The Cosmos Thesis with Sunny Aggarwal & Zaki Manian

**A** (0:00): Digital markets in the future will be all markets, and I'm building for a future in which digital markets are open source public goods. I don't really care about anything else. I just view the tools we've built as Cosmos as an essential part of getting there. I also think Ethereum largely shares this vision and so feel very aligned with Ethereum. But like if we're successful, we will have open source digital markets that provide economic coordination for the entire human race. **B** (0:30): Welcome to Bankless, where we explore the frontier of Internet money and Internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan, Sean Adams, I'm here with David Hoffman and we're here to help you become more Bankless. Today we are going to explore the Cosmos together. This is the Cosmos Thesis. We brought on Zachy and Sunny, who are developers, app developers and longtime Cosmos community members, to talk about the Cosmos. The thesis. This I think will give you a zero to 60 on Cosmos in 90 minutes. I think it's a canonical episode for this community, for this ecosystem. In fact, the guest said as they were leaving, this is probably the best Cosmos episode they've ever recorded. **C** (1:12): You've ever heard of that. **B** (1:13): You be the judge after this episode, a few things to look out for. Number one, we talk about the Cosmos Thesis itself. How it's similar versus how it's different to Ethereum. Number two, we talk about Ethereum as a tree versus Cosmos as a fungus. If that makes no sense to you now, listen to the episode and you'll see what we mean. The difference between the FAT Protocol thesis and the Tall App Thesis. That's another distinction we make. In Atom 2.0. A new white paper was just released with new Token economics and a whole new Cosmos hub design. We talk about the new features and differences in that design. We also asked Zaki and Sunny if they think atoms could one day flip Ethereum in terms of total crypto market cap. David, there's so much we unpacked in this episode. Why are we talking about it? Cosmos, that is. And what should listeners look out for as they listen? **C** (2:04): The Cosmos ecosystem. The Cosmos Community. The Cosmos philosophy has always paired nicely with Ethereum while also being different. I remember reading the Cosmos white paper in 2018 and really having like an aha moment. Like yo, this is something real that's new. And it was specifically about cross chain interoperability. And even when I was talking to Sunny at ECC forever ago, he was, he said like the Cosmos and Ethereum communities have always been Very philosophically aligned. And I think when we get into this episode, the listeners should really pay attention to the, I think the accepted truth that Cosmos and Ethereum converge at their logical conclusion in their design philosophy at the same place. They both believe in the same general outcome of how these ecosystems look like, but where they differ is how they get there and how they get there. The genesis stories for these changes does impact what these things ultimately look like. Cosmos started its journey as a network of interconnected sovereign application chains that weave themselves together, later adding a shared security model. Ethereum started its journey with the central security model of Ether proof of work, a canonical single monolithic chain folding into now the beacon chain, and then many chains organize around it. We have the app chain model in Cosmos, we have the layer 3 model in Ethereum. We're each going after the same design structures. So the listener should really pay attention to what are the net consequences of a system that emphasized the security first, which is Ethereum, and Ether, the asset first, which is Ethereum, versus an ecosystem that emphasized the sovereign app chain model first and then added security later. What are the net effects of that? Overall, I'm just. We've used this metaphor in Bankless and I use this, I've used this in the podcast that if you reroll the dice of the crypto industry over and over and over again, you will see something like Ethereum unfold out of that 100% of the time, 99.9% of the time. And I think that's also true for Cosmos. And that is why I think this, Cosmos and Ethereum is like two sides of the same coin. We will always see these two models, and I don't. And I think these two models, the app chain model, the central security model of Ethereum, that is what crypto has to offer. These are the logical conclusions of crypto design philosophy, in my opinion. So I think with that context, I think the listeners should be pretty well equipped to go into this episode and get completely downloaded as to the whole Cosmos vision. **B** (4:39): The other thing, of course, to think about as you're listening to this episode is where are the investment opportunities in Cosmos? And David, I think I want to talk to you a little bit about that, some of my thoughts on investment opportunities, but we'll save that for the debrief. And of course the debrief is available for you who are premium members. It's our episode after the episode where we talk about the episode that was. So upgrade to premium membership if you want to catch that as well. Full disclosure going in I own Atom Tokens, it does not represent more than 5% of my holdings. We take disclosures very seriously at Bankless, so we're starting to mention them at the top of every episode. There's always a link in the show notes if you want access to see all of our bags, our full disclosures are located there. Guys, we're going to get right to the episode with Zaki and Sunny from Cosmos. But before we do, we want to thank the sponsors that made this episode possible. **C** (5:31): Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing DeFi and NFT ecosystems. With the recent addition of Arbitrum, Nova Gaming and social dapps like Reddit are also now calling arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar and fully EVM compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. 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And lastly, Fuel brings a powerful developer experience with its own domain speed, specific language sway and a supportive tool chain called fork. With Fuel, you can have the benefits of smart contract languages like Solidity while adopting the improvements made by the Rust tooling ecosystem, letting the Fuel development environment go beyond the limitations of the evm. If you want to learn more, there's a link in the show Notes to see how you can get involved with. **B** (8:05): A Fuel network Bankless Nation we are talking Cosmos today with two of the best experts we could find in the space. Sonny Agarwal is a crypto og. He's been in the Cosmos ecosystem since the very early days in the community, since the very beginning. He's a man of many hats. He's been all around the space. He started the Blockchain at Berkeley, a student club. This was the largest student organization for the crypto world at the time. And he's also the co host of the Epicenter podcast. Sunny, how are you doing? **D** (8:34): I'm doing great. Just got off of three days of Cosmoverse, which is the Big Causes conference, and so in decompression mode right now. **B** (8:43): I understand that both of you guys are recovering from cosmosverse, so hopefully we'll get some of that energy back into this podcast as we go through. We also have Zach Emanion. He also wears many hats in the Cosmos and crypto space. He's been in the Cosmos ecosystem from the very beginning as well. He helped ship most recently Cosmos ibc, which is an interchange blockchain protocol. He's also working on the Validator ecosystem. He's been an advisor to Electric Coin company. You remember Zoku and team from Zuko and team from zcash. And he is a co founder of a staking provider as well. Zaki, welcome to Bank. How you doing? **A** (9:24): I'm doing great. Cosmoverse was the best but like I'm glad that I flew out of Columbia. I was like, I was, I was like do I stay in Columbia for devcon? And then I was so tired I was like, I'm going to leave. **B** (9:38): So this was in Colombia? **A** (9:39): Yeah, we did it in Medellin Colombia. **B** (9:43): Nice. You know, Columbia is getting a lot of love this year from the crypto community with devcon. **A** (9:48): From the crypto community, for sure. **B** (9:50): It's great. **A** (9:53): There's actually a bitcoin cafe, like a crypto cafe in Medellin that we got to do some events at. And, you know, I think Bogota is going to be very different, but from the experience of Medellin, ended up being phenomenal. **C** (10:08): So how was the conference for people that weren't able to attend and also people that are wondering what the temperature is during the bear market. What was the energy like, what was the vitality like, how many people were there? Fill us in on what the Cosmos Verse conference was like. **D** (10:23): I don't think you could tell that it was a bear market. We had, like, so, you know, we had. This is the second Cosmoverse we had. The first one was last year in Lisbon. It was like, sandwiched in between, like, Eat Lisbon and the Solana Conference. And I think there were maybe like, 500 or so people there at Cosmoverse this year. I think there was about 1500 people. So it's like three times bigger while we're in a bear market. And, like, you know, last time there was a lot of, like, overflow traffic coming from the other places. It's like here. It's like everyone who came here, like, came for Cosmoverse, right? And, like, so, yeah, just like, shows how much, like, there's a lot of excitement and, like, growth in the last one year even. **C** (11:05): And a little harder to get to than Lisbon. **D** (11:08): Yeah, definitely. **A** (11:09): Yeah. You couldn't get there. You couldn't, you know, you weren't already there for other stuff. Whereas, like, yeah, I'd say a third or more people were just like, okay, like, I'm in town for. For Breakpoint and for Near Con, I might as well do Cosmoverse two. That was kind of the. The, you know, it was all. I also, like, just like, again, the origin of this conference is. Is, like, very typical of Cosmos, which is like a person named Cryptocido, sort of. He's a YouTuber, has a relatively popular YouTube channel about crypto. He got interested in cosmos in early 2021. He started to build up a following in the community. Jack Zamplin, who is my co founder, another one of my projects called Sommelier Finance, has another validator business. And I was also, like, a core dev in the ecosystem. So Jack and I had been kind of looking for people to help us bring the message of Cosmos to the world. And we found that, you know, CryptoCometo was doing a really good job. We ended up spun. We had taken up. There was a marketing dao that was set up called Prop 34 that took money from the Cosmos hub treasury. We ended up spending what was remaining in that to sponsor and like give crypto CEO the funds to do Lisbon. This time it was like multiple chains. So it was the same person now, you know, held this much larger conference in a much more difficult location. He had a staff like 150 people working on it. It was sponsored directly from governance proposals for multiple Cosmos chains. Um, and you know, 1,600 people kept throw up. There were, there were after parties and events every night. It did not feel like a bear market at all. And, and people I think. And then like the other thing that was really unique about this is there's literally never been a Cosmos conference where anything was announced. Like really like the little chains would announce stuff but like ecosystem level announcements had never happened before at a conference. And we actually were able to do Both the Atom 2.0 white paper and the announcement of USDC coming natively to Cosmos at our conference. **D** (13:27): David, I remember like we talked about etc. You know, I was saying like ETC when we had our interview there. I said ETC is my favorite conference. And part of it is because, you know, I don't know, I just always feel that ETC has a very community. Just the fact that it's a community organized conference rather than foundation organized conference. And it always had like a more interesting energy to it to me than even devcon. I like ETC better than devcon. And like every other ecosystem is always like foundation thrown conferences. Right. Cosmos feels very much like ETC for the same reason. It not a foundation thrown conference. It is like random community member decided to do this. **C** (14:04): Yeah. And it's very emblematic of what Cosmos actually is, which is a little bit more bottom up than top down orchestrated. And so what would you credit the success of this conference? While the Cosmos verse was harder to get to in a different part of the world, three times as many people showed up while crypto prices have gone in one third. Right. And so you know, one third the amount of capital in this space, yet three times the amount of people showed up. Like why, where's all this energy in Cosmos coming from? What would you guys credit the vitality, the source of vitality here? **D** (14:39): I mean Cosmos as an ecosystem has just grown a lot I think. Especially you know, in the last three, four months. I think, I think the DYDX sort of announcement of like switching over to Cosmos, you Know, I know Zaki was pretty involved with that. What like that I think just got a lot of people's attention where, you know, it was, it's. And people are like, wait, here's this like project that's like been building on Ethereum for forever and like, you know, why did they suddenly decide to like, you know, make this sort switch, right? And so people started to look into like looking at the reasons, at why like DYDX did it and started learning more about, you know, the Cosmos thesis is very complex and you know, it's like, you know, when you're switching from Ethereum to, I don't know, Avalanche, like oh, okay, cool, it's faster. Yeah, it's like. No, but like, you know, when you're switching to Cosmos, there's like a whole set of like fundamentally different things that we're doing that like and people took one to do with the IDX announcement, people started to actually look into that and I think a lot of people just got very interested in the theses that we have at Cosmos and that kind of just snowballed from there over the last few months. **A** (15:48): Before we break down, I think the thesis and how this really complicated idea of how we're different from Ethereum and how we're basically different from the blockchains that most people are probably familiar with, I'll also say it was just like, you know, we are also basically like what, four or five months out from the Terra collapse. And Luna was built on top of the Cosmos technology stack. It was, it was part of Cosmos. It was connected to ibc. The anchor carry trade passed through both the Cosmos hub and Osmosis in a very large way. So we were very economically connected to it. Its collapse was with almost felt like, felt like was a devastating blow to the ecosystem. You know, almost everybody lost money. It was like, it was a huge thing. And you know, and I don't know, you know, we, we can, we, it's certainly if we want to talk about, you know, how we all feel about the, the whole UST story. But it was, it did feel like there was a moment at which there was a bottom there where we kind of felt like, you know, it was like unclear whether or not Cosmos was really going to, how long it was going to take us to recover. And the recovery happened like far more quickly than anyone anticipated. And like, you know, it basically I got, I got so much busier in like maybe like two weeks after the Terror collapse and it's just like not slowed down like at all since then. **B** (17:25): Yeah, that's really interesting. You're right. This is not long after the Terra collapse. Would you guys believe that was just like less than five months ago when that whole thing imploded? **A** (17:36): It's been a wild five months for us. **B** (17:38): Yeah, I bet. And there's definitely a lot of excitement. One thing I've been observing, of course, in the Cosmos ecosystem is the amount of building that's going on. There's also this kind of renewed interest, maybe through DYDX and others, but even in the Ethereum community around app chains, which I'm sure we'll talk about a little bit more. And really, I think our goal for this episode is David and I cover a lot in the kind of the Ethereum ecosystem on the podcast. Right. So you guys have to teach two Ethereum idiots what Cosmos is, what it's all about. I will say I was involved in the Cosmos ecosystem in the early days and so I, um. It's always been a community that's been kind of. I've been, I've been observing and I've liked and I've appreciated kind of the efforts of. But you guys have come a long way as well. Cosmos, the idea has come a long way and we want to talk about that trajectory. I think we also want to talk a little bit about the Terra Luna collapse, but let's save that maybe until a little bit later. First let's talk Cosmos the idea. And David said this to me before we recorded that. You told him, Sonny. Cosmos has been called an idea more than an actual thing. Those are your words, I think, Sonny, Cosmos being a thing isn't a thing, it's more of an idea. What do you mean by that? What is the idea of Cosmos? What is the central thesis? **D** (19:05): Yeah, sure. The central thesis of Cosmos was that we are going to see a world of not a few blockchains, but many, many blockchains, most of them being application specific blockchains or app chains. And there's no such thing as a single final settlement layer in the real world. There is no final settlement layer. We're going to have many, many settlement layers. And they, you know, every blockchain is going to be the settlement layer for its own native assets and its own native state. And that's what gives it fundamentally sovereignty. Right. Roll ups and other, you know, systems, they don't have true sovereignty from, from the main chain. Right. The main chain is what finally dictates what these. It's the final arbiter of truth in, you know, in this globalized system. While Cosmos is a very, you know, we, we, we're all like localists basically. We, we believe that like hey, we, we're not trying to build the world computer, as Ethan Buckman puts it. He, we're trying to build community computers and let these community computers all talk to each other. So yeah, that's, I know Zaki, you want to add anything to that, all. **A** (20:26): I will say is so there's another thing though that Sonny and that like the Cosmos thesis really believes, which is, you know, so one of the things we say is that like Cosmos is coming to kill your FAT protocol thesis. So the FAT protocol thesis is that like the way that blockchains will accrue value is that you'll build a blockchain. It'll, you know, typically a protocol with a token. That token will have a bunch of apps on top of it. But because the, that the infrastructure layer and the network effects around it are represented by the token, that's where the most value will accrue. And the Cosmos thesis has been from the get go that the, where the value accrual layer is, is the app layer that the, that like it's the application layer that is the thing that and the thing that is closest to the users. It's the, it's, it's the application layer where intent and order flow and everything originates. And that's the layer of the system where the value will accrue. And we basically purpose built a blockchain stack for people to build the best possible app layers rather than thinking that like, hey, I built another FAT protocol. **D** (21:42): An analogy that I like to pull to is like, you know, if you were in the early web in the 1990s, you know, a lot of people were thinking that the way to bet on the web was AOL and CompuServe. But now with like retrospect, we know it was Google and Amazon, right? The apps are what were sticky and actually had user relationships and the infrastructure layers, you know, really, actually what ended up happening was the biggest apps actually ended up building their own infrared layers and became actually the biggest infra providers as well through like aws. But really it is the app developers are the ones who like you know, they'll move between infrastructure providers, but users are sticky to the applications so we. **B** (22:25): Want to leave that out there. So one idea you're presenting is rather than FAT protocol, fat app thesis. Would that be a way to summarize what you just said? Cosmos is fat app. **D** (22:34): I actually like this term called tall apps because one of the things at least With Osmosis, what we really believe in is vertical integration. So we build our front end, we build our Dex modules, but we build the chain itself. And we just happen to build like the primary wallet for the Cosmos ecosystem as well. But we have this, like, you know, what we, what we actually take a lot of inspiration from is like Apple, which is like a very vertically integrated system, but that like, gives them, I think, the best UX out of any, like, any product line. Right. And so, you know, I call these the tall apps, right, for highly vertically integrated. **C** (23:12): So just to put a visual, a metaphor on this whole thing, Ethereum as like, it's got this one canonical layer one, and then we have a proliferation of layer twos. There's like five or six real big ones. And then now, right now is like a big conversation going on in the Ethereum space with layer threes. And this kind of looks like a tree. There's like a big central tree trunk. There are like four or five smaller branches, but still pretty big, that come out of this tree trunk. And then they fracture off into like thousands and thousands of smaller branches and twigs that eventually turn into leaves. And maybe these leaves can be like the applications that, you know, capture the energy of, of the sun, for example, but it all, it all collapses down to a central point, a central trunk. And that was really the Ethereum beacon chain and eat staking at the very, very bottom of this whole thing. The Cosmos model is a little more of a, of a mesh network. I kind of want to say a spider web, but even a spider web has kind of like a center point, but it still kind of looks like a more flat. There's not actually a point in the middle. And these things weave together as like a. **A** (24:21): Just the actual metaphor is. Or like the correct analogy is like a fungus, the mycelial network that like, pervade the, like, forests and the earth and do make it so that the trees can actually live. **C** (24:35): Right? Yes, that's. That's. Yeah, you have definitely used this metaphor, but much better than I have. But that's definitely. Right. It's Google searching mycelial network for those that don't have an image in their head as a result of that will definitely, definitely help. And so, and so the idea here is that like, is it. And the cool thing about the mycelial networks is that they're just like automatically resilient because there is no central focal point. Can you guys kind of just like lean into this metaphor and help me unpack it a little bit more so. **A** (25:04): I Think one of the big things that we've really believed in in Cosmos is that like we do think that like if there is like a core difference of vision, let's say between like Sunny and I and Vitalik is this idea that like, so like we, we think and like these. I'll try and like quickly unpack the argument. Like we're like my perception of Vitalik's views and our perception of our view views, which is, okay, like Vitalik's view is like monetary premiums are really hard, but it's really hard to build like a secure, decentralized, censorship resistant system without securing it using a monetary perimeter. So you have this thing where you have the root monetary premium chain, which is the beacon chain, and then everything descends from that monetary premium chain is secured by the. And like reinforces with that monetary premium chain. You know, Sunny at Cosmoverse presented this idea of mesh security where cosmos chains actually opt into additional slashing conditions around each other. We believe in like ad hoc economic networks forming. So you know, the, you know, you have these like natural trade routes of which the UST carry trade was one of them. But you have trade routes between atom and Osmosis. You have a number of large crypto exchanges run their own cosmos change, including okx and crypto.com, so then you have trade routes between their user bases and other cosmos chains. And you see this, what we are sort of expecting is this network of value to form between these community computers. And some of the ideas that we're exploring now and are sort of in our vision of the future is to make sure that security and economic security can travel with economic interdependence. But you don't need this root structure. **D** (27:15): Like an example of this, it would be chains provide bilateral security agreements with each other. So in this app chain model, people have always asked like, oh, how are you going to get enough security on every individual app chain? The analogy I like to give, I like geopolitical analogies. And so for me the example is NATO. NATO is a collective of sovereign countries. They all have their own governance systems. They don't meddle in each other's internal politics, but they have a security, a mesh security system, right? If Article 5 says that if any one of the NATO countries gets attacked, they all rush to each other's defense. And I think the same thing happened will happen with cosmos chains as well. And it will be based a lot off what, I think what Zaki's point was, it'll be based a lot off of economic Relationships. So if you look at. So I'll give an example of Osmosis and Axelar. So Axelar is, you know, currently the most popular bridge between Ethereum and the Cosmos ecosystem. Osmosis is a Dex. Osmosis makes up about 70% of Axelar's TVL right now, while four of the top 10 assets on Osmosis are ETH, WBTC, DAI and USDC are coming via the Axelar bridge. So it's like, hey, we have such high economic relationship with each other. It would suck a lot for Osmosis if Axelar got like attacked. It would suck for Axelar if Osmosis got attacked. We should be both providing shared security to each other basically, right? Osmo holders should be putting up economic stake backing Axelar validators, while Axelar Valley axle stakers should be putting up economic stake backing Osmosis valid. So basically by these two systems doing mesh security with each other, they actually have the economic value of both of the market caps combined, securing each chain. And you can imagine that this scales with more and more chains. You know, we'll have a network of 5 chains, 10 chains and all the sum value of all of the app chains is going to be, you know, in the, you know, it'll provide greater equal security to like these L1 systems today. **B** (29:20): Can we talk about the trade off here, which is a trade off I think Cosmos has made from the very early days and Zaki just alluded to it and Sunny, I think you also alluded to it in your answer, which is sacrificing monetary premium, essentially saying that the token at the bottom of a layer one chain does not need to and perhaps should be designed not to accrue monetary premium. So coming from maybe kind of the Bitcoin space and also now the Ethereum space, obviously for Bitcoin, Monetary premium is the thing that is the app of Bitcoin, right? And Ethereum, I think the community has most recently, more recently adopted monetary premium as part of its security defense force. And when we've had Justin Drake and others on the podcast is kind of like maybe less the FAT protocol thesis and more kind of the fat money thesis, which is the idea that if you can create monetary premium in your base layer asset, you essentially get free security. It's like memetic security for your entire network, for the entire tree trunk and all of the chains that are built on top. And so why not number one. And then also secondly, how can other layer ones compete against essentially free security against a chain and an ecosystem with monetary premium and this is something I think Adams has Cosmos and atoms being the token of the Cosmos hub at least, which is just one hub in the mesh network, of course is not the thing. The cosmos universe is much larger than just one hub, but in the cosmos hub design, it's been kind of sacrificed. The idea of Adams is not to accrue a monetary premium, but it seems like you're giving that up. What about this trade off, Sunny? What do you think. **D** (31:17): So about getting the free economic security? I actually think that the mesh security is actually a non rent extractive way of getting free economic security. When you're building on top of an L1 that has this monetary premium, there is actually some rent that's being extracted, whether it's being forced to pay transaction fees in that token or giving the mev value to that, to that base layer or while with the app chain system you don't and you use economic relationships to, you know, natural, naturally forming economic relationships to provide that security basis. Now to your other to the question about like, so this might anger some of your listeners, but you know, I remember I had a tweet a little while ago saying that like, hot take, the Cosmos ecosystem is a bunch of undercover bitcoin maxis. And I know you replied to that like, yes, I realized this two years ago and for me, I actually started building, working on Cosmos because I wanted to build the app layer for Bitcoin. I was working on Ethereum stuff for a while. I was at consensus for a little bit and to me, I don't know, the monolithic model didn't make sense. And I was like, okay, wait a second. Bitcoin is an app chain. Maybe we just need to kind of build more app chains and have everything. You know, we can build the, the app layer for bitcoin. Bitcoin will just remain this simple chain and its only purpose is to, you know, control the issuance of the bitcoin system. And then bitcoin will flow off of the bitcoin BTC will flow off of the bitcoin chain and be be the main money of the entire Cosmos network that we're building. You know, I guess I'm a little bit less of a bitcoin max monetary maxi as I used to be. But you know, I'm still, you know, I would definitely put myself more in that. **B** (33:05): You dabble, you still dabble. **D** (33:06): Yeah, I dabble, I dabble. But there's actually a new project that like kind of came out of hiding a little bit at Cosmoverse, which I'm really excited about. It's called Babylon. It's actually a way of using Bitcoin's like monetary premium security layer to provide security to all the Cosmos chains and any proof of stake chain. So what it is is it's a way of checkpointing proof of stake block headers that into Bitcoin's proof of work system and augmenting proof of stake security with the proof of work security of Bitcoin. And you kind of actually get a lot of cool benefits with this. You get proof of stake really secure in short time frames, fast finality, all that. Not really secure in long time frames with whole long range attacks and all this kind of stuff. Proof of work not very secure in the short time frames, really secure in long timeframes. And if you actually overlay these systems together, you actually get a little bit of the best of both worlds. And so, I don't know, I think Babylon is actually in a little way bringing back that idea of using the base monetary premium chain and having it provide security to all of these chains as well. But in this sort of mesh network paradigm it's an opt in system. It's chains that want to use Babylon can. It's not a hard requirement. **B** (34:20): Before we get to Zaki with the same question, just one other follow up for you, Sunny. So isn't this the problem though, when we take something like Bitcoin and we port this to Cosmos is we lose the root economic security of Bitcoin. Now Bitcoin becomes like a lesser secure bitcoin than native Bitcoin on the bitcoin blockchain. So native bitcoin on the bitcoin blockchain of course is secured by all of the miners. Right. It's got bitcoin level sovereign resistant security guarantees. Now when we move Bitcoin to Cosmos now, we have to trust whatever app chain set of validators for our security of that bitcoin asset. It becomes a less secure asset when it's ported in that way because we're not sharing the security. Isn't this a challenge that you see? **D** (35:08): Yeah. So you know, getting secure bridges to Bitcoin is definitely an important focus for, you know, it's not, you know, something that we're definitely want to help promote more of. Right. Like we are, you know, we've been trying to help Jeremy Rubin with like getting some of the OPCTV stuff and like, you know, more secure covenants on bitcoin which will allow for more secure bridges effectively. I'm a big fan of the drive chains Model drive chains is effectively like how you would do IBC for bitcoin. So you know, I think what I've learned is that like pushing on bitcoin development too hard, the more you push at it, the more it's like kind of pushes back at you. And so you know, I think that we're building for the long term here and I think that, and I think the bitcoin core developers have like a 10 year, 50 year, 20 year mindset, you know, and, but I think the, I think the core primitives that will make bitcoin be able to securely have the same trust assumptions as IBC will exist within, you know, a few years. **B** (36:14): Zaki, what's your take on this whole monetary premium thing? Do you think it's much ado about nothing? Do you think monetary premium actually doesn't matter as much as maybe Bankless and kind of the Ethereum and bitcoin community think it does? **A** (36:25): So what I would say is I would, I think too many teams who build L1s. So like again. So one thing that I think is again is sort of important to remember about Cosmos is cosmos is a 2014 project. Basically like we started J. Like Jay started it, I started hanging out with Jay. I've been work, we've been talking, we've been working on it and talking about, and thinking about Cosmos back since then. It's gone through many names but basically the core thesis is the same. We are very long term builders. We, we were building the stuff before there was any money in it. We'll be building it, you know, if the money goes away, like we just, it, like it's an idea that seems so correct that it just has to be built and the, so in that spirit of building for the very long term. I really don't believe in building something that's so fragile that if you're, if you like sort of lose the meme, the whole thing collapses. Right. Whereas like, you know, the problem with, and like honestly I admire Ethereum's current monetary premium. I think, you know, I think Vitalik has done, Vitalik, Justin, Danny have done an extraordinary job. They don't really always listen to me but you know, we saw that with. **D** (37:44): Terror a little bit. Right. They lost the meme and the entire system collapsed. **A** (37:48): Exactly right. So how do you build systems? So start by building a system that is secure in the absence of a monetary premium. If you happen to also get a monetary premium, great. You get like this additional security, additional value. You could do, you could, you could do things differently with but if you don't, but if you don't happen to have that and you've still built a sound system, then it'll keep going. Whereas we've seen the other side of it, which was also built on our tech, which is like, what does it look like when you build a completely unsound system? The minute you lose the meme, everything dies. Which was Luna. **B** (38:28): Let's earmark this question for later. But since we're on the topic of monetary premium, we'll come back to Atom 2.0 and the new economics that were introduced. But just really quick, Zachy, so we can earmark this for later in the episode. Is Atom 2.0 increasing the potential for monetary premium of atoms in your mind, does it make it a better money? **A** (38:51): Yeah, it absolutely is. It is part of the vision. **B** (38:54): That's part of the design. **A** (38:56): It is part of the vision to increase the possibility, increase the probability that Adam may have a monetary premium. Ethan Buckman that is cool. **B** (39:08): That is cool. That makes me as a monetary premium maximalist, which I probably am, in addition to decentralization maximalist, it's cool to see the cosmos community doing that. **D** (39:18): Can I give a little example of what the mesh security, another justification of it, Gold is probably the asset in the world, like the one bear asset in the world that has the most monetary premium right now it has a market cap of about $11 trillion. The top 10 companies by market cap in the world have a higher market cap than gold combined. And so if you go the and that's the app chain model, right? It's like oh, value comes from real actual like revenue streams and like same way that company, you know, market caps come from. And so if the top 10 companies in the world have a greater market cap than gold, why can't the top 10 app chains have a greater market cap and security system than a monetary premium based. **B** (40:00): So your point there Sonny, is just it's about like total economic security. And that economic security does not need to come from monetary premium. It can come from a product of asset that is adding value. So like Facebook stock for example. And like if you add the top 10 companies, then you get a market cap exceeding gold. It's interesting. **D** (40:20): Yep. **C** (40:21): So in this mesh network model of security, what's stopping one chain from just being way more useful and central than the others? And might that chain also beget some network effects and some liquidity premiums? And so while it all starts off as like a pretty diffuse mycelial network, that's very horizontal onechain Call it Osmosis as like the liquidity center of Cosmos. What's stopping Osmosis from kind of just like positioning itself in the very center of everything because everything has to hook into Osmosis for liquidity. And then while the Cosmos idea, the Cosmos ecosystem never actually created like a beacon chain, right. An actual, this is the center is what's stopping something like Osmosis from basically becoming that anyways. **B** (41:13): And what in your answer, Sunny, could you just define what Osmosis is for people who are not familiar with the Cosmos ecosystem? **D** (41:20): Yeah, sure. So Osmosis is a DEX app chain, right? So it is a, currently it's an AMM based system, but we're adding more concentrated liquidity style stuff. And our goal was to build the best Dex possible. And we looked at other dexes on other ecosystems, whether it's Uniswap or Serum, everything's always like constrained with the limitations of the platform it's built on. And we had a lot of ideas about how UX should work, how like new functionality, especially around like privacy and like new things that you, we just were so constrained by building on like the, like the, you know, we've actually, we actually thought about like building it on an EVM and like we're like this doesn't actually work. The things we're trying to do won't work on here. And so, you know, by having our own chain that we can go, you know, especially if you want to do a lot of stuff at the privacy layer, right. You know, we need to go be able to change how the cryptography in the code base works while we also have to go change how the wallets work. And like, you know, you have to have this like full stack control and that's sort of what we did. And Osmosis was, you know, so this IBC thing, this inter blockchain communication protocol that allows Cosmos chains to talk to each other. And it existed for a little while, but then Osmosis sort of came along and like it was like the first killer app of Cosmos. Right. And there will be, there are already more, I think killer apps coming. And by right now it is sort of where the center of user activity and liquidity has aggregated. **B** (42:55): You'd say it's the first, but would you disclude Terra Luna just because it blew up? Because I was looking like a killer app a year ago. **D** (43:02): So Terra Luna was a pretty killer app. They, they took a little bit longer to activate ibc. So they activated, you know, they had, you know, Terra was, had Quite a bit of traction. But they were using the Cosmos SDK stack and then they acted, I activate. I mean, I've talked to them about it. You know, they, they're like, oh, there's no benefit of connecting to the cosmos ecosystem. You know, we're the only app. And then osmosis came along and they're like, oh, okay, there's something worth connecting to, which is why they activated ibc. So back to your question about what we're building here is highly organic systems. And that's the whole premise of Cosmos is like, you let organic systems arise and you let the natural network effects happen and natural connections will happen. And in any organic system, Hayekian system, you have power laws, right? There are things that are. It is fundamental to the nature of how Hayekian systems work that there will be power laws. And obviously as an osmosis developer, I intend Osmosis to be at a certain end of the spectrum on those power laws. But I think our goal is not to be. We're not trying to build a hub and spoke system. I think that would defeat the entire point of what we're trying to do with Cosmos. And that's why osmosis is contributing heavily to things like mesh security and making sure that a lot of people had asked us like, hey, why aren't you doing routing through osmosis, right? You have all these assets flowing through osmosis. If someone wanted to send a token from regen chain to secret network chain, for example, why aren't we? Actually, we had the opportunity to allow it to all go flow through osmosis, but that was just not the vision for how Cosmos works. And we specifically said, no, no, no, no, this whole system is bad. Everything should be doing point to point routing. All chains are the router, the hub for their own native assets. And so I think that's also kind of why we wanted to build this first app chain as well, was so that, you know, our team, you know, me and Dave and other folks, we had spent three years building the core stack of, you know, building the SDK and ibc. And at some point we wanted to go build an application. And by building the application, we can kind of help set how, you know, be the good actor, be the first good, be the good actor that sets the cultural norms for how app chain should be built. **C** (45:32): So in that answer is the answer, yes, a chain could become the liquidity focal point of the entire Cosmos ecosystem, but we will also build surface area and routes around that liquidity center. That doesn't like formally instantiate it as a winner, even though it might be winning, it is not the winner and will never be like locked in there. Is that a summary of your answer, David? **B** (45:59): Doesn't it just feel like Uniswap basically on Ethereum? **C** (46:01): Yes, yeah, yeah. **D** (46:03): You know, Uniswap has quite a bit of competition. They still make up over 50% of volumes on Ethereum. But like, you know, it's still a free and fair market that like, you know, if Uniswap goes down, this Ethereum doesn't die. Right. There's so many alternatives that things can flow through as well. **C** (46:18): I think the difference though is that Uniswap is largely a platform for Ether liquidity more than it is Uni liquidity. And when there is an absence of a monetary premium asset that's like instantiated or formalized in the Cosmos ecosystem, perhaps the osmosis token becomes that asset if it is providing its own liquidity to its own asset and the osmosis token is the most liquid asset inside of Cosmos and starts to become the money of Cosmos. I think that's a difference there. That's worth worth poking at a little bit because then that does start to bake in the osmosis token more formally into the broader Cosmos ecosystem than Uniswap does for the Uni token. Because then the osmosis token starts to fill the role that Ether plays in the Ethereum ecosystem. What would you think about this? **D** (47:04): Yeah, so we did do a little bit of that where OSMO is the base liquidity pair of most of these pools. But I actually don't think that's going to be a lasting thing because as we move towards more concentrated liquidity and order book style systems, I think the UX kind of demands for stablecoins to be the, you know, the quote asset for most of these pairs. You know, people, if they're putting concentrated liquidity positions, they want to say hey, I want to put it between 90 cents and a dollar 10. Right. Not like denominating things in Osmo. So you know, I think with Osmosis, you know, another thing though is like we, we're not just the Cosmos deck or it depends on what you call Cosmos. Funny enough, we're actually the second biggest DEX for dot. That is funny. Yeah. So we have a lot of DOT coming over. We have ETH and WBTC are the third and fourth most liquid assets on Osmosis we have and we are working on building up connections to more ecosystems. One of our goals is we want to Be the place that if you have ETH on Ethereum and you want Avax on Avalanche, Osmosis should be the best place to route it both from a UX perspective and liquidity perspective. **B** (48:24): I don't know if this is true with respect to monetary premiums, but I have always seen the Cosmos ecosystem they sort of import different monies into their kind of trade route network rather than build up their own monies. Maybe thing things are changing with atoms and kind of the new design and that's being more conducive to monetary premium. But importing Bitcoin for example, tokenized version of Bitcoin, importing Eth now more recently importing USDC which has got to be a big boom to the Cosmos community. Zaki, do you have any thoughts on this and just in general, how big do you think is the move for Circle and USDC to be now supported on Cosmos? Are you kind of a stablecoin maximalist and do you have any issues with this particular stablecoin design that it's a. **A** (49:11): Bit more centralized for instance, so occlusion. So okay, I wanted to make a couple of points that like just kind of pop the stack a little bit that like all descend really nicely down this. So one thing that I think is very different about another thing that's a real difference between Cosmos and Ethereum is that in Cosmos most of the core devs also work on apps versus in Ethereum there's like like you go to like, like, like like DevConnect in Amsterdam and you see this like massive disconnect between like the Ethereum core dev community and the Ethereum app community in Cosmos. Every single core debt like most of the like well known core devs inside of Cosmos and the people who sort of guide and steward the other core devs who don't want to think about Apple concerns, almost every one of them has an app. So like I have Sommelier Finance. I also work on a Goric and a Goric stablecoin called ist. I work on the USDC chain or the chain, the generalized asset issuance chain that USDC is coming onto. You know and I helped close the, close the deal and the announcement. And so there's like this whole which gives this very different feeling to the whole ecosystem and also kind of helps solidify this whole oh it's going to be a mesh instead of it's going to be like centralized around one thing because we all have our own apps, we all have our own and economic incentives to make sure that different coins in the Ecosystem all succeed and thrive. And so we're all constantly constructing different routes and trade routes. And it does sort of preserve this sort of decentralized nature of the ecosystem. So then go all the way up onto the stablecoin thing. So in many ways I would say the way the USDC announcement was structured I think was oh, we're coming to a lot of chains. So it just sounds like, okay, we're coming to a lot of chains. But honestly what I would say is the biggest thing that I have seen from the sort of discussion and conversation with USDC around coming to Cosmos about coming to. So one of the differences between Cosmos, right, is on all the other chains, except for Polkadot that they're launching on the chain, the apps where the chain is going to be used and the chain where they're issuing are the same on the Cosmos ecosystem, they are issuing on an interchange secured chain, but with the understanding that the majority of the usage is going to be on DYDX osmosis, SEI protocol, like all of these agoric, all of these things. So what I would say is that one of the things that's been exciting to me has been seeing USDC from go from sort of ignoring the multi chain world and sort of just like, okay, like we're gonna, maybe we're gonna like we were on the like L. We're like kind. They were kind of affiliated with a FAT protocol thesis where they're like we'll go to the fattest protocols, we'll issue USDC there to okay, we get it, it's all multi chain. We gotta like make USDC much more natively multi chain. Which is honestly a challenge for a lot of the bridging protocols. Like you know, when, when Sunny says, you know, Axelr is the biggest bridge into osmosis, it's almost all stablecoin volume. And you know, we're bringing USDC natively to Cosmos. The like most wrapped bridge tokens in general are primarily stablecoins, going from where they aren't to where they are. And we're much more entering a universe of stablecoin ubiquity. Like you know, essentially now you know, if you're building a new L1 and you just build IBC support, you're going to get USDC from Cosmos from the, from the, from the, from the R chain, like seamlessly and permissionlessly, which you could never do before. So these things are like. I think the circle announcement was kind of underplayed as exactly how as a big deal it is because like literally what they were just saying, like the literal, logical implication of, of USDC coming onto cosmos is now USDC is available to any L1 builder who implements the inter blockchain communication protocol and they get USDC for free. **B** (53:40): I think that is a big deal. And I like the idea of USDC on Cosmos more than say something like some kind of a bitcoin. Because USDC itself is already a centralized. It's an IOU for a dollar in a bank account owned by Coinbase. Right. It's not supposed to provide sovereign grade security. It's not a crypto native money at all. And so putting that on Cosmos just seems to make sense. You're not really sacrificing any of the security or any of the sovereignty of the money because it's just already a dollar. It's a digital dollar. Okay, so I'm going to lay out another question I guess I have for you guys. And this is again, maybe from a dumb Ethereum Koolaid drinker point of view and you guys tell me where I'm wrong. Yeah. Okay, so layer 2s versus Cosmos. Let's talk about that. So yes, the future is multi chain. What people don't necessarily understand is that there are kind of two multi chain visions I think at play, right? Not to say that both won't coexist. I'm sure they absolutely will coexist, but one is kind of a Cosmos multi chain vision and the other is maybe an Ethereum multichain vision. And let me lay out the Ethereum kind of multi chain vision because I understand that a little bit more. But the basic idea is all of the chains settle back and use the security of Ethereum, right? And so yes, the Ethereum ecosystem, or Universe if you will, will have app chains. And yes, app chains are a force. Cosmos is absolutely right in its thesis about this, that app chains are going to be a big deal. I think you guys have led the way and probably Ethereum community is like, oh yeah, we get it now, we understand AppChain's big deal. Yes. But the way that the Ethereum community is doing app chains is basically like as part of maybe call it a layer three, as part of kind of a roll up. So you've got Arbitrum and their any trust strategy. We just had the folks from Zksync on the podcast last week or a couple weeks ago at the time of record, at the time of people will listen to this. And that episode was about essentially spinning up app chains inside of what they called a layer two, which just means Basically settled down to Ethereum at the root at the end of the day. So secured by Ethereum. And the benefit of this, you guys are going to emphasize the cost, but let me tell you what the benefit is of this I see is you get Ethereum's level of security or something close to it with maybe a few minor trade offs without having to pay for it. Right? So if you spin up your own sovereign chain, there is a military, there is a security force, the police and the military you have to fund and those are called the validators of the system, they secure the chain for you. If you're on Ethereum, you settle down to Ethereum, you benefit from Ethereum's economic security. You don't have to pay your own military and police force. And so that has both economic advantages. It seems like you get to preserve much of the sovereignty, though you guys maybe will disagree and say, well, it's not completely your own kind of sovereignty in that app chain, but you get those benefits and then you're kind of tapped into the Ethereum network and the Ethereum community cross chain bridging becomes much more secure. You get a lot of benefits from that path. So contrast that, if you will, with the Cosmos app chain model and. Yeah, tell me where the Ethereum strategy breaks down. **D** (57:15): Well, we have a name for that system, it's called Empires and Colonies and we are building for sovereign system. You want to start? **A** (57:25): Yeah. Okay, so that was the very memeable version of the put down. I'll do the a little bit more. So, okay, so first point is I don't think like, I think that the, you know, part of the goal of, you know, part of like the dialogue between Ethereum and Cosmos, which I think most people in Ethereum don't really realize this, but this dialogue has been going on since like 2014. One of the co founders of Cosmos was like an early Geth contributor and Geth person. Like we have been, these have been existent systems that inform each other and honestly we've been trying to get convince Ethereum to move towards something like what the current vision is for a very long time. We've been like, like, okay guys, like yes, like we get it but like you got to understand the app chain thing. Like that has to like be part of the vision. And like it's taken a long time because like they went down this like sharding off ramp and I was like, what are you doing? **D** (58:32): And the plasma off ramp and like. **A** (58:34): There'S a couple off ramps, plasma sharding, it took them so long to like be like single slot finality app shades. Okay, cool. **B** (58:44): So they kind of capitulated a little bit and they came around to the Cosmos vision. **A** (58:48): Yeah, I, you know, I was, I hung out with Vitalik for like a week earlier this year and I'm like, I finally convinced you. It's taken seven years but I finally convinced you. So I was so, you know, there's a, there is a friendliness always to the Ethereum community. We are, we are. We, we have always viewed each other as brothers and in many ways I think the mission of the Cosmos, if that world that you're describing, of the Ethereum world, the idea of Cosmos will have succeeded and that's why we're all here. So that's first of all. Now I'll just go to what is the specific technical reason is in my mind a blockchain is three things. It's an execution environment, it's a data availability system and it's a system of bridges. Ethereum is trying to say, hey, basically we want to build one of all of this. There's like one canonical place you bridge to where you have, where you post your fraud proofs, where you post your zero knowledge proofs. We'll provide one data availability layer called dank sharding and then you can investigate all the execution environments that you want. The Cosmos vision is bridge wherever you want. We have IBC you can bridge anywhere. IBC can enable you to bridge anywhere, post your zero knowledge proofs and your fraud proofs and everything wherever you want. Celestia is kind of part of the Cosmos family. It is a data availability focused app chain enabling like a roll up type ecosystem and you can post your stuff there. And then we've given you a free toolkit for building execution environments. And so the differences between the Ethereum ecosystem right now is one, for the most part the execution environment toolkits are not free, which is I think a big reason of why dydx for instance came to Cosmos and why other chains have come to Cosmos is there is an advantage to being like hey, the execution environment is not the product of some company that raised a multi billion dollar value. **B** (1:01:15): Zaki with that is that like Tendermint is that kind of the Cosmos SDK, it's open source, out of the box. **A** (1:01:22): Open source, Apache 2 license, public goods. **B** (1:01:25): Got it. **A** (1:01:25): You know, collaborated on by many different people where there's many different experts all over the ecosystem who sit in chats with each other and just like work on it and debug it every day. Much of it is funded by the atom holders, but it's like again, we used the ADAM fundraiser, we use the speculation, speculative energy around Adam to like build this public good for everybody. **B** (1:01:50): 1. **A** (1:01:51): So that was, that was, that was. So that's. That I think is the big. **D** (1:01:54): I also just think it's actually just the best framework for this. Like, I mean, you know, if you compound, if you, you know, Robert Leshner tweeted a couple weeks ago, a couple months ago, he's like, you know, compound chain. Tried to build an app chain on you, but I think they just chose the wrong stack. They chose substrate and spent a year banging their head against the walls and gave up. And Robert Leshnar said, hey, I actually think if we chose the Cosmos SDK as the stack to do this on, I think this could have worked. And part of, from a builder perspective, I think there's actually just like one of the big things is we can just build faster with the Cosmos SDK than we could with rollups. Right. So in rollups today you kind of have like two model, two real frameworks right now which either everyone's building these EVM compatible systems, but like I mentioned, you know, the stuff we're trying to do, it doesn't work on the evm. We need a custom framework for that. Building optimistic rollups or ZK rollups for really custom state machines is actually really hard. Probably the closest, you know, the closest thing right now is Cairo from, from the starkware team. And you know, it's really impressive what they've been able to do. But I mean, I'll say that writing a dex of the complexity of what we're trying to, of osmosis, trying to write this in this new thing called Cairo, that's like very cutting edge. You know, it's, it's like trying to write in like you know, not even C, it's like a proto C. Like it's like versus, you know, the stuff that we can do in like go and rust and just like build faster and I think build the applications and build the UX framework. So I guess like, you know, maybe one, one thing is how to compare a lot of this stuff is the Ethereum ecosystem and Cosmos. Yes. Maybe they're moving towards the same place right now, the same end goal. The Ethereum ecosystem decided to spend a lot of time focusing on the things like Dr. Said, the fraud proofs and validity proofs, the data availability stuff. While I think the Cosmos ecosystem has focused much more at a higher layer of the stack at the state Machine stuff. I think the Cosmos VM is probably the best designed VM in all of crypto because how it does interchange composability, the cross chain composability that we have in Cosmos is way more advanced than anything else. Other ecosystems. Yeah, you can bridge tokens right? In Cosmos we can have daos on one chain do transactions on another chain. And I think maybe part of that comes from like Zaki mentioned that all the core devs of Cosmos are app developers as well. And so that's kind of of informs the decision and priorities that we do. And so that's sort of one of the trade offs. And no, we will eventually have fraud proofs and validity proofs and all that stuff for Cosmos SDK chains as well. But we were just like, we're going to build a better UX and app features first. **B** (1:04:51): I think this is very much what the difference is. Cosmos is starting app down and Ethereum is almost starting from kind of like base protocol up a bit more. And so yeah, I think a big part of your answer was hey, the Cosmos SDK is just badass if you're trying to build a chain. And there's nothing comparable in the Ethereum community yet. I know we've heard the optimism team talk about a bedrock which is kind of their version of creating kind of almost like a WordPress for chains. We just kind of stamp them out. And these would be roll ups. **C** (1:05:24): But layer two out of the box. **B** (1:05:25): Yeah, layer two out of the box, but it's not, certainly not there yet. What's interesting, I think hot take is. **D** (1:05:31): That, you know, roll ups like to talk about how much how like secure they are and stuff compared to like. But if you go to l2beat.com, you can see the actual security. **B** (1:05:41): We know it. **D** (1:05:42): Yeah, I would say the IBC system right now is actually more secure than any of the most of the rollups in practice today. **B** (1:05:48): Well, we also had Vitalikon who was like wondering if we'll ever get to a place in optimistic rollups at least where fraud proofs actually work because we're not there yet. Right. Although I will say ZKEVMs are looking pretty good from a tech perspective from that side of things. But yeah, it's very interesting I guess. One comment I want to make and then just a quick question is it does seem like because all of the Cosmos core developers are also app developers, app chain developers that probably put on your app chain hat you guys are just willing to use whatever technology, app chain technology is best. Right. And Right now that seems to be Cosmos for you, but if there was a way to do kind of Cosmos plus settling on Ethereum, you might decide to migrate your app there. It's just not been the best approach to date, right? The Cosmos community has provided the best app chain tools the Brave Wallet is. **C** (1:06:47): Your secure multi chain on ramp into Web3, and it's built directly directly into the Brave Privacy browser. Gone are the days of managing multiple wallet extensions that put you at risk of phishing, spoofs and tracking. 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Nexo lets you buy crypto instantly with your credit or debit card or via bank transfer. They also have an awesome advanced trading platform called Nexo Pro that pays you rewards when you swap crypto assets. And Nexo also lets you earn interest on your crypto in Bitcoin eth or other assets. And they also give you an instant crypto line of credit with as low as 0% APR. And they also give you access to a crypto backed MasterCard of course earning you more crypto when you use it. So enhance your financial life with Nexo who ensures all credit lines are over collateralized with insurance on all custodial assets. Nexo the right place for your crypto. So click the link in the show notes to join over 5 million users who are getting the most out of their crypto. **B** (1:09:13): One question though, and this is a throwback maybe to 2018, 2017, 2018. And this was I remember at the time there were two big interoperability chains because this was the narrative. It was Polka Dot and it was Cosmos and you just were talking about a failed attempt from the Compound team to actually build something in substrate the Polkadot tech. Has Cosmos won that war? Do you think Cosmos versus Polkadot is Cosmos ahead? And I'm asking for obviously you're probably going to say yes because you're on Team Cosmos, but give me some objective reasons for why you think that's true. **A** (1:09:51): Yeah. Okay, so we could talk a little bit about. I mean we have many friends at Parity in the Polkadot community. IBC to Polkadot is also being built by a team called Composable Finance. Another exciting thing just talking about all the ZK progress is ZK IBC has gone from being like maybe it's like five years away to maybe it's like a year away. There's a lot of exciting teams that have kind of come in and started building the building blocks of ZK IBC which would potentially allow for much more interoperability with Ethereum. So just like kind of talk about all those things but then get to the heart of your question. Polkadot vs Cosmos, which model is winning Dot market cap wise dot is winning. But okay so like you know you heard in the same sentence it like basically the same presentation from Circle. USDC is launching in Polkadot. It's launching before it's launching on Cosmos. Absolutely true. Does Polkadot have an app that's going to mint a billion dollars of USDC on it? No. Right. We have dydx like when USDC goes live on, on, on, on Cosmos the floor Mint is a billion dollars just to move the DYDX user base from Starkware to, to, to Cosmos. This is the like I mean, that. That's like. It's a very hard number. It's a very hard metric. But it's like, like, this is what happens when you bring the best apps to your ecosystem and you don't collect rent from your app developers. You. You build an ecosystem in which of collaboration in which they can thrive and we can thrive. You get the best apps and then as assets and stuff move to the ecosystem, you get these exponentials of scale that are not possible in other ecosystems. **B** (1:11:52): What's interesting about that is it feels like Polkadot has maybe done this strategy where they've tried to split the difference between Ethereum and Cosmos. And because they've been in the middle, the middle just hasn't held. Whereas Ethereum is just like, yeah, the middle doesn't hold. And so Ethereum is just like, hey, we're an empire. I guess. I don't think, particularly think they're an evil empire, but in an empire, like, they're not. Vitalik's certainly not evil. No one would say that Vitalik's not evil. There's some rent extraction. There's all sorts of things. Right, I get that. **A** (1:12:23): And it's not nearly. It's as. I don't consider it nearly as adversely selective as, as Polkadot. **B** (1:12:29): Sure. **A** (1:12:29): You are getting these enormous network effects from it. **B** (1:12:32): Well, but, so you have that and it's like, it's kind of like the United States. Right. And all of the chains are sort of states within the United States. There's a federalist kind of like notion to it, but, you know, confederacy of states as well. And then you've got Cosmos on the other side, which is just like anarchy almost. It's not anarchy, but it's almost like, hey, any, any city state can spin up. We'll do a network. If it's advantageous, we'll do Sparta and Athens. We'll make an alliance, but maybe we won't. Maybe we'll go to war, but maybe we will. And like, it's like, it's very loose, but there's no rent collection paid to the kind of the Cosmos hub. But then you have Polkadot, which kind of tried to split the difference here, where they tried to have kind of the sovereignty of all of these chain experiments, but then they asked the chains to pay rent economically back to dot holders. Right. You have to rent out your parachain in the Polkadot network. And it just seems like that model has not picked up from an economic perspective. And this is why very much right now in crypto, maybe this has always been the case. I just see these two sides. There's Ethereum on one side and there's Cosmos on the other. And these are the two kind of parallel ideas that are playing out in crypto before us in 2022. **C** (1:13:48): We've used this metaphor before. Ryan is the one that put this into my brain is that nature has made a crab like 10, 15, 20 different times throughout history. And these crabs are unrelated to each other on the bio evolutionary line. And that's just because the crab is a good strategy. And some of the lines I've been using on this like metaphor is that if you reroll the dice over and over and over again about how the crypto industry forms, you'll get Ethereum every single time. And it also, I think, goes to show with. Ryan was just saying you'll also get Cosmos. It is the central security model of Ethereum versus the app chain model of Cosmos. And that is like the whole thing. Maybe Bitcoiners will be like, oh, and there's also the proof of work money strategy as well. Maybe that, maybe that's also true. But my opinion, that's a type of app chain. Yeah, okay, sure, I said app chain, right? So it's, it's one of these two flavors. Maybe, maybe it's a 50, 50 split, maybe it's an 8020 split, but it's definitely not 100 0. I definitely will take that into account. I want to talk about mev. I want to go down the MEV rabbit hole a little bit because I think that will also help illustrate the incentive for apps to be their own app chain. Sunny, can you talk about the MEV model of Ethereum? And like, we can use Uniswap as an example. Dan Elitzer just put out a fantastic article talking about Uniswap and all of the money it makes as revenue versus the money it leaks to the ecosystem. And just like real. Just to speed run, that article of roughly one third of the economic energy that go through Uniswap is captured by liquidity providers, the actual like service providers of Uniswap. About one third goes to gas payments to transact on Uniswap and one more third goes to MEV payments front running, back running, like arbitrage opportunities. So there's this application on Ethereum called Uniswap. And of all the costs it takes users to use Uniswap, about one third of that cost goes to profits for liquidity providers. One third goes to gas payments, which goes to ether holders, and one third goes to MeV bots, which are MEV bots. And so the claim here is that there's a leaking a lot of value anytime you use Uniswap. So Sonny, can you talk about this in like the cosmos perspective and how cosmos and app chains solve some of these problems, some of these MEV problems and are a less leaky ship when it comes to value capture and value accrual for apps. **D** (1:16:21): Yeah, sure, yeah. You know, Dan's officer's like proposal, hey, we should build like a uni chain. And I'm like, yeah, we did. It's called osmosis. And Dan knows this. Nathan is a major investor in osmosis. But so the, yeah, so Anatoly from Solana had a, you know, had a tweet a couple months ago at this point, but he basically said, but he also doesn't believe in the monetary premium thesis. Right? And he actually said that like I don't think this, I don't know about the monetary premium stuff. It's a little bit too hand wavy for me. But the value of L1s is the MeV that they capture. And like you said exactly that Uniswap is leaking that MEV value to the user, to the base layer of Ethereum. Right. For osmosis, you know, for as a vertically integrated chain, there's sort of three sources of revenue. Right? I could see it. We have our app revenue which is like, you know, it's a dex trading fees and all that kind of stuff. There's your transaction fee revenue. But my take is actually that transaction fee revenue should never be a meaningful source of revenue. This is sort of my like concern with the whole EIP 1559 like sound ultrasound money like thesis is that in any world in which the transaction fee. Okay, why is. What are you paying for with transaction fees? You're paying for block space of a BFT compute system. And the point is that I think that block space and BFT compute systems is going to be cheap in the long run because there's going to be so many chains and they're going to have a lot of as more. Even in the Ethereum model, as more usage moves onto rollups, the demand for base layer block space will go down massively. And like users are not going to in any world if transaction fees are too low, it's not a meaningful source of revenue. If they're too high, users are not going to use it. And Ethereum had this kind of like it had this two year period last, starting two years ago of like, oh, okay, there was high enough, there was really high fees, but users were still using it because there was no real alternative. But I don't know if that like is a, especially with roll ups and app chains and all this new stuff coming out, I don't know if that will, I don't know if users are going to be willing to pay hundreds of dollars again for transactions. So. And then we kind of see this, you know, that's why a lot of stuff, markets have moved to other chains. You know, NFTs are very popular on, you know, Solana for example. Right. Or games have moved off of like completely move off of Ethereum main chain altogether. So yeah, the third source of revenue is the MEV capture. Right. And so osmosis, we actually started with osmosis before we were building a dex. We actually were just like building like MEV mitigation strategies. And so we were working on something called threshold decryption, which is a way of encrypting the mempool entirely. And so that way only decrypting and executing after blocks have been finalized and committed. And so, you know, the motto that we follow at osmosis is mitigate bad mev, internalize good mev. So where do we draw this distinction? Bad MEV is the type of MEV when you are doing actions based off of other people's transactions. Right. Because the mempool is public, you can read others transactions and you could sandwich them, you could generalize, front run them, copy their strategies. You can do all this stuff which is like not cool. Fundamentally that's a privacy breach and like it is a bug that the mempools are not encrypted right now. So that's why we focus on building threshold decryption so that the mempools are encrypted. But now there's still some types of MEV that remain. Right. And I call these like, I don't know if good MEV is the right word, but they're not, it's not extractive mev, you're not extracting it from anyone else. So examples would be arbing prices on osmosis relative to centralized exchanges, or even arbing prices within osmosis pools. You know, there are circular routes through pools, arbing those together or there's, there's, you know, the MARS protocol is launching a lending platform on osmosis quite soon. So you know, triggering liquidations is another sort of, you know, good mev. And all of these are good things. You know, you want your pools to be arb you want liquidations to be happening fast, but there is value in being the person to do that. Right. And so how do we internalize good MEV and bring that s protocol of revenue? We're working very closely with a team called Skip who's helping us. You know, instead of letting this stuff be like, you know, I call them, I call, you know, letting them be run by these off chain validator cartels. Right. You know, I would say like flashbots not being part of the core protocol, it makes it so like, you know, it's sort of, it ends up having to be a little bit profit maximizing when if the core the beauty of app chains is because your chain understands the semantics of the application built on top of it, it can be opinionated about how it orders transactions or and it can do things to actually promote social good. Right. It could be like, you know, we are going to make sure, you know, you can't just rug liquidity. We're going to make sure all trades happen first before liquidity removals happen. And like, so that way liquidity can't get rugged from under you. Or we can detect sandwiches and be like, oh, this is an invalid transaction order. We're going to move these transactions around so it's not a sandwich anymore. And you can do things like that to help continue to mitigate the bad mev. And then on the good mev we can run automatic on chain ARB bots where we calculate ARB cycles and we run an on chain arbor that happens at the end of every block and captures that ARB revenue at and gives it to OSMO stakers. Or we could, what we're going to do is have a top of the block auction but in the protocol itself. So instead of relying on off chain system, the in protocol you can bid to say, hey, I want to be the first transaction in the block. And that way you can be the one to do all the arbs and you know, liquidations and stuff. And doing it in protocol is important because then the protocol can decide how the revenue gets shared right in if you do it off chain, you know, the revenue goes to like only the validators. And you know, maybe we have to rely on them altruistic or like, you know, maybe we'll see a market where validators have to end up start sharing all their revenue with with their delegators. Right. But in, if you do it in protocol we can say, oh, we want some of this MEV revenue to go to all stakers. We want some of it to go to the community pool, we want to give some of it as a kickback to users. We can choose what to do with that MEV revenue, which is, I think, a very important property. **B** (1:23:22): Yeah, I think that's definitely the strength of the app chain model. As we move kind of this conversation from comparisons to Ethereum and from the Cosmos thesis to the world of the new Atom 2.0 economics that were released. Having gone through that paper, there are a few things that stuck out to me and I'm going to try my attempt at summarizing, but you guys go in there and let me know what the main thrust of these changes are. It seems like before atoms from an economic perspective, the token economics, for an investor anyways, weren't really great, kind of sucked, at least did not accrue monetary premium. And Zaki, you're going thumbs down. Can you talk about, like, why did. Why did. **C** (1:24:09): Thumbs down in agreement, right? **B** (1:24:10): Yes, thumbs down. **A** (1:24:11): Thumbs down in agreement. **B** (1:24:12): Yeah, I know, right? Why did they suck before? **A** (1:24:15): I mean, like, this was a big part of our presentation at Cosmoverse, my presentation specifically, you know, it was like, look, you can think of what Adam was foremost in the first iteration was a prototype of a proof of stake chain. Right? We kind of, you know, we would say that from our point of view that our argument is that before the Cosmos Hub launch, there was no live proof of stake chain that had really taken proof of stake economically seriously and done it in a rigorous way from the computer science level all the way to the economics level. I believe that the Cosmos Hub was the first chain to do this, but it was a prototype of what does proof of stake look like? How can it be done in a rigorous way, all of these things. But it was only a prototype. And the best way I would describe it is also is we have an app chain thesis. What the hell is the app of the Cosmos Hub? It doesn't appear to have an app. So we were kind of the. And so both Ethan and I talked about this and this has been a big theme of the last week of our lives and the preceding nine months of pulling all these ideas together have been about, okay, we would like to go out and we would like to say, one, we want to make Adam a better ecosystem asset. But part of that. But inherent to that idea is we must create an app for the Cosmos Hub. Why don't I let you kind of do other takeaways from the paper? Because I'm curious in real time, getting what you took away from it and then. But I could talk a Little bit about. But yes. So like issuance is changing. We are moving towards, you know, not this exponential inflation. We think that helps define the ecosystem. We think it makes Adam closer to a monetary, a monetary asset like all of those things. And we think those things are good. Okay, first leg of the stool, let's. **B** (1:26:21): Camp on that because as a, as a monetary maximalist you'll note that the first thing I noticed in this paper was hey, the monetary policy has changed. How this is interesting. And I almost wondered in the back of my mind if the Ethereum community kind of capitulated and being like, ah, Cosmos, these app chain guys were right. They were right all along. Right. We're going to do more app chains in Ethereum. I almost saw maybe some recognition from the Cosmos community that huh, this ultrasound money thing, maybe we want our atom token to actually exhibit some characteristics of money and have a better issuance policy. That's kind of what I saw, but maybe that's my biased reading of the thing. And so what I saw is previously I think issuance for atom token holders was that between like 7 and 20% per year. That was the rate of issuance, new. **A** (1:27:12): Issuance in the market, it's adaptive to the amount that's staked. So we target a stake rate of 67% because of, you know, we want to keep the, make it very expensive to attack to like hat for there to be enough liquid atom to accumulate to actually attack the network. **B** (1:27:31): Right. **A** (1:27:33): And you know, so you know we, and so basically you know, what pulls atoms away from being there are like what's on centralized exchanges, that the centralized exchanges themselves are not staking and then all the atoms that are out there in LP pools, all of that stuff, you know, that pushes the staking rate down, the inflation rate goes up to compensate. So. Right. So like since Osmo, so we had dropped to about 7% inflation. Okay, new atom issuance and then since kind of osmosis Launch and the IBC ecosystem we've been averaging about 9ish percent in this PID loop and that has translated into a staking APY for atoms of about 19, 20%. **B** (1:28:19): Gotcha. And now what are the changes? There seem to be almost two phases of these changes, like a transition phase and then almost a steady state. In the first phase issuance actually increases, I believe. But then in the second phase it kind of like tapers off and it's going to decrease to like 1%. Could you explain that? **A** (1:28:36): Yeah, there's a bunch of complicated moving pieces in the issuance thing. A Big part of the framework around issuance though is that Cosmos is taking a very different approach to liquid staking than let's say Ethereum has. Where I would say Ethereum fought tooth and nail to make it as hard as possible for liquid staking to emerge. And it emerged anyways because the economics are so compelling. The Cosmos ecosystem has been taking an approach of hey, we want to make sure that there are just a large variety of liquid staking providers and so that there is competition and so you don't have a situation where a lido like entity becomes like super dominant. But we think on the whole like liquid staking, staking derivative assets are actually really important to the security budget of the system. So and the logic there is it allows people to stack their yield. So rather than saying atom holders like we're going to try and print so many atoms that we compensate you for the opportunity cost of everything else you could do with Atom, we're saying liquid stake your atom, take your liquid staked atom, go do all the other things that you could do in defi, go use the app ecosystem with your liquid staked atom and have it still contribute to the security budget of the Cosmos hub. So, so the first thesis is so there's probably about six liquid staking protocols launching or in the midst of launching on top of, in the Cosmos ecosystem right now. So there's a lot of activity around that. So we're sort of projecting in the future saying hey, we think this over the next three years we expect these protocols will succeed. My team at occlusion has been working, has been, has been working really like one of our big contributions of the occlusion team to the, to the paper has been that we spent the last like 18 months making changes to the like default Cosmos staking module to improve the UX of liquid staking. So all of that stuff. So that's happening. So staking yield starts to fall, starts to fall on like a yearly basis in this now the issuance goes up, but that is issuance to the community Treasury. It is because a lot of chains have had this idea of having the on chain DAO being able to have funds and funds we started the Cosmos Hub out with a very small amount where there's only about half a percent of new issuance goes into the and so we have about you know, $10 million I think of token of value in our, in our community pool. Whereas you know, some other L1s will have like a third of their market cap in, in the community pool to like fund New things. And one of the things that we're saying is in this new app vision, to execute on that app vision you need working capital. Like we're going to have to go out and do business development, we're going to have to onboard chains onto this interchange security thing. Like there's going to be a lot of stuff that needs to be done that wasn't really conceived of in the original Cosmos. But like, you know, if you hold atoms, you're going to be a voter on what those funds are being. So like the extent to which is dilutive I think is a little overplayed because. And then we're saying after this three year period there's not going to be any more new funding going into the community pool. There's not into the on chain treasury, there's. And then we're going to drop the staking yield basically to about 1%. **B** (1:32:16): That makes sense. Okay, so that's the economic change for Adams and lower staking yield is kind of like lower issuance is the eventual outcome that'll take some years to play out. And you also mentioned liquid staking which I noticed in the paper making that kind of a first class citizen, I would say in the Cosmos ecosystem and the way it's liquid stake is probably not a first class citizen in Ethereum. It's kind of an app that a third party creates. And then I also noticed you're posing the question, Zaki, of what is the app of the Cosmos Hub itself? And is the app of the Cosmos Hub not Interchange security? Isn't that the thing that's supposed. So talk about this. And this I think is sort of the idea that you can call on Atom validators, Cosmos Hub validators to also secure your app chain if you want. Is this the case? Is this what Interchange security means? **A** (1:33:13): Yeah. So I'll contrast. Why don't we talk about two terms. One is mesh security, the other was interchange security. Technical primitives are very similar, are basically almost identical between them. They're about translating staking information and slashing information from one chain to another chain. So like if you fault on one chain you get slashed on another chain. Let's call Interchange security. But like you're the version in which you replicate the hub validator set. Okay, so when we started with this interchange security thing, I was like the biggest skeptic that we would find. Anyone who cared about it. I was like anyone who's really serious about building an app will like want to be of their own sovereign chain. Why would anybody else want to do this like and then we found, we found like an enormous amount of, of customer demand for, for Interchange Security that like or like we call them consumer chains, so chains that consume security from the hub we found so much demand for. And I'm like what? Like it was like a shock to me but I've understood now in, in, in the, in, in the past, like what are the parts, what are the things that Interchange security is offering that people get that is like appealing to people. One category of thing is there are very high value users like USDC for instance, who want to be able to like launch, be strongly affiliated with the developer community, core the exchanges, the custodians, the community around Adam and do not want to think about tokenomics. They just don't want to. That's just not something that they would really at all want to do. And so that's one really strong use case which is really powerful use cases that accrue value to the whole ecosystem and accrue value to the Cosmos Hub but don't want to think about their own tokenomics at all. Other things are, hey, we are building something that's actually very security sensitive, like liquid staking, where if you have a major liquid staking provider and it gets taken over, there's a cascading effect on the security of every other chain that is running on top of their liquid staking protocol. So those chains have also wanted to affiliate more closely with the Cosmos Hub. And then there's the sense of hey, I want to be able to build and really target just the network effects around Atom, the wide holder base, all of that stuff. These are three themes that we see popping up over and over again. And frankly this again has finally given us a sense of what is the purpose of the Cosmos Hub, which is to enable these things to succeed. **B** (1:36:06): That is cool. I guess another thing I noticed was something that you guys are doing with MEV on. **D** (1:36:14): Can I add one more thing about the Hub? **B** (1:36:15): Yeah, yeah, go ahead. **D** (1:36:16): How it relates in the mesh security vision. So I taught a class on Switzerland at UC Berkeley. It's my favorite country in the world. **B** (1:36:26): Taught a class on Switzerland on the subject of Switzerland. **D** (1:36:29): Yeah, yeah. Eight lectures. Talked about history, politics, economics, like everything. It's all on my website. **B** (1:36:35): Very neutral country. **A** (1:36:37): Yes. **D** (1:36:38): So you know, how did Switzerland become. It's one of the richest countries in the world. Right. And there's many things that, that went into that. Right. I think the role of its credible neutrality that is played throughout history was very important. One thing that people maybe don't Realize is that Switzerland, you know, it's, it's neutral, but it actually had one of the best militaries in the world. And even till today it actually is one of the best militaries in the world. But from like you know, the period of like 1200 until like Napoleon, basically they were like Europe's mercenaries. They were the best, most like respected military in all of Europe. But because they were neutral, they acted as mercenaries and went and like defended whoever would pay for them. And I see the role of the Cosmos Hub to be this credibly neutral system that is a we will you pay it for security and you get this like amazing economic security from it. So that's where I see military for hire. Military for hire. It's like, you know, you don't want to have to come up with your own military. Well, you know, you can ha. You can pay the Cosmos Hub and you'll. And that's the role I feel that it plays in this Mesh security vision. **C** (1:37:51): So the idea here is that app chains maybe at Genesis don't do this because they're at Genesis, but then their product market fit happens, their utility is proven out, their value increases and then they can start to be like hey you know what, we can afford security. And so then they start to tap into this like credibly neutral army which then can secure them. **D** (1:38:14): I would say one of the other direction. **A** (1:38:17): Well, I will I'll just say too one, one of the things that is like really cool and I think unique about our vision of shared security is we have specked out the whole system to the extent where you can seamlessly like just through like the standard kind of upgrading, application upgrading process that we use in Cosmos. Both join interchange security without disrupting your IBC connections or anything or leave interchange security. So you know, communities are still giving the. Given the. It's not like they've like if they find the Hub excessively value extractive for the security that it provides, it'll be very possible to leave. It'll be possible to go join someone else's shared security environment too or be your own sovereign app chain. And so again this is a long term commitment. We're creating market forces in Cosmos that ensure that this is a pluralist environment and that we are not creating any sort of artificial renzi like the Hub has to really provide its value, otherwise will provide value, otherwise no one will do this because MEV has been like MEV censorship. All of these things hugely relevant to the Ethereum community. We've heard a little bit about what does MEV look like in the pure app chain thesis. But one of the things that we, I've talked a lot about with the flashbots teams, we also have some very good MEV teams inside of Cosmos, Skip and mechatech who are doing also building businesses around MEV in the Cosmos. And one of the things that we've been talking about, one of the things that is built into it is again, we don't think transaction fees will ever be high. Like, we don't think transaction fees will be a meaningful amount of revenue. But you know, in a world where there's like Adam usdc, other assets that are major fiat or on ramps between Cosmos into the Cosmos ecosystem, at least one hop of every economic sort of loop or economic activity will frequently start within, let's say call it the Atom Economic Zone. The Interchange secured area of Adam will probably be a place where a lot of economic activity originates and the ability to sort of arbitrage that. So statistical arbitrage of not sandwiching or anything, but just knowing, hey, someone has minted a whole bunch of USDC and we see them issuing an IBC packet, that kind of information is likely to be valuable, that block space is likely to be valuable. So one of the things that we're proposing in the Hub 2.0 white paper is that one of the again, applications on the Hub is this block space market that any chain in the ecosystem, whether it's Interchange secured or not, can opt into participating with and say we're actually going to package a product that is a better product than what Skip and mechatech could build right now, which is guaranteed, the guaranteed ability to have a transaction at the top of the block across many blocks over some contiguous period of time, and that the Hub is a natural place to hold this auction and execute on this. **C** (1:41:53): So right now Cosmos, the Atom token is coming in at 23 on CoinGecko, the total coin market cap. And it's kind of behind some tokens that I never really would expect it to be behind. Still behind Ripple Coin, a lot of tokens are sadly behind Ripple. Litecoin is the one that comes to mind. It's right before it at 22. It doesn't make any sense to me because it's Litecoin. All it's got is Lindy. Do you guys envision that Adam actually enters the top 10 crypto assets in the future at some given amount of time? **A** (1:42:28): If that doesn't happen, Adam, I will not be satisfied. I will have considered that the work that I've been doing will not have been a success. I believe that this work that went into Adam 2.0 has created a top 10 when executed creates a top 10 asset if the market doesn't agree with me, you know, but, and like there's. As a, as an entrepreneur, it's like you go out, you bring your best ideas to the market, the market punches you in the face. And so we'll see. But yeah, that's what we're trying. That is, I would say that is explicitly my goal. This Atom 2.0. **C** (1:43:11): Sunny, any thoughts? **D** (1:43:13): Yeah, I'll admit I'm not as focused on the atom side of things. I believe I focus on the cosmos level at the of vision and then I'm very focused. I'm very focused on the cosmos vision and then very focused on the osmosis chain. We're trying to build osmosis. We're trying to build the decentralized version of finance. Finance is a top 10 asset. I think OSMO will be one day too. **C** (1:43:36): Zachy. The Ethereum ecosystem and community largely on the page of like, yeah, we're going to flip Bitcoin one day. Do you think Cosmos is there a part of Cosmos that's like, Adam is going to flip ETH one day? **A** (1:43:55): Like, okay, so I'll just give you where I feel like I can only tell you my feelings. I can't. I have become really probably more despondent about Bitcoin's long term future than I ever have been. I own more ETH today than I've ever owned in the past. I own much more Adam, but I own more ETH than I've ever owned before. I moan, more ETH than Bitcoin. I think Ethereum is doing a great job and like deserves is like the better representative of the cryptocurrency community. The values that I believe in and I feel more aligned with Ethereum than in the past. And so I'm not, I don't, I'm not building this with like, oh, I have to flip eth. I want to. I need to flip all of the shit that is between me. **B** (1:44:47): Bars loading. Do that. There's a lot of it. Guys, this has been a lot of fun. I really feel like listeners at the end of this episode will understand the Cosmos ecosystem so much more, including how it's going to evolve in the future. And what's so interesting to me is these two communities, Ethereum and Cosmos is like, you see Ethereum veering towards Cosmos, right? Getting more into app chains and this sort of thing. You Also see in places Cosmos veering more towards Ethereum, at least with atoms and kind of monetary policy improvements. And it's interesting to see these two communities. One thing I've respected out of both is they are both a community of builders. You guys are just Cosmos is building a lot and it's hard to be bearish on builder activity when you get 1500 people at a conference in a bear market and you know they're there because they think they're building something cool that is special and that is certainly something to watch. So we're definitely watching it at Bankless, I guess. Last question for you both. Let's fast forward five years into the future, 10 years into the future, where do you think Cosmos ends up? What does crypto look like and what does the Cosmos ecosystem look like maybe five years into the future or 10 years from the future? Just any point in time where you feel like the vision is fulfilled. Zaki, over to you. **A** (1:46:13): In so, okay, so I mean my, my expectation is, is that by the time the vision is fulfilled, most people who use cryptocurrency based technologies will kind of not really know whether or not they're using a Cosmos thing, an Ethereum thing and Solana thing. And hopefully what I want is them just to have used. We use a thing where they're, where they are not being exploited, where there's not being front run, where they're part where, where, where Digital market. Okay, so like this, this comes down to the question I think which you know, I have a good way of articulating now digital markets in the future will be all markets and I'm building for a future in which digital markets are open source public goods. That's like flat out what I'm trying to accomplish. I don't really care about anything else. I just view the tools we've built this Cosmos as an essential part of getting there. I also think Ethereum largely shares this vision and so feel very aligned with Ethereum. But like so if we're successful we will have open source digital markets that provide economic coordination for the entire human race. And it works. And no one is exploiting or extracting red sequence because you can't. And that is the world that like that is the utopia. **B** (1:47:31): Open source digital markets. That's Saki's utopia. What's yours Sunny? **D** (1:47:35): Mine is for a long time, you know, like I mentioned, I've always, I really love organic Hayekian systems and part of that I think that like rebuilding the infrastructures of society away from these like very top down organized systems to like bottom up localized. Localized systems where people make bilateral treaties, multilateral treaties, build communities and organize. You know, it meshes all the way up, right. And I really believe in ideas like web of trust based systems. You know, I started working on. One of the reasons I started working on Cosmos was I just thought that, you know, I really wanted to work on proof of stake. And I, you know, I was working on that, you know, I saw that I thought the Cosmos team was the most like, you know, most farthest along on proof of stake actually. And so and I. They were. And so now that like, you know, as of last month or two weeks ago, over 50% of market cap is running on proof of stake. I'm like, that's awesome. But now what's like the next thing? I think there's like, I think there's things we can do even better than proof of stake. I really believe there's like a world where we can build like a web of trust based consensus protocol that will actually be even more decentralized than proof of stake. And I think there's like a lot of like, I don't know, I just want to keep tearing down like centralized or even, you know, high levels of communication required systems and build more organic mesh systems. **C** (1:49:07): So bankless. We use the metaphor of exploring the frontier quite frequently and the Cosmos name actually is very conducive to this. So say a listener is listening to this and they're on board and they want to go explore the cosmos. In Ethereum we have like Metamask. You got to have Metamask. What's the toolkit for people that need, what's the toolkit that they need to be equipped with to go explore the cosmos first? What's like the Metamask of Cosmos? Or just like what are the tools that listeners should probably start with in order to go explore Cosmos? **D** (1:49:41): You should go get a Kepler wallet, which is actually built by our team. But you, you know, go on a centralized exchange, buy Atom, which is the, you know, entry point into Cosmos today. You IBC it to Osmosis, do a swap for a token called stars, you IBC it to Stargaze and go buy your first bad kids. Nft. That's your, that's, you know, that's your onboarding path, that's your to do list. **C** (1:50:07): Cool. **A** (1:50:08): Yeah. And like, I think if you just look at that, okay, you've got like an NFT app, an onboarding place, a dex, and just use that experience and say, hey, is this how, how different does this feel from Ethereum, but then go look at how much you spent on gas. **D** (1:50:28): And we're getting that. We're getting it better right now. Each of those steps requires a click. And you know, at least on osmosis, our view is that every click loses half of our users. And so we're working on a lot of the tooling to like make that entire process feel like one click. **B** (1:50:44): Guys, what we'll do is after the show before this is actually published, so by the time you're listening to this Bankless listener, we will have a little tutorial for everything Sunny just said that we can link to on the Bankless website so you could see Sunny and Zaki's ideas on how to get started with Cosmos and start explaining exploring the Cosmos. Guys, this has been a lot of fun. Thank you so much for joining us. **A** (1:51:06): Thank you. **B** (1:51:08): Action items for you Bankless listeners. The first is we'll include a link to the Cosmos 2.0 Atom 2.0 whitepaper. Check that out. Also referenced was the Inevitability of Unichain, an article by Dan Ellitzer. And of course we'll include a link that I just mentioned to that tactic on how to get started with Cosmos. And this is for Zaki and Sunny if you guys are willing. A thing that we've been doing is having our guests actually read out our outro of risks and disclaimers. **D** (1:51:35): Crypto is risky. You can lose what you put in, but we're heading west. This is the frontier. **A** (1:51:40): It isn't for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot. **C** (1:51:45): Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free your yourself from banks and gain your financial independence. 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