Report Date: Tuesday, September 26th, 2023

1. Overview

Recently, AADAO has focused on strengthening its financial position through measures such as liquid staking and USDC diversification to ensure sufficient funds for grant commitments and operational needs.
During this period, the AADAO reviewer committee successfully processed grants from Batch 4 and 5. AADAO has also announced the recipients of the much anticipated Tokenomics RFP, which has the potential to bring new opportunities to the Cosmos ecosystem. The research commissioned under the grant is well underway and there are several posts on the Cosmos Hub Forum highlighting the progress on the different modules. AADAO has actively engaged with grant recipients and partners through events like a Q&A session on Twitter Spaces, featuring discussions with RFP winners and other grant awardees.
Additionally, our partnership with Dorahacks for the AEZ Boost Hackathon reflects our commitment to fostering early-stage innovation.
Finally, we’ve been closely overseeing the progress of prior grant recipients, ensuring they receive milestone-based grant payments as they make progress towards their deliverables.

2. Financial Reports

Below are the Balance Sheet, Income Statement, and Cash Flow Management Report of AADAO. The DAO operates on two wallets: the main multisignature wallet for grant delivery and a smaller multisignature wallet for operational expenditures. Please refer to our first transparency report for further details. Below, you will find the current holdings on both wallets:

Main wallet address: cosmos1jggracsvp6fkw0ktf544lpda6dwrrxggx9a20n

Operational wallet: cosmos14scyumpc9gw2p2py6ms06n4j9ejv650d0jx76v

Balance Sheet

Income Statement

Cash Flow Management

The combined USD amount from both the Main Wallet and the Operational Wallet is $2,913,109. This is $381,166 more than the total assets ($2,531,943). This variance is due to the hedging operations (swap and liquid staking) carried out by AADAO. The outcomes of these hedging operations are not reflected in the balance sheet because assets are valued at their original purchase cost, while in the cash flow management report they are valued at current market rates.

Hedging Operations:

Due to recent market volatility and the pessimistic macro, our focus has been on financial stability for fulfilling grant commitments and operational expenses. We’ve used liquid staking via the Stride platform and we now own 171,335 stATOM. AADAO has also converted 1,269,155 ATOM tokens into axlUSDC to hedge against market fluctuations and ensure funds for grant initiatives. We will swap the axlUSDC position to native USDC in the coming weeks to remove the bridge risk.

3. Special Initiatives

Astroport Liquidity Bootstrap:

We’re excited to announce a significant achievement in collaboration with the Stride team. Following proposal 800, We’ve deployed 450K ATOM to the stATOM-ATOM liquidity pool on Neutron’s Astroport decentralized exchange, enhancing liquidity in the AEZ and Neutron.
This milestone highlights the nascent collaboration within the ATOM Economic Zone, with Cosmos Hub contributing ATOM, Stride developing the middleware position, Astroport providing the liquidity venue and AADAO supporting with funds custody and deployment.

AADAO is following instructions from the Cosmos hub public governance by extending support for AEZ-related matters, as demonstrated by this collaboration. Proposal 823 is currently up for voting, seeking to extend AADAO’s stewardship of the funds until March 2024.

4. Grant Application Summary

Funding Distribution

Below, you’ll see a breakdown of the total funds that have been distributed across each category, as well as the funds still to be distributed, contingent upon milestone achievement.

5. Grant Funding Updates

6. Notable Grant Updates

Title: Data Lenses Analytics Dashboard
Category: Atom Zone Build Out

Updates: Numia’s Data Lenses project is continuously improving its on-chain data dashboards for the Cosmos Hub and Atom Economic Zone. The Cosmos Hub Dashboard now includes new features such as toggleable chart and table views, price displays for ATOM and OSMO, and public SQL queries for each chart, offering a more comprehensive view of the ecosystem.

Additionally, there are significant backend upgrades underway, focusing on streaming and indexing live state changes. These improvements aim to enhance accuracy, scalability, and design flexibility, making the platform even more valuable for data exploration.

Title: DreddSecure Escrow Module
Category: Applied R&D

Updates: Dredd Secure, a project developed by ProductShop and funded by the ATOM Accelerator Grant program, aims to introduce an Escrow Module to the Cosmos Hub, addressing current transaction security, trust, and flexibility challenges in the ecosystem. This module will provide a robust framework for two-party contracts with customizable conditions for asset release, enhancing transaction security and expanding payment options. It also plans to integrate Bandchain Protocol for oracle-based conditions and offer API support for third-party integration, promising innovation and interoperability within the Cosmos Hub. After completing the testing phase, the project is now ready for deployment and soon will seek community feedback before entering the final stage of the grant with launch efforts.

Title: Metamask to Cosmos
Category: Interchain Public Goods

Updates: Mystic Labs has released the Cosmos snap for MetaMask, enabling Cosmos integration within the MetaMask wallet. Users can effortlessly add this feature in three steps: install MetaMask (if not already done), click the “Install Snap” button, and then click the “Initialize Snap” button, making it easy to access Cosmos through MetaMask at http://metamask.mysticlabs.xyz.

Title: Cosmoverse
Category: Events, Marketing, & Organization

Updates: The Cosmoverse team is actively preparing for the largest Cosmos conference of the year, set to take place in Istanbul, Turkey. Their efforts involve PR strategy, event organization, speaker selection, and accommodations. Notably, several members from AADAO, including Better Future, Youssef Amrani, Reena Shtedle, Bendy, Mikey Lee, Xavier Meegan, Dilan Asatekin, Julien Robert, and Curious J, will be attending and contributing to the event’s success.

Title: Messari Research
Category: Events, Marketing, & Organization

Updates: Messari aims to provide more institutional awareness by conducting an initiative coverage report followed by 4 quarterly reports on Cosmos Hub and Atom Economic Zone. Recently, Messari conducted the initiative coverage report. This report concluded coverage on Cosmos hub such as background, tech, tokenomics, interchain security, and how it correlates to Cosmos IBC ecosystem. Full report can be read here.

Title: Range Security
Category: AEZ Buildout

Updates: Progress has been made on both the infra and data layer. Recently the integration of consumer chains like Neutron was added. On the observability front, building the data infrastructure to monitor IBC activity, esp between the hub and consumer chains. Finally can find the integration of the Cosmos Hub in the community version here.

Title: Auction Module
Category: Interchain Public Goods

Updates: The team has made significant progress on their project, focusing on defining specifications, user journeys, and documentation for the first MVP vertical slice of functionality. They have also gathered feedback on the mechanism design to explore the problem space thoroughly before coding. Implementation work on the module has begun, with the basic framework in place and testing infrastructure updated to the latest SDK, Comet, and IBC versions. Additionally, preparations are underway for an ABCI++ workshop at the upcoming Cosmoverse hackathon, showcasing a novel use case related to prepare/process proposal and vote extensions for MEV exploitation and mitigation with simple auctions. The team plans to promote the module through various online and offline channels, including workshops, conferences, blog posts, and potential integration with AEZ, while actively engaging with the community on GitHub for issue tracking.

Title: DAODAO
Category: AEZ Buildout

Updates: This grant supported the deployment of DA0DA0 on Neutron.DAO DAO on Neutron is now fully operational, with featured and followed DAOs available at https://daodao.zone/neutron and governance DAOs, including the main DAO and SubDAOs, aggregated at https://daodao.zone/gov/neutron . Users can create new Neutron DAOs by selecting Neutron from the dropdown menu at https://daodao.zone/dao/create. These developments are poised to facilitate the creation of DAOs within the Cosmos ecosystem, particularly in the Atom Economic Zone (AEZ).

7. Discontinued Grants

Title: Piloting deliberative governance for the Cosmos Hub
Category: Governance, Tooling, Infra

Updates: AADAO has decided to discontinue its funding for the Mission Publiques/RnDAO led project ‘Cosmozens Research Pilot Program’. The project team was unable to complete the milestone related to publishing its methodolgy to select participants into sortitions in a reasonable timeframe, and there was a general lack of community support, which were both factors. The team very much wants to continue its effort to create and run the deliberative governance forums, and to prove out its methodology, and intends to continue its work independently based on its own passion and belief about their methodology. The team has asked AADAO for a retrospective review, after they complete their project, which AADAO has agreed to perform for them as a courtesy. Of course, even though AADAO has pulled backed from funding the next 50% milestone, the AADAO team remains interested in the approach and results, and we wish the team the best in their journey. It’s important to note that AADAO takes a holistic approach to evaluating its projects, taking into account milestones, team performance, and community feedback. While community feedback is an essential part of this process, it alone is not sufficient to alter the course of a project; our decisions are based on a combination of all three factors and we all vote our conscience.

8. Tokenomics RFP Updates

The ATOM Accelerator DAO has selected three winners for our Tokenomics RFP.
Binary Builders, a seasoned team with extensive Cosmos experience, will focus on enabling the Hub to take stake in other chains, creating a dynamic spending model, and alignment with developers. Noam from Binary Builders shared their research on AEZ Growth and Atom Alignment Treasury.
Blockworks Research, a multidisciplinary team, aims to redesign tokenomics, address validator stake centralization, and envision the Hub’s future in a rollup-centric environment, recently sharing an update on the monetary policy of ATOM.
RMIT University, an academic team specializing in crypto economics and governance, will develop standardized contracts between the Hub and consumer chains and establish an effective governance framework, sharing their research on Governance of Interchain Security.

Over the next two months, these teams will collaborate and share their findings through various channels, such as Twitter spaces, YouTube channels, and research papers, involving the community in shaping the Cosmos Hub’s future and fostering growth within the Interchain. A detailed overview of the next steps can be found on our medium post.

9. Mystic Labs Funding Agreement

We’re excited to announce a continuation of our Grant Funding relationship with Mystic Labs. Under the next phase of our agreement, AADAO has provided initial funding of $49,000 for Mystic Labs to stand-up RPC services and to architect a gas fee flexibility capability within its MetaMask wallet that is compatible with Cosmos chains. The RPC providers will be Rhinostake & Numia. In return for AADAO’s support of RPCs and development expense on gas fee flexibility, Cosmos Community Pool will receive a 33% share of fees generated from IBC swaps after the wallet achieves two months of operating at breakeven.

10. About Community Feedback

In light of recent developments and funding discontinuation, we kindly request the community’s understanding and support for our grant teams. Unfair treatment can impede their work, add unnecessary stress and affect the quality of their deliverables. While direct questions and constructive criticism are welcome and an essential part of our continuous improvement process, we also ask that the community gives our grantees a fair chance to demonstrate their commitment and potential. Ad hominem attacks, baseless criticisms, and conspiracy theories do not make the community a place where people want to contribute and give their best effort.

Additionally, we would like to emphasize the importance of productive communication within our community, particularly in Telegram chats. If we find that chats become unproductive and if we experience unfair treatment from community members, we may consider withdrawing our teams from further engagement to prevent any risks of slowing down project progress. We believe that fostering a positive and collaborative environment is vital for the success of our projects, and your support is greatly appreciated.

11. Upcoming Updates

1. Our grant selection process is evolving with expanded interviews co-hosted by Oversight’s Curious J and Cryptocito, giving grant winners a chance to showcase their project’s value to the ATOM ecosystem.
2. Youssef, Co-Founder of Atom Accelerator Dao, will represent Cosmos at the MessariCrypto Mainnet 2023 event, discussing opportunities and challenges.
3. We’re actively preparing an AEZ room at Cosmoverse, featuring seven selected project teams.
4. We’ve closed new grant submissions as of September 5th to focus on processing batches 6 and 7 for the upcoming mandate renewal in November.

Appendix A: Grant Summaries

Batch 1
Interchain Meetups
Events in Universities across Italy to educate young developers and onboard them into Cosmos

Cosmos SDK Module Registry
Registry for Cosmos SDK to discover modules for developers to use and build on.

CosmWasm by Example
Github repo for CosmWasm smart contract samples across the interchain

Cosmos Millions
Open source prize protocol which utilizes ATOM yield to distribute to winners.

Batch 2

Cosmos Hub Data Lenses
Dashboard for Cosmos hub and Atom Economic Zone on-chain analytics.

Escrow Module: DreddSecure
Cosmos SDK Escrow module designed to provide a secure and reliable way for parties in the Cosmos ecosystem to transact with each other and reduce the risk of fraud and disputes.

Metamask To Cosmos
Metamask support for Cosmos ecosystem via Snaps variant.

Batch 3
LongHashX Accelerator Cosmos Cohort
A cohort between AADAO, Neutron, & LongHashX for a 12-week program, the first focusing on accelerating projects on Cosmos’ Partner Chains, to boost applications in the ATOM Economic Zone, including those on Neutron.

Fairblocks Private Governance
aims to deliver pre-execution privacy and private governance to Cosmos, ensuring user protection and enhancing the overall user experience while mitigating against bad MEV.

Amulet Finance
Non-custodial lending protocol on Neutron with self repaying loans.

Cosmoverse 2023
AADAO is the sponsor of Cosmoverse, with inclusion of AADAO grant teams, tokenomics RFP, and other AEZ related topics.

Messari Research Reports
Institutional grade research reports on Cosmos hub and Atom Economic Zone

Batch 4
Range Security
IBC monitoring dashboard for AEZ to monitor and alert anomalies & security breaches.

Auction Module for AEZ
An auction module which allows for the development of applications which aim to benefit partner chains by enhancing AEZ’s value and generate revenue from listing fees, NFT marketplace sales, and auction commissions, with $ATOM as the default settlement token.

Piloting deliberative governance for the Cosmos
Pilot research program aimed to address and improve governance challenges Cosmos hub faces today.

Blockworks Research
Tokenomics RFP Lead contributor

Binary Builders
Tokenomics RFP Lead contributor

RMIT
Tokenomics RFP Lead contributor

Batch 5
ICS/RS Consumer Chain KickStart Service
Focused on ICS, it will offer comprehensive support, including codebase preparation, testing, launch events, and ongoing operation, for potential Consumer Chains looking to deploy or migrate to the AEZ platform.

Cryptocito
4 month sponsorship on producing monthly videos dedicated to the hub, Atom Zone spaces, spaces with our DAO/our grantees, a monthly hub focused livestream plus additional hub advertising.

Proof of Personhood — Anima
Use Cosmos hub as a central hub for cosmos user identities across the interchain.

DAO DAO Neutron Deployment
Porting DAODAO to Neutron to have more on-chain tooling for AADAO and other subDAOs

Cosmos Indexer
Generic indexer for for investigating governance, delegations, taxes, IBC transfers etc

Leap Wallet
In wallet services for AEZ with with a key focus on ATOM.

Mystic Labs Wallet Agreement
Funding RPC costs & build out of the Gas Flexibility Module

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