**A** (0:00):
Foreign.
**B** (0:09):
I am here to introduce you, Sunny, the founder of Osmosis and myself, I will help him as a moderator here. I hope we will enjoy the question and answer session. Okay. The concept is this, you can ask also your question after I ask him several of question. You are welcome to ask him any question. You can go really technical or you can ask anything about the ecosystem. Yeah. Welcome Sunny. Again.
**A** (0:48):
Thank you, thank you, thank you for accommodating this weird format. I. I'm still working on my slides for tomorrow, so this makes it a lot more convenient than having to give another talk here as well. And then. Yeah, thank you.
**B** (1:03):
You're welcome. Again, thank you so much for being here. You were too busy. I know, like last 20 minutes. We could have you here and we know that you have another meeting after us, so to keep it short, I can start directly. Like who is Sunny? Can you a bit like introduce yourself to the community please?
**A** (1:26):
Yeah, sure. Hey everyone, my name is Sunny, I'm one of the co founders of Osmosis, which is a Dex app chain built in the Cosmos ecosystem. And I've been working on Cosmos since summer of 2017. So a little bit over six years now and just excited, really happy to see how far the ecosystem has grown since. When I started it was like 10 people.
**B** (1:57):
Saniya, I was wondering how did you came up with the idea of Osmosis? How did you see the opportunity? And as far as I know you are in Berkeley and I have a friend who is your friend, maybe Anthony, you would remember him. Like I really wonder the story behind Osmosis and I think most of the audience too.
**A** (2:24):
Yeah, sure. So, okay, like I said, you know, I was working on Cosmos, part of the core team at AIB for three years and then, you know, there was the whole story that happened there. If anyone wants to ask about that, you can, I guess. But so, but then, you know, I was thinking about, okay, what do I want to do next in the space? And we were really thinking about like, okay, what are the biggest challenges that we wanted to solve when we got into crypto? And we saw there as being like three main big challenges which were the proof of stake, scalability and privacy. And I think, you know, with the work that we did at Cosmos, at AIB and launching the Cosmos Hub and Tendermint, which like proof of stake, like done right, you know, today we've solved it right. Like you know, after Ethereum switched to proof of stake, I think over 50% of crypto market cap is running on proof of stake now and so it's like, okay, you know, we've accomplished our goal there. A lot of, you know, as Marco was saying, a lot of it has been inspired by Tendermint. Okay, so next was scalability. I think there's a lot of, I think there's a lot of progress that has already happened on scalability and I think there's a lot more that's continuing to happen and a lot of people are working on it and making good progress on it. So we were confident that that will happen no matter what and we don't need to go make that happen. So that's why we were kind of left with the third one, which was privacy. We were like, okay, this is the thing that we, at least for the co founders, it's something we're very passionate about. And we were like, you know, we didn't see enough people in the crypto space making real headways in that field. And so we were like, okay, let's work on privacy stuff. And so what are the things we need to do on privacy? And I think, you know, we saw it as like a lot of other projects usually started from like, oh, privacy as the pitch, right? Like, oh, zcash is like, oh, it's the privacy thing. Our take was like, no, I don't think privacy is a product. I think privacy is a feature. And so we were like, okay, well we need to build a product that people want to use and is compelling and then people will. And then you push the privacy stuff as part of that. Right? Like, you know, you see today Apple is pushing pretty heavily on a lot of the privacy stuff. But no one buys an iPhone because of the privacy features, right? They buy an iPhone for all of these other reasons. And then here's this, like really, really good privacy features that they've built in. And that was kind of what we were trying to do where it's like, okay, let's build an amazing product, a dex that people want to use and then we'll use that as our vehicle to push our views on, you know, push private first stuff. And so we, you know, one of the main things we were working on was like mempool privacy. So you can make sure that when you make a transaction before it hits the chain, like when it's in the mempool, no one can read it. So no one can front run you, no one can sandwich you. And then now we're also starting to work on actual chain level privacy where it's like, how do you have a place where you can today on Every Dex, everyone can see which account is making, which trades, you're leaking your trading strategy, all this stuff. And so we're working on how do you make that private as well.
**B** (5:52):
Thank you so much. I really like Osmosis as a product and this brings another question to my mind. We are struggling with the ux. Also, Jake Zanpolm was giving a speech about it. I think Osmosis has accomplished a lot about the ux, but still we have a long way to go. What do you think about the UX problem? Like what is the next step? Or of maybe Osmosis, but also like the whole ecosystem. What do you think about this?
**A** (6:29):
Yeah, so this is actually going to be a big topic of my talk tomorrow, but basically three days ago I asked one of my friends who is a software engineer at a fintech company, I asked him do a challenge and I recorded it and I'll put it on YouTube, but I told him buy $10 of Maker on Uniswap. That was the challenge. And like, he, he doesn't have MetaMask. He doesn't have anything installed yet. And he's like. And it took him like, I think over an hour to figure out how to like install MetaMask, how to use the fiat, how to use. To get the. And. And the fees was a big one. That, that really hung him up because he like, he's like, oh, he's like, he got himself some USDC and. And then he tried to use it to buy it and he's like, oh, wait, I don't have ETH for fees. And then he's like, oh, okay, let me go buy eth. Wait a second. I can't buy ETH on Uniswap if I don't have ETH for fees. And so he was like stuck in this circle for a bit. So basically by watching that video, I kind of realized, okay, I took like notes the whole time and I think there's like three overarching concerns or the three big categories of problems. There's some smaller ones. I think, like some things on the UI are confusing, but those are minor things. I think the three large categories were. Wallets are very confusing. There's a whole concept of browser extensions and seed phrases and whatnot. So that's actually what going to be my talk about tomorrow, about smart accounts and how we want to fix the wallet onboarding story. The second issue was the fiat on ramps don't work like moonpay. So Uniswap has Moonpay built into their site and it's like, you know, first of all, it was confusing that you can only buy USDC and ETH using Moonpay. And he got very confused. So he's like, wait, I'm trying to buy maker and why isn't this working? So that was confusing for him. And then also like moonpay just kept declining it and stuff. So, you know, here I'm actually quite excited for some of the stuff that Cato is working on where like, you know, one, you'll be able to buy, not just USDC or Atom or something you can buy with Cato, you'll be able to buy any asset on osmosis because what it will do is they're going to focus on fiat, on ramping into usdc and then it actually uses the Dex liquidity itself to swap into any asset you want. They're also doing some cool stuff where like, you know, if you're buying, I think less than 900 or â¬900 worth, you don't have to do KYC and they have like all these like sort of like things to make the, you know, let's make it so getting someone their first hundred dollars of crypto is as easy as possible. Then we can like, you know, I think that's the goal so that I think Cato is doing a lot of cool stuff there and we're excited to be integrating with them more closely. And then the last one is the fees, right? And I think that's actually what we've already solved in osmosis. At least with Osmosis you can pay your transaction fees in any token you want. You don't have to have Osmo. You can pay an Atom and USDC and Bitcoin and eth. And we wrote this module called fee abstraction which is taking the same idea that we built for Osmosis, but giving it to every Cosmos chain. So I think one of the biggest issues today people always complain about is like, oh, fees are very. You have to have. In Cosmos, there's so many different fee tokens. How do you know what you have? Soon it's not going to matter. You'll be able to pay with whatever token you want, your fees everywhere. So I think that will help. And then I think we're also doing other stuff as well to improve the fees other than just paying in any token, like making it so, you know, if you have a certain amount staked, you can do a certain amount of free transactions or you know, your iPhone device has a unique device ID that we can verify on the chain if we wanted to. And what we could say is like, hey, if you're using this app with a new device, a new Apple device, we can give you like your first 10 transactions for free. So that way it's like.
**B** (10:26):
Or maybe credit.
**A** (10:28):
Yeah, yeah. And so, and you know no one's gonna go buy a new iPhone just to get 10 free transactions. Right. So you can like do these like tricks like this. So how do we make that onboarding simpler and simpler?
**B** (10:39):
So do you think this also could make like with Apple pay, can we also like purchase some tokens? Would you like?
**A** (10:50):
Yeah. So this is what Cato is working on.
**B** (10:53):
Amazing.
**A** (10:54):
Not only purchasing tokens, you can also be able to pay for anything using your tokens on chain. So you don't have to. So you can like the, the new app that they're working, you can like tap to pay. And what it will do is you don't have to be holding like I don't know if anyone's used like crypto.com or something like that. What usually happens is, you know, they frame it as this crypto credit card, but it's kind of fake. Fake because in the app you have to first convert your crypto into US dollar into that balance and then you can spend from that balance. And that's like not, you know, you're not actually spending your crypto. You already sold your crypto and now you're just like spending from a bank account in the same app. But what Cato's design does is it they use auth z and what they all do is like if you have at the, at the moment of swipe they will use Authsy to pull money from like you know, you can have OSMO or Bitcoin or Atom. They'll auto swap it to usdc, send the USDC to their account and then they'll front the payment. So it's like you're actually like at time of purchase like converting bitcoin to dollars and spending it.
**B** (12:02):
There was another question. I think this is like the time to ask it. Like as you know USDC is coming to Cosmos USDT as well. Even like native btc, Bitcoin and wrapped bitcoin. Like what do you think the impact of them? Like what is going to be happen? Like we have all the native tokens here. How is going to change the game for Cosmos ecosystem?
**A** (12:35):
You mean for bitcoin specifically or I.
**B** (12:37):
Mean like there are new like liquid tokens are coming to the Cosmos ecosystem. Oh like yeah, like usdc, usdc, usdt, Bitcoin all of them are native. They weren't native, they were breached and like minted on accelerator or other. But right now they are going to be here. What do you think about this?
**A** (13:03):
Yeah, so I think so let's take the stable coins first. So you, we have usdc, USDT and wbtc. You can consider WBTC as kind of like a stablecoin. It's issued by a centralized company called Bitgo. And it's like tracking the price of, you know, just like Circle has USDC US dollar sitting in a bank account, Bitgo has Bitcoin sitting in a custody account. Right. So, you know, WBDC is also that. So what's nice about these is that they kind of remove the bridge risk. I think historically bridges have been one of the biggest points of failure in crypto. A lot of the biggest hacks have all been bridges. And so I think people generally just feel a little wary about holding large amounts of capital over these bridges. And the idea is by giving them a more native version of USDC and Tether that's like native to Cosmos, they remove the axel, our bridge risk from that and that that will hopefully make them more comfortable holding these large assets. And especially like, you know, if you're, you know, today we're talking about like, you know, I think on osmosis there's like $40 million of USDC. But you know, with something like DYDX coming where they're going to have you know, hundreds of millions, probably maybe billions in the bear in the book once the bull market comes of usdc, it's like, okay, that's turning that you want to remove that bridge risk as much.
**B** (14:31):
A lot of attention, I think like a lot of attention are like to the bridge because like a lot of hacks happened through the bridge.
**A** (14:40):
So now at the same time though, what we are very like cognizant of is making sure the UX of this works. Right now we have to, you know, at the end of the day most people still have their USDC on, on Ethereum. And so, you know, by bridging it via Axelar, it's very easy to convert that right into the Axle USDC on osmosis. But the problem is at the moment to convert Ethereum USDC to noble usdc, you need to have a Circle account which requires going through this whole KYC process and everything, which makes it hard for an average user to convert their go between them. Circle is planning on fixing this using this thing called CCTP which will allow anyone to convert between them. But there's some concerns with that where I don't know how widely CCTP is going to be deployed, if it's going to be on, you know, World Coin and zksync, like, you know, it'll be on Ethereum and you know, Arbitrum, all the places where USDC is natively issued, but there's USDC elsewhere and we want to make that easy to bring in. And also like Tether has nothing like ccdp. And if you look at it, most Tether is on USD is on either Tron or Ethereum. And the way to convert it, it's very complicated to convert those USDT into the Kava usdt. And then same thing with the Bitcoin, right? Converting between WBTC on Ethereum to WBTC on Osmosis is going to be challenging. So this is why we created this thing called alloyed assets. So alloyed assets are this idea where you can have different versions of an asset, but then they're all sitting in a stable swap with each other and then we make the LP share of that stable swap be the canonical version of an asset. So this was originally meant for use for eth, right? So we currently have ETH from Ethereum via Axelar, but now we have more Bridges. Right. We have ETH from Wormhole, right. But now we also have eth from L2s, right. And the idea is like with Axelar, if you want to bring that eth from Polygon to Osmosis, you have to first send it back to Ethereum, then to Osmosis, and that gets annoying. So the idea is that this Alloid asset, this one canonical eth, it'll be made up of a composition, a basket of a bunch of different types of ETH from different places, and you can bridge them directly using whatever bridging solution you want, or at least that's approved by Osmosis, and you'll be able to mint the canonical one. And this makes it very easy to bring assets from anywhere. And so the same thing will actually happen for like usdt, let's say, right, the canonical USDT on Osmosis, and I hope Cosmos more broadly will be this alloyed asset. And it will be probably like 95% made up of the cosmos native USDT, but the other 5% it should be made up of, you know, Axelar Bridge from Ethereum, Axelar Bridge from Tron, So that way you can just bridge USDT from any of these other places and just mint this canonical one, and then you'll have like backend market makers Just arbitraging it back. The UX is very similar to what we're going for here is you know everyone's favorite exchange ftx. They had this thing where like you can deposit any stablecoin and and the asset you get on the site is just USD right? Like it wasn't actually it didn't matter whether you deposited USDC or BUSD or true USD or they didn't do tether because for reasons. But you know I think that was actually really good ux. Obviously now we don't know if there was any USD there at all but you know that's a different problem.
**B** (18:30):
Thank you so much for the explanation. Our time is limited so I will ask you like almost two question in one. Also we have developer here and as far as I know on Cosmos ecosystem Osmosis is doing the biggest grant program. As we followed I was wondering also for the developer who is listening or watching or later they will watch on YouTube, what would you suggest them how they could be onboarded to this grant program? What should they do? Yeah, could you please enlight us?
**A** (19:16):
Yeah. So we, if you go to Grants Osnosis zone there's a place to apply but there's also a section of RFPs like Request for proposals where these are like ideas that we have for grants that we would like to give. And you can go through this list and find like hey, this is like something that you know, we have the expertise to build or we want to build and you can basically like put in an application and we kind of prioritize these grant apps because these are the things that we're asking for and are looking for. So yeah, checking out the list of RFPs, a lot of them tend to be like a lot of cosmosm related stuff. So you know my suggestion for anyone interested in getting into Cosmos development, just you know, don't start with learning the Cosmos SDK like Marco talked about. You know I think you know Rust is really nice and I think Cosmos is just a lot easier to get onboarded and start building these like utilities. And then one of the things I want to set up is using like Gitopia which I want to like start setting up like developer bounties where it's like hey, just like create a PR that solves this issue and like hey, we'll give up this much osmo so keep an eye out for that because we're working on setting that up.
**B** (20:35):
Amazing. I think this is really amazing because like a lot of grant program is onboarding many, many people. I would really like thank you on behalf of the community. Also like last question and we can ask to the attendees if they want to ask anything else. I was wondering like the barrier of the technical barrier for node operators. As you know like many validators are on Cosmos ecosystem but proof of stake is growing every day as you mentioned in the earlier stage, how these people can like manage nodes, run nodes or update their nodes easily. What do you think about onboarding these people? Is there any solution that you have heard?
**A** (21:31):
So I know you guys have this product called Klein which is really cool. It makes it much easier to. What I really liked about. So it's basically a UI tool that makes it very easy to one click deploy your own validator nodes. What, what I really like about it is very focused on like self hosting because you know a lot of these like validator as a service things, you're actually just like someone else is running the stuff for you, right? And it's like they have access to your funds and stuff. This is, this is like hey you put in your own digitalocean credentials or whatever cloud you want and like it will. It's really a set of like really what all these validator as a service providers do is they have a bunch of like ansible scripts and stuff that like pre just like fill up these things and it's like well instead of gatekeeping that you know, client just makes that accessible for you and you can go one click deploy all of these things yourself and like do what the validator service providers are just doing. Just you know, here's an open source version of it basically and so yeah, you still self custodial, self custodial but you get the UX of these validators of service things. And I think this is going to become more and more important because I think that like you know, I think these Cosmos app chains, the jobs of validators are going to get more and more challenging over time. Like I, I subscribe to something I've been calling sidecar maximalism where you know, part of the point of having an app chain with your own validator set is you should, you know, demand more of them, right? Like the best example of this is Secret network, right? Secret Network is like hey, we require all of our validators to also have an SGX node, right? And I think that's like an example of hey, let's demand more of our validators to do things with osmosis where very soon we work with Skip to build this Oracle module where all the validators are going to have a second Node second process that they run the that is going to be fetching Oracle prices from centralized exchanges or pith or whatever and pushing them on chain using vote extensions, which is part of abci. Right. So that's like example of a sidecar but like okay, so for Osmosis we have a, for the Osmosis foundation we have today, you know the chain decentralized, right. But a lot of the stuff like the front end, the data libraries, like there's a lot of stuff that is still pretty centralized on our foundation right now how you access it. And There are alternative UIs, right? You can go to TFM, you can go to Squid, you can go to Coinhall, there are alternative ways of accessing this stuff. But we want to make sure that hey if a lot at the end of the day right now at least 90% of the use over more than 90, like probably 99% of the usage is coming from the main front end. How do we make sure that that thing is decentralized? And so we have a goal of like by the end of next year we should have not a single server or SaaS bill with the Cosmosys Foundation's name on it. Like we should be able to shut off our bank account and everything keeps running fine. And so part of that is leaning into the validators to do more right, like routing servers, validators to be running them. We should require every validator should run a front end server for the website we should require, you know there's a great cosmos project called NIM which is like a better version of Tor. Basically it's like let's require all validators to run NIM nodes as well. So that way, you know, if we want to mix node I think yeah, mixed nodes, yeah. So it's like, you know, as regulatory environments get stricter and like the geo blocks become stricter, right. That's like let's have native built in ways of making sure there's like global permissionless access. So you know. Yeah. So basically validators are not going to just have to run the blockchain nodes anymore. They're going to have to run Oracles and front end servers and NIM nodes. And so making this tooling to make it one click easy for people to spin up all these things is going to be very important.
**B** (25:39):
Thank you so much. I think we are running off time but if we have any question. We would love to have any question for Sunny we have there. Can we. Ah, thank you.
**C** (25:55):
Hi. Hi, my name is David and I have a question about the Alloy Pool that you mentioned earlier. Yeah. Before we had a talk by Mary explaining, you know, the value proposition of Cosmos and IBCs. The Light client approach, it's never been hacked. If you're introducing an alloy pool and saying, hey, I'm going to put in all these different versions of the same token, for example, Axelar ETH or other wrapped versions, aren't you inheriting like, more vulnerability? Because what happens if Axelar gets hacked? Now your entire alloy pool and the LP on top of the like that LP token that you're using as the main one is destabilized. So is the, is that correct? And is then the alloy pool a sustainable solution to defi, like fragmentation of liquidity is the question.
**A** (26:53):
Yeah. So the alloy pool, it's not actually a normal stable swap. It's a special type of stable swap we wrote called a transmuter. And what that does is it has a bunch of like, range rate limits built in. So governance can basically say, hey, let's say it's like 95% noble USDC and then like 5%. Let's say, let's say it's 5% axle USDC. Right. What the rate limit could say is like, hey, the percent of Noble, sorry, Axle USDC can't increase by more than like 1% a day. So even if there is a bridge hack, okay, yes, more, a little bit more will come in, but it's like, okay, the losses are capped at like 6%, basically. Right. And we have like different types of limits that we built into the transmuter contract. You can put like a, like a max min, where it's like, okay, the amount of Noble USDC itself can never go below 95%. You can say like, oh, the percent of this thing can't change by more than this rate per day. And so by building these rate limits, you make it. So if there is these like crazy events, that gives time for governance to like pause the system and like keep the capital that, you know, protect the capital that's there. So at the end of the day. But yes, there is more risk obviously than just pure Noble usdc. And we're basically making this trade off of like perfect security versus, you know, what gives better ux? How are we going to let users bridge USDT from Ethereum without this? Right now, the only way to go between USDT on Ethereum to the Cosmos one is like to go through Bitfinex, like a centralized exchange. And that's kind of not what we want. And so, yeah, and the nice thing is actually is that if you don't want to hold that bridge or hold the alloy risk, you don't have to. You can actually just go and hold Noble USDC in your account. And every time you want to do a swap, you. You. It will actually go ahead and mint. You can. It'll swap it through the. No, because the alloy, we actually also treat it like a pool itself. And so you can quote, unquote, swap from Noble USDC into alloyed usdc. What it's really doing is minting it. It'll swap that and then you can swap into whatever you're looking to actually buy, Atom or whatever. And so, yeah, you know people who are. And you can do that with the ETH one as well. Let's say, like, okay, we have the ETH alloy between Axel and Wormhole. You could be like, hey, I don't want that wormhole bridge risk. I only want to hold the axle version. You can do that.
**B** (29:29):
The.
**A** (29:30):
The canonical one. The. The. The. What does it mean for the alloyed version to be canonical? It basically means two things. One is at least our version of the UI is going to heavily prioritize that. And two, we. I would like osmosis governance to focus its incentives on the alloyed version to. In order to like, provide the, you know, make sure there's enough people holding the alloy. And then ideally, more of the osmosis defi integrations will focus on the alloyed one. So on Mars or Levana, they'll use the alloyed one as the main type of collateral.
**B** (30:06):
So thank you so much for this. Thank you so much, Sunny. It was a pleasure.
**A** (30:12):
Yeah.