with smart contracts is proposed as a solution, but there are concerns about centralization and government pressure.
- There is a debate about whether censorship should occur at the base layer or at the app level, with some arguing for app-level censorship resistance to protect against dictatorships.
- The issue of funding North Korea's nuclear program through DeFi platforms is discussed, with transparency in DeFi being seen as a step in the right direction.
- There are concerns that government overreach could target node operators and pose a significant problem for the crypto industry.
- The debate around LIDO's dominance in Ethereum staking and the potential centralizing effects of liquid staking tokens is mentioned, with discussions about enshrining a liquid staking mechanism in the Ethereum base layer.
- Some argue against enshrining such a mechanism, emphasizing the importance of free market forces and avoiding interference in the market.
- Criticism is raised towards Ethereum for not addressing the issue earlier and for focusing on other priorities like MEV burn instead of credible threats to Ethereum's neutrality.

- The focus on MEV burn and ultrasound money is distracting from the real threat to Ethereum's credibility, which is liquid staking.
- Ethereum's value lies in its ability to secure digital property rights in a growing digital economy.
- If Ethereum absorbs and controls private entities like Lido, it undermines the belief in private property in the digital world and could lead to Ethereum's downfall.
- Other proof of stake networks like Solana and Cosmos were not built on the principle of credible neutrality like Ethereum.
- Ethereum needs to align with Lido, rather than the other way around, and find a way to communicate and resolve the current issues.
- Lido is actively working on decentralization and has plans to further decentralize its governance.
- The fear of collusion among Lido node operators is unfounded as they are financially motivated to act in the best interest of Ethereum.
- Lido is committed to keeping Ethereum decentralized and resistant to censorship, and is actively working on improving its governance and distribution.
- StakeDeep and liquid staking tokens compete as money and serve a purpose in providing liquidity and avoiding fragmentation in the market.
- Lido is making significant efforts to prevent centralization and is committed to the long-term sustainability of Ethereum.

- The Cosmos ecosystem is thriving despite the bear market and low Adam prices.
- Effort Capital attended the Cosmosverse event and highlighted the strong presence of developers and active community members.
- Interoperability solutions in the Layer 2 space are needed in the Cosmos ecosystem.
- The potential merger between Stride and Cosmos Hub is causing controversy and discussions in the Cosmos community.
- The illiquidity of the Stride token is a concern for team members and investors.
- Axelar is proposing reducing inflation and implementing a burn mechanism for its Axel token.
- The concept of tokens as equity and the importance of funding development and marketing are discussed.
- The temporary pause of ThorSwap operations due to an alleged North Korean exploit is mentioned.
- The debate around LIDO's dominance in Ethereum staking and the potential centralizing effects of liquid staking tokens is discussed.
- Ethereum needs to align with Lido and find a way to resolve the current issues.

- The speaker believes that Ethereum is stuck due to the issue of credible neutrality.
- They mention that on-chain game theory can only do so much and off-chain reputation also plays a role.
- Lido may have mechanisms to solve the principal agent problem between validators and delegates for the long-term viability and security of Ethereum.
- The speaker clarifies that there are 31 node operators, but no centralized exchanges currently running nodes.
- The topic shifts to non-crypto related content, with the speaker mentioning the release of new albums by Lil Wayne and Drake.
- They express excitement to listen to the new music and recommend following Effort Capital on Twitter for music recommendations.

- Ethereum is facing challenges related to credible neutrality.
- On-chain game theory is limited and off-chain reputation also matters.
- Lido may have solutions for the principal agent problem in Ethereum.
- There are 31 node operators, but no centralized exchanges running nodes.
- The speaker mentions the release of new albums by Lil Wayne and Drake and recommends following Effort Capital on Twitter for music recommendations.

In this week's analyst round table Dan and Sam are joined by analysts EffortCapital and Ren. To kick-off the team discusses Cosmos events, including Cosmoverse takeaways and potential mergers between Stride and the Cosmos Hub and potential AXL token inflation adjustments. They also dissect alleged illicit transactions moved through Thorswap and its operational shutdown. They then discuss Lido's growing share of staked Ether and the on-going community debate. EffortCapital closes us out with key mentions of new album releases from Drake and Lil Wayne.

As always remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice.
- -
Follow Sam: https://twitter.com/swmartin19
Follow Dan: https://twitter.com/smyyguy
Follow EffortCapital: https://twitter.com/EffortCapital
Follow Ren: https://twitter.com/purplepill3m
Follow Blockworks Research: https://twitter.com/blockworksres

Subscribe on YouTube: https://bit.ly/3foDS38
Subscribe on Apple: https://apple.co/3SNhUEt
Subscribe on Spotify: https://spoti.fi/3NlP1hA

Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/
- -
Hexens is the premier cybersecurity provider in web3 with an essential focus on blockchain technologies. Always exceeding clients’ expectations, Hexens is a trusted security partner of the most prominent web3 projects like Polygon & zkEVM, 1inch, Lido, Nubank, TON, Risc0, EigenLayer, Mantle, Celo and more.
https://hexens.io/
- -
Timestamps
(00:00) Introduction
(02:16) Cosmosverse Event Takeaway
(06:32) “Hexens Ad”
(07:31) Cosmosverse Event Takeaway
(19:14) Stride Proposal
(36:14) AXL Token Forum Post
(40:56) Are Tokens Money?
(47:18) Thorswap Frontend Shutdown
(57:02) Is Lido Too Big?
(1:11:06) Lil Wayne and Drake Albums
- -
Resources
Cosmos News 
https://forum.cosmos.network/t/atom-tokenomics-update-blockworks-research-aadao-grant-monetary-policy/11519
https://www.youtube.com/live/ag0Jj2iUKH8?si=yBQLicwUsBDHb5YQ&t=25165
https://www.youtube.com/watch?v=j6Vjo6t_uus&t=8142s

Thorswap Illicit Activity
https://x.com/THORSwap/status/1710162462639575065

AXL Token Forum Post
https://community.axelar.network/t/adjusting-axelar-network-incentives-a-proposal-to-scale-to-thousands-of-chains-call-for-comments/2515
- -
Check out Blockworks Research today! Research, data, governance, tokenomics, and models – now, all in one place

Blockworks Research: https://www.blockworksresearch.com/
Free Daily Newsletter: https://blockworks.co/newsletter
- -
Disclaimer: Nothing said on 0xResearch is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Dan, Sam, and our guests may hold positions in the companies, funds, or projects discussed.

The fact is all the issues that you see on Cosmos historically are going to port over to the L2 space.

Optimism still does not have an interoperability solution.

There's still not an interoperability solution between Optimism and Arbitrum.

And before people start coming into the comments saying, oh, CCIP from Chainlink is going to solve world hunger, slow your roll.

It's easy to say that when it's just a concept, but until it has a year or 2 under its belt, I personally would not trust any bridge outside of IPC today.

All right, everyone, welcome back to another episode of 0 X Research.

We've got a great analyst episode lined up for you guys today and you're really liking this new format.

So glad you guys are in the same boat with us.

It really just gives us the floor to just jam on what we've been thinking about all week.

So we got another 1 rolling this week with Effort Capital and REN, but before we dive into the thick of it, quick word from our sponsor, the Hexens, the most hardcore security team in Web3.

They're working a ton with ZK and Novel Cryptography, and they've worked with trusted projects like Polygon, including work on their new ZK EVM, as well as Mantle, Risk 0, Lido, 1inch, NewBank and more.

We are recording this episode on October 6th, and it will be released on the following Wednesday.

So again, we're battling through some PTO and some time off.

So forgive us if anything in this goes stale before it gets released.

We're doing our best here, but we will be back to the regular scheduled programming the week after this.

This week we have a interview section going live on the Thursday of the week.

Another good episode, this 1 with Bitwise.

Again, Matt Hogan and Ryan Rasmussen make a third appearance.

I don't know, we're giving these guys too much time.

A lot of good talk on ETFs, why it's important, as well as always we get their institutional viewpoint.

So let's jump into the analyst segment though.

Maybe I'll get Effort Capital to kick things off.

He was just over in Istanbul enjoying the Cosmosverse event.

And honestly, there's a major news event that kind of rolls us right into the governance update segment.

Yeah, so just got back from Cosmosverse from Istanbul about a little over 24 hours ago at this point.

And I'll start off by saying overall, the vibes were pretty immaculate.

So despite the bear market, despite, I think, a lot of narratives in crypto Twitter, especially after the whole OP stack and the announcement of BASE earlier this year, you saw a lot of people really think that the AppChain thesis, specifically as it relates to the Cosmos ecosystem, was dead.

That L2s were really taking over this idea, commercializing it in Ethereum.

As we all know, Ethereum and the wider L2 ecosystem likes to rip ideas off Cosmos and really just do it better, better distribution and what have you.

But despite that narrative, I think that is still out there for those outside the Cosmos Eco, attendance was up 20% year over year.

So more people are still following the ecosystem.

Again, despite like, if you look at Adam prices, Adam prices are as low as they were back in June 2022.

A large percentage of the attendees were devs and really active community members.

There really weren't as much like professional capital allocators.

So I want to say there was like less than 15 people out of the, I think there was over 1700 or 1800 attendees at Cosmoverse this year.

So like there was literally like less than 15 to 20 people that were in like the VC space.

I heard that SoftBank was there, which was really interesting, given like their size.

Hashkey, which is like a startup accelerator and they allocate capital to other areas as well.

I believe Spartan Group was there, I could be wrong, and a couple other like Cosmos specific investors.

But overall, you can think that that is bearish.

Devs are still building, bear markets are building as the old cliche goes.

And I fundamentally believe, and again, obviously I'm relatively talking my book, so take it with a grain of salt, but I still think the Cosmos ecosystem is the most slept on out of like the 3 or 4 major ecosystems in the space.

The major takeaways outside of that were a strong focus on cross-chain UX.

So We got to this point where IBC is arguably the most valid test interoperability protocol, but the UX itself built on top of that still is a little, I don't want to say archaic, but it still has a ways to go.

But I think people are going to be shocked that are coming from Ethereum to the Cosmos over the next 6 months, I think they're gonna be shocked to see how far we've come.

So I think you're seeing a lot of interchain aggregators.

So like DEX aggregation over IBC, having 1 account on chain A, being able to control another account on chain B, you know, making the entire Cosmos ecosystem actually feel like 1 like omni chain or 1 super chain, like to quote like the optimism thesis.

You're seeing a lot of work on better wallet UX, having better fiat on ramps, you know, Leap Wallet, which is 1 of the major wallets in the cosmos.

They presented what their roadmap looks like over the next coming years.

And It's really just like a vast improvement over what you've seen in Metamask and even Coinbase Wallet, I still think has a lot of long ways to go.

A lot of discussion in the Ethereum ecosystem around account abstraction, ERC-4337, like paymasters and all that stuff.

But it sounds like the Cosmos ecosystem and the devs there are much more focused on UX, I think, and are much further along than what they're given credit for.

I wanna jump in right there, because that makes sense that that's the focus, right?

Is because if you have this network of app chains that inherently have a piece of friction between them, right?

Like they are separate ecosystems, they need to connect.

There needs to be that super, super driven focus on UX, where if you think about some of these other smart contracting platforms, like honestly, any of the monolithic L1s, like they didn't necessarily need to think about that out of the gates.

And I don't know, I mean, this is like an impossible question to answer, but I wonder if that like played a role in like the very like engineering focused drip mindset versus, you know, bringing an app to a consumer.

As we explore today's blockchain landscape, let's take a moment to recognize them as a premier cybersecurity provider in Web3.

Hexens is trusted by tier 1 projects like Polygon, including a security review on their new Polygon ZK EVM, Mantle, Risk 0, Lido, OneInch, NewBank, and more.

Get a deep dive into your technology stack with the most comprehensive analysis and cybersecurity consulting.

Hexens not only uses widely known methodologies and flows, but discovers and introduces new ones on a day-to-day basis.

With over $55 billion secured, they cover everything from smart contracts to blockchain to Web2 pen tests.

Yeah, there's been nearly $7 billion of total value hacked in crypto's nascent history, so it's safe to say your team has a lot on the line.

Don't skimp out, take your security seriously and reach out to Hexens.

Don't forget to mention ZeroX Research for a free web2 pen test with your partnership and reach out to Hexens at hexens.io.

Find them in the links in the show notes.

But without further ado, let's get back to today's episode.

There's obviously benefits of building on a monolith, at least up front.

And we see obviously some of the downstream or longer term effects of doing so.

Outside of Sloan, it sounds like they've kind of figured out a lot of the issues with building on a monolithic chain.

But the fact is, all the issues that you see on Cosmos historically are going to port over to the L2 space.

And before people start coming into the comments saying, oh, CCIP from Chainlink is going to solve world hunger, like slow your roll, it hasn't even launched yet.

It's easy to say that when it's just a concept, but until it has a year or 2 under its belt, I personally would not trust any bridge outside of like IBC today.

But there's been a strong focus on product, on applications and user experience over the past like 6 to 12 months in the ecosystem to abstract away IBC.

And I think you're starting to see the fruits of that labor starting to play out.

And I'm actually really excited to see like what the ecosystem looks like at the end of this year in early 2024.

You know on top of that obviously we spoke about it a little bit and it's been on the in mainstream media I guess for the past few months but NativeUSDC officially coming officially here in the Cosmos ecosystem.

Circle was there and presented like the work that they've done with the Noble team to really have like useless, seamless transfer of USDC from Ethereum to the Cosmos.

It's going to be like a really big launch, like officially when DYDX comes to see like how much native USDC transfers over into the Cosmos Eco.

Another big thing was like lack of liquidity.

Obviously Cosmos ecosystem is not nearly as liquid as you'd like to see it compared to Ethereum at the very least.

And there was a big focus on how do you bring ETH liquidity and Bitcoin liquidity over into the Cosmos ecosystem and potentially create an on-chain economy for Bitcoin.

So Nomek, which is like a BTC bridge, leveraging Taproot, gave a good presentation.

There was a whole host of teams building ZKIPC tech to bring main net Ethereum liquidity into the Cosmos ecosystem.

And I think that the last really big takeaway I'd say is the ICF, which is not Cosmos hub specific, like the foundation for the wider interchain.

And they're sitting on like $280 million split up between Atom, Bitcoin and Ethereum.

And I think about like 80 to 90 million dollars of that is sitting in dollars or maybe treasuries.

The ICF is extremely well funded for the perceived future.

And I think that the Cosmos ecosystem is like teaming with activity.

It just, we need to figure out what is that use case that gets users over here.

And I don't think this is Cosmos specific.

I think the entire crypto ecosystem saying, like, what is this killer use case?

Obviously, we know it's like gambling today.

That's why I'm extremely excited about DYDX.

And if DYDX is a good product, I think that's going to create like a flywheel where you see more liquidity and more developers come here.

They realize how good and how strong the Cosmos SDK was.

Last thing I'll say, and this kind of parlays into the major announcement at the end of Cosmoverse was the Stride and Cosmos Hub potential merger.

So the Stride team came up right at the end of Cosmoverse and presented an idea for Stride, which is the dominant liquid staking protocol in the Cosmos ecosystem, to be acquired by the Cosmos Hub.

And their reasoning was that, obviously, we're seeing a whole bunch of conversation around Lido and aligned with Ethereum and potentially Ethereum and trying LST mechanism into the protocol to ensure credibility, neutrality and safety.

And 1 of the ideas is that Shride proposed, like if the Cosmos Hub acquired Shride, then Shride can scale to much more billions of dollars worth of liquid staking derivatives or liquid staking tokens.

And Potentially because the Atom asset is more distributed than Stride and almost every other chain in the Cosmos ecosystem because of how long it's been around.

I personally think that the distribution of the asset is what correlates to how neutral a given protocol could be.

And their thinking was, you know, for Stride to be like the ultimate neutral LST provider, it probably needs the most distributed and largest market cap asset backing it.

And that goes beyond just leveraging the Cosmos hub for security.

That means actual Atom being the governance asset of the protocol as well.

So I'll pause there because I think we can kind of riff on about this a lot.

But it's a really interesting concept, especially on the backs of like Vitalik's piece on minimum viable attriment.

First of all, on the user experience, I think everyone agrees that there's a lot of work to be done.

Even, for example, if we think like Coinbase wallet is a better product than MetaMask.

After Onchain summer, Brian Armstrong basically came out with a tweet saying, okay, guys, after on-chain summer, I've realized that our wallet is completely dog shit.

There's a lot of work that needs to be done.

And if I'm not wrong, he put out a Slack message asking every employee to go through the entire onboarding process, spend 3 hours doing that and send him a personal memo of what the experience was and what they can work on.

As far as what the use case or the app for the Cosmos will be, I think DYDX obviously is a very critical moment for Cosmos.

But 1 thing I didn't think about until like what you talked about was CCTP, because USDC is going to be sort of like the base token for DYDX and CCTP is live on Ethereum, Avalanche, I think Arbitrum, and hopefully I would guess Optimism sometime soon.

I feel like that could potentially be a very big boost versus a world where CCTP did not exist just because that user experience is pretty seamless and it's a thing, it's like a backend technology where any big provider can sort of like use it.

So yeah, I think we'll see like a significant amount of inflows there just based on CCTP being linked with all of these like rollups or like other like chains.

Lastly on a note of what you said about sort of Cosmos having like its own like base token, you know, like Ethereum has ETH, like Avalanche has AVAX, Solana has like SOL.

I'm not sure, now that I thought about it, I'm not sure that a blockchain needs to have a non-stablecoin as its base token.

I think obviously it's good for the price and obviously you need the base token for gas fees on most chains.

But now that I think about it, I definitely think that there are going to be blockchains where you're going to see more USDC liquidity than whatever the native gas fee token liquidity is.

And that sort of brings me into like the Stride and Hub merger, right?

Now that you mentioned that the ICF is sort of like a third Bitcoin, Eve, a third like stable coins and a third like Atom, I think, I'm thinking like, does it make sense if this deal does go through, does Stride want Adam?

Or for example, like, would they want like USDC?

Like, which 1 is the asset that they want more?

Well, I think in terms of, In terms of like governance, right?

So I think you're saying like, if the team plus all the stride token holders wanted to be get it to get acquired, they obviously probably want to get paid in USDC because it's more stable form of cash.

But I think in terms of like governance over the stride protocol What would you do I guess would you just like lock up USDC like Where's the world where do you lock up USDC in the amount of USDC you have locked up to a given EOA?

Determines like your voting power like that'd be really interesting

The issue there is you can't just print more USDC to fund things, right?

Like Circle could do that and they could run Circle Chain and you know, they could print somehow print those while still ensuring the other, their backing of user USDC is still 1 to 1.

I think that's where the idea of a stable coin kind of breaks down in this case.

You've seen chains like Agorix sticking in the Cosmos, their gas token is IST, right?

But it still has its own CDP mechanism behind it, which is kind of interesting.

I'd have to think on that more if I really had like a logical conclusion there.

I, What's interesting going back to the whole Stride hub thing.

After that, there was a quick panel discussion with the Stride team, some of the core dev teams, like informal, about the implications.

And it sounds like the idea was like came on a Monday, like Monday night after a couple drinks, the stride team and like the 1 of the core dev teams were like, hey, it seems like a good idea.

I personally do think that there's some merit to this idea, but I also understand the other side of it.

There's a lot of drama going on in the Cosmos Hub forum right now.

People are upset, especially a lot of Stride token holders, because they feel like they are getting potentially short under the stick.

If this merger goes through, it's like, hey, look, I bought Stride for this reason.

Stride is valued at approximately $80 million market cap right now, or it was prior to this proposal, but the idea being floated.

After that, it pumped 10% on the idea being announced, and now it's actually down 20% week to date.

So you know, the market's kind of, it sounds like upset, Stride token holders are upset.

But also want to be clear, the Cosmos hub doesn't even have a treasury sizable enough to actually purchase Stride at current market cap.

So I think we've seen from like the Feirari proposal, historically, like mergers and acquisitions are very hostile.

You know, both counterparties in these transactions never feel like they're getting their full value.

You can argue that Stride is not worth it at current prices because 80% of its TBL is Atom anyways.

And you could also argue that the Cosmos hub should maybe potentially remain credibly neutral and not own a specific LST provider.

I see both sides of the argument, but I could also make a strong case for why it actually makes sense.

I ultimately think that the end state is probably not going to be a merger, maybe, or an acquisition, I should say.

I think what we're going to have to do is probably find a middle ground, which is like some type of treasury swap, where the Cosmos Hub would love to have a team like Stride who have shown time and time again they can execute.

Maybe the Hub buys out Stride teams and Stride's VC allocation.

Stride team has KPIs and ultimately work on behalf of the hub, but still work specifically on Stride, the protocol on behalf of the hub.

So there's some type of alignment there between the core development team and the protocol.

And ultimately, maybe the hub also gets governance rights by buying out the Stride allocation from the team and investors.

But this is going to be a really interesting ride.

It's going to probably take a few months for the hub community and the Stride community to figure out what they want to do.

Yeah, let's break this down a bit because we've been talking about it since the announcement, basically.

So I feel like we just jumped to the end state there.

But if we rewind and go from the beginning, so Stride wants to get acquired by the hub.

And to your point, the hub doesn't have a community pool that just has approximately 70, 80 million sitting in it, which is roughly the FDV of Stride today, which by the way, I did not realize it like nuked 20% over the past week.

So there's like a couple of immediate questions that come up here.

First of all, what's the fair value of Stride?

Second of all, which tokens deserve to be bought at the fair value?

If I'm just an average Joe holding a Stride, I deserve to be bought at fair value.

If I'm the team and I'm vesting, I don't know these specific terms off the top of my head for the Stride team, but something probably like a one-year cliff, four-year vest.

Did my tokens that vest to me in 4 years, am I fully deserving of those tokens?

Because I only created a half-baked product, should those be bought out at fair value?

And I'm not trying to, like, throw shade at all here.

I'm just, like, saying from an M&A standpoint, like, the answer is probably no.

Investors, they seeded the capital, took full risk that the protocol would go nowhere.

Do their token allocation deserve to be bought out even if they are on that fourth year of their vest?

And then what about additional liquidity incentives?

I know Stride had a large portion of its token allocation save for liquidity incentives, given the nature of the protocol being a liquid staking protocol.

And liquidity is very important to have a successful product.

And I mean, maybe yes, because then, you know, you buy them out in Atom.

And then lastly, what about the Stride community pool?

I don't know the size of the community pool.

I assume there's a community pool, just given it's a hub chain, sorry, a Cosmos SDK chain.

And that's like 1 of the modules I would imagine is part of Stride.

Probably not, because why would they just buy a community pool?

So there's like all these questions around, how do you actually buy?

What are you buying, first of all, and how do you buy it?

And the next question is, well, with what assets do I buy it?

And that answer is kind of has to be a one-time mint of Adam.

And so if you're gonna mint, it's somewhere between 60 and $80 million of Adam, that's roughly for 3 to 5% of the current market cap, around 2000000.

And so you got to ask yourself, as an Atom holder, do I want to take a 3 to 5 percent hit of inflation for this product of stride.

I see a lot of people freaking out about that.

And I'm like, guys, your inflation rate is what 16% today, like, it's not gonna make a difference.

See all 0xResearch transcripts on Applepodcasts

Will Cosmos Hub Enshrine Stride and Save ATOM? | Analyst Round Table