Cosmos Hub has submitted a governance proposal seeking community approval to transfer 1 million ATOM to liquidity protocol Hydro.

The platform said on July 26 that Cosmos Hub’s (ATOM) proposal is live in the community forum. If the community approves the plan, Cosmos Hub will transfer 1 million ATOM tokens from its community pool to the Hydro committee.

Accordingly, 500,000 ATOM will be used to seed an ATOM liquidity pool on the interchain auction protocol. Meanwhile, the other 500,000 ATOM will be staked with liquid staking platform Stride to seed the stATOM liquidity bucket.

Stride is the Cosmos ecosystem’s top liquid staking platform, currently boasting nearly 120,000 liquid staking users. At the time of writing, the protocol’s assets were close to $100 million.

What is Hydro?

Hydro is an interchain liquidity management platform that leverages the Cosmos Hub for liquidity, governance, and community growth. The protocol generates value from bidders and through yield accrued by deploying liquidity into decentralized finance protocols.

As for how Hydro works, Cosmos Hub says it’s a set of smart contracts that projects can tap into to deploy protocol-owned liquidity. These deployments allow DeFi protocols to bid for liquidity and are governed by the Cosmos Hub community. Value accrued from these transactions benefits all ATOM holders.

Thyborg, a Cosmos Hub contributor Informal Systems strategist, outlined the proposal as introducing a new liquidity injection ahead of the Hydro platform launch.

Hydro is currently in testnet.

Deployment of ATOM tokens

ATOM is currently the second largest native token for liquidity on Osmosis, while it accounts for a significant portion of the total value locked on Astroport, a Cosmos liquidity protocol.

Per DefiLlama, Astroport’s TVL currently stands at approximately $28.89 million, while volume year-to-date is over $1.3 billion.

The ATOM token is also deployed across 15 dApps in the Cosmos ecosystem, including Canto, Injective, Archway, Dymension, and Kava.