ATOM IS MONEY with Sunny Aggarwal of Osmosis

Transcript

welcome to the interop today my guest is sunny agell co-founder at osmosis the greatest decks in the inner chain in today's conversation we'll discuss the Mars Neutron merger and the osmosis counter proposal we'll talk about prop 858 on the cosmos Hub to provide 900k of atom protocol owned liquidity to osmosis we'll look at Adam's only chance at becoming a capital asset and saving the Hub and plans for osmosis 2.0 I'm also dying to find out why he thinks atam 1 makes sense before we get started make sure to subscribe to get notified when new episodes drop every week and remember that none of what we discuss here on the interop is investment advice and if you enjoy this content please consider sticking with us we're

validating on ammos Quicks osmosis and Juno just look for interop in the active set my guest Sunny agal is coming up next right here on the interop [Music] hey sunny how's it going thanks for coming on thanks for having me on it's been a while yeah it's been a little while it's been a while since uh we've done any podcast together since uh since you're on on your epicenter Hiatus um and uh I think last time you were on

was some time yeah it was a long time ago uh but uh was on the 50th or the 500th episode anniversary you are going to be on the 500th episodes which by the way I should mention here epicenter is celebrating it's not 500 episodes it's 10 years 10 years 10 years 10 year episode uh on December 20th and it's going to be a live stream so anybody who's like into epicenter should definitely uh check it out subscribe to the subscribe to the channel the Twitter we'll announce it there and we'll have all kinds of cool people it's going to be basically like call-in show and we have let have 2 hours of reminiscing on on 10 years of podcasting but anyways uh I want to get you on to just yeah catch up and there's so much

stuff happening and actually we were supposed to do this last week but you had an alarm clock malfunction so uh it's actually good that we're doing it now because there's so much more going on now that I want that is kind of coming together um and so um I don't know where to start man like do you want to do you want to talk about the neutron stuff right away or do you have some some some more General topics you want to cover cover first I don't know you you you there's so much to discuss you pick to start let's do it all right so so like basically today Mars announced that uh they were going to basically move from having their own uh their own app chain right their own app chain with their own Valor set to uh

becoming part of neutron so basically the Mars Hub would be part of neutron now I think there's been some confusion around this because like I I see people on Twitter saying oh they're they're moving away from osmosis which is like kind of not really true right because like Neutron's home is not really osmosis like Neutron is a is a sovereign app chain that it that's sole purpose I mean aside from having I think like kind of their treasury there or their backup like their kind of stop Gap fund uh is to coordinate different uh Outpost right so so they're just moving they're moving that to Neutron which you know makes sense From perspective that like running your own

chain is expensive and you know I've been talking about this for a while anticipating that Chains would end up kind of not downgrading but going to a more cost-effective way of running and that's what they're doing but um yeah curious to get your take on this and and also maybe uh expanding on some of the spicy stuff that's been going on on Twitter since they announced that yeah so you know it's funny it's it's like the Mars Hub as a standalone chain was actually like my idea from like a you know rewind 18 months know Tera just crashed and like Mars is trying to figure out what to do now me and Larry were actually like the ones who came up with this concept of uh a lending app chain that will unify different markets

uh so like what I mean by this is if you look at something like a right like a has deployments on ethereum Avalanche like a different bunch of different l2s but these are all like isolated markets right so the the price of like the lending rate on eth on like different markets is different and when I have as a as a lender or a borrower I have to choose like which Market to go to and so the idea that we had was like hey why don't we have like a unified lending Market where it's um you know we you just dep you should deposit usdc to be lent on Mars but it will have these

outposts that's why they were called outposts originally on every chain and when you deposit it will move the usdc to wherever there's demand and if you want to borrow more than what's on your chain it will just use IBC to pull in more from other places so it actually builds one unified lending market so that was the vision behind Mars app chain um and you know to launch they they started with just an outpost on osmosis and then they were going to while they build out the lending uh app chain stuff it makes sense right because like if you're borrowing like you don't care who you're borrowing from or what chain you're borrowing from you just want to borrow you just want to borrow eth or whatever right like exactly it shouldn't matter where you're boring

from and you shouldn't have to reason about what the different lending rates are like if you go to yeah yeah especially For A lender right like a lender should just like deposit somewhere and then it will just it should just handle where to to you know where where the best borrow aprs are um so yeah that's kind of where we where Mar started with but then over time they kind of like uh you know pivoted to where it's like okay wanted to focus more on Leverage trading um and like you know they realize osmosis is like the place where all the volumes are and that's why they built like Mars V2 on osmosis and EV eventually they kind they so basically they realized okay they two things happen one they realized that like once you start diving the details like this like unified lending market

app chain is actually a little bit more difficult than we originally expected I still we I still think it's doable but it's definitely a little bit like different than what more challenging that was than what was expected the other is that um like they kind of want to just focus on this lever trading especially you know as they mentioned in their proposal this new pers product that they were building um and so yeah and so so you know we actually were working together on a similarly structured deal with the Mars team uh as the neutron one um and yeah almost like very very very very similar terms like three like uh but ours is going to be

from the community pool right like I think the neutron is doing it from their Foundation but you know for us like we wereing oh it should go through the community pool like got awesome holder should have a say in this and everything um so yeah basically we were going to do that but then you know I think what I so basically I think what happened was Mars got a little bit spooked with the amount of competition there is on perss on osmosis already where like you know we have Lana obviously doing like having massive success um of you know we we did inform both the mar you know I guess this is a good time to announce this maybe but like the osmosis team is also working on our per implementation as

well um which ours is slightly different than uh the Lana and Mars design personally so we're doing like an oracle based not Oracle order book based thing the like Mars and levana Designs right now are still are very Oracle based they're I think simpler faster go to market um but like longterm I you know I'm a big believer that order books are going to end up like uh being the the main sort of thing and so that's why like you know we we've spent a lot of time like work designing this order book thing it's a little bit farther out and you know our plan is to build that and I think the more market like the more things there are going on on a single chain the better with pers like you know you you

want multiple markets people will be arbing between them in general I just think perss are actually this like super New Market structure right they've only if you think about it only have been around for like five years right uh five six years um and like they've had like one round of inovation innovation with like you know you had bitm then I think FTX did a lot of like good improvements uh then you had like know GMX kind of doing like different improvements and like you're seeing this like Cambrian explosion right now of like all these different like models for how pers can work um and so I think there's actually just room for a lot of different purpose markets right like and our our goal is to make sure that everything building on osmosis can like

you know you know have this like very um positive sum thing like the same thing you see on arbitrum right you have like multiple purpose markets like all on arbitrum together and like you know I think it's just good for everyone cuz it just attracts more Capital onto the chain and yeah you have more interesting stuff happening so um yeah that was that was the plan but I think the Mars team just got a little bit you know spooked and would rather just go somewhere where there's less competition even if that means that there's less users and volume um and and I I think it was probably that exclusivity Clause that like they're like oh we don't want to be in a situation where we're stuck on osmosis and can't go anywhere else and so know that's why they took the neutron Neutron

I guess made a similar counter offer but so if you see the proposal you know in order to keep Cosmos exciting uh John G from stride actually just put up a proposal like an hour ago to basically match the neutron offer but remove any exclusivity so now it's like hey all we're asking is like hey come bring Mars Hub onto osmosis you can de Loy Mars on the your purpose protocol on both osmosis and neutron there's no like exclusivity or anything like that um and you know I think we're going to end up seeing something similar to Lana where Lana deployed on osmosis say an injective and has like close to zero traction on any of them

and all the tractions on osmosis so you know I think the best thing for Mars holders to do is probably to like take the zero non-compete um like the zero exclusivity offer and deploy in multiple places and like and like you know hedge their bets yeah but again like this this is a question of the the coordination mechanism for Mars right I mean whether that's on Neutron or on as its own chain or as a roll up or like why would that matter if they have deployments to outposts on osmosis on Neutron on injective or wherever it matters because the neutron offer is asking for

exclusivity uh any new feature has to exist only on Neutron for 3 months uh before it can be deployed anywhere else and I think that's just going to hamper them hamstring them forever as a Mars token holder this is like just a terrible deal in my opinion right okay got it yeah so which is why I guess like the V2 will continue to exist on osmosis but this pers product you know would only exist on Mars probably on Neutron for for for three months on Neutron for three months for three months got it okay yeah what what what's your take like you know as sort of like having been close to this project and you know

osmosis I think was pretty enthusiastic about this project early on and I think Mars was kind of like the first Outpost or one of the first outposts on osmosis how do you feel about the whole thing uh uh you know I mean I've always like even till now I have like a deep respect for the Mars team they're like a team that I've always wanted to work very closely with ever even since like the Tera days I think that we'll still honestly get it like we'll still be working closely with them on like the Mars V2 and like you know osmosis team like our team is building a UI for Mars V2 into the osmosis front end so you can do margin trading um so you know I think we'll no matter what have to be like you know we will be we'll still be working closely

with the Mars team but I I think that they're making a mistake by taking this like exclusivity agreement with from Neutron so I this this other proposal um this osmosis proposal I just read it but I kind of like read through it quickly before we got on here but does it have any um does it make a better pricing offer because I I you know there is money involved here yeah no I think it uh it just is the same pricing offer as uh Neutron okay and so what's what's next here basically like on Neutron this has to go to governance it also has to governance go to governance on Mars uh and osmosis I guess and osmosis will also have a proposal up so

basically osmosis I think like to me I think the reasonable order of events is that osmosis and neutron both need to make proposal I to be honest I don't really fully understand how the neutron Foundation is set up like it's say in The Proposal it says that the tokens like the Mars tokens 60 million Mars tokens go to the neutron foundation not to the neutron Dow which is a little bit surprising so I don't for mosos side I think that everything should go like this should all be done by the community pool so that way like you know eventually you want to have like pass through voting access and stuff so like okay if you have like let's say so osmosis community pool has 60 million Mars tokens if you own like 1% of staked osmo you should have the voting right of

1% of that 60 million Mars tokens right and so yeah so we'll so that's why we'll we would want it in the community pool not in like a foundation or something um yeah so basically I think the order of operations from the Osa side is we put up a proposal which what John what John did was put up this proposal asking osmosis community pool to extend this offer to Mars and then if that is uh agreed upon passed by osmosis then we send that you know now it's up to the Mars governance process to decide which uh which offer they want to take I don't know how they're going to decide between the two maybe they have to run some sort of like Bridge off or something like

some multiple choice rank voting or something wow interesting we have like high stakes uh bidding going on here between crypto protocols like hostile takeover and counter offers and no I mean it's um it's going to be interesting uh do do you have any idea of like the timelines here like when when is this going up on mars or we do we know that I believe the neutron governance process requires it to be on their forum for 14 days yeah um so I think that's at least some timeline uh that minimum the osmosis governance process takes two days on forum and then

five-day voting period so I think like you know technically osmosis has not created any sort of offer to Mars yet so uh we would have to like go through our own governance process in order to extend any sort of offer it's unclear if osmo holders even think this is valuable right like this this is saying that like effectively we need to like you know we're what we're doing is offering Mars would be offering Mars 3 million usdc which requires selling 3 million osmo there's a lot of buyers of osmo right now like you know I think there's a couple of fun that reached out about like interested in doing like a o like OTC swap with the osmosis Community bull they're like hey we want to buy like a few million dollars of osmo like can we

pay the community pool in usdc or Bitcoin so I think that would be a cool way of getting some funds for that but like it's up to Osmos Oso holders to decide like is the is is this worth this or let Neutron foot the bill and you know yeah yeah but I mean ultimately you know looking at from the perspective of Mars you know there is a lot of competition on osmosis like Lavana although it is a different product and I think they have a different uh Vision uh is a very similar product competing for the same liquidity and osmosis now you know you mentioned is working on a purpose product so that's also competing for the same liquidity as as these projects right as the as these like

communities how should they be looking at you know osmosis you know potentially there there is this term in uh in Tech which is to get sherlocked and this is when uh Apple famously built this uh this functionality that had uh uh basically put out of business this software this this very OG Apple software called Sherlock and then you know subsequently implementing things that kind of put out of business the the the apps that were being built on on uh on Apple um how do you how do you account for that and uh reassure those communities that like osmosis will not out compete these protocols yeah um I mean I think for like oral based pers they're all

competing for the same liquidity and it's like I I don't know if I actually agree with that like you know the the well yes we're all competing to like steal liquidity from like binance right like that's where the actual like pools of liquidity are and it's like you know dydx osmosis Mars Lana we're all like know if we're all just fighting over like the same liquidity that's internal to we that's already on these chains that defeats the point right like the liquidity we need to get is how do we get liquidity from there and like you look at I think liquidity begets more liquidity right so it's like looking at Arbitron like every new purpose protocol that launches an arbitrum actually benefits from the like Capital that's

like in that ecosystem yeah that's a good point yeah and so how do and so how do we make sure ource doesn't compete right like I mean at some point I think osmosis holders obviously need to do what's best for osmosis Revenue generation but and that means like retain that means balancing like Internal Revenue with like retaining partners and I think there's a lot of ways that the Oracle stuff like works together with a uh with an order books system right the oracles are much much better for like I think faster for bootstrapping new markets before you have like active market makers the omx team like is working on this like per aggregator which is really cool cuz what it will do is like you can decide hey I

want like this position and it will like balance like it'll like it's kind of like building a 1 inch for per basically um so it'll like balance your uh trade between like La I think the I think their initial Integrations are Lana dydx and omx oror GMX on arbitrum which is really cool so it'll like kind of balance uh trades between them um and like and then what it see is like oh if the funding rate spikes on one of them it'll close your position there and open it there so like you know I think there'll be ways of making sure these things work together the other thing is I think these Oracle things actually might be able to just turn onto turn into vaults on top of the order book um so I think there's a lot of ways for

these things to just like be synergistic and I think the chain will like you know continue to support um all of them um and you know we like I said right now our focus is not on like you know we just to informed like Lana and Mars and margin that hey we are one day we will build an order book per system but like right now our focus is on like supporting you guys and help you know I think uh there's a lot of stuff that the osmosis chain needs to work on right now like as we saw on like the performance side and I think uh you know we're going to be spending the next few months just like focusing on like how do we make osmosis be this like High perform and

change so that way we can actually build you know make sure things like Lana work really seamlessly and you know making onchain order books is not easy like even like serum like failed to really work properly at like on on salana at like times of peak throughput which is when you need your system to work um and so we are working on like we have this like new design for an order book that I think will like make it uh way more performant than anything else though we've seen cool well I want to talk about that a little bit later on U but we you know we didn't talk about II also uh the Umi announcement that they would merge with osmosis what's that about yeah so I mean that was uh you know

we've been in talks with II for a while uh uh sort of somewhat independent from this um but once they heard about the Mars Neutron stuff they're like hey we should like accelerate these timelines you know if Mars is leaving osmosis like you know Umi believes in Osmos and would like to double down on it so they kind of like we had this like yeah let's let's do this um and so basically Umi will be shutting down their app chain and migrating into onto osmosis but you know the thing is their code is mostly written in Cosmos SDK go modules right now so they're going to have to be doing a significant rewrite into cosm lawm uh in order to do that and so you know we we'll be supporting them in this like

helping them with like as much as we can but yeah then you know integrating a lot of the product and stuff like you know if Mars ends up focusing more on like the per stuff you know like I said we're we're working on a margin trading UI maybe we'll end up plugging that into II instead of Mars um yeah I don't know things are obviously everything's up in the air a little bit we're seeing how things shake out yeah I mean it it I think I think it's it points to another to a broader Trend that I had anticipated would happen in this I think is you know some initial uh indications of of it happening um and and that is app chains merging with existing app chains or

becoming rollups or becoming smart contracts on on general purpose chains right and um and so you know these are two very relevant examples and uh in a short period of time I think that will probably uh prompt other app other application specific chains to do the same because cost of security is too high alignment with other ecosystems provide value um like the maintenance also of having to run your like all the complexity of having to run your own Valor set and the politics around around all that and the governance everything is like a huge overhead for a lot of teams yeah do do you think this is also something that will accelerate yeah I

mean I think uh part of what makes Silicon Valley work is like you have this like exit opportunity of like a you know you don't have to go IPO eventually you can get acquired by a larger company and you know I think it's uh it actually allows a lot of like you know independent research to be done but then like you work with a larger Pro company to like productionize and like like do help with the go to market so I think that if anything it's more surprising we haven't seen as much m&a in crypto uh I think the biggest one has been actually like polygon uh like has done a lot of like very successful m&as um but outside of that like not so much um and you know once again to be clear right now like when we right now there's no talk of any

sort of like token merge or anything between osmosis and II right now it's just a a a chain merge you know you have the osmosis chain you have the II chain we're like combining the chains but right right now Umi will be a govern have its own governance token and uh it'll it'll it'll still be governed independently and then any sort of like token swaps or anything that osmosis and II want to do together will can be decided by the by the indep respective governance systems all right let let's let's talk about this um prop 858 uh you had posted this on the cosmos subub Forum a couple weeks ago now and it just went up on on chain in the last couple days I think um over the

weekend yeah what's the what's the deal with this uh with this prop why do you want Cosmos Hub to provide you liquidity you're not part of a uh I think I think osmosis is the main the biggest portion of a we've been the primary you know AZ stands for atom economic zone and I think osmosis has been the primary driver of like Adam in D5 for the last like you know two years uh so I I would actually push boing we are definitely part of the a um if you wanted to find you know if a just means like set of ICS chains then like yeah that's true uh but that's cuz like I don't know I think IC as a technology

just doesn't make sense for osmosis in its current form be you know I think the techn like I don't think it makes economic sense I think validators get like kind of screwed uh via the current economics of IC I think um you know part of the goal of Osmosis is we want like our validators to do more and more so like starting pretty soon validators are going to be running in in in chain price oracles so that's when we have valid all all validators have to provide price price oracles but you know eventually I want them to do a lot more so we have this like routing server that we build like require validators to run that require validators to run front-end servers you know a lot of the entire Cosmos stack right like you know our

decks is like the chain is decentralized but a lot of the stack is quite centralized still right like the front ends the routers the database indexers like all these things and I think the best path to decentralizing these is actually like shifting more of these responsibilities onto the validators and I think just by switching to IC you and like losing I think like part of the benefit of an option is having this like specialized uh validator set who's like a great example of this is like secret Network right secret Network only works how it does because all validators are required to have an sgx node and I think like putting that sort of requirement on all Cosmos Hub validators will actually

limit the amount of people who can like run Cosmos Hub validators which is I think the opposite of what the Hub wants so I I think like having specialized validator sets is good this is why we came up with mesh security because it's actually the system that allows Economic Security to be shared while allowing for specialized validator sets yeah I I was just uh I was just [ __ ] around when I said that it wasn't part osmosis wasn't part of a I mean I I think that uh um I I heard someone say this recently AZ is kind of like the European Union and the different uh uh economic mil you know security e uh and monetary alliances that exist within Europe right there's

some that overlap and there's some that don't right like you have the the economic zone and then you have shenen and then you have um you know the the EU uh the the Euro Zone and sometimes those overlap and some sometimes don't like Switzerland doesn't use the it's part of Europe it's part of the economic zone but it doesn't use the euro right like in this sort of thing so I think for a it's kind of similar some chains are going to use security um other chains are not but they're part of the they're they're part of the the economic zone that makes well you know Cosmos and the Hub and atom more valuable and like certainly osmosis has play like a huge role there um but yeah we haven't talked about this like this proposal uh yet

um yeah so the proposal is basically like you know for a lot of uh things we need St you know I think that like Adam is like the base money of Cosmos and what that means is like it's the base collateral asset right um and so in but really people this all kind of actually ties it's it's a little bit related to 858 as well uh which was the Hing prop proposal but the the the general idea is that like you know at the end of the day I think people prefer to use lsds as uh collateral and you see this happening in ethereum where like you have LSD is growing very rapidly because people would rather be earning the staking

rewards while earning while being able to continue to use Defi and basically right now the atom staking rate was and still is a bit H like really quite high and what that does is it makes it more difficult for at to be used like okay so economics of lsds right you can use St atom as collateral on Lana or Mars or you know margin or membrane or II or all of these like places but you need a way to you need liquidity for it to turn be able to convert St atom into atom now the problem is that like that liquidity

needs to be subsidized in ethereum the E staking rate is like less than 6% maybe less than 5% even um and so you know if you have the exit liquidity needs to be sitting in eth and that eth is not earning the staking rewards and you have to assume these are pretty like Pro users who are providing liquidity here uh they don't want to be foregoing staking staking rewards so the thing is they with eth's like 5% staking rewards are made up by the combination of trading fees volume uh Lio incentives and curve incentives so the three of them together can add up to just barely eek out and

like make up the 5% yield that uh compensate the 5% yield that the uh LPS are like foregoing now how do you like deal with this for uh Adam when it was having 15% staking rewards you you you know you just couldn't and that's where stride came up with this idea of like oh let's protocol owned liquidity to help do this where it's like it is in the Kos hubs like it behooves Kos Hub to like Drive demand for Adam as collateral because you know at the end of the day that's what Adam is it is it's a meme token right it is just like the way Bitcoin is and this kind of like the way eth is really if you think about it and so you know you want but your goal is to drive the usage of Your Meme token as

collateral in like different projects and Defi and like have things dominated in it and so to get St atom used as collateral we needed to inject some atom liquidity so that that St atom can be liquidated into that at some sort of like discount basically um and hopefully this happening stuff will and if we continue to decrease the atom inflation rate maybe you know the Hub doesn't have to be actively doing this PO in the long term but to begin with this is like I think the way that we came up with to like stop Gap okay so the idea here I think this was also described in um uh in the block Works research is that if you reduce the

staking rate if you reduce the staking rate then people will have an incentive uh to use their atom as collateral um and instead of as U as just like sitting there and being used in liquid stake basically using the liquid staking tokens as collateral so we're trying to incentivize people to use atom as collateral instead of uh staking it no it's it's actually different I I I still think people are going to want to use statom as collateral it's um what's what the thing is to in order to enable the usage of St atom as collateral you still need atom sitting at in the atom in the S atom

atom liquidity pool and you need compensate that atom uh with their forone statement rewards what's been the like the reactions so far to to the proposal uh basically overwhelming support I mean I think uh it's currently at like it was surprisingly overwhelming support uh like I think 95% yes right now or something like that yeah I think it's 72 but I mean by the time this goes out on on Thursday 72% yes 22% abstain so like only 5% no right now yeah yeah I think I also think it will go through um and so how much this is

nine so basically like $9 million an atom um 900k also um it not 900k atom basically it's roughly double what the the not roughly it's exactly double of what the cosmos Hub already provisioned into astroport on uh Neutron currently the the the pool on osmosis does about 22 the volume um and so you know I think it's just asking for twice as much liquidity but that that twice liquidity is going to go a lot further because of Osmosis contrary liquidity pools yeah so you you you said something earlier which I think is a good segue into this other topic I wanted to discuss which is uh you know

that that Adam is is this meme token and you know I think you've been pretty vocal about the AZ IC uh kind of direction that Adam has taken uh and have argued for the Hub to really embody its memess as a governance uh uh a governance Hub and for Adam to embody its memess as a governance token can you uh can you describe your your thesis here yeah um basically crypto needs like Capital assets um today we only have two main capital assets um which are Bitcoin and eth everything else is like leagues away

um and to create a new capital asset you know I think over focusing on revenue is like not okay to become number three right the number three crypto asset is not going to be just like uh it's not going to be like a utility token it's going to be a capital asset and all capital assets are meme tokens to some extent gold is a meme token right um US dollar is a meme token uh and so for Adam for so Bitcoin follows this like unique monetary policy that got people excited around it right it was this idea of like fixed Supply like no no uh can never ever change like 21 million till the end of time eth you

know achieved its money off of you know basically the bankless GU Shilling eth's money and but basically like you have this like double like system of EIP 1559 on one side causing a burn and then you have this proof of stake basically causing like new inflation to come in and so you have you know I I call like Bitcoin is digital gold eth is the Petro dollar right it's like it's value is driven by its demand so the more demand for gas there is like EIP 1559 Burns it but then the more demand there is for Capital it like you know more people stake it to use lsds it'll you know it'll cause a little bit of inflation I think but both Bitcoin and eth are like not very Dynamic like you

know eth is a little bit more Dynamic than Bitcoin but like it's still pretty stationary I think Adam can be you know I think like a more General take is like I think to become a third Capital asset you have to do something different right Bitcoin had a lot of people tried to copy what Bitcoin did right you had like Litecoin and Dogecoin and all these like things that played bitcoin's game none of them worked right eth went ahead and were like oh where're something I mean they're all they're all above adom in terms of market cap that's true that's true uh some some level so xrp by the way that's true um but like I think eth went ahead and just played a completely

different game right it's like no this like dumb this like you know fix Supply thing is stupid we're just going to like do something like a different thesis on money um and you know it I think it worked out well for them and I think Adam like I think everyone who's just trying to play the same game as eth will never like reach that same level right I think uh Adam has this opportunity I think it is the most decentralized governance token in all of crypto and I think it should lean in on that and once you actually have a governance system you can do more Dynamic things such as like more active monetary policy which is what we did right I think that was a great success we like governance said hey we think that the inflation rate of

adom is too high and we're not going to follow this stupid cod's law thing we're actually going to like use governance to change the inflation rate that is like what a normal thing to do right like you should just cuz it was written into the code Once Upon a Time like into the white paper I guess actually like four or five years ago no government should be able to update this and there's I think more interesting things Adam can do as well like you know doing things like this protocol owned liquidity or doing like incentives for driving demand of Adam so this is something I've been talking about with the stride uh team and a dow folks of like you know we if we want to like drive more demand for atom as collateral we should be doing

rev share with projects for having atom as collateral so if like Lana has a bunch of like atom collateral or St atom collateral it should get a get some like atom Revenue uh cut possibly from that like you know stride takes 10% off the top of the staking rewards maybe they can give half of those to LVN holders or if kujira has a bunch of atom collateral that can go to koogi Holders or if uh osmo osmo liquidity pools have a bunch of atom St atom collateral that can go to uh osmo holders so it's basically coll like incentivizing projects and and protocols to use atom as collateral exactly so it's like now we can go to

maker and be like hey add atom as collateral and if you know your atom collateral grows then great you got guys have here's a free Revenue stream for you guys I don't see any reason for them not to take that deal I mean where did that Revenue come from would that be like Hub revenue or staking rewards staking rewards okay yeah so so what so basically like right like I said right now stride takes like a 10% off the top of all the staking reward uh revenue of St adom right what I'm what I'm suggesting is like they could split that with the projects that drive demand for St atam okay so so the idea like I think the the high level idea is you know Bitcoin and eth each have their memes um lots of kind of chains that came about

around you know 2017 2018 Cosmos and polka dot and like tried to scale eth um by sharding state into like different app chains or different like domains of state but like CR composability MH in the end I mean in the end it's nothing like sort of fundamentally new in terms of like creating new memes it creates new uh paradigms for building blockchains but it doesn't like create a new capital asset in the same sense that Bitcoin and ethereum are and so here the idea is like let's turn uh a uh the the the adom token into this collateral asset by giving it this memess and encouraging

projects to use it as collateral um so that it can well gain in uh in in demand and also value it also aligns everyone with atom because now all these projects have a revenue stream denominated in atom and like it doesn't have to be liquid atom right away right it could be like atom bonds for example so it's like oh here's atom that gets unlocked in six months so now it's like now all these projects are like have atom on their treasury on their books and it's like you have it kind of like makes it so like you know the AZ is aligned around like what I Define as the AZ is defi is is aligned around Adam yeah when you said earlier that that um Adam is the most decentralized token

were you talking about in its distribution in its governance processes and distribution right like Bitcoin and E definitely more decentralized but they're not governance tokens every like you know Adam only gave like Adam's Ico was like 80% of the Supply right that's like quite High relative to uh you know the standard for projects today right today you look at like the token distributions it's like okay 5% for an airdrop you know 20% for the team 20% for operations 20% for VCS like you know it's like and you and you kind of and just like none of these processes are

set up as such right you see if you saw what happened with like the arbitrum vote that happened like it was probably six months ago where like the foundation just like the treasury was in the hands of the foundation the foundation just executed a trade uh and then the community was like what the [ __ ] like we never voted we never agreed to like vote on that and so then they're like oh sorry we'll put up the proposal now surpris [ __ ] we have the keys yeah and and then what happened was the community was they put up the proposal and the community was super against it uh and then at the last minute a VC just came in and just like swung the vote entirely because you know you see the same thing happen with like Unis swap right like

per I know this cuz I once tried to Vamp like pre- osmosis days I tried to vampire I tried to like governance attack Unis swap for fun uh and I I realize it's impossible because Paradigm a16z and unisoft Labs together can like block anything um and so you know I think people often say like oh look Cosmos it governance is so centralized because of the validators but I think that's like similar to like people's misunderstanding of how mining pools work as well where it's like mining pools it's like miners can switch about switch pools whenever they want it's the same thing here right like all delegators actually do have their own like stake and I I'm actually very open to decreasing the power of validators in

uh in like Cosmos governance um but yeah so I think that both in terms of distribution and um just like governance culture right the fact you know I saw the like a tweet from I forgot who but like you know the fact that the founder of a project could like want one thing and the community like like the founder of the project is like oh this was my vision but like the government is be like nope we don't care we're GNA like do it this way instead and I think that's like that's definitionally like the how good governance should work speaking of which we can we can also bring up uh we can also talk about Adam I so I do want

to ask you just one more question about this so so basically like what what needs to happen for this Vision to uh come to fruition like what I know you've sort of like made this claim on Twitter that this should be the case but yeah what's the what's the plan to get there what does the Hub need to do what does the community need to vote on and action on so I think uh I think honestly 858 is a uh 68 68 is a good first step because it's the Kos Hub governance agreeing that like hey IC is not what defines AE right it's like we're not going to be favoritist towards Neutron just because it's using IC but rather like hey if if osmosis is where

demand for Adam is we're going to help like Foster that demand for Adam on osmosis by providing liquidity so that I think that's honestly a really good first step uh I think the next thing to do is I okay other good step was uh the havening proposal right it's like okay the government is saying no we are we are in control of monetary policy um I believe that like uh effort Capital you know the happening was only the first step there's a lot more like changes to be made to the monetary policy uh going forward um I think the next one is like governance should probably demand that stride uh like Implement some sort of rev share like this uh or like uh so that way it like you know helps achieve

that uh that goal and to an extent I think it's just like a narrative thing as well right like I think everyone in the community has to like stand behind this is the direction and now let's all like R around this and like we need to be like shouting this from the rooftops like you know let's this right now there's just like so much Adam is money right like right now there's just so much like internal like confusion on what the purpose of Adam is I think you know maybe maybe some sort of gov prop that's like hey this is like setting the direction of Adam and we're going to like let's all rally behind this you going to do it you're going to you're going to make a gr prop once I finish the other five 10 grv props in my on on my backlog yes but I'm working with like

effort capital and like a dow folks and stuff to like help shape this generally I mean I'm on board I I like like I I think that a is a good is a good attempt to try to give the Hub some legitimacy I mean it's the best attempt we've had in a long time right but but the thing is that there's increasing competition to the hub so like Celestia and now like enan Lair and all of the other you know l1s whether it's polygon or whatever these are these are all competing for developers and for applications to go build there and a lot of them have liquidity and a lot of them have like lots of people who are excited about them like SLA for instance right and and narratives that are very strong and so

the Hub the hub's a narrative and this whole idea of like a hub of applications that kind of serve each other's purpose and sort of builds as ecosystem it's not I mean it's cool but it's not like super exciting right it doesn't like rally it hasn't really rallied the community I think I think like you know people like oh okay cool like AZ great you know like it's it's not like a rallying cry for all adom holders and and I think that's kind of what what we need we need like this rally and cry um yeah and this is this is a rallying cry I mean like it could

it could work it could also not work but I I I I think it's like a it it's so like simple right that's what I love about it it's like it feels like to me it feels like that like d curve meme it's like you know like ICS all this stuff it's like no no it's just like Adam is money it's a govern it's governance back based money right and I think there's like value to this like if you you know Bitcoin and eth are just too dumb like you know humans like can actually make good decisions let's build proper and Cosmos governance is far from perfect right like I think there's a lot of improvements that like Cosmos governance could be doing but like let's start making those changes and like

double down on this as like the direction like the gov module is probably the currently the most under resourced module in the cosos SDK from the on like on from The Hub side and like it should probably be like the most important one that like that like that's also has funded a uh a a big revamp to the go module so hopefully like the Hub will be able to reuse a lot of the the work that we we've done yeah I mean the governance module should have like all of Dow Dow's functionality basically right it should have like a whole bunch of extra functionality that's been built later right in in kmm but just doesn't exist in the in the gov module yep so

yeah we we briefly discussed you know the idea of a of a Founder uh being out of favor with uh with the community so you know coming back to the passing of 848 and the subsequent um Fork threats or or uh I don't know if they're threats but um this uh this Adam one idea that I mean this I mean Jay Jay was talking about Adam 1 back in the Adam 2.0 days I think this proposal is a little bit different um but yeah what's the what's the high level idea with Adam 1 and um what's the current status of this potential Fork yeah okay so here's

my you know let's call it a little bit of a charitable view on like what adom one is from like you know I've SP I actually the the discussion for adom one actually came out on a call with me and Jay and and a couple other people um and it is like before any of the havening and everything but it basically came from this perspective of like I was telling him about this like governance like view of like Adam and he's like yeah this makes sense or his take was governance needs political parties and he effectively saw that like his take was or I forgot whose take it was it was a combination of Dave me Jay and Chango but we were basically going down this

route of okay L if we believe that most capital of Adam is actually going to be held in lsds right because that's what's going to be used as money everywhere then these lsds actually have massive voting power they're going to be the biggest owners of governance power effectively and these actually probably serve as good shelling points to build political parties around so instead of having a single and you know it behooves Adam to not have a single solely dominant LSD but actually have a couple of competing ones but what caus you know you see this happening on ethereum the problem with e with lsds is the economic incentives of lsds drives toward centralization

because you want as much liquidity aggregation as possible but what leads to some uh fragmentation on lsds is different political views so like rocket pool has a pretty different political stances than Lio like when it comes to like ethereum governance uh ideas and so it's like okay let's actually leverage that and build political parties around lsds and now okay now this is where like Jay's like you know parano comes in he's like oh stride is like the representation of like the informal ICF cabal that's like trying to destroy the Hub and so we need to build a competing political party called Adam one so and build an LSD around that

which okay you know I'm actually I actually quite like the stride team I think that's a little bit of a uh misar ization of of that but the general take of like okay let's build an LSD that is uh you know H is based off a specific political view and that's why it actually you know I I'd go so far as to say it actually kind of makes sense so so if you choose like the Hing prop as like your deci to build your political party you want to like send it like coordinate the people who like have a shared political view and I guess Jay's take is that everyone who voted no one this is like Pro conservatism of the Hub and that's if that's the goal of the political party is to be the Hub

conservatives then like you know distribute your political party membership token membership cards to the people who voted no on that proposal um that is my like highlevel charitable view of like what is happening now the problem with Jay is that like he's so isolated from the rest of crypto that he uh doesn't know the standard terminology that everyone else uses and so struggles to explain his ideas in a way that most people understand I I think if you explain this idea of political parties lsds as political parties I think it's actually this like very very interesting Insight in like crypto political economics right and like um I just think he's not very good

at explaining it but I I think I think high level it makes sense what do you mean he's so isolated he doesn't know what terms people use like like I don't think he actually understands the term like I had to explain to him what an LSD is like or like yeah like I mean he does doesn't he know what liquid s ders are not really he's like it's weird like you know so even okay so like even like this whole like Photon thing that he had from a long time ago it was basically this but like I don't think anyone got that I mean obviously and there are some things he did differently like he want he wanted it to be like oh you photon is sort of this like thing like LSD is thing that

like gets minted and burned on a bonding curve like based off of atom but like I was like oh that makes it so the photon price isn't equivalent to that what you can instead do is make it so like you do a variable like unbonding rate and then you let the market figure out the actual proper rate between the two so there's a lot of like things that like uh like you just like I don't know I don't know if you know really like I'm sure he maybe knows these terms but he doesn't realize he like there's standardized terms that everyone you there's a shared vocabulary that we use to share our ideas and if you're not plugged into that shared vocabulary it's very hard for every for other people to understand your ideas

even if maybe like maybe it also just is that he like the shared vocabulary that everyone uses doesn't accurately represent like what he yeah what what he thinks like what he wants to build right so like you can that's true but at the very least putting it in terms of some shared vocabulary and then say okay these this is the diff of what my idea is from the standards yeah yeah so so what's the current kind of status of is Adam going to have a fork is is this going to happen or so I don't know what the current status of Adam 1 is like this is all like from a discussion that happened like over a month ago at this point

um before the happening and everything and I was like yeah this sounds great I mean uh that sound that sounds like a cool idea to like build a political party LSD so I don't know what I have not even read like the current Adam 1 proposal or anything so I don't I don't I don't know how much it's diverted from that original idea yeah well those who are interested should go back and listen to my episode with Jay from over a year ago when we talked about item one uh but probably I should try to get him on and just like yeah discuss this in detail this is kind of a it's kind of a weird episode because it's not like a proper interview we're just kind of going going all over the place but it's interesting it's like actually like this because we can just

talk about things that are happening right right now yeah what's going on with Adam 2.0 like you guys announced this smart account cosmoverse and I'm still waiting for my smart account I still want to ditch my ledger so I can use pass keys and um yeah yeah OS 2. when intents when CL hooks when so beat Sexes uh CL hooks I think should be in the next chain upgrade which definitely should be happening by end of year uh so what are CL hooks maybe let's yeah what's a CL hook CL hooks is a thing that allows developers to add custom logic to concentrated liquidity pools so

this is very similar to what unisoft V4 does on top of unisoft V3 where it's basically saying like like hey you want uh like for example we could you the examples of what you can use this custom Logic for um you know the provenance team wants to use this to add a whit list for like trading so they want to you know they want to take some of their assets list them but they want to say oh only like this Whit list who has passed R kyc can trade or LP in this pool so what it will do is every time you try to execute a swap it will use their custom logic to go check your address against a white list and if it's not in there it'll just say no it'll reject the swap um another one would be adding an

additional fee so this is something that we're discussing with uh the actually a couple of teams the Apollo team astroport team um where it's like hey uh you can do a swap but you can add a custom uh hook with logic where it adds an additional swap fee so you know currently osmosis already takes like a 10 10 bips like protocol fee but like Apollo might be like hey anything that's like traded on the these pools that we're adding liquidity to we want to add an additional five basis point fee that gets sent to the Apollo da so we can like do like these custom things like

that and you know there's all sorts of other use cases of these custom Logics as well so that's what uh the CL hooks are ultimately it's a developer tool it's a develop developer feature that allows developers to uh add extra functionality when interacting with a concentrated liquidity pool exactly um cool and yeah smart accounts smart accounts uh so we decided to break down smart accounts into like a couple segmented things so the first thing that we're doing is the one-click trading so this basically means that like you'll be able to um you know instead of having to sign every every single transaction you make when you log in you authenticate a

key it generates a key in your browser which is typically very insecure but we'll get into why it's why we're okay with this and then you can like uh do your like trades and you don't you can just click just like on binance or coinbase you just click and it does the trade you don't have to like you know do an email confirmation for every trade you want unless you're doing a big trade or unless you're withdrawing assets or something like that right then it asks for these confirmations which is what we're doing as well so there's there are projects out there who've already done like oneclick trading like dydx even has it but the way they do it is actually quite insecure because all your funds are on this browser hot key um and what

we're doing is like no let's put rate limits on these things where it's like okay when you when you log in it says oh you can trade with up to like five you the initial one we're doing is like trading with up to 5% of your portfolio and that means that you can like you you can like trade back and forth as long as the balance of your portfolio doesn't go down by 5% that means you could be like if you're paying too much in trading fees that could cause your balance go down or if you're going from a high cap token to a low cap token so if you're just trading sitting there trading Bitcoin and eth and atom like that's okay because no one can really steal your money from doing that right they all they can do is B basically cause you to

pay a lot of trading fees but if you're trying to go from like Bitcoin to like some random shitcoin that you created we our thing will be like no no no that's like that's effectively a loss of money and so like that's capped at like 5% basically um so that we're doing that we're also working with a company called blockade to build a co-signer which is like so blockade they do some stuff they work with wallets uh they're like they have this like machine learning based uh or actually you know I'm going to use the new Buzzard you know they probably called themselves machine learning last year but now ai is all the hype so AI powered uh thing that like it's a security check basically where like uh they do all sorts of things like check where the history is coming like uh

transaction patterns they check like oh which like server you're accessing the site from and all this stuff and it will like what they do today with wallets is basically like you know give you a warning of like hey that we you know something seems wrong you should probably be careful when signing this so what we're working with blockade on in our smart account is being a cosigner where you can optionally say that hey if I generate this key uh this hot key and I want to sign a transaction what it does is it sends it to blockade as well they evaluate the transaction you're doing and if they think it's safe they will co-sign it as well and then submit it to the chain so that way uh you have this like you know if blockade thinks

something is sketchy like it can they can block the transactions from going in using your hotkey amazing I I I'm I'm happy I don't have to go every time yeah so so one click trading is the first thing we're doing next we're probably going to work on like the pass keys and the onboarding and stuff what we realized a lot of the stuff that was complicated on like the ux flows was for new user onboarding because you have to deal with like how do people create a smart account when they don't have any tokens at all and just like you end up in this like weird like crazy all these edge cases and like okay let's ship something the simp that that like makes our life better for our existing users and that's why we're starting with the

one-click trading that's great I mean I like one one of the most annoying things about using defi is just like every transaction having to I mean since if you use a ledger right having to like flip through all these pages and if you're if you're doing many you know you're State you're reaking you might be moving some assets you might be doing a bunch of Trades um you know you spend a lot lot of time sort of on your Ledger doing this any any way that we can use I I presume this uses o z uh to simplify um certain types of transactions uh that'd be great I was talking to a team this week that is building kind of um like a a governance tool where basically

you give Oz uh authorization to like their key uh for governance votes only and every time a new governance vote comes up on the chains that you're uh subscribe to it just pops up as a message in your telegram with like four buttons yes no no veto and abstain and you could just vote right there in telegram without having to whip out your Ledger open up the Kepler wallet or any of that you just vote in telegram um and it's like I mean this I think would just improve uh and increase governance participation if if everybody was using this yep which osmosis apps are you most excited about um

I mean the obvious answer is Lana because they're launching their token next week so that's exciting yeah um you can buy you know at the at at the launch uh all you can do with it is buy socks so that's a it's a utility token for buying socks uh but you know they might they may they may or may not add more utility over time uh and then but I don't know I think otherwise uh pretty excited about I think margin is quite cool with like the squared assets you know uh it it's actually like one of my like best friends Zubin like open they came up with the idea of squared assets uh they did it for eth um but then uh you know

they went through some legal issues but you know what's cool about margin is they're doing it for all sorts of assets so they have sasmo and sadum and I think yeah uh Bitcoin and suntia as well uh so that's really interesting um and then so margin is just a a it's basically like this leverage long or leverage short that you take and it [Music] um yeah it's like this pre-programmed like the the the the leverage long and leverage short is programmed into the asset price yes exactly it's and it does this like square of the of the assets so if Adam goes up 2x your position goes up 4X if Adam goes up 3x your position goes up 9x uh so it's just like really good

position the thing is you have to pay a funding rate a a relatively High funding rate for this position that's where the shorts uh take the money cuz if in a pure payoff the shorts are kind of like not making that much so it's it's more similar to an option right when you buy an option you you know it's the premium that you're that you're paying for or that the other side is earning um so that's kind of what what what what margined is um membrane uh there's this new project called temporal that is doing like fixed rate interest loans so I there's just there's a lot of cool stuff happening right now all right well I got to check all this stuff out um cool well thanks for thanks for coming on again and shooting

the [ __ ] as they say um and sharing your thoughts on all this stuff and um yeah really like look forward to seeing your uh your your proposal for Adam as money yeah I mean it's it's kind of weird right cuz like it it it doesn't really require the community to agree on anything or like to action on anything other than just get behind this idea yes and and then you know up from that you know we might get some like you know stride like having part of the fee go to protocols that utilize atam as as as collateral so things like this but it it just it starts from like an agreement that this is the vision and it's a

fairly simple Vision MH um this which what I kind of like about it uh but yeah we'll uh thanks again and we'll talk to you soon I guess maybe you can come back on in a couple of months and we can do this again yeah