Phase 3 Proposal Discussion

Governance Ops Proposal šŸ—³ļø
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As Phase 2 is coming to a close, Iā€™d like to open up the discussion for the governance proposal to transition to Phase 3 of the mainnet activation.

This proposal looks to enable transparent and shielded transfers for governance-enabled IBC assets, establish gas costs for non-native assets, and set initial rate and mint limits for each asset. Selecting the right set of assets, alongside these foundational initial parameters, is important to not only ensuring a smooth launch, but also robust user participation.

After some discussion from our previous forum post, Iā€™d like to kick-off the discussion by proposing the following initial set of non-native assets for Phase 3 support:

Asset Selection

  1. ATOM (Cosmos Hub)
  2. OSMO (Osmosis)
  3. TIA (Celestia)
  4. INJ (Injective)
  5. stATOM (Stride Liquid-Staked ATOM)
  6. stOSMO (Stride Liquid-Staked OSMO)
  7. stTIA (Stride Liquid-Staked TIA)

These selections prioritize interoperability, ecosystem relevance, liquidity, and ease of integration to ensure Namadaā€™s Phase 3 launch is impactful and well-supported.

One additional note: there are some inherent constraints on which assets can be supported from day one, so this proposal reflects our best attempt to select a feasible set at launch. However, this initial selection criteria isnā€™t set in stone. Once the protocol is fully live and governance is able to weigh in more broadly, we expect the list of supported assets to expand significantlyā€”and for that process to be driven by the communityā€™s priorities rather than just the considerations weā€™re using here.

Gas Costs and Rate/Mint Limits

The proposed gas costs aim to balance usability, scalability, and fairness in the system. However, given the dynamic nature of market conditions, gas values will require periodic updates on an ongoing basis. By introducing uniform Rate Limits (~$1M per epoch) and Mint Limits (~$5M), we aim to reduce cognitive load for governance and simplify initial implementation. Rate Limits cap the maximum transaction volume per epoch to mitigate risks of abuse (ex: flooding the MASP with high-volume transactions, while ensuring a manageable pace of adoption). Mint Limits restrict the total amount of any asset that can be introduced into the MASP, helping to control supply and safeguard against unauthorized minting. Additionally, enabling gas payments in non-native tokens allows the network to function smoothly during the initial phases since NAM transfers wonā€™t be enabled until Phase 5.

We think itā€™s important for NAM to be the most cost-efficient option on Namada, supporting its role as the native asset. The minimum transaction cost in the system is set as 0.05 NAM. This structure aims to keep NAM transactions very affordable. By positioning NAM as the cheapest option we hope to encourage its use as the primary means of gas payment.

For most of the whitelisted non-native assets above, the minimum gas payment that the current protocol can support is 0.05 units, which is about $0.20 - $0.30 for ATOM, stATOM, TIA, and stTIA. We propose bringing the cost of gas for all of the non-native assets in line with this approximate range. Thus, we propose setting parameters such that the minimum cost of gas for a Namada tx in each of the non-native assets is:

  • 0.05 (ATOM, TIA, stATOM, stTIA)
  • 0.5 (OSMO, stOSMO)
  • 0.01 INJ

Particularly, the relevant parameters will set a cost per unit of gas for each non-native asset.

Hereā€™s a link to the initial draft of the Phase 3 WASM proposal code (it is not compiling just yet). Please note that the estimated inputs are based on current market prices and are subject to slight adjustment in the finalized proposal.

Looking forward to hearing everyoneā€™s feedback and suggestions!

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TLDR of the above post about initial non-native token parameters:

  • Proposed initial set of whitelisted non-native assets: ATOM, OSMO, TIA, INJ, stATOM, stOSMO, stTIA
  • Non-native token gas payment such that the minimum tx cost in a non-native asset will be in the approximate $0.20 - $0.30 range (whereas it is 0.05 NAM for native asset)
  • Global mint limit of ~$5M of a given non-native asset allowed into Namada
  • Throughput limit of ~$1M of a given non-native asset to flow into/out of Namada per epoch
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Ill be thinking about this a little bit but I just want to point out that 0.05NAM is what we are using in Namadillo as a default fee and itā€™s an overestimation by 2/5x.
Btw, is there a reason why we want to incentive LS tokens?

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@Fraccaman Incentivizing the LS tokens is advantageous because there are really not other opportunities for rewards on these tokens anywhere else in the ecosystem. We donā€™t have to compete with other rewards opportunities here and any holders of these tokens looking to farm rewards with them should put them in the MASP.

For the standard tokens like ATOM, etc, holders need to decide whether they want to stake or seek out the incentives in the MASP for example.

P.S. I donā€™t think youā€™re being entirely correct here on the NAM fee. The minimum fee for any tx paid in NAM, whether from the CLI or a front-end, is currently 0.05 NAM in all situations due to the gas_scale = 50000.

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So start preparing relayers then? =)

Question. Why Injective? I mean what was the criteria for picking those? Who is the TA here? Why not Axelar then?

I would highly assume that the main chunk of inejctive / osmo users are the same people. There are a number of cool chains on Cosmos. i.e. orai or gravity bridge.There are also privacy and/or privacy orientated chains, chains, such as nym, secret, etc

Sorry. Just trying to grasp the logic for myself here.

EDIT: i found the discuss, missed it, my bad

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@brentstone ls tokens makes sense, for the gas fees I guess my bad

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This looks good to me, however I think if we are looking to add sTIA it may also make sense to include the other popular staked token milkTIA? It currently has about 2x the amount of TIA staked in it than sTIA.

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Since milkTIA is native to a different chain from stTIA, stATOM, and stOSMO, it might make it a bit tricky to set up the additional open IBC channels. However, we can always consider adding milkTIA in future proposals.

Iā€™d like to suggest reserving the first open IBC client for Penumbra. Both Namada and Penumbra have shielded pools, and connecting them could really enhance privacy for users on both platforms.

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Fully support this proposal, what is the timeline to put the proposal on-chain for voting? @Veildev

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Considerations on Tokenomics

if the main utility of $NAM is paying tx fees (aside of investment, speculation &bonding), then the ratio between native and non-native gas costs is a crucial metric for pricing $NAM.

as formulated now, a ~0.25$ fee for non-native gas fees puts an upper cap of 5$ to $NAM (0.05 $NAM * 5$), above which the incentive to buy $NAM for gas payments turns negative.

However, we shouldnā€™t assume that this cap will ever be fully reached - there will always be a premium for being lazy. Assuming this laziness premium is somewhere around x2, under current conditions (and current non-native token prices), $NAM is capped at 2.5$ per pop. Not unreasonable as it implies a max market cap of $2.5bn compared to an ATOM cap of ~$2.8bn and a TIA cap of ~$2.6bn.

The point of this exercise is not to estimate $NAMā€™s price once it goes to market, there are too many other factors involved. it is merely to highlight that the ratio between targeted tx price for non-native vs native payments has an impact that should not be overlooked.

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Support waiting for proposal

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I think we might still be 1.5-2 weeks away.

  1. Need to cut a new release v1.1.0.
  2. Upgrade Housefire testnet to v1.1.0
  3. Open IBC channels on Housefire testnet
  4. Phase 3 proposal on Housefire testnet
  5. Allow some days for thorough testing (will make a forum post for some testing recommendations)

Also need to upgrade mainnet to v1.1.0 after Housefire is upgraded and is deemed stable there.

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Donā€™t forget that the gas token prices can and will be re-evaluated on a regular basis that perhaps occurs something like every n months. This is just an initial configuration.

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I agree with this proposal, the fee of 0.05 NAM is appropriate. Letā€™s get started

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We moved relatively fast from phase 1 to phase 2. However, to move to phase 3 there has been a larger delay since a lot needs to be activated in phase 3. For the phase 4 only shielded set rewards need to be enabled and for phase 5 NAM transfers, therefore while it is taking a lot of time to move to phase 3, moving to phase 4 and 5 should be quick given it is just activating masp rewards and transfers?

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Hello and thank you for the proposal!

I generally agree with the spirit of the proposal, but I find it lacking in ambition. If there are any reasons why the number of assets supported remains very modest, or if there are any selection criteria of which I am unaware, I would be grateful if you could share them with us in advance.

Based on what I know, Iā€™d like to make a few suggestions and share my strategic point of view with you.

Indeed, Penumbra is an ecosystem with which it would be interesting to create bridges and strong relationships (an IBC bridge is a good start ^^) as soon as possible, for questions of positioning and common target (the zcash/monero ecosystem is also interesting for these reasons).
Let me explain: it seems reasonable to me to start from the assumption that these ecosystems attract a lot of users (old and new crypto investors) who want to preserve their privacy and use technologies and value units specifically designed for this purpose.
Furthermore, I think itā€™s important to create as many synergies as possible when it comes to privacy narratives and projects, also to avoid splitting liquidity and preventing censorship of the use of these value units (tokens).

In addition, and in order to maximise A/ the performance of phase 4 (liquidity bridge to Namada), and B/ the final appeal of the Namada chain from day 1 post phase 5 (start of the conquest beyond the people who have been droped $NAM at the TGE), I personally would have supported other major marketcaps connected to the IBC:

  • MANTRA
  • SEI
  • DYDX
  • AKASH
  • CRONOS ?
  • ā€¦
    In this way we can attract more different users.
    If thatā€™s not possible, can you give us a transparent breakdown of the criteria you think are relevant when choosing which assets to support?

As for the argument that there will be less ā€˜competition for yieldā€™ on these assets, I donā€™t really believe it (at least not for $TIA and lst $TIA) but it also seems to me that itā€™s not the only one that users will consider:
Shielded pools will reward the LP in $NAM if Iā€™m not mistaken ā†’ if one is interested in $NAM that should interest them.
And then considering the advantages that Namada offers: SP and Namada in general should generate trust and create an asymmetric market advantage when compared to other ā€˜non privacy centeredā€™ chains and protocols where yield is usually offered for IBC assets

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We are in support of this proposal.

Disclaimer: We voted to abstain on the other proposals because we needed to make sure if any new laws prohibited us voting in one direction or the other.