Two chains are in Governance process for requesting approval to join the Cosmos Hub’s shared security model, Interchain Security.

Intro

Since it’s inception, The Cosmos Ecosystem has had an issue with what I call, security fragmentation. This is where, each blockchain built in the Cosmos ecosystem, has been built using it’s own validator set, rather than a shared validator set of shared set of economic security. This has lead to an economic security attack vector, for someone who can afford to coordinate such an attack on a chain with a market cap they can afford to acquire.

With this issue in mind, a new feature of the Cosmos Hub was introduced. On 03/ 07/2023, the Cosmos Hub delegators and validators approved the Lambda upgrade. This upgrade, allowed for the first feature of the Interchain Security stack, Replicated Security.

What is Replicated Security?

Replicated Security allows for new or existing blockchains, to skip the line of finding validators and let’s them hook into the existing ATOM validator set. This means that projects can retain sovereignty, have fees on chain paid in their native currency AND lease security from a nearly $4 billion dollar blockchain. What does it take from the protocol being added? The chain has to be approved via ATOM Governance.

In this approval process they need to show as much info as possible to ensure this addition to the validator set will be worth the extra work a validator will have to do. But while this provides more work, it could show even more profit for ATOM validators and stakers.

These chains that lease ATOMs validator set, will be paying the ATOM validators and stakers in their native currency. Or they can also be paying in any fee token, that the consumer chain utilizes (so this could mean ATOM or another IBC native currency, could be used rather than the consumer chain having its own token). This additional yield will be on top of the staking rewards from ATOM (20% at time of writing).

Whic chains have begun the Governance process, to on-board to Replicated security?

Since the launch of Replicated Security, the Cosmos Hub has seen a few forum, pre-proposals, to signal whether the Cosmos Hub would have interest in on-boarding to the Cosmos Hub’s Replicated Security.

However, two chains have officially made clear intent to on-board into Replicated Security. These chains are:

• Neutron: Neutron is a Cosmwasm enabled Smart contracting platform, that will be leveraging the Cosmos Hubs economic security, through Interchain (Replicated) Security. Neutron will be home to Lido liquid staking services for the Cosmos Ecosystem. Neutron has also announced that the Astroport Dex will also be coming to its suite of dApps. Neutron has officially proposed, via Cosmos Hub on-chain governance, that the Hub onboard Neutron as a partner chain for Replicated Security.

• Stride: Stride is a liquid staking protocol for the Cosmos ecosystem. At the moment, the Stride blockchain liquid stakes for 7 blockchains. One of the value propositions of Stride is that while it provides liquid staking services, it also earns fees from the user, paid in the token they are staking. Thereby, as it stands today, if you stake their native token, STRD, you will earn STRD inflation as well as the staked tokens of 7 other chains (more are being on-boarded).

Over all, this means that since security is being switched to the Cosmos Hubs validator set, then as a delegator to the Cosmos Hub, you will earn STRD inflation and protocol fees from all of those chains, just by staking ATOM.

Conclusion

The value proposition of Interchain security is pretty simple. The Cosmos Hub delegators and validators earn more tokens and potentially more overall revenue, by staking ATOM.

This could be a huge developer experience improvement and security upgrade for blockchains in the Cosmos ecosystem, on behalf of Interchain Security. However, in the other hand, ATOM stakers gain the ability to potentially earn significant amounts of new revenue, with every new chain that is onboarded. This is a pretty interesting time for the Cosmos Hub, to see this type of innovation already gaining momentum. It will be fun too watch how this innovation affects scaling, in the Cosmos ecosystem, as well as the value proposition for the Cosmos Hub.