###### tags: `L1 whitepaper`

# The Cosmos Hub
>Paper: <https://gateway.pinata.cloud/ipfs/QmWXkzM74FCiERdZ1WrU33cqdStUK9dz1A8oEvYcnBAHeo>

## 1 Introduction
- The vision of the Cosmos Network, as laid out in 2016, has been realized. (Kwon, Jae; Buchman, Ethan. “Cosmos Whitepaper.” Mar. 2017,
<https://v1.cosmos.network/resources/whitepaper>)
- The Cosmos Network is an association of autonomous communities connected economically and
ideologically with the Cosmos Hub.
- Liquid Staking: Liquidity is critical in the proof of stake economy. Liquid Staking Research Report: Implications of Proof-of-Stake Assets in Decentralized Finance.” Jun. 2020, <https://mirror.chorus.one/liquid-staking-report.pdf>.

## 2 Securely Scaling Cosmos
- Interchain Security enables the reuse of the same validator set and staked collateral to secure additional state machines.
- New projects can develop as independent applications within the Cosmos Hub’s security boundary while the Hub continues to minimize its security surface.

### 2.1 Interchain Security
- Interchain Security’s value proposition starts with an increase in economic security up to the Cosmos Hub’s cost of corruption
- The utility of Interchain Security for consumer chains rests on providing strong accountability guarantees to a broad set of Cosmos chains and substantiating the Hub’s credible neutrality.

### 2.2 Liquid Staking
- Manian, Zaki. “ATOM 2021.” Aug. 2020, https://github.com/cosmosdevs/atom2021
- Liquid staking requires providers to custody assets, and therefore represents a significant change to the Cosmos Hub’s security model.

## 3 ATOM: The Interchain Reserve Currency
### 3.1 Issuance
- Chitra, Tarun; Kulkarni, Kshitij. “Improving Proof of Stake Economic Security via MEV Redistribution.” Aug. 2022,
<https://people.eecs.berkeley.edu/~ksk/files/MEV_Redistribution.pdf>

### 3.2 Fees
- governance-determined pricing for every accepted token is cumbersome and prone to resource mispricing
- governance should set a single ATOM floor fee, while the base fee is algorithmically priced in response to demand.
- Exchange rates obtained from trust-minimized oracles may then be used to automatically update the corresponding price for all remaining whitelisted tokens.

## 4 The Cosmos Economic Engine
1. Interchain Scheduler: a secure cross-chain block space marketplace and MEV solution
2. Interchain Allocator: a venue for economic coordination and interchain project alignment

### 4.1 Interchain Scheduler
- Unity is Strength: A Formalization of Cross-Domain Maximal Extractable Value.” Dec. 2021, <https://arxiv.org/pdf/2112.01472.pdf>.
- “Tendermint’s New Application Blockchain Interface — ABCI++.” Sep.2022, <https://medium.com/the-interchain-foundation/tendermints-new-application-blockchain-interface-abci-86d46bd6f987>.
- “MEV Auction: Auctioning transaction ordering rights as a solution to Miner Extractable Value.” Jan. 2020, https://ethresear.ch/t/mev-auction-auctioning-transaction-ordering-rights-as-a-solution-to-miner-extractable-value/6788.

### 4.2 Interchain Allocator
The Allocator provides two basic tools that enable incentive-aligned commu-
nities to develop strategies for economic coordination on behalf of the Cosmos
Hub:
1. Covenant: a system for establishing multilateral agreements with desig-nated chains and IBC-enabled entities.
2. Rebalancer: a system for automatically managing asset portfolios with public liquidity.

## 5 Cosmos Governance
Buchman, Ethan. “The Mind, Body, and Soul of Cosmos.” May 2022,
<https://blog.cosmos.network/the-mind-body-and-soul-of-cosmos-140ee7cec0cd>.
Buchman, Ethan. “Phases of Cosmos.” Sep. 2022,
<https://ebuchman.github.io/posts/phases-of-cosmos/>.

### 5.1 The Cosmos Governance
- The Governance Stack would provide a general specification for DAOs to self-describe their organizational structure and relationships with one another.

### 5.2 The Cosmos Assembly
- The Cosmos Hub Assembly, together with a set of domain-specific Councils, form a governance supply chain that enables a variety of entities to work within a common framework.
- Hasu. “Simple MakerDAO — Governance from first principles.” Jun. 2022,
<https://forum.makerdao.com/t/simple-makerdao-governance-from-first-principles/16207>.
- Improvements to the Cosmos Hub Forum over the last year, as well as new on-chain functionality like generic Gov proposals and the Groups module improve the Cosmos community’s capacity to coordinate.
- Likewise, adoption of Authz and upcoming features such as optimistic voting, allowing designated third parties to defensively revoke capabilities and block actions, will increase operational efficiency through constrained delegation.
> Public accountability is perhaps the most significant challenge of decentralized
governance. The introduction of a new Community Council can aid in this ef-
fort. The Cosmos Community Council will represent the interests of the ATOM
Community within the Cosmos Assembly and on a day-to-day basis. Their role
will include observing the work of core teams, providing feedback on product
decisions, and providing a bridge to the wider community by communicating
important facets of ongoing workstreams. The precise role of the Community
Council and specifics about its formation should be discussed on the Cosmos
Hub Forum in conjunction with the initial formation of the Cosmos Hub Char-
ter.
- Informal Systems. “Workflow.” Accessed Sep. 2022, https://workflow.informal.systems
- The first step in this process should be a com-munity dialogue on the forum about a Cosmos Hub Charter and initial Rules of Engagement.
> Some of the issues that will need close attention include balance of power among committees representing various stakeholders, term limits,
mitigating conflict of interest, and provisions about membership within multiple organizational bodies. Community-driven creation of initial governing documents will be complex, but effective governance is only created through a shared
commitment to accountability and decentralization of power

## 6 Conclusion
The Cosmos Hub gave rise to the internet of blockchains. Interchain Security
and Liquid Staking are the final building blocks required for a secure interchain
economy, which in turn, enable the creation of the Hub’s application-specific
functionality, the Interchain Allocator and Interchain Scheduler.