The distribution problem in Cosmos

Introduction

As someone who’s been around Cosmos since 2019 and seen all the milestones materialize (even tho sometimes takes longer than expected) needless to say that I have a strong conviction in the app-chain thesis and the teams behind all these great chains and projects. I have spent countless days thinking about this exact problem and even tried to push various teams in directions that would tackle some of these problems. But still, here we are, in 2023 talking about how to kick-start the ecosystem to be a leader in the arena.

This will be a long post of problems and personal ideas on how to solve those problems, with solutions that I have heard from someone and others that I have come up with. I was inspired to finally write this post after hearing the Twitter space discussion available here: https://x.com/Neutron_org/status/1712845869056205262?s=20

The topic of this great discussion is the problem of Cosmos attracting users, liquidity, even more builders, ideas, or else.

With all the groundbreaking technology that Cosmos has unveiled, there are instances where we witness incredible teams constructing robust and useful software, like what dYdX did recently. Yet, we often encounter individuals voicing that it’s insufficient and that the competition is ahead of us.

With such incredible technology at our fingertips, the expectation is to see more individuals in the ecosystem developing cool apps, and an influx of users engaging with them, filling this block space, right? Maybe

Attracting devs & users

I want to start with what Zaki said, the primary use case for crypto at the current moment is speculation. Web3 introduces a new paradigm where applications need to use tokens to make sense, these tokens live on a decentralized network and need special tools to be accessed (wallets). All dApps that we know of today are financialized, and tokens are introduced as a means for value to be accrued either to the token directly or to the underlying network (The Ethereum model). Often, this comes at the expense of UI & UX or just scares people away.

Back in my younger days, I was all about finding free stuff — whether it was apps, games, tools, you name it. And there was always an option available that didn’t cost a dime. In reality, as much as we would like to apply blockchain technology everywhere, this is probably not the case. If you have a normal free-to-use app and a dApp where you have to pay small fees every other step… the majority of the population would use the free version for sure, even if they know those apps are centralized (they don’t even think about those things).

We as an industry are not just competing with banks, central banks, and centralized exchanges, we are competing with the whole Web2 space. And we need to find solutions on how to transition the Web2 community into the next era, otherwise, we will all suffer, not just Cosmos.

I guess we need to bring in more application developers and new talent to build the next TikTok, Instagram, and Fiverr which will use blockchain in the background but for a specific use case. Payments, storage, community organizations, etc. The reality is that we need fun and useful applications, the underlying infrastructure is less important to 90% of the population.

To discover and engage these creative developers, it’s clear we need to ramp up our Business Development and Marketing strategies. The real question is whether we tackle this challenge through centralized efforts, with a coordinated and directed approach, or do we embrace a decentralized strategy, leveraging the collective and diverse strengths of our community?

My opinion is that we 100% need both. A centralized team can do a lot of focused work, but having boots on the ground in all countries is even more important. In Cosmos, we have great developers who are helping new developers join the ecosystem, and of course, the Interchain Academy is another magnificent way to get more software developers in. It appears that Cosmos is performing well, as it ranks as the third-largest ecosystem in terms of developer count and has seen the strongest growth over the last 2 years. This suggests that our approach is indeed effective.

What if we take a similar approach and onboard BD experts? We can teach them how to “sell” the idea of building in Cosmos to companies, where to find the necessary docs, people, and other resources, and hopefully, how to get a position in the startup/company they onboard. How to incentivize this and find the right candidates it’s a debate that we should have if we want to move forward with this.

An example of a successful project that has a similar approach is Polygon. Polygon guilds & the Advocate program are doing that and more. To expect a small team to constantly attract huge projects to join Cosmos is, to put it mildly, an unrealistic expectation.

We need local communities of

• Developers,
• BizDevs,
• Marketers,
• Designers,
• and everything in between.

Academia

Another interesting thing that was discussed is onboarding new people straight from universities. This is something I have been thinking about for a long time, and IMO this one could have a huge ROI.

To accomplish our goal, several measures must be taken. It’s not feasible to simply approach a university and propose to start educating their students about Cosmos. While we have excellent tutorials on YouTube and various guides distributed across the internet, these resources alone are not sufficient. We must establish a more formal and integrated curriculum to effectively teach this content within academic institutions.

Therefore, I propose the following steps are necessary:

• Books about the history, terminology, people, and the Cosmos Stack. We need stories and ideas that can be ingrained in people’s minds. We need the story of the Cosmos to be shared freely, even among non-tech people.
• In-depth explanations of how things work in Cosmos, CometBFT, IBC, Cosmos SDK, CosmWasm, etc.
• Exercises, problems, and how to solve them.
• Translating those materials into more languages should amplify the results even more.
• Integrations with platforms like Alchemy where students can easily deploy smart contracts.

We’ve seen that books are hugely popular with certain types of communities. Mastering Bitcoin and Mastering Ethereum are among the best-selling books on Cryptocurrency. But there are no books on this amazing ecosystem we are all part of (AFAIK). So, let’s ask ourselves: is this the right time to move out of Twitter and other social media and start writing books like in the old days?

Given the vast network of thousands of contributors within Cosmos, accomplishing these objectives within the next year or two should be feasible. However, this will require clear methods for organization, communication, and development. Ensuring that these ideas are executed with the highest quality is crucial to avoid squandering both the opportunity and valuable time.

Tokenomics (Cosmos Hub)

When it comes to tokenomics, I do have my opinions, but they are just that. I’m sure that the teams selected by AADAO will do a good job when it comes to tokenomics. If it was up to me, I would lower the minimum inflation to 3% and the upper bound to 7-10%. Regarding the fiscal policy, I think we need to use it to further decentralize the validator set. Applying a tax like Effort Capital proposed should be the right way to push for further decentralization. Another matter where we should be careful is to make sure the Cosmos hub has enough reserves to fund its future development.

The Weimar ecosystem

The current trend in the crypto market is launching tokens before the actual product, which can attract initial interest but often leads to a drop in value if the tokens lack utility. Instead of rushing to create new tokens, teams should focus on developing their applications on established platforms, ensuring they offer real value and gain genuine community support.

It’s better to build a solid product first and consider additional features like governance tokens later. This approach not only avoids regulatory scrutiny but also contributes to building lasting and credible projects in the crypto space. As for inflation in cryptocurrency, it’s crucial to manage it carefully, much like how strong economies (try to) manage their fiat currencies, to maintain long-term stability and value.

In the world of crypto (Cosmos as well), many projects want to get paid before they actually build anything. This can lead to projects being abandoned because there’s no real commitment; they get paid regardless of the outcome. It’s better to first create an MVP and gather a group of interested users. This way, when a project launches its token, it’s more likely to succeed.

In Cosmos, the ATOM token is like the gold standard — it’s what people generally trust and want to hold onto because it’s seen as valuable and trustworthy. Even though not everyone may agree, many prefer to hold ATOM.

For new projects looking to get attention in Cosmos, the smart move is to tap into the reputation and community that ATOM has. Like getting a popular friend to introduce you to others.

Osmosis is another project that’s gaining trust and could also be a good way to introduce new projects to the community.

If projects continue to launch tokens and distribute them through airdrops simply to draw in communities, they should not be surprised if those tokens start approaching…

ZZZZZ

Oh yeah, another point I want to make is the following:

A Cosmos ecosystem could exist without the Cosmos Hub, but it would likely face difficulties. We’ve seen the impact of negative events before, like when Terra failed, which affected the reputation and liquidity of the ecosystem. If the Cosmos Hub were to lose its importance, it could cause people to question the entire Cosmos stack. While the Hub might not directly generate a crazy revenue(for now), it’s closely connected to the Cosmos brand and showcases the capabilities of the interchain technology while also providing economic security to chains approved by governance through Interchain Security.

Fragmentation of communities, dApps, and liquidity

In the Cosmos ecosystem, the issue of fragmented communities is becoming apparent. For example on Optimism, there are platforms like Snapshot.xyz and Mirror.xyz providing places for community discussions and governance, but Cosmos lacks a native, Web3-centric platform for such interactions. This raises the question of whether our protocols can truly be considered fully Web3 without our own dedicated space for communication, which is maybe the most important aspect of web3. I’ve outlined a concept for what this platform could entail; if you’re interested in reviewing it, please send me a direct message on Twitter.

In case centralized platforms are told to start banning web3 accounts from their platforms, there is a risk of completely losing parts of the community. This web3 solution should serve as the backup plan and a hub for the community to engage and make use of tools that we have created so far, like NFTs, etc.

I envision this platform as a one-stop hub for other things as well — a unified marketplace where projects and developers converge. Whether projects are hiring or developers are job-hunting, everything would be streamlined in one space. By leveraging our shared technology, this marketplace would serve as the community’s anchor, ensuring we stay connected and continue to thrive, no matter what happens in the centralized world.

The fragmentation of community voices is not the only fragmentation problem Cosmos is facing. We have sovereign chains with their ecosystems of dApps, the challenge is that you have to know what something is offered in Cosmos to use those dApps. What I want is simple (lol): liquid stake my atoms on Stride, lock stATOM in an Inter vault and get out IST, use IST to provide liquidity on Osmosis, and trade perps on Sei from one single front end. This front end ideally would be hosted on Akash or other decentralized providers.

We need solutions like what Keplr did with the dApp tab. All interesting stuff in one place, without changing websites and/or wallets. Tackling the problem of UI should be among the first things projects are willing to do, and of course, cooperate with the wider ecosystem to find the best solutions to this persistent problem.

TFM.com has become my go-to place if I need to do cross-chain transactions, kudos to the team, but we need even more products.

When it comes to liquidity, the Cosmos architecture is just built differently, and the problem of liquidity is likely to persist in the future. The lack of composability is a trade-off that builders are making when they want to build a Cosmos chain. Native stablecoins and integrations with centralized exchanges are probably the lowest-hanging fruit that could provide more liquidity to the ecosystem.

Another idea worth considering is making the Cosmos Hub a liquidity provider for promising chains in exchange for something! More on this later.

Cross-chain dApps

The next pain point builds on the previous one and it starts with a few questions.

How hard is it to launch outposts like what Mars & Astroport did on Osmosis, Neutron, Sei, etc? With the blessing of Interoperability, we can serve dApps to other chains that might not have the time/know-how or ambitions to launch and maintain them. How can we accelerate their development and deployment?

If such a strategy is feasible and can be implemented with relative ease, it could offer a viable remedy for the liquidity challenges mentioned before which are faced by many projects. Mars, for instance, can dynamically allocate liquidity to different outposts depending on where the demand spikes, thus optimizing resource distribution within the ecosystem. This approach could not only solve liquidity issues but also reinforce the cohesion and utility of IBC.

I’m a firm believer in the App-chain thesis, but small niche applications launching a self-inflating and expensive chain is not the greatest start for most projects. It’s essential to have a solid framework that guides new projects on the most effective way to build and sustain their projects.

By advocating for app chains as the primary solution to scalability, there’s a risk of leading projects into problems such as fragmentation, lack of users, and other expensive lessons.

The idea of a sustainable path from dApp to Appchain

Building on the previous point, establishing a robust process is essential, and it could pave the way for onboarding dApps from outside the Cosmos ecosystem. While major players like Uniswap, Maker, and Aave might prefer to create their own chains, offering them a ‘free trial’ experience in the Cosmos environment could showcase the demand for their services within the Interchain. This trial could serve as a compelling demonstration, potentially persuading them to join the Interchain and take advantage of its unique tools.

Interchain money

I’m coming back to this topic because I think the importance of this question cannot be understated. The fact that Cosmos is a centerless ecosystem makes it hard to find consensus on such topics, especially when it comes to money. It is likely that the broader ecosystem will not agree with me on this one, but I find it difficult to think of better money than ATOM. As stated before liquidity injections will probably become a natural progression in Cosmos, and the hub as a DAO will have to find a way to get paid for doing that service from both consumer chains and non consumer chains.

Just as America exports dollars, the Cosmos Hub community may be called upon to export ATOMs to other chains and ecosystems. However, before embarking on this process, we should be ready to establish a solid structure that will guide and make this endeavor sustainable for the Cosmos Hub and its community.

The Cosmos Hub should retain ownership of its liquidity, even when shared with other chains. In exchange for this liquidity support, the recipient chains should offer something in return.

Some ideas:

• Making ATOM the fee token of that chain
• The beneficiary chain contributes a portion of its community pool to the Cosmos Hub’s community pool.
• Airdrop tokens to the users of the Cosmos Hub who are utilizing the application receiving liquidity.
• etc.

These suggestions are initial thoughts and would require thorough research to assess their practicality and potential impact on the Cosmos ecosystem. It’s important to explore the implications of such strategies to ensure they align with the network’s objectives and provide mutual benefits.

Cosmos the ultimate giga-brain ecosystem

If you’ve hung around Cosmos, you’ve likely heard about the cool group of builders we’ve got. They’re so well-known that some in the community call them “the cartel”. But having giga-chads can lead to over-focusing on deeper stuff instead of building something fun that the masses can use and enjoy every day.

Hackathons often lead to building more Infra. Let me be clear, I don’t think that infra is unnecessary or perfect right now, but maybe we are way too focused on those things?

Hosting a specialized hackathon once a year should present a unique opportunity to bring together skilled developers to craft user-centric applications. Should any standout projects arise, there’s the potential to connect them with dedicated teams ready to take the helm for further development, potentially offering rewards for their contributions.

Memes, Drama, and Love

1) What

Cosmos is already accepted in the larger crypto ecosystem as a thought leader in this technology. Now we should be building up strong local memes to attract more eyes and contributors. Sometimes, it looks like we are too focused on accusing and fighting with each other instead of having fun while building all this amazing stuff. TBF cosmos is like a huge middle school class.

As we encourage the spread of memes, the stories and ideas they represent gain increasingly more traction and significance.

While boxing matches might not have hit the mark for resolving our issues, I’m pitching the idea of roasting sessions live-streamed on Twitch. It’s a chance for us to tackle long-standing debates with a dose of humor, craft some legendary memes, and share a laugh. After that, we can get back to business, channeling our inner grown-ups to move forward.

Fostering a strong community culture is vital and should be continuously encouraged. Overcoming conflicts is the initial step towards this goal — let’s promote tolerance and collaboration. I hope this suggestion is received well, although it might just spark more drama.

Conclusion

As much as we are aware of the superiority of our tech, we should not stop building Web3 native solutions. We are still too reliant on Web2 solutions for our problems and social coordination.

A decentralized web of contributors is essential to scale to billions of users. The lack of network effects around one single token might be an issue to tackle this adventure, but we have advanced DAO solutions and we should be able to strike a process where we come together as an ecosystem to attract more builders/users.

High-quality educational materials like books, documentation, and tutorials are key to advancing knowledge and will be crucial for technological adoption in the years ahead. Relying solely on a technological lead is not enough. Expecting a single expert, such as Zaki, to educate hundreds of teams is not practical. So we either find a way to clone Zaki, or we can develop tools and materials that will empower a new generation of experts in Cosmos.

Cosmos offers a lot of solutions, from smart contracts to app chains, token/no token chains, multiple virtual machines, and soon, probably even consensus algorithms. If all this technology is presented to someone as is, they will just leave and build a smart contract on Polygon. Providing clear instructions for newcomers can help them opt for Cosmos over other platforms by clearly understanding the range of choices available and the path to growth while removing the fear of making incorrect decisions.

I do not think these are the only problems that are slowing down the Cosmos distribution, I probably did miss quite a few others. But with this post, I tried to lay down my thoughts. In doing so, I hope to motivate developers and community members to start thinking about those issues and maybe propose solutions that will make Cosmos an ecosystem worth coming in and building.

The future is bright, but we have a mission and every one of us is involved in this progression. We cannot stop until the world is Cosmos-ified.

Let’s find something to work on together!