**A** (0:00):
Sa.
**B** (0:29):
All right, Sonny. Welcome to the Block Hash podcast. How you doing, man?
**A** (0:34):
Good. Thank you for having me on. Excited.
**B** (0:36):
Yeah. Excited to have you here. And plus, bitcoin's almost, like, at an all time high, so it's. It's a great day in general.
**A** (0:44):
Always a good day.
**B** (0:45):
Oh, yeah. Any. Any thoughts on the. The fact that an ETF for bitcoin actually exists now on the New York Stock Exchange? It's kind of crazy to think about.
**A** (0:55):
Yeah, I feel like I remember, like, the 2017 bull run was, like, kicked off by, like, the rumor of, like, the Winklevoss etf. And it's like, wow, okay. Four years later and it's finally. Okay. Finally have one now. Okay, there we go. Took a while, but we got there.
**B** (1:13):
Yeah, it did take a while. The SEC definitely wouldn't let that go through. I'm surprised they stepped back and now they're allowing it. I think grayscale is going to do one too, with actual physical bitcoin in it, so be interesting.
**A** (1:26):
Yeah.
**B** (1:27):
Anyways, before we jump into talking about osmosis and, you know, everything that you guys are doing right now, tell me a little bit more about yourself and your background. Like, how did you get into crypto? How did you get into this space?
**A** (1:40):
Yeah, sure. So I, you know, there's a rolling stages of what it means to, like, get into crypto. Right. But I guess, like, you know, my first, like, time I was like, got like, you know, really more involved with it was. I was a freshman at UC Berkeley, and I heard, you know, I was studying computer science and political economy and there was this little bitcoin club there. And so I was like, reached out to them and I was like, hey, can I, like, do stuff? You know, that, like, this is the perfect combination of the two things I was interested in. And so I just started, like, you know, helping out there and learning more. I signed up to then teach a class on it because for me, my tr. When I want to learn something, the best way to learn something is to sign up to teach it. Because if you have to teach something, you better learn it. And so that was my, like, technique that I always used. And so, yeah, so we started teaching a class on, like, bitcoin and stuff. Sorry. And then, yeah, we started teaching that class for a couple. You know, I taught it for two semesters, and I just kind of, like, learned a lot of the internals of bitcoin. And then the summer after my sophomore year, I was interning at first at a company called Consensus, which is one of the big Ethereum development companies. And then kind of got bored of my internship halfway through the summer. But then I got really interested in Proof of Stake while I was there. And so I started like, spent most of the summer just researching Proof of stake stuff and I learned about Tendermint and I was like, wow, this consensus protocol is cool. And so I reached out to the Tendermint team and started working with them and I was learning so much that come fall I was like, this is. I'm learning way more here than I am at school. So I dropped out and started working on Tendermint and Cosmos full time.
**B** (3:35):
What did you do when you worked on Tendermint?
**A** (3:38):
Yeah, so I was working on a bunch of different things. So, you know, I was there pretty soon after the Cosmos, you know, ico, we were, we. I worked on parts up and down the stack, basically, you know, help build the Cosmos SDK. My role was a research scientist. And to this day I'm still trying to figure out what that role means. But you know, it involved a lot of development, a lot of like research and spec work and like designing things. I think that's sort of the part that I actually love the most is mostly on like the architecture and designing kind of things. But then also it was also like a lot of evangelism as well. You know, I was sort of the one out there in the community telling, teaching everyone about Cosmos and be like, hey guys, the interchange, this is going to be so cool. And yeah, just like growing the Cosmos ecosystem that way as well.
**B** (4:32):
Yeah, I heard good things about the Cosmos ecosystem. What about it do you do you like so much or that's kind of drawn you towards building around that?
**A** (4:41):
Yeah. So I mean, like I said, I was working on Ethereum stuff before that and before that I was really in Bitcoin and Cosmos almost in a way felt like a little bit of the synthesis of the two. And it was like, hey, everything that's going on in Ethereum is super cool. Like all these applications being built, but I just didn't see them as being scalable. And both from, I mean that both from like a technical scalability, but also social scalability. And so I believe that communities will want their own blockchains and that the more things that you have in one system, the less scalable it becomes. I kind of put it actually in this sort of narrative where it's like, okay, I treat the generation of one of blockchains as these kingdoms or like small city states where you have like Bitcoin And Saya and Namecoin, they all have their own little applications, but they're not really like you can't use your Bitcoin to buy a name on Namecoin. Then Ethereum came along and I called this like the empire model which is like, hey, let's build one big system that sort of puts all applications within its domain and then you can get a lot of composability. So I can mix and match and use applications together, but then you lose out on a lot of sovereignty and things like that. And so block Cosmos I see as sort of the third generation. And what I mean by that is I see it's the nation state model of blockchains where it's like, hey, can you get like in the world today we have high levels of economic integration without political integration. And so I think we can do the same with blocking. Can we have a network of many blockchains that are still interacting with each other? We can send tokens between them, we can send data between them, we can have them build complex applications by taking these building blocks, but they still are on their own independent blockchains and have that level of sovereignty.
**B** (6:43):
Yeah. Taking that into account, how do you think it stacks up next to other blockchains like Cardano or Polkadot or Tezos that also have a lot of potential viability?
**A** (6:56):
Yeah, so I think most of those systems, I'd say like Cardano and Tezos and Solana and stuff, they kind of are continuing along the empire model and trying to make maybe better empires. They're building more scalable models and stuff. But I think that in the end that's ultimately non scalable. It's gonna hit, it's gonna, you, you know, things like Solana are doing a great job at like really pushing the boundaries on how scalable a single blockchain can be. But inevitably they will hit some boundaries at some point. And I think like, you know, some things like Polka Dot for example, I think Cosmos and Polkadot are sort of more similar, more in that, you know, in this model of like, oh, okay, we're gonna go towards a more of a multi chain future. And then I think they approach it from like a little bit different directions where Cosmos is really more focused on like sovereign blockchains while Polkadot kind of, I don't know, I, I, I call Polka Dot somewhere in the middle between like the empire model and nations. Like maybe it's like the EU or something that I think that's like, it's like somewhere in the middle it's like not. Not Empire model, but it's not quite fully sovereign state. It's like somewhere in the middle.
**B** (8:12):
Yeah, it'll be interesting to see how all those, you know, fully develop and play out over time. Obviously all the tension is kind of on Bitcoin right now, but I'm sure that, you know, we're going to enter an alt season pretty soon. A lot of money and attention will start flowing into those. Those projects. So I think they'll start shaping out as we get into the next year. I want to talk about Cosmo, sorry, Cosmos Osmosis as well, because you're one of the co founders for that, Correct. So tell me a little bit about what it is and what you guys are doing with it.
**A** (8:44):
Yeah, so around last year, so about almost a little bit over a year ago now, I left the Tendermint team, like the Cosmos team, to just sort of start doing different things. And during the time Defi Summer was happening on Ethereum, and I was like, whoa, there's a lot of cool stuff happening here. How. How do we bring Defi to Cosmos? And so me and one of my co founders, Dave, we spent a while, just like, we're like, okay, what do we want to solve? We're like, hey, let's build. When we started working in the space, there was three things we wanted to solve, right? There was like proof of stake scalability and privacy. And it's like, I feel like we did a. I think we've basically solved proof of stake at this point. Like, you know, I don't think anything launches today without using proof of stake scalability. It's well underway. I think there's a lot of people working on cool solutions, and I think it's just like a lot of people working on it and it's coming along well. But then the last one was privacy. So we're like, okay, let's focus in on this privacy and figure out what we want to solve with this. And so the specific thing that we decided to focus in on, which we saw there was a high demand for, was a feature we're calling like, Mempool Privacy. And so what that means is if you've been following MEV and front running on Ethereum, it's like this idea that people are reading other people's transactions in the Mempool and then front running them and sandwiching them and extracting value by knowing that data. And so what we built was a solution that makes it basically all the transactions are encrypted before they hit the chain. And only Once they hit the chain, they're decrypted and executed. So this basically prevents any of that sort of front running stuff from happening. And that was sort of like the original thing that he and I were focused on. Meanwhile, on the other side of the world, literally there were Josh and Tony. They were sort of the creators of this wallet called Kepler, which was like the biggest wallet in the Cosmos ecosystem. And they, as a hackathon project, sort of built the MVP of Osmosis. They, at a hackathon, they took the Balancer code, or not the code, but they took their paper and they implemented it in the Cosmos SDK, which is the framework to build Cosmos apps. We started working with them to get the threshold encryption into that project. Basically we ended up merging teams essentially to encrypt work on Osmosis. And we had been working on it since about January and we launched in about June of this year. And you know, it's. And since then, you know, we're still very much focused on our, you know, North Star, sort of of like getting the privacy into this dexes. But then we're also working on a number of other cool features around like innovations around Seeking and just new Defi primitives that we're building as well as just we're doing a lot of the Cosmo, a lot of just growing the Cosmos ecosystem and making the UX of the Interchange. Just really we have a mission to show the world that the UX of the Interchange will be as good as dealing with a single chain. And so we've been working a lot on getting the features needed to make that possible.
**B** (12:19):
Got it. What are you guys trying to do in terms of defi?
**A** (12:23):
Yeah, so right now we're primarily a Dex. So we're a dex. We are an AMM Dex specifically we're heavily inspired by Balancer, but then we also take elements of a bunch of different protocols like Sushi and Curve and Thorchain and things like that. But yeah, so we basically. And then as we go forward, we're just working on new defi protocols to make it easier to expand the functionalities of our deck. So my belief is that if decentralized exchanges want to compete with centralized exchanges, centralized exchanges offer a series of products that are all packaged into this one experience. So like one that like the trading infrastructures is one thing that they do, but they also do like, you know, what are other things they do. They like often provide like discovery tools, they provide, you know, initial access to tokens, they provide custody solutions, they provide like all the fiat on ramps. And so it's like we're trying to figure out how do we build decentralized versions of like all of these like pieces so we can provide that best UX to a full product to like all the users. Yeah.
**B** (13:43):
Can you explain what an AMM is? An automated money maker. I'm sure some people may be familiar with it, but it's, it's kind of a new term.
**A** (13:51):
Yeah. So amm, it stands for Automated Market maker. And what an automated market maker is, is it's a new format of exchange. And what it, how it works is it was instead of having an order book like, you know, people place orders and you have market makers place orders and people, you know, takers who take, who like make market orders and, and buy those. What AMM is, is you have a, you have two, you know, two main classes of users. You have the LPS and you have the traders. And so LPs are people who want to basically be the market makers. It's an algorithmic market maker where what you do is you just take your, you take, let's say there's two assets in a pool for a specific pair. You take both the assets, you put them into a smart contract and the smart contract will use an algorithm to do market making for you. You'll be market making according to the algorithm. And you know, and what you do, the reason you do this is that you'll earn the swap fee. So you'll have traders now who come in and they say, hey, I want to trade asset A for B. The algorithm will tell the trader, hey, here's the price that we'll sell it to you at. And the trader will be like, okay. And they'll pay a fee on that and they'll basically. Algorithm will use your assets to sell them tokens. And so by doing this you earn the swap fee, but you take on. There's a lot of risk that goes into LPing as well. But what it did was it sort of democratized this like market making process where you, okay, you don't have to be this like super professional, like market maker that's like you can, you can be a more passive player and still like provide liquidity and help like the ecosystem and like benefit from it.
**B** (15:46):
Got it? Yeah. It's interesting. All the things are being done with defi lately and it feels like there's a defi summer obviously last summer and then there was one again this summer. And I don't know if it's relegated to just seasons, but it's very interesting how decentralized finance is really starting to play out and push back in exchanges and offer the same kind of liquidity and products that you get to traders and to people that want to invest. And it's really fun watching that space grow. Is that something you guys want to stay in in defi and have a dex or do you want to also branch out and maybe DO tokens or NFTs or a more specific use case? What's kind of the future for osmosis?
**A** (16:27):
Yeah, I mean I think our focus is primarily on DEFI right now as well as just like this general interchain infrastructure. Like I said, our thesis is interchange defi. And so we kind of have to focus on both of those sides. But on the other stuff I think like NFTs, I think we are seeing this process right now where they're slowly becoming more and more financialized. Where and I think like the NFT market right now, like especially like I think what's happening right now is people are building new defi tools around NFTs. So you see things like fractionalization, you see new ideas like floor per and all these like cool ways of like you borrowing against NFTs. And we see like this is like a new defi primitive is being built around these and the primitives are being built around these art NFTs. But we have to imagine that in the future more and more financial assets are going to be placed on chain and many of them will have to be structured as NFTs. So for example, a home or something. Right, A home deed that would probably have to be an nft. And a lot of the defi tools that we're using that are being built right now for the current class of NFTs will be generalized to then deal with all this new financial assets. So really I see these two sort of ecosystems like converging going forward and.
**B** (17:55):
Then yeah, that would be pretty cool. I do imagine they will converge at some point. I know there's a lot of people trying to find a way to properly appraise NFTs so that you can do something like that so you can borrow against it or, or lend or fractionalize it in some kind of way incorporate it into DeFi. So I think that's definitely an avenue for NFTs. It'd be cool to see that see you guys do that in the future too, if it becomes viable. What about tokenized securities or stuff like that?
**A** (18:25):
Yeah, so we're not really focused on the issuance of tokenized securities. Ourselves, but I think there might be a couple of projects in the Cosmos ecosystem working on things like that. And, you know, our. Our goal is, you know, we're just focused on building infrastructure, and, like, it's a permissionless platform. You can bring over any sort of, you know, token that matches the IBC standard, and it will be compatible with that.
**B** (18:48):
Got it. Moving away from that for a second, I imagine, or. I know you. You're one of the co hosts on the Epicenter podcast, correct?
**A** (18:56):
Mm.
**B** (18:58):
You know, as a fellow podcaster, what's it like being a podcaster in the crypto space? It's very different. It's very, very niche. But you have some incredible conversations, meet some very interesting people. What's it been like for you?
**A** (19:12):
Yeah, I guess, you know, similar to what I said at the beginning. When I want to learn something, I sign up to teach it. And so I guess, like, you know, podcasting with, like, you know, interviewing is not. Not quite the same as teaching, but it's pretty similar. Right? And I feel it's like, Epicenter is really fun because it gives me the opportunity to, like, keep up with the entire ecosystem, because I feel like otherwise, oftentimes I'll be just, like, very, like, head in the sand, focused, like, building what I'm focused on or focused on what I'm building, you know, super deep in what we're doing. But it's like, all right, once a week, I get an opportunity to, like, you know, go learn about something going on in NFT or working on. Learn about something going on, like a different ecosystem or something going on in, like, the social crypto ecosystem or something like that. So I think that's, like. That's sort of been, like, the really nice thing about Epicenter is it just, like, you know, constant learning tool.
**B** (20:06):
I'm very much the same. I learned so much just doing a podcast. That's kind of, like, the whole reason I did it. I just wanted to learn more. And then, you know, you start having great conversations, you meet so many interesting people, and, I don't know, it's just fantastic medium of exchange of information, I guess.
**A** (20:26):
What's been your favorite episode you've done?
**B** (20:29):
I've done so many. I don't think it's fair for me to pick, especially live, but I don't know. I'm not gonna pick. That's not fair. But I enjoy all of them because I always learn something new, and this space is moving like crazy all the time and changing every single day. So every time I have someone on which is almost every single day I'm learning something. So I know I take great pride and value in being able to have that.
**A** (20:56):
Yeah, yeah, for sure.
**B** (20:59):
Before we wrap up, I want to get more of like a high level opinion from you. You know, obviously said it a few times. Bitcoin's like almost, you know, about to break its all time high. A lot of people are very bullish. You know, that can also be a dangerous thing, people getting in at the wrong time. Where do you think the market's kind of at right now? Do you think it's, you know, probably going to do very well going into the end of the year? Do you think it's just building momentum for next year? Do you think there's potential worries that people are going to get at the wrong time and you know, might just get completely hammered? Or do you have an idea in your opinion of the direction of the market?
**A** (21:42):
So I will just say I am a terrible trader, which is why I don't trade. That's why I, I'm like, okay, I've learned a long time ago that I'm not the greatest at that. And so instead I'll, you know, I, I'll just hold my bitcoin and my ETH and whatever and I'll just hold it for many years on end. But you know, that being said, I don't know, I mean, I think like, like we mentioned the ETF stuff is pretty interesting. We'll be seeing, we'll be interesting to see. Like, you know, the meme for a long time has been, oh, when the ETF comes, institutions are coming. Right. And it's like, I don't know what the, what institutions actually want to use the ETF for. I wonder how much like short sure there is on. That's going to be like unleashed because of the access to this etf. So that might, that could be interesting to see.
**B** (22:31):
But you know what's crazy is about like an hour ago, before even jumping on here, I saw that the, the volume trade volume already for the ETF was over like $500 million. So it's definitely getting some attention. But yeah, it was kind of a joke for a while. Is this going to be the make or break thing for Bitcoin, like an ETF really? I don't really think it was ever that important, but apparently for some people it was. Maybe it's just legitimizing. But we live in a world where bitcoin's in an ETF now.
**A** (23:02):
Yeah. And otherwise I think that as long as the Ecosystem still building real products. As long as it continues to build real products? Yeah, we will. I think we're all going to make it.
**B** (23:22):
What about the future of Defi? You seem to really like it and kind of be in that space anyways. Within Blockchain. How do you see that developing going into next year? There's a lot of good things, a lot of positive things, a lot of competition, a lot of new ideas. Do you think that that's going to carry over very well? Do you think possible regulations could hold that back? Could be some pushback from big exchanges or government in different parts of the world? I don't know. What do you think? What's your opinion?
**A** (23:54):
Yeah, so I think Defi is going to continue to develop. I think there's going to be. I think that there's going to be a lot more new stuff that's being developed. I think there's actually a whole, like the design space is still like, there's still a lot more to explore, in my opinion. And so I think we're going to push into that more and more. I think the one big thing that I see that's coming is going to be, I think as Defi goes, multi chain. I think four years ago when Cosmos used to be like, oh, multi chain is the future. Everyone was like, oh, no, Ethereum is going to scale. Right? Well, now it's like very. I feel like now it's like in a way we were kind of definitely right about that and it's hard to dispute with that. But now I guess the next big thing is what's the future of Interchange going to be? Is it going to be everything on. You can have the generalized chains and the same Defi apps deploying everywhere. So you see things like Sushi, they're going around on every single chain and they're like, okay, we're going to deploy on Polygon and then on Arbitrum and then on BSC and then on. We're going to just play everywhere or do you see things or is it going to be like application specific chains? An example of this would be compound chain. Compound chain is like, oh, we're not going to go deploy compound on every protocol. Instead we're going to build compound chain and have that connect to every other chain. And so osmosis is sort of in that same realm. I call that the interchange world versus the multi chain. And so just random terms I made up. But yeah, so I think that's sort of what we're going to see is like going to be the next big thing of seeing, like which direction Defi goes. Is it going to be more towards an interchange future or a multi chain future?
**B** (25:47):
Cool. It's exciting, man. So it's going to be exciting future. Either way it goes. Anyways, good place to wrap up. Sunny, thank you for taking the time to come on the podcast and elaborate on Osmosis and Cosmos and, you know, your background. Tendermints. Epicenter your thoughts on Defi, your thoughts on the market. Really appreciate it. Stay on for just a second so I can talk to you. Otherwise, love to talk to you again in the future. Let me know.
**A** (26:13):
Awesome. Thank you.
**B** (26:14):
All right, see ya.