Report Date: Thursday, February 22nd, 2024

1. Overview

The AADAO recently received Cosmos governance approval to pursue a new mandate. The new mandate ushers in a new era in the DAO with many structural and operational changes happening.

AADAO will be transferring its payment and treasury management operations to DAODAO giving the DAO more flexibility in structure and flow whilst also allowing for more transparency for third parties to view the on-chain activity of the DAO and sub-DAOs associated. The move to DAODAO also gives our Oversight Committee direct access to be able to VETO anything that they deem worthy as they are now part of the process flow.

As part of our commitment to being more aligned with the Hub community, our election process for a third Oversight member was announced.

Finally, we recently announced the reopening of new applications to our grant program.

2. Financial Reports

Below are the Balance Sheet, Income Statement, and Cash Flow Management Report of AADAO. The AADAO operates on two wallets: the main multi-signature wallet for grant delivery and a smaller multi-signature wallet for operational expenditures. The financial statements reflect the transition of AADAO treasury to DAODAO.

Main wallet address: cosmos1jggracsvp6fkw0ktf544lpda6dwrrxggx9a20n

DAODAO Main wallet: cosmos1syhp2rh3kgqpa5hjrkyfsqsh49mqyye5k9ejc70lev9pq5g9spxs7ya6zd 1

Operational wallet: cosmos14scyumpc9gw2p2py6ms06n4j9ejv650d0jx76v

DAODAO Operational Cosmos: cosmos1nu33s49z4axmkjdzggrj6huvnajfrrj8z78cwe4hhunvy8h7xdds3v6hv7

DAODAO Operational Neutron: neutron1t8esqdrptfxj9th28ysa9cnxlnnhmrsukl4vlsjp7207vs8adpfqhfu4s3

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Balance Sheet

Income Statement

Cash Flow Management

Hedging Operations:

Our focus has been on financial stability for fulfilling grant commitments and operational expenses. Therefore, future hedging operations are being discussed to remediate market volatility and macroeconomic aspects.

3. Internal Operations/Changes

The AADAO welcomed Carter (@l_woetzel) to the Strategic Committee of the AADAO. His intimate knowledge of Cosmos and his multiple talents, notably in research, will be key to pushing forward $ATOM

Our Oversight Committee also welcomed a new member, Damien (@damobon) who was elected when the second mandate proposal passed on-chain.

Changes on Transparency

AADAO is raising the bar in transparency by migrating its multisig and treasury management capabilities to DAO DAO, where its Oversight Committee will have the power to VETO any disbursement.

Changes to the Application Process

We have implemented a Terms of Service section to the application forms that we invite all applicants to read through and see if they agree with the terms set for funding.

Migration to DAODAO

As part of our commitment to transparency, and as mentioned before, we as a DAO are moving our operations to DAODAO.

Our SubDAO addresses can be found at

Grants: Grants Committee

Operational wallet: Operational committee

Oversight: Oversight Committee

Strategy: Strategy Comittee

Please note that AADAO hasn’t fully onboarded into DAODAO yet and that it’s treasury is in the process of migrating to DAO DAO on Neutron, which should happen within the next week.

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.

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5. Grant Funding Updates

6. Grant Updates

Title: Liquid Staking & LP middleware by Stride
Category: ATOM zone build-out
Updates: The Strides Covenant V1 liquid staking module is complete. The module is specific to Stride on deploying liquidity to Astroport, but the foundation for Timewave’s Covenant V2 was built on the work done in this grant. Timewave has picked up V2 on batch 6 Allocator aka Covenant V2.

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Title: LongHash Accelerator Cosmos Cohort
Category: ATOM zone build-out
Progress Status: The AEZ Accelerator kicked off on Monday 13th November, with 4 teams within the Accelerator Track & 3 teams in the Builders’ Fellowship. Projects in the Accelerator Track include Apollo, Obi, FortyTwo, and QuantAMM. The program is expected to come to a close with a Demo Day scheduled on the 21st of February.

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Title: Fairblocks Private Governance
Category: Governance Tooling & Infra
Updates: In PHASE I, Fairblock successfully achieved 100% completion in several key developments: they built the PEP (Pre-Execution Privacy) Cosmos SDK module, created FairyRing as a decentralized decryption key generator and oracle service, developed FairyPort as a low-latency relayer for decryption keys, and integrated Decentralized IBE, VSS, and DKG cryptographic libraries into Cosmos SDK, with validation from AADAO.

In PHASE II, they continued the trend of achieving 100% completion in the grant by building a Private Governance Cosmos SDK module, offering encryption options for voting in the Cosmos governance process, and developing an IBC relayer for distributing decryption keys to integrated chains.

Finally, in PHASE III, they completed the development of a frontend JavaScript library for transaction encryption, which can be integrated into applications and wallets like Keplr and Cosmostation. Additionally, they created an MVP frontend that allows users to submit encrypted and plaintext votes for Cosmos proposals, demonstrating the practical value of their work beyond grant milestones.

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Title: Mystic Labs RPC and Gas Fee Flexibility Agreement
Category: Biz dev & growth
Updates: At this stage of development, we have decided to discontinue the gas fee flexibility module. This decision has been influenced by the technical challenges and limitations posed by v1 of Metamask Snaps, which have affected Mystic Labs and other Snap providers. Notably, Metamask has not communicated a specific date for an upgrade to address existing technical limitations, including issues related to token balance updates. We may reevaluate the module’s potential at a later point, particularly when more integrations and increased activity come into play.

Furthermore, we are actively working to reduce the costs associated with RPC providers significantly. Mystic Labs has chosen to independently pursue the development of the gas fee flexibility module and is free to explore potential collaborations with other partners. Amendments to our contract reflecting these changes are currently underway. Nonetheless, we remain committed to collaborating on new integrations that will continue to benefit both the Cosmos Hub and the broader Cosmos ecosystem.

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Title: Amulet Finance
Category: Atom Zone Buildout
Updates: Amulet Finance introduces self-repaying Advances (loans) on staked assets with ATOM being the default gas token on the network. Amulet Finance has achieved a significant milestone with the official deployment of their testnet. Despite encountering challenges from pesky bots chasing testnet $ATOM, which have caused some slowdowns and bugs, the testnet continues to attract substantial interest from real testers. The team actively addresses these issues, aiming to iron out bugs and improve performance. With the testnet progressing steadily, there is anticipation for a mainnet launch in Q2. Impressively, the Amulet Hub has already processed 5,000 transactions in just two days, indicating strong activity and interest in the project.

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Title: Messari Research
Category: Biz dev & growth
Updates: Messari’s Q4 2023 report on the Cosmos Hub highlights significant developments, including updates to ATOM’s tokenomics and protocol changes triggering the AtomOne fork.

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Title: Range Security
Category: Atom Zone build out
Updates: Range Security has made progress in enhancing security and monitoring capabilities within the Cosmos ecosystem. Pre-development efforts included thorough code reviews of IBC and ICS codebases, along with a review of past audits. Technical milestones were achieved through R&D work to design rules for the Cosmos Hub and AEZ, specification writing, rule implementation, test creation, and documentation. Notably, Range has publicly listed open-source rules in their monitoring engine, visible in the Events tab on the Range platform.

Post-launch support and maintenance plans are yet to be determined. Range has also bolstered monitoring and analytics for the AEZ, focusing on IBC and ICS activities. Their real-time dashboards enable tracking and setting up security alerts based on thresholds to detect anomalies. Moreover, Range has provided comprehensive support for the Cosmos Hub with Range Trail, a leading forensics tool in the IBC ecosystem. Additionally, they’ve developed an open-source list of rules to detect and prevent bugs and anomalies based on previous security audits on ICS.

7. Tokenomics RFP Updates

As part of the original Tokenomics RFP, Binary Builders proposed to conceive and build an ATOM Alignment Treasury.

We are pleased to see that the hard work from Binary Builders has passed on-chain. The signalling proposal (#864) shows the desire of the community to build products like the AAT. We at AADAO, have previously funded Binary for the research and we are willing to continue funding the team as they build out the AAT.

In line with the BlockWorks Research funded by the AADAO, regarding a tokenomics overhaul for the Cosmos Hub, we were pleased to see that the research came to use when the Inflation rate was decreased by a governance vote.

We will have more updates from the teams behind the RFP shortly.

8. The new Mandate/Application starts on 2/7/24

Our Proposal (#865) passed on the 30th of December. This officially marked the first day of the new mandate of the ATOM Accelerator DAO. We are proud to have been given the vote of confidence by the Cosmos Community.

With that being said, we are pleased to announce that new applications have been open since the 7th of February. Any prospective team or individual seeking a grant is invited to apply. New changes such as rating scores and grant categories will be retroactively updated.

9. Oversight Election Process

In our Proposal, we highlighted that one of the goals of the AADAO is to have more community representation and alignment. This is where the Oversight Committee election process comes in. The process aimed to make a community decision as to who would be elected through ATOM Governance to be the third member of the Oversight.

The election post and full process can be found on the official Cosmos Hub Forum.

10. Notable Internal Transfers

The AADAO has transferred $2.8M to the Grant Multi-sig on DAO DAO alongside a separate transfer to the Operational Multi-sig on DAO DAO to cover 3 months’ worth of salaries.

11. Upcoming Updates

Hiring

Entering our new mandate, and amidst some structural changes, we launched a campaign for the hiring of a Grant Lead and a Marketing Lead of which Interviews are being conducted.

We urge any interested applicants to apply to be part of the AADAO!

https://www.atomaccelerator.com/careers

Legal Structure

The AADAO is entering into a relationship with the legal trust firm Saffery Trust. This agreement will be finalized by the end of February to minimize the liability that the DAO may face and for the DAO to have legal representation in a nation-state jurisdiction

ATOM Swap to cover costs

The AADAO will swap $4M worth of ATOM into USDC to cover a minimum of 75% of our upcoming liabilities over two tranches.

The first main tranche of $2.5M was set to be an OTC swap with FlowDesk however, with our legal trust not fully onboarded yet, the OTC swap will be delayed.

In the meantime, to ensure we have enough assets to cover our liabilities in the short term:

• $1.25M will be swapped on Osmosis
• The remaining $1.25M is pending

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Disclaimer: The following information within this document is accurately reflected as of Friday 16th February.

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.

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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.

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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

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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

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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 RPC and Gas Fee Flexibility Agreement
Funding RPC costs & build out of the Gas Flexibility Module

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Batch 6

- IBC Atom Compounding

- Colombian Development Seedbed

- Cosmos Brazil
Grant Proposal for onboarding New Developers, bring awareness and a new Foundation for the Cosmos in Brazil

- Funding the buildout of the Interchain Allocator’s Covenant System

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Batch 7

- Cosmos Hub Hackathon

- New DAO bootstrapping

- Interchain Info Development Funding w/ AEZ chain priority.

- Fiat Onboarding to the ATOM Economic Zone

- AEZ Ecosystem build out References

- Astrovault+

- GT:1 Automated grant payments/treasury tooling

- Cosmos Hub & AEZ Educational Content

- Testnet working group

- Polymer Labs IBC Summit