**A** (0:20):
From icp. I work at Definite foundation as the lead for global adoption and we are very excited to be here in the amazing universe of Cosmos. It has been a fantastic conference and it's really amazing to see so many people still listening to people that's very unheard of in a lot of conferences. So ICP is a layer one blockchain and with our chain fusion technology we believe that earlier the keynote speaker just before us was talking about unified liquidity and next phase of user experience in DEFI comes from addressing the issue of liquidity and user fragmentation. On my left I have a very good friend, an ecosystem project from ICP called Omnity and the founder Luis is here right from China. Louis is a OG when it comes to interoperability in the space. In past he has built Octopus protocol in near foundation and then he has also worked in Cosmos Ecosystem with the IBC team for a long time. And then of course Sunny doesn't need any introduction anymore in this space, so I'm not going to waste my time on that. The panel today is about Bitcoin cross chain. I will let. Before we start, I will let you, Louis speak a little bit about Omnity, the omnichain that he's building and why he's building and what it is. And then we will open up for the questions for this panel.
**B** (2:02):
Hello everyone, I'm Louis from Omnity and last year I joined Cosmos in Istanbul. At the time we are called Octopus Network and we bring the idea of adaptive ibc. Before that we have been working on let's say heterogeneous chain IBC for a while and we realized that the major headache to make IBC everywhere is actually it's not on the other side. The headache is on the Cosmos side. But we cannot just permissionlessly deploy different type of light clients and then make it work with IBC framework on Cosmos chain without, let's say closely connect with the core teams like informal. So we come up with idea that we can run different type of lifetimes on a proxy chain and utilize the Silo machine Life client on Cosmos side. So on Cosmos side you only see public key, so you trust whatever the transaction signed from this public key. But the proxy team will make sure that all the verification happen. And we happily find that ICP is a great place to be the proxy chain and run all kinds of live clients. And so yeah, this is the idea of last year and little by little we realized that ICP is more than that. It has some unique feature to, let's say to resolve Some long time headache in interoperability area. So we present a new protocol called Omnity and we even rebrand ourselves into Almenity and jump into ICP ecosystem in full measure.
**A** (4:23):
So for everybody here back a month back in September we announced for the first time anybody can send bitcoin from their bitcoin wallet to their Kepler wallet in the osmosis chain directly. And that's phenomenal. So with that note, I want to open for the first question, let's address the elephant in the room which is WBTC as of now osmosis, 95% of assets Bitcoin assets are in WBTC. So sunny, the question to you is what's your take on WBTC and why you chose something called as ckbtc?
**C** (5:12):
Yeah, so you know, I think WBTC wrapped Bitcoin is, I mean it's probably been one of the most important products in the space. Like I mentioned yesterday, I've been a big believer in Bitcoin will be the primary asset used in Defi. And I think WBTC was the, it showed the demand for that, right? You go on something like aave, right? I think it's like the third most, you know, lent asset on aave. And so there's like a lot of, clearly a lot of demand to use Bitcoin and Defi and WBTC came out like, you know, I don't know, six, seven years ago at this point. And like you know, it's a very centralized solution but it showed that there's demand to do this. But, but the, you know, one it's very centralized and we saw that like just very recently there was a shift in like corporate structure behind wbtc which is like, it's scary, right? Cause it's like you know, this asset that like you know, whatever, 15 trillion, $15 billion like asset that like you know, can just change its corporate entity. But the other is that like there's no way for a normal user to go mint wbtc. So if you have bitcoin on the bitcoin BTC, on the bitcoin chain or on some exchange, you can't go mint WBTC and use it in defi. And there's only a handful of merchants that can do that. And it costs like you know, I think like 18 bips, 16 bips or something to do this. And it's like that makes it be this like big divide. But the lack of, makes there be a big divide between like bitcoin liquidity which is huge, especially on centralized exchanges and then defi liquidity of Bitcoin which is in WBTC because you have this like you know, dividing line. Only the merchant network can do this. And you know, Osmosis foundation actually is a merchant for WBTC but it still, you know, it costs 16 bips to mint and burn and we have to be sitting in the middle and minting and burning on, on the osmosis. So it's like. And then, and the other problem is WBTC is not fungible across chains. So you know, Bitgo does issue WBTC on Ethereum, they issue it on Osmosis, they issue it on, I don't know, one of maybe on Solana I think. And so but all these WBTCs are isolated and you know that's even more friction and lack of fungibility across them. So I think that the next step now, and I think this like corporate restructuring around WBTC is like giving the industry like the necessary kick it needs to like wean off of wbtc. And now it's time to shift to other to proper decentralized bitcoin bridges that actually are permissionless and allow anyone to take BTC on Mainnet and bridge it to Ethereum or Osmosis or Solana or wherever.
**A** (8:11):
Yeah, so a follow up question to you Sunny about what's your understanding? Because if I say about ckbtc, of course I'm in ICP and I will say good things about it but what's your understanding? You have been in an OG in DeFi space in general. A bitcoin maxi you say. I'm self proclaimed bitcoin maxi if I have to quote you. So what's your understanding of CKBTC and its security? Because knowing you, you go for gold. So if you have chosen it, you will have your reasons. And what are those reasons?
**C** (8:47):
Yeah, so I can kind of like maybe put the, put it in a couple of like a taxonomy of decentralized bitcoin bridges or let's say quorum based decentralized bitcoin bridges. So on one hand you have these like super centralized bitcoin bridges like wbtc. On the other hand now you're starting to see some of these like you know, more trustless but more complex bitcoin bridges using like bitvm and all this stuff. And you know a lot of these Bitcoin L2s are doing that but it's much more experimental. It's like they're very slow and expensive right now. So right now I think the best that we the gold standard right now is on some sort of quorum based system right you, you have a very large multi sig, you know, hundred people or whatever and then they're custodying bitcoin in a multisig. Now you kind of have two models of doing this. One is you can use smart contracts to create a multisig or you can use MPC to create a multisig. And you know, in Cosmos Land, in Bridges we see both models be used, right? So something like Axelar uses smart contracts, right. When you bridge from Ethereum to osmosis with Axel are there, they have a smart contract on Ethereum or Wormhole has a smart contract on Solana where they instantiate their multi sig. The problem is that writing smart contracts in Bitcoin is very complicated and difficult. Right. And that's not to say can't be done. So you know, one of the other bitcoin bridges we work with, Nomic, they've actually, they're one of the, I would say one of the first to build a large multisig in bitcoin script. And they like did all this like very fancy taproot based like contract and all this stuff. And it works, right. But the problem is it's very bitcoin specific. It's only work. You know, they, they took advantage of a lot of the new developments in bitcoin that came out over the last few years, which is cool. But that means it's also not repeatable for different things. Right. You know, we can do it for bitcoin but like now you have to like write a new smart contract for Litecoin and Dogecoin. You have to write a new smart contract for time. You'd have to write a new smart contract for, you know, whatever you're trying to connect to. The nice thing about the MPC approach is it's, you know, I kind of talked about this in my Polaris talk yesterday as well, right. Which was like we are trying to avoid writing smart contracts in like a bunch of different places because it's just not scalable. The nice thing about MPC is it's a very reusable infrastructure that you can, you know, almost every blockchain today uses some form of ECDs, ECDSA signatures and you can reuse the MPC system to custody assets on a bunch of different chains. And so what ICP basically did was they built a NPC custody system at the, in the blockchain itself. Right. And they're not one of the, they're not the first to do it. I would say probably the first to actually do this is Thor chain Another Cosmos chain. But Thor chains is a very application specific way of doing it. They can only they use NPC on a bunch of different chains to custody assets, but only to the only thing you can do with it is, is Thor chain stuff. You can do swaps or LPs. Right. What ICP was the first to do is take that NPC like chain built in chain NPC technology but actually just connect it into a smart contracting system. So you can have a smart contract control these NPC wallets on these chains and want. And that way at the chain level, at this protocol level you have this like primitive. And then projects like Omnity can come on and and build smart contracts on ICP that take advantage of that. And what they did was they basically took that chain abstraction technology that ICP built and then connected it to ibc.
**B** (12:57):
Yeah. One thing I want to add is this chain key. So CKBTC stands for Chinky btc. So this Chinky technology is not designed for bridging. It's the cornerstone of ICP majorly for inter shard communication. So ICP is sharded blockchain composed with many subnets. And each subnet authenticate with each other. Based on this chain key technology and any, let's say smart contract ICP can have unlimited key and to sign it to assign transaction and control assets on other blockchains.
**A** (13:43):
So a question and for everybody here, one very fascinating information nugget about ICP Bitcoin integration is ICP takes the entire UTXO of Bitcoin every now and then and they have the entire state of Bitcoin on on ICP chain in the smart contracts in the Bitcoin subnet. ICP smart contracts can hold up to 400 gigabytes of data. So that makes it really really possible. And of course you can look for other security features that are in place to do that. My question to you Louis. Right, because the Omnity bridge is even making not only Bitcoin but other assets also interoperable. Right. Can you quickly share about that? And then I would like to go to Sunny about talk about the allied assets because that's another very fascinating thing that they are doing.
**B** (14:45):
Yes, we can do Bitcoin asset. Not just BTC itself, but also as a metaphorical asset still in fully trustless way. You you guys know that Bitcoin minor protocol asset usually rely on indexer. But if the indexer is just a centralized server, it cannot be trustless. The beauty of let's say our work is to run indexer on chain Once again on icp. So just like Bitfinergy foundation did, it can maintain the whole bitcoin state inside a smart contract on icp. It takes about gigabyte on chain state. It's horrible. Horribly large for other blockchain, but it's possible on icp. What we did is to transplant the ORD indexer which ordinars and ruins meta protocol rely on. We run ord indexer inside a smart contract on icp. It only takes a few gigabytes, but it's still the only decentralized indexer out there.
**A** (16:06):
So what?
**C** (16:07):
Yeah, so I just add like that. That's actually really fascinating because like, you know a lot of bitcoin bridges, right? It they. Or like, you know, they don't understand the difference between different, you know, okay, how ordinals and BRC 20s work is they're kind of this like meta protocol on top of UTXOs and they look like a bitcoin. If you, if you're not running the right indexer system, they look like a bitcoin, right? And that's why like, if you ever are doing anything with like ordinals or runes or BRC 20s, make sure you're using a proper bitcoin wallet that understands these, right? You should go use like X verse or Unisat or leather or something. Because if you accidentally try to like import that bitcoin wallet into a wallet that doesn't understand ordinals and you just try to send a bitcoin, you might be trying to send like you know, 5 cents of Bitcoin but you accidentally sent your like $5,000 ordinal, right? So you want to really be careful of that. And the problem is most bitcoin bridges might not be. Are probably not running like ordinals indexers on top of it, right? And so they might just be. They might actually be holding ordinals or runes or something, but they, they don't realize it and their protocol isn't designed to do that. What's cool about how like the ICP model works is that because it. The bridge ICP itself is not running the bridge, right? It's just providing a key for smart contracts to custody assets. And then you know, you can upgrade the bitcoin. You know, the omnity contracts, right, Are what actually acting as the bridge. And they can upgrade over time. So when ordinals come out, they can upgrade to be like, hey, we're going to add ordinal indexing into the smart contract so that way we don't accidentally spend these Ordinals instead of, you know, bitcoin. So this is like, you know, it's very cool of this, like separating the, the bridging logic into a smart contract layer separate from the custody system.
**A** (18:16):
So what it means for Cosmos ecosystem and other ecosystems that omnity has integrated now starting today or it has been live for a few months now already, you can have all sorts of bits into your chain in any chain in Cosmos. And that's pretty fascinating. And that can be facilitated easily through the osmosis route. You can get Bitcoin, you can get all the ordinals, runes, whatever it is. And this unlocks I think huge possibilities for the Cosmos ecosystem in terms of growth and adoption because new layer ones coming on Cosmos Hub can actually leverage this and grow from it. Sunny question for you. Ever since I heard about Allied Assets, right. I think it was three, four months back when we were having conversation and it is a very fascinating way of understanding and minimizing exposure to this. And I think you told me this, this learning came from your exposure to Terra Luna, I think somehow. So will you like to share more about allowed assets and what it is and now the CKBTC is part of Bitcoin Allied asset on the governance approved it. So it's there. So what's happening there?
**C** (19:51):
Yeah, so alloyed assets came from, you know, in, you know, I mean in Cosmos we went through this like Terra collapse and you know, that was a sort of what it more came of. This is like, okay, don't put all your eggs in one basket, right? We kind of put all of our eggs in one stable coin or. And the same thing is true for Bridges, right? Like don't put all your eggs in one bridge. And so what we came up, we're like, okay, right now for example, or until know, a few months ago, the primary eth in Osmosis and Cosmos ecosystem was Axar bridged from main net Ethereum. Right. And Axelar's, you know, done a great job. They haven't, they've had no like critical issues anything. So, you know, very happy with that partnership. But it's like, you know, once again, don't put all your eggs in one basket. And so we wanted to diversify our bridge risk, right. Don't like, you know, if, if Axel gets hacked, how do we make sure that literally all of our like Bridge TVL doesn't get wiped out at all at once? And the other thing that alloy, the other problem we wanted to solve was this like UX issue. So you know, when we started almost all the ETH that was being bridged was coming from Mainnet, Ethereum. But since then, L2s have become, you know, very popular. A lot of. And we used to get a lot of problems where people are like, hey, I'm trying to bridge ETH from Polygon, but I'm sending it here. And it's like, not fungible and like, what do I do? And, you know, you look at what centralized exchanges do they actually, you know, if you go on Coinbase, you can deposit eth, you can also deposit it from Polygon or Arbitrum Base. Optimism, right? They have a set of like, L2s that they consider trustworthy and allow you to deposit, withdraw from. And what's really happening is under the hood, Coinbase's maintaining a basket of a couple of these, of these different forms of ETH and to, you know, facilitate deposit withdrawals. And then they're just like, balancing it in the back end and we're like, okay, well, if we want a DEX to, you know, compete with a centralized exchange, we need to match that ux. And so Alloyed Assets was basically taking this basketing concept and putting it on chain, transparently, publicly visible with publicly visible risk parameters. So, so the basket of ETH on Osmosis, now it consists of bridged Ethereum from mainnet, but also from Arbitrum Base and Polygon. And, but it puts caps and it says, hey, Arbitrum eth can only be a maximum of 5% of the alloy Base ETH can only be a maximum of 5%. Polygon ETH can be a maximum of 5%. So that way, even if one of those, you know, less secure chains than Main Net Ethereum gets hacked or something, yes, it'll, it'll, it'll flood. That, that worthless ETH might flood in, but only to like, you know, the losses are capped at 5%. And that is something that, you know, the osmosis community pool or some, something can ensure or the Bridge provider can ensure and like, cover the losses, but. And it prevents the entire system from being wiped out. And so, you know, Alloy ETH is live on osmosis, Alloy USDT is live on osmosis. But, you know, the one that's most relevant here is Allied Bitcoin. So, you know, we see that, that, you know, till today, still, the most popular BTC used in DeFi is the WBTC, right? And so we want WBTC to be able to come from Ethereum and Polygon and wherever else that's being used, but we want that to be fungible with BTC from Bitcoin mainnet. And so basically what we've done is we built an alloy on osmosis alloy bitcoin that is you know, partially made up of WBTC from Ethereum but partially made up of CKBTC and nomic BTC from Bitcoin Mainnet. So once again diversifying bridge risk, right where we're spreading our risk between Nomic and, and, and the omnity bridge basically. So and then you know both of these bridges right now have lower caps right now because they're new, right? These are new integrations. Both of them just got done in the last couple weeks basically. But and I as the caps get filled and you know as these things become more lindy, we'll increase the caps. And I expect that over time the, the native bitcoin will probably end up being the majority in the alloy. And we're starting to see alloys be adopted more throughout Cosmos as well. So like you know Knowlis which is the lending app chain, they just added support for alloy BTC Levana. You see you can deposit allied BTC in Mars. And so I think, you know I've always said my vision was that like bitcoin will be the money of Cosmos. And I think alloy BTC is how we do that while diversifying risk and allowing really good ux. Oh the other thing that's worth mentioning is you know we have for Bitcoin Mainnet right now and we have WBTC from Ethereum. But I think the next step is, you know, we're seeing all of these Bitcoin L2s start to grow, right? We had the Bitcoin L2 panel yesterday. So you know, I think, well, major Bitcoin L2s, things like stacks, Citria Botanics, we're going to start adding those bitcoins as well to the alloy. And so that way this will be probably the best way to actually move. You know, I think osmosis and alloys are very well positioned to be like the best interoperability, like liquidity interoperability protocol for this growing Bitcoin L2 ecosystem.
**A** (25:15):
So one of the reason why central exchanges exist in first place because you need all the tokens at one place to trade them, right? And you can have all the order books and futures and options and whatnot. I think now with technologies like chain key we have reached a space so just for understanding for the user like this is a two way integration. What it essentially means now any asset from Cosmos can actually trade on Defi in Torn or Solana and All of this in a trustless manner. So the question to both of you is how is your work going to make this happen? This is the same question and that will be the closing question for today. How is you see Osmosis, the future of this integration, the CK integration that we did. How do you see this as getting like becoming like the Suez Canal of Defi?
**C** (26:24):
Yeah. So you know, I mean I talked in my talk yesterday about what we're building with Polaris and being this one interface that can tap into liquidity on as many chains as possible to provide this UX of being able to trade any asset on any chain. Right. You want to be able to trade Bitcoin, Esol, xrp, everything from one place. And the thing is Ethan sol have great on chain liquidity right now. Right. You can go to Uniswap, you can go to Radium and you know you have very deep liquidity for those assets. But a lot of assets don't have their own native spot dexes like, like Bitcoin and xrp. Right. There's, there's not native spot dexes and there's not a lot of on chain defi liquidity for these assets. Right now Osmosis is going to be focusing on and working with bridges like ICP to bring Bitcoin, bring Dogecoin, bring xrp, bring Cardano. You know, bring these assets that have huge market caps but very little on chain liquidity. Bring them to Osmosis. We're building a hyper performant spot order book decks which Alpin talked about earlier and make it be the best venue for trading these assets.
**B** (27:44):
Yeah, I found that the idea of the concept of Polaris is very inspiring. I think the major, the major thing is about user experience so people can use multiple blockchain. So essentially it's a multi block, multi chain app without need user to moving around their assets. But the app itself can take care of this and I think it's open quite a lot possibility especially for ICP ecosystem projects. Since by the chinky tech stack Smart contract on ICP can control assets on different blockchain and also it can communicate with different blockchain in a fully on chain, fully trustless manner. Yeah. But be frankly I haven't come up with the idea of how we can provide a new service based on that. It's quite new.
**A** (28:59):
Thank you very much gentlemen. I would like to close on a note. This integration, the chain key integration across almost 20 chains are supported through gives power to each one of you. As Sunny actually highlighted that point to not rely on authorities that can issue you that asset but actually mint it yourself. So for example, you have USDC on Ethereum and then you are working with some chain that doesn't have native integration of usdc. You can actually go and mint USDC by locking your own USDC on Ethereum, say for example on ICP and mint that stablecoin there and use it for defi there. And you can do it for all the tokens. You can do it for your meme coins. And the very important use case for the meme coins, summer or winter, whatever it can be, is meme coins are heavily reliant on central exchanges for their adoption. Now when you launch a meme coin, say for example in Solana, they can go and list in Uniswap, tap into the use of this technology. And that's an interesting paradigm. On that note, I would like to end this. You have been an amazing audience. Thank you very much for having.