**A** (0:12):
Now hello and welcome Defi Times Community to yet another episode of this week in Cosmos. And today, Kotosito and I have the great pleasure to welcome him to the show. Sunny Agarwal, he's a co founder of osmo Osmosis Labs. Hey Sunny, how are you doing? It's such a pleasure to having you on.
**B** (0:31):
Thank you, nice to meet you. And Procito, nice to be on just a week later. But yeah, always more time to talk to you, it's more fun.
**A** (0:41):
Yeah. And before we start kicking off here it would be super awesome because like Osmosis gained a lot of attention very recently. I mean it's obvious everything worked perfectly fine. So so far, and that being said, would be super cool if you could give us like a historic background about the project of Osmosis. So how did it kick off and yeah, what were the plans in the first place?
**B** (1:11):
Yeah, so it kind of kicked off in some ways. It kicked off many years ago when we started working on Cosmos. We were, you know, when I was, I used to be one of the main researchers at the Tendermint company where we helped design a lot of the infrastructure to build like the Cosmos ecosystem. So worked on Tendermint, Core, Cosmos, Decay, IBC and then you know, last summer, so about a little bit over a year ago, you know, we saw Defi summer happening on Ethereum and I was like, how do we bring that to Cosmos? And so I kind of wanted to, okay, let's start building an actual application and start building Defi stuff on Cosmos. And we looked at everything that was being done on Defi and obviously I think the AMMs were sort of like the base primitive, right? You need Uniswap or Dex or something and then you can start building more stuff that becomes useful once you have those. So yeah, we started building and while we were doing that we were kind of figuring out okay, what is it that we want to do? So I had a validator company called Sika and so me and my co founder there, Dave, we started figuring out okay, what is the big problems in Defi today? How can we build? We can copy what's happening on Ethereum, but we also want to make sure that whatever we're building is better than what's the Defi on Ethereum because that's what, what's going to be the reason people come over. And so we really decided to start, you know, evaluating the things and we decided to focus in on like the privacy and front running resistance side of things because you know, if you've Been following all the MEV stuff that happens on Ethereum. We were like, wait, this is atrocious. We know how to fix this. And so we spent a lot of time designing solutions for that. Then meanwhile, literally on the other side of the world, Josh and Tony from Chain Apsis and they also, they built the Kepler wallet. Tony at a hackathon at the Cosmos hack Atom, I think in November built a the MVP of Osmosis Day. He basically for the Hackathon project, he re implemented the balancer white paper on Cosmos SDK. And we, our teams got in touch with each other and we're like, hey, why don't we work together to do this? Because you guys have built this cool mvp, we have a lot of this more privacy stuff that we want to execute, but that's a feature, not a product. And so like, hey, why don't we just merge and work on launching this thing. So basically around December, January ish, we decided, hey, let's worked together on this. And we were working on it basically nonstop for the next six months until we launched Osmosis in June.
**C** (4:11):
Yeah. And since then Osmosis, especially in the cosmonaut community, has gained a lot of adoption and traction. Also took IBC mainstream. I also seen you on the Citizen Cosmos podcast. I highly recommend everybody to check that one out as well. And he also said that everybody was kind of like waiting, okay, what is the first killer application for ibc, which is this inter blockchain communication protocol that connects all sovereign blockchains in the Cosmos ecosystem. And then Osmosis came around and killed it. Right. So within a couple of weeks you could literally track on minscan the IBC traffic that routed through Osmosis. So that was really cool to observe and giant use case also for ibc. But fast forward now it's almost live, three months, two and a half months now. And I'm starting to see more public interest. People are starting to engage more on Twitter, people are starting to cover it more on YouTube. Obviously my channel is still small and what we do, so we don't have the hundreds of thousands of followers yet, but it's going to come very soon. But Elliot trades, for example, he covered Cosmos now in a dedicated video and said, man, Osmosis is a very well kept secret. So where do we see Osmosis right now in the broader context of the Cosmos ecosystem, but also in the broader context of crypto and the whole defi jungle that we're in right now?
**B** (5:33):
Yeah, so you know, when we started it we so you know I mentioned we had all these like privacy ideas and cool things. None of that is live right now. All of what we have is basically a reimplementation of Balancer with like liquidity mining and things like that. And that's because we saw that hey, there is a untapped like there's a need for liquidity in Cosmos and it's very hard for sometimes a lot of Cosmos chains to get access to centralized exchanges just because it's not as simple as adding an ERC 20. Right. Decentralized exchange would have to run new software and all of this stuff. And so IBC actually makes it very simple where it's like you make a transaction on both chains and now you have an IBC connection and it's like once you are listed on Osmosis, we spent a lot of time adding integrations with like CoinGecko. So you know, to be on Coingecko you need to have an exchange that they can use as a price. So we actually worked with them to get Coin osmosis accepted as a valid exchange. So now you can get on Coingecko just by being on Osmosis. But yeah, and so that's great. You know, we, over the last two, two and a half, three months, we've seen like the liquidity just been constantly increasing. So I think the liquidity on Osmosis right now is over $250 million. And then the volumes have been like, you know, roughly staying within this bound between like 5 to 10 million dollars. And so question is, you know, liquidity is constantly increasing, but how do we make sure that our volumes are, you know, at the end of the day? I think that's actually the more important. You know, I think right now in the crypto space we have a little bit too much focus on TBL when really maybe TBL makes sense for some use cases like for Yearn, for example. I think that obviously is what you're trying to the metric to follow. But for a Dex, I think volume is really the metric you want to follow. And so the question there is where is your organic flow coming in from? You can have arbitrage volume and stuff, but at the end of the day what you want is organic user flow. And so right now it's primarily from within the Cosmos ecosystem. But now the question is how do we bring in more ecosystems? So the next one that's probably going to was supposed to be this week, but things happen is Terra. Where once Terra comes on, they have a large set of users, they have a lot of interesting assets there and very importantly they have a stablecoin. That's one thing that we're missing right now in the osmosis, like in the IBC connected ecosystem. So once we have a stable coin, you know, I imagine the makeshift of the make the makeup of the pools on osmosis will change heavily because I think a lot of people are looking for like some sort of stable swap, stablecoin based pools and then the next one is the gravity bridge. So I, I don't, I, you know, I can't give any strong deadlines. It's really up to like some of the teams working on it. But I'm hoping that like by October we should have this bridge up for Ethereum. And in the meanwhile we're working on a lot of like the UX stuff around it. So we're working on like making sure it's like when Ethereum users come in they can, they should be able to use MetaMask with osmosis, like they don't have to download a new wallet just to be able to start trading. And so we're really trying to make it as pleasurable of an experience as possible for like bringing in these new users.
**A** (9:12):
Yeah, and we are very excited for that. I think the bridge will be an absolute game changer. And yeah, I think there's a lot of user demand for having a stable asset like Tether or even dai. So I think yeah, very, very exciting times lie ahead of us in terms of osmosis. And what is exciting already today are the insane rewards for liquidity providing on osmosis. Men. It's absolutely crazy. And I also have to say it makes so much fun just to play around with it with low gas fees. But many people wonder, especially people who are new to crypto, how is that possible? So how can it be that these rewards are so high? I mean there's literally no pool with like less than 100% or so.
**B** (10:05):
Yeah, I mean it mostly is coming from the fact that like I think one of the most interesting things that's happened in crypto is this idea of like user owned products. And so in many ways like the token, the OSMO token sort of is a piece of ownership in this osmosis product and people have to work to do it. You have to stake or you have governance responsibilities and stuff. But what makes it different than other traditional companies is that you have the ability to share the equity and upside very easily with your users. For example, Airbnb has been trying for many years to figure out how they can Share. They can give the hosts on their platform equity in Airbnb, but it's just been this very weird, complicated legal challenge for many years. Meanwhile, with crypto, we're able to do this very easily. We are basically rewarding the early contributors of the project with equity stake in the, in the, in the project itself. And they have to, like, contribute, but, you know, they have to work to be part of it. Same like, you know, I'm sure if Facebook gave out early Facebook equity to all the early users, they also would have had, like, crazy returns as well. Right. And I think it's a similar thing going on here where it's like, hey, if these are people who, like, believe in this product and want to help contribute, you know, to make this product work, we need to have that liquidity in the system. So if you want to help contribute to that, you bring in your liquidity and you'll be earning the equity stake in this platform. And so that's sort of where the returns are coming from. And this is only possible because we start with a brand new platform, a new chain, a new token, where, like the supply, basically, you know, we had a small genesis supply that started with the airdrop to atom holders. But how I see the airdrop to atom holders was really as a invitation, you know, I think that, like, it's like, hey, atom holders, here's something to get your attention. But now if you want to be part of osmosis, you know, you have to do something because that, that airdrop, the initial genesis supply, was only 10% of the final supply of the chain. And so to really get access to that remaining inflation, you have to contribute to the network.
**C** (12:47):
I think also around two weeks ago, it started to dilute. So anybody who didn't claim their airdrop yet, you have to do four tasks to get it. You have to conduct a trade, you have to provide liquidity, you have to participate in governance even, I think. But it already started to dilute. So if you haven't claimed your OSMO yet and the snapshot was February 18th, then make sure you do this as soon as possible, because on a daily basis you get less and less that you can claim. And I think also you mentioned the kind of like, supply and issuance. I think OSMO is right now, since it's a brand new coin, is still in its very early kind of like hyperinflation phase, which means that the issuance of new OSMO per day, what is it, around 800,000 osmo a day or something like that, is quite High. So in percentage, you know, diluted, or in relation to the amount of users that are actually providing liquidity, it's still very profitable for those people. But I think as more people join the network, join the product and provide liquidity, this number goes down, obviously. So I think, because I also get this question a lot like, this is too good to be true. This can't be sustainable.
**B** (13:57):
Right.
**C** (13:58):
I mean, if you're early in something innovative, then yeah, it seems to be too good to be true, but it actually is, isn't.
**B** (14:06):
So, yeah, yeah, the rates will definitely have to drop over time, both as more people enter the system and as the rewards get diluted over more pools. Right. Because like, you know, one of the things that it is is like, you know, these first eight assets that were like, had ibc. I mean, you know, in a way those high rewards early on was a reward for them. Like, hey, okay, you guys were the first movers on like activating IBC on your chains. But then as more and more chains get ibc, then those rewards are going to have to start being spread over more and more pools.
**C** (14:43):
Yeah. And I think also when something like UST comes over, that could potentially bring in a lot of more also whale money and people that are just more comfortable providing liquidity for stablecoin pairs instead of providing for coins that they don't even know about. So I think as IBC adoption grows, also the Osmosis adoption will grow exponentially. I think that's also a great transition. Oh, by the way, one thing I wanted to add here is also, you guys didn't raise any VC money to start Osmosis. Right. You kind of like started that with mostly rewards from Sika from your node. So that's also, I think, important to state here because that's actually very impressive. Most people are trying to raise funds and then start to build a product, but you have built a product and even gave most of it to the community. So I think it's important to capture that here. But in regards of ibc, now that Osmosis has adopted it and found great use cases, Gravity decks as well, they're also starting to slowly pick up. What are your general thoughts about IBC adoption moving forward and what are some of the exciting projects that you see? Maybe besides Terra, we already covered that, that are looking into implementing ibc.
**B** (16:00):
Yeah. So a couple of projects that I'm pretty excited for. One is if you guys have heard of Axelar. So Axelar, they are sort of building this, sort of like they're taking A similar like bridge technology as Thorchain but actually allowing it to mint like pegged assets. So and I think that will be, I think Axelar will be a really exciting way to get like Bitcoin and Dogecoin and all these like other coins on, in like on pegged onto Axelar and then being able to flow into the IBC ecosystem. And so I think I'm quite excited for that. My dream has always been I started working on Cosmos in order to get bitcoin onto other chains. And so I think Axelar will be really helpful on that. I'm looking forward to some of these new. I've been working with the stargaze team with Shane helping design some of the tokenomics and mechanism designs there because I'm just really excited about like getting more social projects and like NFTs and stuff on onto the causes ecosystem working on and then also just like you know, a lot of these like, like a lot of these smart contracting chains that are coming up. So you'll have like Ethermint and Juno and like I think this will also just like make it much easier for people to start developing as well. Like where, how you can get. It's a, you know, I think eventually, you know, obviously we still believe in like application specific blockchains but I think like having these like smart contracting chains is a good first step where it's like, okay, this is where you can do a lot of your rapid prototyping and then eventually break off onto your own chains when needed.
**A** (18:01):
Yeah, I think also the. And network effect is kind of a key word here and I think we started to see it very recently when more and more projects came to osmosis and all of a sudden you were able to use the Cosmos ecosystem actively. And for me personally that was the game changer. So regarding that, do you expect to experience a similar network effect? So will the Cosmos ecosystem experience a similar network effect like Ethereum in DeFi summer 2020?
**B** (18:38):
Yeah, I mean I'm hoping so. I think one of the things that we definitely have to sort of do. I tweeted this a couple days ago where everyone else in the blockchain ecosystem is starting to now think about cross chain communication. Right? Like you have all these cross chain communication projects suddenly popping up. We've been thinking about and building it for the last three years and now we have it built and it's like working. Now we're on the step of thinking about cross chain composability and it's like how do you make the UX of doing applications cross chain as simple and seamless as doing them on a single chain. And that's going to be sort of what once it, if we can solve that nut, then I think then Cosmos will just explode because we'll just have the best multi chain scalable UX where you can. Let's say I go, let's say I want to take a leverage position. I can go click one button and it should go on UMI and borrow some tokens and then like do the trade on osmosis and then like do that cycle a couple of times so I can build up a leverage position and like you know, you want, you want that to be as seamless as using Zapper or something is today on Ethereum. So I think that would be really cool. Oh, one other thing about the, about the IBC thing was I've, you know, I've been following Wormhole pretty closely recently. So Wormhole is this like project that kind of originated out of the Solana ecosystem. It's built by Certus one who's like, you know, still a, I think they're still a validator in the Cosmos ecosystem and they sort of really originated out of the Cosmos ecosystem. But what they're building is building this like more trusted bridge protocol. Then it's much more trusted than IBC because IBC is supposed to be this like trustless thing between two chains. In Wormhole you have a trusted set in between. But they built it as this arbitrary message passing system. One of the things I'm interested to do is see how can we make the higher level application semantics of IBC and Wormhole be more similar. That way you don't know regardless of which protocol it's using underneath, whether it's using IBC or Wormhole, can the token transfer process be the same on both of them? So then I can now start to communicate with Solana or whoever new starts adding Wormhole. Right. Can we start to talk to these chains as well to the application developer? It should feel the same whether you're using IBC or Wormhole. So that's something I'd be interested in doing. And so yeah, I think that's sort of like if IBC wants to go next, like you know, we have to figure out how to make it. So even if we're using different lower level protocols, the higher level protocols feel very similar.
**C** (21:52):
Yeah. And I think the kind of like whole interoperability aspect in crypto is gaining more and more importance and attention. I think Chainlink, they have also worked on Their own, what is it called, CCIP Bridge or something like that. And then Avalanche, they have something that's called subnets. So they all try to kind of like build interoperable elastic networks that are all able to cross communicate. Because eventually that's all what we need, right, to unlock the value and the potential of blockchain technology in the first place. So what would be your advice for someone who is maybe listening now and they have built either their own chain or their own network, or launched on one of the chains, Solana, Cardano, Avalanche. And they said like, hey, how can I connect to Cosmos? I want to somehow get listed on Osmosis, for example. What would be your number one advice how to kick this process off?
**B** (22:52):
Yeah, so I think it really depends on which one. So if it's on the Ethereum one, if you launch on Ethereum, I think really helping contribute to the Gravity Bridge work. And so there's this, there's this right now, like, you know, I think the biggest thing if you can contribute on the, on the Gravity Bridge is this is crowdsourced audit hackathon going on by, by C4. And they're like, really? I think it's called C4. They're like, you know, it's just like hackathon where like people are contributing through the audit of the Gravity Bridge. And I think that's like a really. And I know there's a lot of teams contributing to that and making sure that bridge is really secure. So that's the best way to contribute. If you're from the Solana ecosystem, I think there's some work on maybe helping out on this wormhole IBC merging of. I think that kind of stuff would be really useful if you're coming from the Polkadot ecosystem. I think there's still some work being happening on getting IBC onto substrate and so just figuring out how you can help there. And then if you're building in Cosmos, it's very simple. You just add the IBC module to your chain. I guess one of the things would be if you've been building on Cosmos for a while, looking to see how you can upgrade to the latest version of the Cosmos SDK, because there's like a number of chains that like have been building on Cosmos for a long time and like, how can they like get up to speed and like with the latest SDK so they can use ibc. So like, you know, Terra obviously is doing that right now where like, you know, they're going to upgrade and to 043 and that's going to give them IBC. But you know, there's a lot of other chains like Kava and Thor chain and I know thorchain is actively working on that as well. But yeah, so just a lot of these other chains that can start to figure out how to upgrade to Stargate and then there's also just a whole bunch of other benefits to upgrading to the latest version as well. Yeah.
**A** (25:02):
And that being said, we saw very recently how AAVE and Curve decided to launch on Avalanche and this was very exciting because these are some big projects on Ethereum, better said blue chips. And I wondered, I wondered because the thing is like what I love about the Cosmos system nowadays is that you can actually use it. There's not only theory you can provide liquidity, you can stake, you can participate in governance proposals. So are there like similar events planned or can we look forward to something like this? That major protocols from other ecosystems are joining the Cosmos ecosystem in which way whatsoever?
**B** (25:46):
Yeah, so I think one of the I have this like tweet sitting in my drafts that I never tweeted out yet. But what it says is Cosmos was right about everything except EVM skepticism. So I will say that like in the early days we were, we saw this whole multi chain interchange vision coming alive but we were very skeptical of the evm. We were like no, no, no, this EVM thing is not going to be, it's not it. We're going to have like other, the EVM is going to die out and it's going to be replaced by better VMs and maybe that's still possible. Cosmos, from what I can tell, is probably the second most popular smart contracting language right now after solidity. Right. I mean in large part thanks to the Terra ecosystem. But you know, I think that that's really cool. But at the end of the day it's just, the EVM is just so powerful right now and it's just very. And all these like ecosystems that just have a drop in EVM and it's just very easy for any applicant, any project that's developed on major protocol developed on Ethereum to just go, okay, let's redeploy our contracts there. And so I think we are improving on that now. And you know, so I know the Tharsis team, you know, close friends of mine from Berkeley, they're working on getting Ethermint up and going as soon as possible and you know where I'm helping them figuring out like what are cool. Once again, my thing is always like, you know, yeah, we can Just copy what's already exists. But my thesis has always been yours and you provide something better. Like what's the 10x improvement? Improvement. And so we're helping them figure out, okay, how can we provide something that's as familiar to Ethereum developers as possible. But then still it's like, hey, here's something you can only do on Ethermint that you can't do anywhere else. And how do we get them excited about that kind of thing? So Ethermint should be coming pretty soon. And then what is more interesting though is I do want to see what happens with like which of these protocols are going to be the first to do application specific chains. Compound. Right. Compound is probably the first blue chip that has. I think we can zoom out for a second and talk about the multi chain versus interchange vision. Right. So multi chain is what Sushi and Aave and stuff are doing where they have many chains and they're just redeploying their contracts in all these chains. And I think that's okay, you know, as a, as a hedging thing to see which ecosystems work. But at the end of the day that's not great because what you're ending up doing is like splitting up your liquidity and like, you know, I just don't think that the right long term approach, I think the right long term approach is the interchange vision, which is, you know, application specific chains where it's like, you know, Osmosis doesn't say, hey, we're not going to redeploy osmosis on like 10 different chains. We're going to have one osmosis chain that connects to every other chain. And so, you know, there are a few blue chips that get it right. Like I think compound chain is like, you know, they're like, no, we're not going to redeploy. We're just going to have one compound chain that connects to everything. I think Uniswap a little bit. You know, that's why Uniswap is pretty resistant to going onto many chains change. Right? They're like, okay, we're just going to stick to optimism basically. And obviously they're going to keep their main net, Ethereum 1, but they're really focusing on optimism as their optimism will be an application specific chain for Uniswap, I think. And so it'll be curious to see which other blue chips are doing this. I have a bet from about one and a half years ago where I said that that within three years maker will be on its own chain. So hasn't happened yet, but I still think I can win this back.
**C** (29:53):
Yes. So one and a half years to go. One thing that just came out in my mind as you were speaking about this multi chain versus interchain is obviously we're seeing this rise of layer 1s right now that are actually gaining maybe adoption, but also a lot of interest from VCs. Obviously the market caps are going through the roof, but that's I think two different things here. What is your general thought about the Layer one landscape out there? What do you think about Ethereum right now with the gas fees, E2 coming up, their timeline? Do you think they're going to ship? Do you think Polygon is going to take over a majority of the market share? What is your thoughts about the current L1 landscape and how do you see certain chains positioned?
**B** (30:41):
Yeah, so I think that eth2 I think the most important part is just the switch to proof of stake. I am personally not really convinced that the sharding is that important anymore because I think that the rise of roll ups basically is what sharding was supposed to be anyways. And so you know, I think we're just going to see. I'm skeptical if we're ever going to see sharding ship. I think we're just going to see proof of stake and then many more roll ups which is I think a good outcome to be honest. So I think that I think the Ethereum ecosystem will continue to develop there. I think Solana is interesting because you have vertical scalability and you have horizontal scalability. Horizontal is this idea of to scale the system you need to have more and more change. And so sharding roll ups, Cosmos, all of these are forms of horizontal scaling. Vertical scaling is how much can we scale a single blockchain, can we put maximum through, what's the maximum throughput we can achieve on this thing? And I think Solana is the one that's doing the most progress in that field. I think personally I don't find.
**C** (32:04):
Especially.
**B** (32:04):
If you have an evm like you know, I think like there's a lot of people who are like oh like for example Polygon or Avalanche, you know. Yes, you can swap out the consensus protocol and you know you can get quite a bit of improvement. You know Polygon uses Tendermint and can just get like a lot of improvement on the scalability. But at the end of the day the main bottleneck is not the consensus protocol. The main bottleneck is the like state machine. The EVM is still like the bottleneck there. And so I think Solana is the one right now who's doing the most, like, innovation on making it like actual vertical scalability improvements. And part of it is they have to change how they think about blockchains. Like, you know, there's no light client proofs on Solana. There is right now and they just like change a lot of the assumptions of auto blockchain. But I mean, there's users, right? There's. It clearly met some market demand for, like, people who want to use that platform. I think it'll eventually run into bottlenecks, but probably much farther down the road. I think they still have quite a bit to go and I think that, you know, their team is very smart and they are. Maybe they'll be able to stay ahead of those, you know, keep innovating there. But yeah, I mean, Cosmos and we're still betting on this, like, more horizontal scalability approach. Yeah, I guess. To be honest, I think the four ecosystems that I think are the have the most, like, you know, interesting are probably, in my opinion, Ethereum, Solana, Polkadot and Cosmos.
**A** (33:46):
And so, yeah, and speaking about Ethereum and Solana, like the recent trend or why gas fees on Ethereum took off so heavily recently was NFTs. I just tried to buy an Ethereum address yesterday and just because of the gas fees, it would have cost me like $200. And I said, okay, let's wait a couple of weeks. And because of this, like many people claimed on Twitter in the last two days, hey, have your eyes on the Solana ecosystem because maybe, like, there are many interesting NFT projects as well. So many people expect right now to see like a huge NFT kickoff in the Solana ecosystem. And now here we are again. Like, for me, Cosmos is, besides Ethereum, the most active ecosystem at the moment. So can we expect more NFT projects or more NFT activity in general on Cosmos? Because I think this is really the tight guys right now.
**B** (34:47):
Yeah, I mean, I'm hoping so. I mean, I've seen and on the Iris chain there's a little, there's a small nascent NFT market looming a little bit. And like, you know, with the uptick platform there, I think the uptick platform has a little bit to go. I mean, I think the UI and stuff has some room for improvement, but it's nice to see that there's actual, like, usage happening there now. You know, like I mentioned, I'm, you know, working with, helping the stargaze team, you know, build, like, build stuff there and I think, you know, I think like really combining NFTs with like social elements I think is sort of a lot of how like a lot of cool stuff will happen. Yeah, I mean, honestly, I think what we really just need is like some. The problem is, you know, I mean people have asked me like, hey, what are you going to do anything with NFTs? And I'm like, I'm gonna, I'm happy to be a user of NFTs. I think once we have a cool NFT platform on Cosmos, I mean I definitely want to issue like awesome. People have been like, I want was Mington NFTs. I'm like, and, and you know, our designer Kevin, he's like, yeah, I want to make some Washington NFTs. We're like, all right, but we need a good platform and so we're not, we're not going to be the ones to build the platform because, you know, I think that's not really what we're trying to focus on. We have a lot of Defi stuff to finish, but we definitely want to. Yeah, I mean, once we have some really good product oriented people who want to build a really cool NFT platform on Cosmos, I think that's a huge market. I think there's a huge market demand for that.
**C** (36:24):
Yeah, I think there's actually a couple of projects trying to build this. I think Pylons Tech is one. They're trying to build an NFT platform and then also saw this project popping up. The Strange Clan. I don't know if you saw that, but they're also built on Cosmos and they're using also Akash for the computing layer. I had a call with their founder, very, very deep in the whole computing and cloud industry and also in Cosmos. This one is very cool. They just unveiled the first character today. I think it's also more like gamified, you know, it's more of a game basically, but also leveraging nft. So that's really cool to see things slowly coming up. I agree. We need the open sea of Cosmos. I think we talked about this also on my channel last time, but yeah, you just said you guys are focused more on Defi stuff. And one thing I think the whole osmosis community is really looking forward to is super fluid staking. So I think. I don't know who came up with that term, but it sounds really cool and fancy. So maybe can you explain for everybody who has no clue what it is, what does super fluid staking mean and what's the timeline for that?
**B** (37:34):
Yeah, so Superfluid staking. Who came up with the term was actually, his name is Dan Ellitzer, he currently runs Nascent Ventures. But so he had this blog post like maybe two years ago, three years ago or something, it was called Super Fluid Collateral in Defi or something like that. And he basically had this idea, he had this like today it feels very obvious, but back then it was just like very crazy idea where he's like, okay, what's going to happen is we're going to take defi assets, we're going to take tokens, put them into protocols and get out defi assets and we're going to use that defi asset as collateral in other protocols and then we're going to get that back. And so you can see this happening slightly, a little bit today on Ethereum where it's like, you know, you can Maker now accepts some Uniswap LP shares as collateral on Maker. So you can, you know, use that as collateral to mid dai. So that blog post was really cool and you know, I stuck with me for a while. And so we call our thing Super Fluid because it also kind of like fits with like, you know, another name for staking derivative. People are going to use it is like Liquid staking. And so it's like ah, liquid super fluid. So what, so what it means is what is normal? So there's been these ideas for like normal staking derivatives around for a while and I contributed to a bunch of them. But you know, I've always had a little bit of concern with them where I've always been like, hey, these are, you know, I'd be helping design some ideas but I'd always have a caveat where like here's a nice intellectual idea. I don't know if it's the. I don't know if it's a good thing. Why? Because it kind of undermines proof of stake in a lot of ways where you undo the unbonding period and you kind of undid the security system that proof of stake gives you. And so I've always been a little bit skeptical about that. But about six months ago we had this idea of like, hey, maybe there's actually a different way we can get a lot of those benefits without undermining the security. And so what are staking derivatives? Staking derivatives are this idea that you have staking tokens, let's say osmo, you stake them and then you get back this staking derivative token like staked osmo. And then you take that staking derivative and go use IT in defi or whatever you want to do. We said hey, what if we do this in the reverse order? What if we take osmo, use it in defi, take that defi asset and stake it. And this is kind of like once again inspired by that super fluid design. And so if you do that process, the defi assets are still staked and the chain has the ability to understand like hey, there is real OSMO underlying this defi asset. And so in our example, in our case what we can do is if you have OSMO in a liquidity pool, you can take the LP shares and stake them and the chain will staking module will say like oh yes, this LP share for pool one. We know that one LP share converts to this much osmo. If you try to withdraw, let's allow you to stake it and have it be treated as staked osmo. And this is only possible because we have our own chain and we can like very go fine grained and like be like hey, like we can modify the staking system itself which is just something you could never do on someone else's chain. And this is cool because we get a lot of the benefits where users will be able to both be like liquidity providing and staking at the same time, but without undoing those security issues.
**C** (41:24):
Yeah, that's awesome. And I have one question also maybe as a comparison to that, because natively I think this is obviously this discussion about shared security coming to the hub. We talked about this a lot on our previous conversation, but now the Cosmos or basically I think the tournament team announced that interchange staking is going to come. And I think this is also kind of like this, maybe in a reverse model but a similar architecture that you have one coin and you can actually secure various chains with it and also earn natively their staking rewards. So can you a little bit differentiate? Because I think for a lot of people it's a bit confusing now that you explained the concept of superfluid staking, how interchange staking works in comparison to that.
**A** (42:18):
So.
**B** (42:20):
There'S actually interchange staking is actually this higher level thing. So I actually asked them to. They used to call their shared security system interchange Staking. I asked them to change that interchange security because I think interchange staking is actually this higher level thing which encompasses many different designs. So I actually think that superfluid staking will become a type of interchange staking eventually. And how we. So we have something called superfluid v2 which is called interfluid staking where interfluid staking how it works is so going back to superfluid staking. Now imagine we have a LP share with like Osmo and AKT in it and we take that LP share, we stake it on osmosis and say that LP share converts to 5 Osmo and 10 AKT. We stake it. The chain says okay great, this is 5 Osmo vaccine power. What about all that akt, right? Wouldn't it be nice if we were able to tell the Akash network chain over ibc being like hey by the way, you guys have a bunch of AKTs sitting on our chain. It's staked in our system. Do you want to let these people choose validators on your side and if they get double signed or anything you can just let us know over IBC and we'll slash them over here. This is sort of what it is is it's super fluid staking as a service, right? Where the osmosis chain basically says hey other chains, a lot of your guys tokens are sitting on our chain because they're providing liquidity. Let us superfluid stake them for you and they can provide to your chain security. I think this is really cool. I think this is a type of interchange staking but it's actually very different than interchange security because interchange security, what the Cosmos Hub is doing is more about using atoms and their immense market cap to help secure many chains at the same time. So there it's about like okay, atom stakers will be able to go secure all these new chains. While interfluid staking is more about every chain, it's still only their own token that's staking it on the Akash network. It's not like OSMO is helping secure the Akash network chain. It's literally just saying hey, the AK sitting on osmosis is going to help secure their chain. So I think they have slightly different designs and use cases and I think they, they'll both like be quite complement complementary because a chain like Akash Network could do both for example, right? It could you know, use interfluid to get all the Akash sitting on us closes and elsewhere to help secure it. But then it can also borrow security from the Cosmos Hub using Interchange security.
**C** (45:28):
It's funny how you explain it and you say like oh yeah, it's pretty cool. I'm like man, this is a game changer. This is next level for you. It's like, it's pretty cool. Yeah, but I think it's really, really cool. And what is the timeline for that? So I know First, Moses, you are kind of like working on this already. Is there already some kind of like rough estimate.
**B** (45:49):
Interfluid staking? I do not have. I cannot give you any realistic estimate for right now. Right now we're really focused on getting that superfluid V1 going just for the osmosis chain and that I think where this, we're in the active engineering of that right now. Like the interfluid stuff is sort of more of a design idea that it's like, yeah, but super fluid. It's being engineered right now. This is definitely, I think it's our, probably our highest priority for like. And so. Well, highest priority on the chain engineering side, I think one of our highest priorities before that is like getting that like Ethereum UX really nice. But from the chain development side, yeah, that's our highest priority right now. So hopefully within a few months the V1 should be ready.
**A** (46:40):
And speaking of developments, I think many in the cosmos and especially like the osmosis community are very interested which developments around the corner. So what can they look forward to specifically for osmosis? So are there any launches or events you can announce?
**B** (47:03):
Yeah, so I guess like some of the things is like, you know, I think there's going to be a lot more like lbps happening on osmosis pretty soon. So the Regen team was sort of the first one to do the lbp. And you know, I think we learned a lot from that process because what we did was we actually copied the LBP design from Balancer team. So they came up with this design design that uses like weight changes of a pool to do like this like Dutch auction kind of thing. And I think it works, but I think it has a lot of room for improvement. And by going, sitting and going through that process, I think we've learned a lot of the like, okay, this is what works well, this is what doesn't. And now we're sort of working on designing LVP V2 where like how can we take the learnings from that and make it make it even easier for people to do like initial token liquidity events on Osmosis. So I think there's a number of chains that have expressed interest to us already. So Desmos is one, Stargaze is another. I think those are some interesting events that will come up and then, yeah, I mean I think just the liquidity events that will happen once you have Ethereum assets flowing in and more stable coins stable. Once we have Terra and then we have the Ethereum bridge, we're going to have multiple stable coins. So then people will be able to start providing liquidity using stable swap style pools and stuff. That should be pretty exciting.
**A** (48:42):
Yeah. And I think many people are now looking forward to all of this. So could you give us some good hop off points to learn more about Osmosis and to engage more with you and the rest of the osmosis community?
**B** (48:57):
Yeah, sure. So I think we're most active on Telegram and Discord. So we have a Discord community which is a little bit more. Where more. Some of the more better intellectual discussions happen. And then we have the Telegram, which is where a lot of customer support and just more fun discussions. We have this great platform now called using Commonwealth. But if you go to Gov Osmosis Zone, that's where we actually have one of the most like probably one of the more active governance communities. I think Osmosis probably has like, I think we're on proposal number 30 already and we've been live for like two and a half months, which means we're having a governance proposal roughly every two to three days, which is kind of crazy. But so that's really. So, you know, this Gov Osmosis Zone is sort of this like4forum where people are like actively contributing and sharing ideas and proposals for new things coming up. And so I think that's sort of the best place to follow there. And then our Twitter is probably best for announcements and stuff. We are working on getting more blog posts up and running again because we, I think we had to. We had a lot of blog posts like prior to the launch, but then after our launch we just got busy with other stuff. But we're working on like, you know, hiring more writers and technical writers who can like help us like a lot of these ideas. You know, I like talking, you know, I can share all this stuff on a podcast. I'm a podcaster myself. I'm that presenter and I don't really like writing as much. But you know, I think having the written thing as this more evergreen, everlasting written content is important. So we'll be have. We'll be working on getting more of that soon.
**A** (50:43):
Yeah, you heard it here first. And as always, you can find all the links you need in the description below. Sunny, it was such a pleasure having you on the show. Thank you so much for sharing your thoughts with us, sharing all the insights with us. I think this was a very informative episode. That being said, I wish you a wonderful start to the day and greetings to San Francisco.
**B** (51:07):
Thank you.
**C** (51:08):
And we'll see you soon in Lisbon.
**A** (51:10):
Yeah, that's another thing. See you in Lisbon.