Noble has introduced a signalling proposal to the Cosmos Hub community, aiming to establish a value accrual mechanism for ATOM through the yield generated by USDN, Noble’s yield-bearing stablecoin. The draft outlines a vision of ATOM alignment - redirecting yield to support stakeholders, drive application activity, and increase overall liquidity across the Hub.
The proposal also marks Noble’s first formal participation in Cosmos Hub governance, signaling a growing interest from stablecoin issuers to deepen their integration with ATOM.
The Three Yield Distribution Methods
To implement the idea of value accrual via USDN, the proposal outlines three distinct approaches:
1. Direct Yield Distribution to Stakers
USDN yield accrued on the Hub could be sent to a distribution module that pays it directly to ATOM stakers. This would provide a straightforward, programmatic mechanism to reward participation.
2. Buy-and-Burn Model
Alternatively, USDN yield could be used to purchase ATOM on the market and burn it. This deflationary method could support long-term ATOM price appreciation by reducing supply.
3. Strategic Limit Orders
The third option involves placing limit orders to buy ATOM at a discount (e.g., 20% below market). When triggered, these orders would purchase and burn ATOM, adding a protective layer during market downturns.
Each method is designed to enhance ATOM’s value capture, either through direct distribution or strategic market operations.
Timing and Community Feedback
While the Cosmos community has expressed general support for the concept of ATOM alignment, the prevailing sentiment is that it may be premature. Several community members, including developers and long-time contributors, have suggested that deployment of a permissionless VM on the Hub should precede any such mechanism. The rationale: establish a broader DeFi ecosystem first, then layer in targeted yield mechanics.
Noble has noted that USDN is expected to become IBC-enabled in the coming weeks, at which point more specific implementation proposals may follow.
What’s Next
This proposal is a signaling initiative, not yet a binding governance vote. If supported, Noble would begin technical implementation and coordinate with Hub contributors to align on the preferred yield mechanism. The draft reflects broader momentum across Cosmos to more explicitly connect ecosystem products to ATOM’s value proposition.
For Noble, this is part of a longer-term effort to position USDN as an integrated yield layer for Cosmos chains. For the Hub, it may be one of the first practical experiments in tying stablecoin infrastructure to token holder rewards.
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