**A** (0:04):
Hello, Hello, hello, hello, bitconnect.
**B** (0:18):
Cosmos.
**A** (0:21):
IBC.
**C** (0:24):
Please.
**A** (0:29):
Hello, we're waiting on our moderator by the way.
**D** (0:32):
Hello. Yeah, it's working now.
**A** (0:34):
I think there's a technical issue while.
**B** (0:37):
We wait for the moderator. The moderator's here.
**D** (0:41):
Do you guys start the panel already?
**B** (0:44):
Yeah.
**D** (0:45):
Maybe we should continue in Turkish, right? The previous panel was in Turkish. Maybe we should to do that.
**A** (0:52):
I. I know two sentences I don't think we have.
**D** (0:56):
So I have Sunny here from Osmosis, I have Valentin from Quasar and Yun from Crescent. So that's a panel on Cosmos Defy. There was a very interesting prop, very controversial prop in my opinion from Sunny a day ago. And so I think it involves Quasar and I'm curious to hear what questions think about it as well. So I'm going to ask first, Sonny to explain what is this prop, this liquidity injection that you're seeking from the Cosmos Hub?
**B** (1:28):
Yeah, sure. I put up a prop yesterday on the Cosmos Hub forum that basically proposes that the Cosmos Hub should put some protocol owned liquidity, allocate 900k atom into the Atom ST Atom pool on osmosis in order to provide more liquidity backstop for driving usage of ST atom on osmosis and you know, Cosmos Defi more widely. The proposal basically says to put currently 90% into a static range of you know, 1 to 1.3, which will give it like 15x more capital efficiency than classical AMMs. But then we also suggest putting the 10% of it into a quasar vault that will basically allow it to be dynamically managed and get way, way, way, way more capital efficiency than even the static range. And then hopefully the idea is that as Quasar sort of proves itself over the coming months, you know, it's still a pretty new product. But then, you know, I think more and more of that POL should go into vaults like Quasar and there are other people building vaults as well. Right. And so you know, for like that much Pol, it should probably diversify across like a couple of different vaults. But yeah, you know, I mean, I think there's a lot of Defi protocols building on Osmosis. It's sort of the hub of Cosmos Defi. Right now most of the over 90% of atom dex volumes happen on osmosis. Most of the TVL is on Osmosis. The most of the new projects are building on Osmosis. And I think for Atom to be money in the Cosmos ecosystem, it needs to make sure not just Atom, but to make sure that ST Atom, the LSD is. We need to have liquidity there so that projects like Mars and Levana and OMX and Membrane, and not just projects on Osmosis chain, but many projects in Cosmos like ist, Nolus, umi, they all use osmosis for liquidations. And so we need to drive more ST atom liquidity on Osmosis. So.
**D** (3:47):
Yeah, but the reason it's controversial I think is it's twice the amount that was deployed on neutral. Right? It's twice as much. And Neutron obviously is part of the Atom economic zone. You may argue that so is osmosis. I would argue that at the very least, Neutron is part of the atom security zone. And so for that reason the Cosmos hub should prioritize Neutron over other projects in Cosmos and outside of Cosmos. What's. What do you have to reply to that? I'll ask you afterwards what you think about it.
**B** (4:20):
Yeah, so we're asking for twice the TVL, but osmosis has 300x the volume. And I think that, you know, that is still actually, you know, providing some favoritism towards what's, you know, towards Neutron. But you know, at some point you have to read the, read the market and know where the users are.
**D** (4:37):
What do you think?
**A** (4:39):
Yeah, I mean, I think if we look ahead, especially with the launch of CL across Cosmos Protocol liquidity is just going to increase. Like that's a trend that's definitely going to happen. We already have multiple projects reaching out to us because with CL now, as Sandy has mentioned, you can just really cut down on the incentive spend the protocols have to do and you can increase protocol owned proto ref, essentially. Right. Because the protocol captures the trading fees from that protocol liquidity. And with CL especially, you cannot have a full range position that, you know, a community pool just sits as the admin and like leaves. You have to have some dynamic rebalancing when it comes to, I guess, picking favorites, picking winners, whatever. I can just speak about how we at Quasa think about this, which is liquidity and volume is king. Right. If something has a lot of volume, that is the most direct indicator for product market fit. Right. If someone trade, if people trade something a lot, that means that people want to trade it, which means we should build on top of that. And any volume of any chain is always the base of the defi yield or any other primitives you can build on top of that. So you can only get that far with incentives. So if Neutron were to say 100 extra volume and SD Atom or Atom, we would deploy a vault There. Right. Because if users can get good yield there, then people should have access to a vault that demands that liquidity. I'm going to stay out and a bit, you know, unpartisan on that proposal because it involves Quasar. So I'm obviously biased. But the trend that we are at least seeing on our side is people see that the system works, the infrastructure is pretty solid. We have a lot of trust minimizing infrastructure that allows that to happen. And I obviously personally would hope it, it passes because I think it's a good showcase for Atom as well, that it's not just the AZ that's a value driver for Atom, it's where people trade it, it's where its liquidity is managed. Right. That's what I think you were kind of alluding to with Osmosis. Part of the easy. It's not, you don't have to be a consumer chain to add value to Adam. As long as you facilitate other aspects of it, we can play a role in that. And I think Osmosis does too.
**D** (6:43):
So I think many people would counter on these two points that it's a short term vision, it's a short term agreement, short term value proposition for Adam, that yes, in the short term, maybe Osmosis is making more volume, Osmosis is going to generate more fees, especially if Quasar is managing this liquidity. But in the long term, the role of the Hub should be to grow neutron to the point where the 25% revenues it get backs, that gets back to the Hub actually worth way much more than, you know, the, what, $250,000 that you guys, I think estimated for, for one year of, of swap fees on, on osmosis.
**A** (7:22):
I want to, I want to comment on that. I think there's a, you know, we obviously have different visions of the Hub, right, as an ecosystem, but I think we all want to see it succeed generally. And what I can say when it comes to the volume, for example, is if we were to imagine a future where there's a, where there's a quasi vote on, on osmosis and a quasi of neutron for the same asset, if liquidity moves, the capital is going to move, right? Because the piece in the vault get their, their APR and they yield based on the liquidity. So the goal is the composable aspect of the interchange, right? Like why do we have ibc? Like why do we have the app chain thesis? It's so we can connect different products that are specified for singular use cases depending on where users are going and I think that whether or not these chains are easy or not, the atom hub would not be better off if it doesn't help volume that the atom hub has. Obviously I understand from the atom perspective you want neutral to succeed. We don't have a horse in this race. Quasi just wants liquidity and volume. That's where users get their stuff. If it comes up, we'll build a vault.
**D** (8:30):
What about from the question perspective? Would you guys be also interested in having that kind of proposal the same way osmosis put up theirs?
**C** (8:39):
I want to suggest more like looking into bigger picture. So not only in Cosmos but if you see Uniswap, which is the most successful defi having a lot of volumes and liquidity but still the APR for liquidity provider is like less than 5% and if you compare with the risk it's coming from like implement loss that's really high when you imagine this kind of like crypto volatility. So financially doesn't make any sense. So that's a bigger problem than solving smaller problems. In this bear market everyone is holding tokens, not buying and selling all the time. It works in blue market, in bear market everyone holds. So in smaller picture in Cosmos it makes even worse. So it doesn't make any sense. So I believe that the real yield should come from a variety of sources. So our team is trying to expand this opportunity of creating new yields and utility for traders and users which is more about options right now from our team. So we are focusing on launching our new product called flip. And Flip is to flip the way we trade so that the biggest trading volume is not coming from stocks right now in Tradfi it's mostly on option trading. It's really surprising because in web three it's like our all options are just like zombie right now. But in Tradfi it's like sky hiking. So why is that? It's like all young people, it's like the growth is coming from India. A lot of young people trading options like games. So it's like everything is speculation in there and you can see that blockchain is coming from speculation too. Like Bitcoin and Ethereum. Earlier investors they were looking for 100 times earning. It's not going to be from technology development, right? So it's like ingredient is coming from speculation and like this like India option market is also like coming from speculation from retail demands. So the liquidity provider, real yield and turnover, trading volume, those are all same language. It should have like high turnover. You need to trade 20 times a day. To make enough revenue. But if you trade Crescent token or Osmosis token, there's no necessity to trade 20 times a day. So it doesn't make any sense. So I think like Spotx makes sense in a very crazy bull market only. So in bear market you should have other revenue source and that is derivatives. Because in derivatives you can bet on shorting, longing and also staying too. So in any market you can create revenue. That's derivatives. That's the future. We need to go.
**D** (12:02):
Sonny, I think that was one of the arguments in your, in your proposal that Astroport on Neutron is an AMM and doesn't have a concentrated liquidity like Osmosis does. Can you maybe explain the difference here between the two models?
**B** (12:16):
Yeah, sure. So classical AMM basically says that everyone who's depositing into this LP pool. Liquidity pool. LP pool, that's one of those like ATM machines, huh? Okay, okay, so anyone who's deposited into the liquidity pool. Oh no. LP stands for a liquidity provider. Sorry. Okay, never mind. So anyways, putting the pool, they're like following a single market making strategy that everyone is using the same thing of, right? And especially in the XYK pools, like basically people are market making like on the price of Adam from like zero to infinity, right? And it's like most of that capital is like not being used, right? Like, you know, I know we'd all love it, but you know, Adam is not going to $1,000 tomorrow. You know, maybe despite the presentation last year, it's not going to $1,000 tomorrow, right? And it's like, and like the market making at a price above $1,000 is just like a waste of capital, right? When instead you could actually just like put a narrower bound. You can be like, hey, I want to market make atom from like, you know, between $5 to $15. That's like a reasonable range that I think it will stay in for the next one month. And you can just put it there and you know, with a much tighter range, basically you'll be able to get with, with let's say 100k of liquidity, you might be able to get the same amount of like price impact for the traders as you would have with like, you know, $10 million of liquidity in the full range position. And this gets even more powerful when you add in vaults like Quasar, which I'll let, I'll let Valentin talk about.
**A** (13:55):
Yeah, I think kind of what one of the connection points that we had in Defi for a long time is more liquidity means bigger swaps possible, right? That's what you think if you see like an ammo. But with CL you can have higher swap efficiency with lower capital if it's very tightly deployed. For example, our Axel USDC USDT vault manages around 75% of that pool. Our range is so tight that no one effectively ever moves out of that range because we've deployed so much capital there. You can basically swap $800,000 in a single swap and you pay I think 0.01% of slippage. Right. So you effectively have a one on one trade. So when you think about protocols, especially incentivizing their own token and their own yield, we used to say $1 of liquidity is X amount of incentive. Now with the change in cl, the incentives are specifically targeted to well, how often is this dollar used? Like how often is this specific liquidity being used for the swaps? Because that's the only thing that really matters. If liquidity moves and you keep the range tight and all the capital is deployed there, then you always have access to the entire liquidity versus the full range, which there are some interesting statistics internally, but there's a couple pools where I think the quasar vault covers 90% of all the incentives. Because it's so tight, obviously IL is bigger. If ranges are tighter, you constantly move between both assets. So there's considerations to be made here. But for the entire cosmos, I think capital efficiency is something we desperately need. Whether or not our actual total capital increases, obviously that's also beneficial. But the more capital that is not used is being used where it's efficiently used, the better the entire ecosystem.
**D** (15:39):
Yeah. I want to point out though that you've probably seen that neutron and duality have something going on together. And so the efficiency, capital efficiency that is going on, on osmosis right now might be coming to neutron soon enough. So to me that's a weak argument. The fact that osmosis in the short term, again like is going to provide this capital efficiency is going to generate more fees for the reason you described. But that may not last forever.
**C** (16:04):
I understand this micro engineering about LP management and farming, incentive for liquidity, but still it doesn't change the real resource of the revenue. There's a concept called Sharpe ratio comparing risk and return. It's like return divided by risk. And if you use concentrated liquidity, like efficient farming is still you are multiplying both like the upper part and also lower part. So the efficiency of capital is increased from concentrated liquidity. But still the Sharpe ratio, which Means the attractiveness of investment is just stay there. So more risk, more return. It's just like same investment amplified. So can we make it like revenue more risk less.
**A** (16:59):
So that is, I mean I would say that I will push back a little bit on that because effectively the bigger swaps ecosystem can support which independent of neutron asmosis, like the bigger the swaps are that you can carry, that's a multiplier to the size of a defi market. Right? Because that's like the choking point. Can you actually move between assets? Because that's effectively the baseline primitive for anything we build. So increasing capital efficiency is also a multiplier to that because suddenly you are using more capital. So stuff like the Vana perhaps or options as well have more collateral or you know, more counter value that can be used to increase the market size. We're going to have to see how IL performs over long periods of time. But to say that it's yield farming when the entire goal of incentivization is, is to supply liquidity. Right. We are literally the vaults are getting the rewards because they do what they want, because they do what the protocol wants. Right. To be able to facilitate that better, you also get more swapping fees because all the swaps are going through that range. So you are also increasing the real rewards. As you mentioned, stepping back a little.
**D** (18:06):
Bit from, from the. What generates more fees. Sunny in the, in the post you had like an argument in favor of osmosis and the hub aligning themselves better. Right? That was like a significant portion of the post. Can you expand a little, a little bit on that and what that would look like especially compared to actually becoming consumer chain like Neutron Trust.
**B** (18:27):
Yeah, I mean, look, it just doesn't make sense for osmosis to become a consumer chain. I think becoming a consumer chain just like massively restricts the amount of like your iteration speed on how fast you can like develop products. I think the point of building app chains is that you want your own validator set and you can like demand more of your validator set. Having to go through like Cosmos hub governance every time we want to do a protocol upgrade like and like expecting all the validators to upgrade, you know, with. I've talked about this before but like, you know, sidecar maximalism where you want the. We want the validator set of osmosis to be doing more than just running the chain. Right. Very soon they're going to have to start running oracles and Pithnet nodes, which is a Solana node. Right.
**D** (19:14):
So you don't like the osmosis by your set, like 70 or 80% overlap with the hub right now?
**B** (19:20):
No, I don't think so. I think so.
**D** (19:22):
You. You posted yourself like something from.
**B** (19:25):
It's around like 60%, 50 to 60% right now.
**D** (19:27):
It's pretty high.
**B** (19:28):
It's pretty high, yeah.
**D** (19:29):
So how big of a difference would that make?
**B** (19:31):
I think it'll change more as the. As these things go live. Right. Like, I think the best example of a app chain right now that makes usage of specialized validator sets is secret network. Because they're like, oh, our validator set must have access to these SGX nodes. And that's like, I don't know off the top of my head, but I would be surprised if like the percentage overlap between the secret network validator set is not much higher than something like Hub and Osmosis. And I imagine as osmosis like iterates right now in our new product directions, I expect that validator set to diverge further.
**D** (20:10):
So what about alignment then? If it's not through a consumer chain?
**B** (20:13):
Yeah, I mean, I think the Cosmos Hub and Osmosis have two very different products. And I think that like, you know, let's say something like Osmosis and Axelar, right? Like, they were wanting to build bridges, we wanted to build a Dex. We partnered together to like, build something that is greater than like, we. The sum of our hold. Right. Like, I think that the Cosmos Hub, the job of Adam should be to like, be this, like, interchange money. And I think it has a really good shot at being this like, very unique capital asset in crypto. And to do that, you need to. To be a winning capital asset, you need to export yourself everywhere, right? The U.S. dollar won by exporting itself everywhere. You want the U.S. you want everything using the U.S. dollar, you want. The goal is, what you really want is, you know, going back to Bucky's talk, you want as much debt denominated in US dollars as possible, right? And so there's like at least four different projects building per Dexes on top of Osmosis right now. And I think it behooves the success of Adam as interchain money to have Atom be the primary collateral. Atom and ST Atom be the primary collateral in all these DEFI projects building on top of Osmosis.
**D** (21:35):
But for to become in chain money, to become like he called it, in chain capital, that requires a productive asset, right? An asset that actually generates revenue for itself. Otherwise, why would you use that as collateral?
**B** (21:47):
Bitcoin doesn't produce revenue. The dollar doesn't produce revenue.
**D** (21:52):
Bitcoin has a very specific history that Atom doesn't have.
**B** (21:56):
Atom has a cooler history or I think Atom has this amazing history. I think the bull case on Atom, I think it is the most decentralized governance token in all of crypto. Right. And I think that building Bitcoin has this extremely static monetary policy system that is untouchable. Eth had a little bit more of a dynamic monetary policy system. You know, it has like the IP 1559 with a, you know, more of this proof of stake kind of thing. I think cosmos Adam, specifically, right. Like it has the opportunity to be this like hey, we're going to take this route of we actually have a governance system and we are going to use that to like do like you know, bd. We're going to like actually have governance around monetary policy. And I think that gives Adam like this third like a new niche in this like spectrum of like monetary, this new generation of monetary capital assets that we're building. And I think that's what Adam, like there's. You don't, you don't need revenue for that. You need to figure out how do you denominate. You don't. Currencies, money, capital, like currencies don't need revenue. They need to maximize the debt denominated in them.
**A** (23:11):
Can I have my 2 cents? I think we at causes need to look at our ecosystem from a product market fit point of view as like an internal entire thing, right. We all know we need to improve our infrastructure. We all know we need to expand distribution through ibc. But distribution expansion goes beyond just ibc. Say what you want about Adam, it has the highest distribution of holders of any causes asset, period. It's not even close. I think there's a million Atom addresses, you know, a couple addresses, couple multi, six, whatever. Make it 800,000. There's still a ton, right? And those users can be converted to cosmos ecosystem users that do defi, that do different primitives. And I think if, if Atom positions itself as the interchange currency, as Sandia said, currencies don't necessarily generate revenue, right? They're backed by something. They're backed by either belief or security guarantee or a government. Atom is backed by validators that make revenue in a bear market. There is so many app chains right now that do not have sustainable validator revenue because you have a singular protocol carrying an entire validator set. It's already hard enough to build a good protocol. Imagine you now also have to carry an entire validator community behind that. ADAM has it. ADAM is very profitable even in the bear market for validators. So you have a very high guarantee of security that it's going to stay with us, that it's going to be here, that it's not going to move away. And it's already. It jumped effectively. The distribution, which is one of the biggest challenges in building any protocol is like how do you get your token in people's hands? I mean there's been so many articles about airdrop philosophy, like how to get the right holders, how to make them stake, not sell. ADAM skipped all of that. ADAM is years ahead of any other ecosystem token in the entire cosmos. So I feel like the argument of currency is a valid one. I think ADAM should try to decentralize and distribute its streams of usage. A is one, currency is one, distribution is another one. And the validator set being the most.
**D** (25:12):
How do you just, you say the A here? How, how do you define it?
**A** (25:16):
How? I like the A.
**D** (25:18):
How do you define the A? Where do you scop it?
**A** (25:20):
Sure. I think there's going to be in. We talk about DeFi 2024, right? That's kind of the purpose of this. I think that the Easy is going to have a similar model to the EU where you have different alignment levels, right? Are you, are you a currency alignment and also security alignment and also Schengen area alignment. Are you just showing an area alignment, not currency alignment? Are you, are you monetary alignment but not a currency? Like there's going to be these different levels of association and I think at least from a protocol perspective, you probably agree it's always better to have more variables you can touch when it comes to alignment. Someone is going to want to be built on Neutron and skip the validator question and skip the descent. Skip the question of like building up this governance. Right. And distribution of a token. Some are going to want to rent some security with the goal of moving out in the future. Some are currently independent, are going to want to move into renting to kind of save themselves from a downfall. Valid economics. So the way I see the AZ is it's going to be a multi faceted, multipurpose and multi offer security consortium for the ecosystem.
**D** (26:23):
But I think it's interesting that you use different levels of alignments by that you basically acknowledge that some chains in Cosmos will be better aligned than others. With the Hub, there's a level one more, level two and level three. And if Neutron is level one and Osmosis is level two, why would Osmosis get double What Neutron got as a liquidity injection.
**A** (26:45):
Can I say one sense of this? What would happen if osmosis was gone tomorrow?
**D** (26:50):
Sorry?
**A** (26:50):
What would happen if osmosis was gone tomorrow and the liquidity would be gone and CL would be gone? Capital efficiency would drop, trading volume would drop and users of the protocol would drop. And that goes for any osmosis or die. Yeah, yeah. So I think we are all for distribution of opportunities generally. But if the AZ wants to have a sustainable, in my opinion, a sustainable path into becoming something big, it needs to be serious about where it is now and not continue valuing potential. That's two or three years ahead. If you're in a fundraising market, if any one of you has fundraised, the first thing that happens in the bear market is less and less of the unrealized potential is valued. Right. Because you're de risking in a bull market. Oh this, this can be $5 billion big this. Right. In a bear market, you move away from this. We are in a rough bear market. Let's look at the current numbers. It doesn't mean we don't leave the options open for a difference of where liquidity moves and where value moves in the future, but this is where we are now and we need to be realistic as an ecosystem.
**D** (27:54):
Yeah. I wanted, since we have two Texas on stage today, I wanted each other to say something nice about the other. Something you admire. For instance. Sonny, you can start. What do you admire about the Krisn team and what they've built so far?
**B** (28:08):
I think the notifications UI on the Crescent website are some of the best like notification UX I've seen in like any crypto project. So I like that you know, when you like deposit something it like, you know, it shows you exactly how long it's taking for the deposit to happen in the toast notification. When you like do swaps it like tells you in the toast notification exactly how much you got out. I think like the amount of information it gives to the user via their like their notification system is like a plus.
**D** (28:40):
What about you? Even from the osmosis side, what do you get from it?
**C** (28:46):
Yeah, I'm envying a lot about the deep ecosystem with a lot of participants in governance talking about future of osmosis, like discussion in forum, very enthusiastic opinions in Twitter. Those kind of activities in osmosis. Really rich resource for you guys. It's all people there. So I think the value within the osmosis is about the people who are participating.
**D** (29:19):
Cool. How do you since you. Since people like that, since when you look outside of Osemosys, right? Like, there's other Dexes in Cosmos at Crescent, which all the Dexes do you feel like also leading the way, like, osmosis? Sorry, which other competitors do you look at within Cosmos? Is there any others that you look at for inspiration for, I don't know, competition?
**C** (29:48):
I'm not sure what you're talking about.
**B** (29:50):
I. You can answer this one for me. I think the one that, like, the decks that the Cosmos decks that I like, find most inspiration from is Thor Chain. I think Thorchain has been, like, you know, committed to, like, they had a product in mind that they've been working on for, like, over five years. And, like, you know, they like, you know, obviously I'm a big bitcoiner, right? And so I think they were like, one of the early people to be like, okay, there. There is demand. They took the contrarian take that. There's demand for using Bitcoin in Defi, and they were very early in that market. And now I think Thorchain might be definitely top five indexes by volume right now. And a lot of that is driven by the bitcoin to ETH trade route. People want to go from native bitcoin to ETH in a decentralized way. And so I think that they were very smart in recognizing that early and going after that. So obviously, I hope Osmosis will do that soon, too. Now with Nomic BTC coming live. But, yeah, huge fan of Thorchain, Thor Chain.
**D** (30:55):
Cool. Well, we up on time. Thanks, everyone, for this panel. That was very interesting. We didn't talk too much about Defi, a little bit of a broader Cosmos, but I think that was kind of the. Everyone is fighting for liquidity injections. So that's kind of what Defi is these days.
**B** (31:08):
Thank you.
**A** (31:09):
Thank you.
**B** (31:17):
Sam.