Include stATOM holders in ATOM1

[asalzmann]

stATOM holders are ATOM stakers, through Stride.

stATOM holders are part of the ATOM community and secure the Cosmos Hub. As such, they should be included in the ATOM1 genesis file or airdrop, like all other ATOM holders and stakers.

stATOM is primarily held on the following chains:

• Cosmos Hub
• Stride
• Osmosis
• Umee
• Kujira
• Secret Network (Shade)
• Evmos

The Stride Labs team can snapshot stATOM holders and balances on each of these chains, at whatever block height ATOM1 chooses and upload the snapshot to this Github repository.

Stride does not vote on governance proposals, so how stATOM holders should be treated is up to debate. They are probably most similar to an ABSTAIN vote on Prop 848.

There are two different ways this distribution could work: (1) stATOM holders receive $ATOM1 tokens at their address, on the ATOM1 chain. (2) Stride launches liquid staking for $ATOM1, and a Stride ICA is credited ATOM1. Then, Stride can mint stATOM1 and distribute it to the addresses directly, so the stATOM1 holders can more easily use the tokens in defi.

Open questions:

• How should stATOM holders be treated, relative to ATOM holders, ATOM stakers, and 848 voters?
• To which accounts should the ATOM1 be airdropped?

[asalzmann]

From Jae:

oh sorry I thought you said phATOM. stATOM should get the airdrop but depending on how the delegated validators voted.

https://twitter.com/jaekwon/status/1729275809675034737

This approach seems reasonable to me

[asalzmann]

https://docs.google.com/spreadsheets/d/1bAmtRnBISgx8i5lJwJH6Kh-a9885N2_1LTNp5mCU1u8/edit#gid=0

Vote	Stride Weighted
YES	0.55875
NO	0.2725
ABSTAIN	0.14
WEIGHTED	0.02875

This is extremely close to the overall vote distribution	Vote	Validator weighted
YES	0.5532
NO	0.2624
ABSTAIN	0.1418

[giunatale]

I think stATOM holders should not have governance representation directly, hence should not be recipient of the airdrop as other ATOM stakers.

I personally believe that if an airdrop for stATOM holders is considered, it should be in the form of phATOM1 with no governance rights. The how of this is to be figured out. It is somehow controversial though as ATOM1 wants to also offer a competitive alternative to stride through PHOTON. https://github.com/atomone-hub/genesis#5-fix-liquid-staking

[asalzmann]

I think stATOM holders should not have governance representation directly, hence should not be recipient of the airdrop as other ATOM stakers.

Can you elaborate on this? I don't follow the logical leap from "stATOM holders should not have governance rights" to "stATOM holders should not receive an airdrop".

[maxinmos]

what about statom on evmos?

[giunatale]

Can you elaborate on this? I don't follow the logical leap from "stATOM holders should not have governance rights" to "stATOM holders should not receive an airdrop".

From: https://github.com/atomone-hub/genesis#5-fix-liquid-staking

People seek out these liquid tokens because they want to avoid the inflation penalty and use these tokens for purposes other than validator staking (because the inflation rate is too high). These users are generally not interested in the staking token for the purpose of staking, but are more interested in new uses of the token especially Defi use-cases. These users are not necessarily Decentralists or aligned with AtomOne in spirit--they are anyone and everyone.

I agree with this statement, and for this reason hesitant.

I didn't exactly say stATOM holders shouldn't get the airdrop, but more specifically that they shouldn't get an airdrop as other ATOM stakers would. They don't even pick their validators so how using their validators vote would be an indicator of their alignment is a bit obscure to me.

I went from "stATOM holders should not receive an airdrop" at all because they are likely not aligned with the social contract that is being established, to maybe "stATOM holders should not have governance rights" but receive phATOM1 if anything, which doesn't have governance rights.

[asalzmann]

Thanks for linking that rationale, that's helpful.

They don't even pick their validators so how using their validators vote would be an indicator of their alignment is a bit obscure to me.

The way that I think about Stride is as a collective of stakers - my sense is there's a lot of overlap between STRD holders and stATOM stakers. 30m of the 100m STRD are being used for liquidity mining incentives, last year alone nearly 10m STRD were distributed. Much of this went to ATOM/stATOM LPs. STRD stakers ultimately approve the delegation policy on the Hub, so it's not as clear cut as stATOM stakers choosing validators (it is impossible to build this feature without sacrificing liquid staking protocol safety, an unacceptable tradeoff in our opinion, more on that here: https://eprint.iacr.org/2023/605). But, the Stride collective and stakeholders did approve the delegations. I agree with you that it's abstract, but there is a link between stATOM holders and the delegation policy.

@giunatale can you help me understand phATOM1? Will there be a minting/burning mechanism to convert between phATOM1 and ATOM1?

[asalzmann]

what about statom on evmos?

I updated the issue to include Evmos, thanks for pointing that out.

[giunatale]

I'd really like others opinion here cause I am not exactly calling the shots for making decisions. I just stated my opinion. If the intent of this initiative is to find and build an aligned community, I doubt stATOM holders are suited to be involved with governance. If they are - perhaps - given $phATOM1 instead, since the conversion back to ATOM1 cannot happen all at once, they could slowly turn their phATOM1 to ATOM1, stake them themselves and get governance rights. My argument though is that they'll likely not be interested in this, and would rather use the liquid derivative, so let's give them that.

for a somewhat crude description of the mechanism, you can read: https://github.com/atomone-hub/genesis#phatom1-the-more-deflationary-version-of-atom1 but I have also followed personally Jae's discussion around $PHOTON during proposal 82 and the atomone constitution, where he IMHO explained the idea better (although he later removed it): https://github.com/tendermint/atom_one/tree/c0f7d935930fedb700866c079a7056729e87d899#article-3c-the-photon-token

In general, my understanding is more broadly that the conversion back to ATOM1 from phATOM1 and ATOM from phATOM will not just equate to an unbonding. There is some form of rate-limiting, but the actual mechanism is from my understanding still up for debate.

[quanglefed]

what about pStake and Quick Silver assets? I think we should treat them as the same. Another concern is LPer on osmosis, forge and others DEX, do they count?

[giunatale]

I think it's a responsibility of every chain to participate in the discussion if they want to claim a share. In this sense I appreciate very much the Stride team for openly engaging in the discussion and showing willingness to help gathering the needed data.

To map every holder across the interchain is definitely a heavy lift. Plus, the details of if and how ATOM1 will be distributed to non-stakers or liquid stakers is up to debate from what I can tell.

[giunatale]

@asalzmann hey btw thanks for the paper, very interesting read!

helped me also to mentally compare with my understanding of the PHOTON idea.

I may be jumping the gun, but I think PHOTON would not be affected by the Principal-Agent problem since auto-stake is across all validators in proportion of their VP (which would need auto-rebalancing) making attacks like the ones described in the paper infeasible. If you auto-stake a certain amount of ASSET to get an stASSET, only a fractional % based on the total VP would be delegated to the malicious validator that will commit the equivocation, proportional to what he already has at stake for slashing outside of the liquid staking protocol. By "staking on the entire valset" you remove the necessity of "wisdom" from the game entirely because you remove preference (I guess stride does the same from the stATOM holder perspective, leaving the decision to Stride governance? although a curated valset is somewhat introducing a bias in VP distribution). You either accept trusting the entire valset as is (and whatever it will be in the future) or you don't. In this sense, any slashing is "fair punishment" cause it's within the terms of the accepted contract. However theory is one thing and practice is another.

[asalzmann]

That's possible - I need to do some research on PHOTON to better understand whether it both gives users choice and has fair slashing (I'm not sure).

Bringing this back to the original topic of this post, do you have thoughts on airdropping to stATOM stakers?

[asalzmann]

@giunatale @jaekwon now that there's a launch date planned, I figured it'd make sense to revisit this.

In my view, stATOM holders should still get an airdrop, even if it's at a different rate than standard ATOM stakers.

We can provide snapshots of stATOM holders at a block height.

What height do you need the snapshot at?

[giunatale]

hey @asalzmann GovGen and AtomOne are two different things. For GovGen the distribution is 1:1 for who voted no and nwv on prop848 only. I think to revisit this is going to be a competency of GovGen once it launches.

for the record there is no planned launch date for AtomOne