**A** (0:01):
Hey there. Welcome back to Crypto Clarified Investing in the Truth. This is a podcast series where we come together to discuss the most captivating headlines and trends from the crypto space. My name is Benjamin Dean. I'm director in WisdomTree's digital assets team. And today I've got the pleasure of being joined by Sunny Agarwal, who's a co founder of Osmosis Labs. Before I ask son you to introduce himself, we've got social media shout outs. You can find me on the bird app Engamindean. If you're in the United states, go to wisdomtreeprime.com join the waitlist. You won't be disappointed. And regardless of which platform you're watching or listening to us today, hit subscribe. Subscribe. It makes your life easier. You don't have to come and find us every couple of weeks. It just drops straight into your phone or device. Subscribe. So on today's episode, we're talking about Cosmos and its diverse ecosystem. We're going to talk about how it's uniquely structured and why that matters. And then finally, as always, we're going to look to the future. Before I start though, I have to do the usual shout out to James and Sam in compliance. I need to say the following to clarify the views and opinions expressed in this podcast of those of Wisdom Tree in Osmosis Labs and are subject to change. Anything we present in this podcast is not intended to be relied upon as a forecast research nor as investment or tax advice. The information and opinions expressed in this podcast are not a recommendation offer or solicitation to buy or sell any securities, and reliance upon them is at the sole discretion of the listener. Please remember, past performance is no indication of future results. Now we're onto the fun stuff. Sunny, thank you for joining me. It's a pleasure to see you.
**B** (1:38):
Thanks for having me on.
**A** (1:40):
Got tons of time today and lots to talk about. We also, both of us have colds, so we're going to do our best today to make sure that we don't exert ourselves too much.
**B** (1:51):
I appreciate you though, joining a bit. Sorry for that. For the list.
**A** (1:55):
Yeah, well, post production is going to have to use the mute button a bit today, I think, but that's okay. You people in podcast land won't even realize it's happening, so you've got that on your side. Sunny, you are a co founder at Osmosis Labs. Usually when we have guests on the show, we kick off with a quick, quick introduction. Can you tell us a little bit about yourself? How you got involved in this space and then close out with telling us a bit about osmosis labs.
**B** (2:21):
Yeah, sure. So I got into the space basically in like 2015. I was a student. I just got a freshman at UC Berkeley. And I just, you know, showed up. I was studying computer science and political economy. And so I learned about Bitcoin. And I was like, wow, what a cool combination of my two interests. And so started doing stuff there. There was a small bitcoin club, me and two friends, we started to teach a course at UC Berkeley and just got a lot of. For me, like, the best way to learn anything is to sign up to teach it. So, you know, I'm sure maybe that's why you do this podcast, right? And it's like, it's a cool, great way of learning stuff, right? And so, yeah, I did that. And then, you know, Fast forward to 2017 summer I was like, interning at Consensys. And I was mostly because I just wanted to learn more about Ethereum. Before that, I was just like, very, very bitcoin focused. Like, our course was like, very bitcoin maxi. It's a little bit almost cringy when I go back and watch some of the old lectures of like, how bitcoin maxi it was, but. But yeah, so I was really interested in learning more about Ethereum. So I started interning at Consensys. And there's things I liked about Ethereum, but then there's things that, like, I just didn't like, like. Or things that didn't make quite as much sense to me. But one of the things that I really did like was proof of stake. And I was like, wow, this proof of stake concept is really cool. And so I went, basically that summer I, like, read every proof of white, proof of stake, white paper I could find. And out of all the ones I read, the one that, like, seemed the most obvious to me or like, correct to me was Tendermint. So I kind of reached out to the team that built, that was building Tendermint. And I didn't realize at the time that it was like, you know, so then they, they. I reached out to them and they were like, oh, yeah, we're also working on this thing called Cosmos as well. And they explained this idea of Cosmos to me and I was like, oh, this makes so much sense. This fixes all of the issues that I have with Ethereum. And so I kind of quit my internship at Consensus halfway through the summer and instead started working with the Tendermint Cosmos team. Um, and yeah, started doing that since 2017. Come September it was time to go back to school and I was just like learning so much from my internship. I decided to, you know, take a gap year, which eventually just turned into never going back. And yeah, I ended up dropping out to work on Cosmos and so worked on that, you know, for, you know, worked at that team, it was called all in Bits. Worked there for about three years and then eventually it had a, you know, the company kind of imploded. We can go into that if you want. But like the everyone who was working on the project still wanted to keep working on Cosmos. And so we all sort of found different ways of doing that. And you know, for me, I, you know, I can also later go on and if you wanted to explain what are the stages of like development we went through. But eventually we landed on working on building a project called Osmosis, which is a dex on the built on the Cosmos ecosystem.
**A** (6:03):
Great. All right, so we share something in common there because my undergrad was in political economy and then I also ended up doing cyber security for years. And it's funny that it's kind of obvious for someone who's got a background like that why this space is interesting. The whole magic Internet, money and then kind of how things do and don't function on the back end. I can totally see why you would be grabbed by this, because it occurred to me as well.
**B** (6:29):
For me, what I find interesting is this like notion that like, look, the field is called political science, but like science implies some ability to like make hypotheses and run experiments and it's very hard to do that in the real world. And what fun about like blockchains and like, you know, just these crypto economies is where we can run political and economic experiments and like get rapid, real time feedback on them.
**A** (6:58):
Yeah, there's no counterfactuals in economics. And you're right that, I mean I always used to think about it as like they're kind of monetary experiments. So we can build this simulation of money and then put it out there and see if people use it and how, and then change variables around, around like the supply, the emission rate, so on and so forth. And then you see what works and what doesn't. As you say, like you get real time feedback, you find out what works and what doesn't and why. Super interesting, isn't it? Now you mentioned Ethereum, then you had some issues with it early on. Can you spell those out for listeners? Because I think that that sets some of the foundation for why Cosmos and then what you're doing now with Osmosis.
**B** (7:42):
So I had a couple of things with Ethereum. So at the time I think one big concerns was keep in mind like this, so 2017, this was only about a year after the, the famous DAO fork where Ethereum had to fork in order to undo the hack. And I was under the impression that like this would become a recurring issue where I'll admit, you know, in retrospective now, now we're five years later and it seems that maybe my concerns there were a little bit over magnified. It's like, you know, a lot of the Ethereum people are like, no, no, that's a one and done thing, it's never going again. And I just didn't believe them. But it seemed like they actually did a good job at sticking to their guns on that. And it really does seem to have been a one and done thing, at least up till now. But I was very concerned that, okay, if Ethereum has to keep forking every time there's a hack or a bug, this is going to become unsustainable. And if you're building an application on Ethereum, you, you have to start dealing with all of these forks just because someone else's application got hacked or has a bug and it's, and on top of that, like, I also just was concerned about like the scalability side of Ethereum as well. And that means both like technical scalability, like how are we going to make one blockchain scale to the levels it needs to and you know, the multi chain approach as the solution, but also like social scalability. My, my, my issue was that like, look, as communities get bigger, the competing interests grow higher and higher to the point that it forces stagnation at the base layer. And my take is like Ethereum struggles to innovate because you have a million applications or I don't know, not a million, maybe like 10,000 applications built on top of it and you can't break a single one of them. Otherwise you like break your premise of this trustworthy computer. Right. And that kind of relates to what I was saying about these DAO4 kind of stuff. But the idea is, okay, if you give each application its own blockchain, it can innovate at the protocol layer without worrying about it breaking everyone else.
**A** (10:11):
Got it. So for listeners who weren't around 2017 nerding out on this stuff, very early on in Ethereum's days there was something called the dao, the centralized autonomous organization. It's A set of smart contracts, or at least was that ended up being hacked. And basically the solution the Ethereum developers and Ether holders came up with was to hard fork the network and essentially reverse the hack to make people even. Now that runs up against kind of as Sunny saying, like the, the promise is that you can't go and change the ledger. And the immutability is the word that folks use is one of the strengths supposedly of this wave architecting software. So yes, having gone and done a hard fork early on to make a certain subset of people even was. Was an early mistake. You're right, it wasn't repeated, which is a good thing. But it definitely shows, as you say, with the scalability problem, you want stability at the base layer. You want some certainty at the same time that imposes constraints upon those who use the network and the network's future trajectory of evolution. So how does that lead you then to kind of Cosmos and the way that that infrastructure is set up, because it's somewhat unique and I see activity around it, so I know people are using it. But what is it specifically about the Cosmos approach or architecture that paints it so starkly in contrast to something like, for instance, Ethereum?
**B** (11:42):
Yeah. So the idea behind Cosmos was saying, hey, instead of this one chain to rule them all, the idea back then with Ethereum was like, hey, we can build one blockchain and just have all applications running on top of it. The idea behind Cosmos was saying, hey, no, why don't we actually make it super easy for people to build blockchains and let every application be on its own blockchain while still allowing easy interoperability between all the blockchains. Right. So it was sort of this like, the analogy is like we saw Ethereum, they called themselves like the world computer, right? And it's this mainframe computer that everyone uploads code to and your. You're all sharing the same compute resources and like competing for those resources. While Cosmos was this idea of like, hey, let's give everyone a PC or, you know, not instead of personal computers, you know, so we have the personal computers, we have Ethereum calling itself the world computer. One of the terms we liked in Cosmos was we called it like community computers, where it's like, okay, it's still like a computer, like a blockchain is a machine that. But instead of being like one global system, it's like, okay, each community, whether it's an application or it could be local communities, like they can all have their own machine, but then we have this Internet of blockchains where allows all of these individual blockchains to still communicate with each other, send tokens between each other, send data between each other, provide this like standard protocol where you still get all the nice composability and interoperability. Part of what Ethereum really enabled was the composability, right? In the pre Ethereum days you had, I would say you actually had these things called app chains, right? So Bitcoin was an app chain, right? It's an app chain meant for payments. You had namecoin, it was an app chain meant for like DNS, you had Saya, it was an app chain for storage. But you couldn't use Bitcoin to pay for a name on namecoin and have it like point to an application, to a website stored on sia, right? Like Ethereum, by putting everything into one system, it made it very composable. And that's what kind of like helped take off defi, right? You wanted that composability for defi to really be possible. But Cosmos Take is like, hey, we can still have composability, but across multiple blockchains. It's the same way that like in the web, in the Internet, you don't need the entire Internet running on a single server to have composability across like different web applications. And so we were basically building a set of tools to make it possible to like achieve this vision. There was three sort of tools that we were building. So one, we just saw that every blockchain being proof of work is not going to work. We needed proof of stake to make this possible. Today this seems very obvious now, every blockchain is proof of stake, I guess, other than Bitcoin and a couple others. But at the time it was a very radical thing. We were sort of on the forefront of proof of stake technology. So that was one of the technologies. The other was the Cosmos SDK. So we needed to make it as easy as possible, provide a toolkit to make it easy for people to build custom blockchains, give them all the base stuff that they're probably going to want, token stuff, governance, proof of stake. But then make it easy for them to build custom business logic for their blockchains. And then the third was ibc, Inter Blockchain Communication Protocol. And that's, that was the, our equivalent of tcp. Ip. TCP IP lets computers talk to each other. It's a standard protocol for that. IBC is a standard protocol to let blockchains talk to each other. So those are the three technologies that we saw we started building them and, you know, here we are today with over 50 blockchains built on this stack.
**A** (16:01):
Thank you for all that clarification. Listeners will start hearing words that we've encountered in the past. Last episode we went right on what composability is. So that word should be familiar. They'll know what proof of stake is. Now because we've talked about Ethereum, the merge ad nauseam and that, that last piece there. Let's zoom in on that a little bit. The Inter Blockchain Communications Protocol, it is somewhat unique to Cosmos. I know you've just done it, you've explained that it allows blockchains to speak to one another. Like TCP IP lets computers speak to one another. Or for the listeners who like my email analogy, the SMTP protocol, you use it for email, so your email inboxes speak to one another. So that's what a protocol is. What is this ibc, The Inter Blockchain Communications Protocol. Kind of like some level of depth. How does it work? How does it let these blockchains speak to one another?
**B** (17:02):
So there's this idea called light clients. So light clients are, you know, it was an idea that originally Satoshi came up with, like it was in the original bitcoin white paper. And it's the idea of like, you know, without going to detail, we have all these merkle trees and stuff. It's a way of efficiently proving something about one blockchain to some third party. Right. Normally it's meant for use in wallets where it's like, let's say I have a mobile phone with a bitcoin wallet on it. I want to, you know, prove that like, hey, to someone. I want the wallet to know that, hey, this payment happened, but you don't, you know, your phone is not going to run a full bitcoin node on it. And so light clients are an efficient, like succinct way of making that, giving you that proof. And you know, this is one of, I think one of the most important functionalities that blockchains do. And it's kind of sad to me right now that most, like, I think other than bitcoin, very few, like blockchain protocols have done a lot of like, you know, it's kind of sad to me that like Ethereum wallets don't have like good light client support right now because without this, you're kind of trusting whoever you're talking to. Whether you're talking to someone like Infura or Alchemy, you know, it loses a lot of the trust assumptions. But so in Cosmos we were like, hey, instead of that third party being a wallet, what if that third party is another blockchain itself? So the same protocol that you would use to verify these light clients that we write in the code of a wallet, we can put this in the code of a counterparty blockchain itself. And so now you have two blockchains, let's say chain A and chain B. Chain A wants to prove something about itself to chain B. It can generate a light client proof and send this to chain B. And you can think of it like it's almost like a smart contract on chain B that is verifying that light client proof and doing something on top of it. So I like that you mentioned like the SMTP like so what we see it is like IBC is like very much like tcpip. TCPIP lets two computers talk to each other, but it doesn't say what they're talking about yet. Right. It just this is how to talk to each other. On top of TCPIP you needed higher level protocols like SMTP for mail or FTP for file transfers or HTTP for the web. So similarly on top of IBC now you have people build higher level protocols like we call these ICS interchange standards. So ICS 20 is the token transfer protocol. But there's also like ones for people to do like NFTs across blockchains. You can make it so account on one blockchain can make transactions on another blockchain. We call this interchain account. So we have all of these like higher level protocols now also being built on top of the IBC stack.
**A** (20:19):
Got it. The, the element here that's maybe not obvious to listeners, but I think is you've done a really great job of explaining there. It's this idea that you need to have standards that the kind of infrastructure needs to be able to speak in inverted commas to other parts. So you've got this interoperability element. You've got the idea that it's own stack of technology. In the past we've talked about the Ethereum stack with layer twos and then applications the third layer above it. Similar the way the Internet stack works here you're talking about a separate stack which is designed with interoperability kind of at its heart. This is something what you've been describing here I see described named sometimes out there is the app chain model. And let's think about that a little bit because we should contrast like how this infrastructure setup is different to others. The app Chain model says that each application will have its own blockchain which it can configure itself and then those applications and the chains on which they operate speak to one another using this inter blockchain communications protocol. Is that broadly accurate? Yeah. And how is that different then to something like Ethereum? And I know you've said it, but let's make it really clear for folks.
**B** (21:43):
Yeah. So one thing that's worth noting is that the Ethereum vision has evolved heavily over the years. Right. Like, I think it's become Cosmos ified. Like if you go back to 2017, the idea was, oh, Ethereum is going to be the blockchain that everything is built on top of and eventually they're going to have this sharding thing, but everything's still going to be built on top of Ethereum. Today I think that's been largely moved away from and it's moved towards this model of roll ups where it's like, oh, we have all of these other blockchains now, but they're all going to be using Ethereum as a settlement layer and we can go into what that means. But that's like the. Well, so I guess in that way Ethereum has given in to the Cosmos worldview that, okay, a single execution environment is not feasible. We're going to have many execution environments. Even today, roll ups are starting to talk about roll apps. Like it's like app chains as roll ups and stuff. So I think that has like, you know, we've won that battle. We've ideologically won that battle, I think, but now it's like, yeah, the big question now is like, I think now the main difference between Cosmos and the Ethereum roll up model of the world is do we need a single settlement system or can every application act as its own settlement system? It's like in Cosmos, our take is like, hey, any asset that's issued on its own chain, that chain is the settlement system for that thing. To put it in context of an Ethereum roll up. Right, the OP token. Right, the optimism token. It's issued on the optimism roll up chain. Right. And so this whole notion of calling Ethereum the settlement layer for the OP token doesn't make sense. Our, you know, our view with Cosmos is we're trying to move away from this like strong L1 versus L2 model of the world. And what we really see is for every blockchain, it is the L1 for its native state and it is an L2 for foreign state. So, you know, eth that moves to optimism, it acts like an L2 for that, for that. But for assets that are issued on Optimism, it doesn't need to act like an L2 to Ethereum. That doesn't make any sense because those assets are not meaningful without the context of the execution environment. There's no, it doesn't make sense to settle them to Ethereum. And so that's kind of what Cosmo. And so I guess the other part that Cosmos comes from is, you know, we really believe in this like bottom up view of the world. So every other ecosystem has a token or a central hub chain, right? In Ethereum it's Ethereum for all the roll ups and Polkadot they have their relay chain and Avalanche, they have their C chain or sorry, their P chain or whatever. In Cosmos there's no central chain, there's no token for the Cosmos ecosystem. It is a completely mesh. Every chain talks to every other chain. There's no central router that everything has to go through. And we think that this actually builds for it makes for a more resilient ecosystem and more decentralized ecosystem. There's no one token that is going to charge rent for everything. The IBC protocol is a permissionless protocol that any blockchain can use. There's always been this notion, you always see this meme that imagine when people are pitching blockchains, they're like, oh, imagine TCPIP had its own token and how valuable it would have been. But I think those people are missing the point that TCPIP won because it was a neutral, non rent extractive protocol. If you go back and look at the history of the Internet wars, TCPIP was not the only protocol competing in this, right? There were other competing standards, you had Apple Talk, you had all these more proprietary ones. But TCPIP won out because it was the neutral one. Non rent extractive. And our bet is the same thing with ibc because it is a non rent extractive system. It is going to be the natural winner for what people build.
**A** (26:52):
On top of always love a bit of technology history. And yes, the open standards did eventually win out. Same way Linux ended up getting baked into Microsoft. As much as Bill Gates hated that the open standards over time, it's not alone sufficient to win, but it does help a lot. Standards that as you say are neutral. Anyone can plug into the word you used there as well was a mesh. So for listeners, a nice way to think then of the Cosmos ecosystem is this kind of mesh model where there's no central point which is very different to other infrastructures. Like the Ethereum stack, which it's true, is becoming. It is all kind of reconciles back to the base Ethereum layer, but is increasingly with these scaling things like Arbitrum and optimism. And Zksync is actually having some certain central points of activity as it moves up the stack. So anyway, the point is kind of a more distributed model, no center, highly interoperable, and then that allows people to build applications that have their own chain where you don't have to.
**B** (28:03):
This is probably not helpful for the people who are listening to the podcast version, but anyone who's watching on YouTube just want to throw this video up here. You can go to hub.minscan.com or IO maybe, and you go to IBC Network and you can see this, like, visualization of all the cosmos chains. And you can see it's like a constellation, right? Not this like hub and spoke system. It is this like mesh, like constellation of every chain sort of communicating to each other.
**A** (28:41):
Can you repeat that website for the listeners just so they can punch it in while listening?
**B** (28:46):
Yeah, it is Hub mintscan IO.
**A** (28:50):
Yeah, there you go. Go and have a look at that. That expresses way more than at least I can do in.
**B** (28:55):
A picture's worth 10,000 words. Right?
**A** (28:57):
Yeah. Right. That's excellent. Thank you for sharing that. So then let's think a little bit about, like, kind of the constituent elements then. You've mentioned before working on Osmosis and Osmosis Labs, Correct me if I'm wrong, that is one of the applications on the cosmos in the constellation. You could say it's one of the stars. Is that accurate?
**B** (29:20):
Sure. Yeah.
**A** (29:22):
Great.
**B** (29:23):
Yeah. So we, yeah, so like I said, I was working at, like, the core team. Like, I was building a lot of the tech and we built out a lot of the, you know, those three technologies I mentioned. And then once, once those base technologies were ready, I felt it was like, okay, it's time to go start building actual applications using this. Let's dog food our own tech. And so, yeah, we. And we kind of looked at, okay, what are the things that are worth building? You know, a decentralized exchange was obviously, you know, I think there's a lot of, lot of reasons we decided to start with that as the initial application that we wanted to build. But yeah, so that's what Osmosis is. It's a decentralized exchange built as an app chain. So it's a dex on its own blockchain. There's no other. The purpose of this blockchain is to provide the best blockchain framework to run this decentralized exchange application. Ethereum isn't optimized for running Uniswap, but the Osmosis blockchain is optimized for running the osmosis. Dex. Great.
**A** (30:35):
Let's unpack that a little bit because it's interesting. Decentralized exchanges for listeners. You should be familiar by now with the Uniswaps and sushi swaps of the world. Basically the problem was centralized exchanges had a nasty habit of going bust or running away with people's collateral. So some clever folks went and wrote applications that do essentially what a stock exchange does, except it has no central party. Everyone gets to self custody their assets. It's open 247 and accessible globally. Now let's contrast the kind of experience with Uniswap against that of Osmosis then. Uniswap is built on the Ethereum base layer. I might be wrong. Is it interoperable across different networks?
**B** (31:21):
These days they have deployments of Uniswap on other blockchains as well. But I would say they all feel like isolated deployments and there's not really an easy composability between them. You can't say I want to trade my eth on Ethereum for BNB on Binance smart chain. Right. Like each of these deployments is its own individual isolated system.
**A** (31:52):
Yeah. Great. So that points to one issue, which is if you did want to make such an exchange, you need what's called a bridge. And they have a nasty habit of being hacked we found in the last year or so. So that opens one problem, the bridging problem. The second problem was around the, the throughput of the Ethereum network, which was if you wanted to go and make trades on Unis Swap and you had like a couple of hundred US dollars equivalent of something, you'd be paying 50 US dollars in transaction fees. And it really kind of defeated the purpose of the exchange except for those who had very large holdings. So correct from my wrong here with Osmosis then, because you built it on its own chain, you're able to optimize it for scalability and throughput and you're also able to avoid the bridge problem because of this inter blockchain communications protocol. Is that right?
**B** (32:44):
Yep.
**A** (32:46):
Nice. Okay.
**B** (32:48):
Yeah. So like kind of the thesis here of like why, you know, it's I can I treat this like the Apple model of like vertical integration, right. Where part of what makes Apple's UX so good, of what of the stuff they build is had this like Deep vertical integration. They build, they build a lot of the iOS apps, the ones you commonly use, but then they also build the OS itself, then they also build the phone, but then now they also build like the chips inside. They started like you know, Apple silicon and stuff. And so by having this like sort of full stack vertical control they can provide the best performance and UX for the experience they want to provide. Same thing goes with Osmosis where it's like so if you take something like Uniswap, they control their contracts on Ethereum and they have like their front end, right? But with Osmosis we have the Dex logic, we have the front end, but we also control the blockchain itself. And we also are like one of the developers, we helped develop the wallet for the Kepler Wallet, which is the main wallet for the Cosmos ecosystem. So by having this sort of like full stack control from wallet all the way to blockchain, we can do features that like Uniswap couldn't. An example would be. One of my biggest qualms with every blockchain today is that you have to pay your transaction fees in a specific token like eth, right? And it's like I think this is just like horrible UX because how is anyone ever supposed to onboard into this if they don't have ETH in the first place, right? And so in Osmosis we made it so you can pay your transaction fee in any, any token you want. But we do that because the blockchain is aware of the decks built on top of it. But once we have that, but we also need to have the wallet support this functionality. So it's like this is an example of I think an important UX fix to how blockchains work today, but only was possible because we have this vertically integrated blockchain.
**A** (34:56):
Okay, as mentioned before, my background in cybersecurity. Can we think a little bit about the security implications of this kind of model? Like one of the nice things about the bitcoin network is because the hash rate is so high now it becomes kind of economically infeasible to attack the network. Ethereum's move to a proof of stake consensus model or mechanism and that has its own security trade offs. But so far it's, it's played out fine. There hasn't been an over concentration of eth, but we'll see what happens once the Shanghai hard fork happens. How does security work then in something like Cosmos and, and Osmosis? I mean you would surely you would have to defend if you've Got your own blockchain at the base layer. You have to defend it. Right? How does that work? Yes.
**B** (35:45):
So today every cosmos chain sort of has its own proof of stake security. So osmosis has its own token called osmo and OSMO is used to stake on osmosis. Another blockchain like Juno has its own token called Juno, used to stake Axelar has its own token called Axel. And so basically you have all this like, I'll just call it like fragmented security where every cosmos chain has its own security system security budget. Right, so how do we solve this? Right. The Ethereum answer to this is, oh, everyone should just be using Ethereum security. Our take is, so we have this idea called mesh security. And it is the idea. So how we look at it is if you look at like the real world. So I consider like the Ethereum model of security, it's like the empire and colonies, like model of the world where it's like, okay, the empire can give security to its colonies. It provides protection, but you know, it charges a tax for that. And it like, you know, these colonies lose a lot of sovereignty from when, when they opt into this model. Mesh security is the NATO approach to security. It's NATO. All the NATO countries have, you know, they have sovereignty, they have their own governance system, they have their own military defense system. But they have agreements that if any Article 5 of NATO says if any one of them gets attacked, they all like rush to each other's defense. The same thing we can imagine with Mesh security is basically a way of saying, hey, blockchains can make bilateral relationships where they allow the other chains token to also be used in its proof of stake system. So this is done using a method we call restaking, which is basically the idea that like, hey, I have OSMO staked on osmosis and is helping secure osmosis, I can use the same OSMO to also agree. So what does it mean when I'm staking it on osmosis? It's saying I agree to get slashed if this validator does something malicious on osmosis. What I can say is I can opt into an additional slashing condition. I can say I also want to get my OSMO to get burned if this validator does something malicious on Juno. The Juno chain can give incentives for people to restake their osmo. But imagine this is also happening in the other direction. Juno is also being restaked to help secure osmosis. And, and so the equilibrium will play out that eventually both blockchains are going to be secured by the sum of their market caps. And let's say a third chain comes along and joins this coalition, right Axelar, right now each of these chains is actually going to be secured by the sum of all three market caps put together. And so this is like. So our take is that like, hey, we don't actually need one super like, you know, central token like eth to be the security, the proof of stake system for all blockchains. Instead, chains will build these alliances and get, you know, the value of all the app chains I think is going to exceed the value of eth and we can use that sum to be the security system for these proof of stake blockchains.
**A** (39:29):
Do you see much slashing of these validator nodes? Now the valise, the validator nodes process the transactions and make sure that they're correct. And by staking to these validator nodes, you're essentially voting that you think that they've got integrity and will do things correctly. Do you see much slashing out there? So attempts to maliciously manipulate these networks?
**B** (39:51):
No, I think the proof of stake systems have sort of worked as intended so far where there have not been any malicious attacks on as far as I'm aware. There have been one or two accidental slashes I think in the history of a validator misconfigured their nodes and got a slash. But that's kind of what you want, right? You want this stick to incentivize validators to make sure they're running secure setups.
**A** (40:21):
You do that stick is very important for the long term. Sustainability. How much do you see different apps applications like Cross. Did you say cross staking or restaking?
**B** (40:33):
Restaking.
**A** (40:35):
Is that something you see a lot of? I mean, is everyone playing nice or.
**B** (40:39):
So this has not started yet. So like I said, so the current Cosmos is running on this. Every chain has its own proof of stake system. And so our team is like doing a lot of development along. There's, there's a number of teams sort of contributing development and funding towards this like mesh security idea. And so our goal is to hopefully have this live by like end of year.
**A** (41:01):
Okay, nice. Thank you for that clarification. What, what else is on the roadmap then? What's keeping you? Will keep you busy throughout the rest of the year. Where's this, this whole app chain network of networks going to evolve to?
**B** (41:14):
Yeah, so I mean there's a lot of stuff I work on that sometimes I'm wearing my Cosmos hat, like just building stuff for Cosmos. Like mesh security is like more of a general cosmos thing. And then there's also things I work on wearing my osmosis hat where it's like, okay, osmosis core functionality, you know, on the osmosis side really right now sort of focused on shipping our concentrated liquidity. So similar to like Uniswap V3s, like order book style or basically more capital efficiency. Because today we're running these very simple AMMs. And so that's been a big focus, but we're making some adjustments to how Uniswap V3 does it that I think will provide better UX. And then the other thing we're doing is this thing called cross chain swaps. So cross chain swaps is today on osmosis, the UX feels very similar to a centralized exchange almost, which was like you have assets on a different blockchain, you come deposit them onto osmosis, you do your trading, and then you can withdraw them to wherever you want. Which is nice. But we also want to provide the shapeshift experience. So shapeshift was this centralized exchange back in the day where you could be like, oh, I want to trade my bitcoin for Ethan. Right. All you have to do is send the bitcoin and then a couple minutes later they'll send eth to your account. And so we want to provide that UX as well, where it's like someone can be like, hey, I have Avax on the avalanche blockchain and I want eth on Ethereum. Right. Like, they shouldn't even have to have an osmosis account. They shouldn't have had to know like anything about osmosis. They should just be able to like.
**A** (43:01):
Use.
**B** (43:03):
You know, just like send their abacks and then they'll get eth on the other thing side and it's all just like routing through osmosis liquidity. So we're basically building the ability to encode the entire swap in IBC without needing to like, you know. So instead of just being basic transaction, like just transfers like we do today, we're doing entire swaps over ibc.
**A** (43:29):
Understood. So unfortunately we're coming up on time. I do like you mentioning shape shift there. I remember that. That was really good, wasn't it?
**B** (43:37):
Yeah.
**A** (43:38):
Well, it sounds like it's a busy year ahead. It's never a dull moment in this space. We usually finish up episodes by thinking a bit about the future. That can be either what you're working on, specifically what you're excited about, or what you see coming down the pike. Are there any kind of Final thoughts, Sunny, before we close things up.
**B** (43:58):
I'm just getting really excited about bitcoin again. So one thing I didn't mention I mentioned at the beginning. Oh, here's the reasons I'm all these technical and social reasons why I liked the Cosmos model better than the Ethereum model. I'll admit a little bit of part of my personal reasons for it was like I said I was very bitcoin maxi at the time and I was like, oh, all this stuff on Ethereum is cool, but it's like, where does bitcoin fit into all of this? And it's like everything's just like being built. They forked this community and they're like building this ETH thing instead. And for me it was like, if you think about it, like I said, bitcoin is an app chain, right? And it's like focus on being money and payment. And for me, part of why I was interested in Cosmos, I was like, I want to build the application layer for bitcoin where we're going to build all these new applications on custom blockchains and the bitcoin, the BTC asset will flow off of the bitcoin blockchain and be used throughout Cosmos. It'll be the money of Cosmos. And so that was this vision I had early on. That's part of what excited me about Cosmos. And then we got busy with all this other stuff actually built and that kind of fell to the wayside a little bit. And I was a little bit disappointed. After BIP119 failed on Bitcoin, that was like a upgrade that they were going to do to make it easier to export bridge bitcoin off of the bitcoin blockchain. So I was a little bit disheartened. But ever since ordinals happened on bitcoin, it got me excited where it's like, so it's actually a friend of mine that built ordinals and it got me excited like, oh, wow, Bitcoiners can get excited about cool stuff still. And so I'm just really excited right now about this. Going back to the roots of, okay, how do we help make Cosmos be the application layer for bitcoin?
**A** (46:10):
Yeah, yeah. The bitcoin is a bit under the radar for people. I mean, taproot enabled ordinals, it's kind of interesting, the storage of information on that network, it's still around. You know the other thing that strikes me, it's I saw some data the other day about the number of active developers working on osmosis. And Cosmos. I was at a conference the other day with a whole bunch of bitcoin people or doing stuff with lightning. It's kind of, you know, we're at the end of March and you know what's been a brutal bare market over the last year. And it always strikes me to see a bunch of people who are still working away, still as excited as ever and, you know, see what everybody builds. But the fact is that people are still building and it's as long as they keep doing that, something will eventuate. We'll see how it plays out. We are out of time, though. Sunny, how can people find you on the interwebs?
**B** (47:03):
Yeah, you can find me. I'm on the bird app at sunny A97 and you can check out Osmosis. You can go to Osmosis Zone. Is the website excellent?
**A** (47:18):
Well, thank you very much. It's been really nice speaking with you today. For those of you who are listening, WisdomTree Prime WisdomTreePrime.com join the wait list. You can always find me at the bird app engamindean. And as a reminder, if you'd like us to cover any specific topics in future episodes or to find out more information, please use the snail mail CryptoClarifiedIsomeTree.com we find me on Twitter. Thank you for listening and we hope you all have an excellent day.