Order Book and AMM Hybrid Dex with Hyung Lee of Crescent

Transcript

and we're live welcome to the interop my name is the interop is all about exploring the decentralized economic networks that make up the inner chain and today i'm here with hung lee who is the ceo of crescent network hey how's it going hey uh thank you for having me here yeah well thanks so much for coming on i know it's late in korea uh but yeah we've got lots to talk about and uh really interested in diving deep into crescent so like crescent is a project that like obviously being in the cosmos space you know i've noticed i've like seen around like i've been on the app like you had a little bit of tokens in the

airdrop but it's a project that i realized um especially when we were chatting uh in korea because we met in korea a couple weeks ago that i think that i i only kind of knew on the surface and uh you know in chatting with you i realized that there was a lot to this project that i hadn't really um that i hadn't learned about and so i wanted to get you a podcast to dive deep into you know crescent uh but also like your hybrid amm order book model um and then beyond that there's all sorts of interesting things that we talked about including uh like cross chain defy um you know liquid staking governance and lots more because you've been in the

cosmos space for a long time yeah yeah so tell me a little bit about your journey and you know starting from way in the beginning uh and then how you got to you know building crescent yeah we started our uh team way back in uh 2018 march uh before that i was like a market maker and arbitrage trader for 10 years in traditional finance and then we created this company to participate in the blockchain ecosystem so like uh my first journey was actually ethereum to do some

defy product for uh fund management uh and there are like several uh projects such as like economy or like melonport but you know there are no uh good decks at the time there's no liquidity there's no defy product to be connected so it's like of creating a fund is almost impos impossible because there is no tax to trade tokens so yeah at the moment like trading fund is impossible but also like uh the gas fee is too expensive and everything was very inefficient in ethereum so we started to research on cosmos after three years or three months from our

company creation and then we i just like fell in love with it i love the community also i love the vision to have like millions of blockchain that is an obvious future because there are lots of like uh different uh projects and teams and community uh who are like not friend each other so they want their own sovereignty they want their own independency so like different companies different community builds different blockchain and those blockchain need to be connect each other so like millions of blockchain is a very obvious feature i saw in 2018 so since then i i was like deep in cosmos and still i mean so uh we

are like uh cosmos oogie are providing the contribution for the network participating in validators but also participate in research and development for d5 modules so we collaborated with tendermint and icf to create different kinds of modules or contributions to tendermint and cosmos sdk finally we built uh gravity dex on cosmos health and this is finally we decided to migrate this to our own chain app chain which is crescendex and now this crescendex has a hybrid dex feature with ranged liquidity and then we are expanding to more

functionality called crescent boost which will connect different device in different blockchains so multi-blockchain defy gateway cool cool yeah and i mean this company that you're you're this that you were talking about like this this company that you were working at uh early in the early days of cosmos was bee harvest yeah and um you know i remember like you know when when the cosmos hub chain first launched bee harvest being you know one of the you know kind of dashboards that i would go to to get information about like you know like the chain like you had a block explorer i think and i i think perhaps at some point i was probably staking my atoms with you guys so like you know you

you're definitely part of the you know like the the cosmos community like early on and i think you know the this um this group of validators that were part of the uh you know the instant advice test net and like the the game of game of steaks and everything um what was it like being there like in the early beginnings and you know what's changed you do you think that do you think that there's been like a huge shift uh in vision or has it stayed pretty much the same since then you know so yeah at that time i i was really enjoying working uh for this uh community uh so like uh it was like my first time

like working more than 12 hours per day but still happy to do more work so i was like like more like a get into this community talk about the future of cosmos and participate in many activities so like still nowadays uh if i see like those like og people uh uh even though i met them like just one time uh like three years ago still it feels very uh strange and uh weird uh but it feels really good because we were in the same space like virtual space four years ago so like that is a very special moment

for me so that is a very exciting time yeah yeah i know it's been a really exciting time you know i think um i think like cosmos is is definitely going through you know it has has been through its paces and i wonder you know i i had this this kind of um this kind of i don't know if you want to call it a theory or a thesis but i feel like cosmos is entering like a new phase in its development and i'm reluctant to use cosmos i try to use inner chain as much as possible just because i feel like that i feel like um that term is more appropriate to describing like the future and really really this is it right there's

like there's there's the cosmos era and then there's the interchain era and the the cosmos era was um [Music] you know i would qualified it as uh like the the time during which obviously the cosmos hub was launched but then a time also during which lots of app chains were launched many many of those app chains you know led by folks who are close to the tendermint team close to the cosmos team perhaps you know also people who left to build their own thing and that's kind of the cosmos era and then ibc came on and the the the time in which we're entering now is the interchain era where there's all sorts of new infrastructure being built

that you know isn't tied to this this cosmos era you know you have things like um uh things like atmos that you know of course like you know fede works over at um at tenement but atmos is opening up cosmos to the entire evm space and then you have like totally new teams that are coming in like um uh like polymer and penumbra and uh composable finance who are trying to expand you know the functionalities of the interchange even further so you know do you see this also or like are are there more divisions to you know to this uh to this kind of timeline of the inner

chain yeah so like a way back like in three years ago uh we we lived in the cosmos ecosystem so we didn't see much uh we saw the activities around like ethereum and other layer one of blockchain ecosystems but still our activities are closely tightly connected each other within the cosmos ecosystem but they're like not much like activity from outside uh but now we now see a lot of ecosystem outside cosmos uh so this cosmos eq is still very small but still if you see like solana if you see like polygon or if you see like ethereum

we see a much larger uh ecosystem uh having more interest in cosmos and inter chain into blockchain communication so i think this is really exciting uh time right now for cosmos ecosystem uh to uh invite a lot of like different ecosystem from different blockchain uh so that this like a mix of other uh external ecosystem combined into customers to become more like in inter blockchain ecosystem so i think this is very trending and uh exciting time for customers yeah i think so too i think right now is

probably like one of the most exciting times in the space and you know one thing that it gets me really excited about what you know the next year or two and in in a lot of ways i think that you know in in the same way that idc launching about a year you know just over a year ago or going live created all of this innovation and all like this kind of cambrian explosion of of apps and innovation this in in the interchange what we should expect this year i think we'll even you know expand even more broadly so you know interchange accounts interchange security interesting queries all these new exciting new uh paradigms and features what are the things that you're most

interested about uh you know in the next year and uh where do you think it's going to take us um so our focus on on the ecosystem especially interchange ecosystem is that uh we are going to connect different device in different blockchain that is uh what we are focusing right now so from our team our purpose and goal is for the users to have a convenient gateway for users to connect to different device without researching or like reaching out to different blockchains uh multiple blockchains so uh i think there

are different devices in different blockchain uh obviously from ethereum but also in other blockchains and if you if we want to like use this like different products within one uh ecosystem then there should be like better connectivity like uh ibc or bridge so that we can rely on so this connectivity issue will be a core thing for the uh near future uh expansion of connectivity uh and also like uh tokenization of all these kind of like uh complex defy uh will be another key issue because like tokenization gives us standardization of any position so that

we can create more finance upon it so like this is like an etf in stock exchange so uh etf creates a lot of like new financial uh utilities because everything is same same etf so we can standardize everything our risk and return and other aspects so i think we are focusing on this connectivity uh standardization and like a vertical integration of multi-chain d5 so this is uh we are focusing on uh so you're muted i think

right sorry so let's let's dive in let's dive into that um crescent i i think i would describe it as a a hybrid amm and order book dex there's you know it turns out there's lots more to crescent than just you know this very simple explanation um you know talk about why uh what like what's the vision for for crescent and what what is it that why is it interesting to to essentially merge this traditional market structure which is an order book and a more uh novel automated exchange mechanism which you know like

bioaccounts was invented a couple years ago and you know what's it why is that so the holy grail for uh for building index so let me explain this as a historical context so uh at first before uh blockchain there was a older book so every most of the exchange in traditional finance they use audible to trade different assets so after blockchain they try to create a decks or with odor book on ethereum but obviously it is like practically impossible uh because of the gas uh cost and the performance of the

blockchain is too low so uh it was impossible or they had some service but it was like off chain so uh there was no decentralization from blockchain so uh it was failed and then like 2020 uh this uni swap uh came out uh to provide different kind of uh uh dex uh uh utility so uh it creates a different innovation which is that uh it is i think like uh like uh efficiency of gas cost is another important thing in this context but uh that was the practical reason but another reason is that uh the only market maker uh ma uh woodworkside

market making was only participated from professional market maker so this was very closed competition within very big market makers and they are having a world market share in the world having this uh market making business but this uh unicef amm opens this like participation opportunity to anyone so that if you have any like ethereum and other assets then you can just deposit into pool to get this like trading fee from these uh participants so you can become a exchange itself so like finance if you see binance and the binance is the exchange finance gets all the uh trading

fee and then it can be a little bit shared by market makers but still individual participants cannot participate on this activity but in unison unicef itself is not an exchange exchange is like liquidity provider who are taking all the transaction fee so they're getting revenue from their providing liquidity so this is like a democratization of market making participation uh to the world so that or anyone can participate in in this activity but still this ama functionality has a very restricted freedom for market makers to participate in the

market because this constant proto model restricts users to provide liquidity with a predefined algorithm but the order book provides maximized freedom for market maker to provide liquidity with their own strategy so this is like big difference for this freedom so older book has a good point about the freedom of market maker strategy and amm has a advantage to open this participation for the users and uh recently last year unicef open uh

concentrated liquidity which is like units of version 3 and now sushi sub is following with their new product uh trident and so this will be going on with like other uh amm also uh to uh make it more efficient so this ama is uh in uh evolving to better uh utility right now so this amm has its advantage to open this participation for individuals and market maker can have more freedom on the older book so obviously they have each each of their advantages so uh losing one of them is like having a half uh feature for the decks uh so we

decided to have all of this in one deck so that we can take the advantage from both innovation so that was the original uh concept for gravity dex so actually we didn't open the order book ui for gravity dax way back ago but still the gravity decks uh back end code base uh inclu already include the order book feature within it so it was already a hybrid dex but it was too innovative so we couldn't uh open it from start but now uh with crescent we can move faster so we can open this uh functionality so uh april this year we

launched our blockchain and then july after three months we have a great big upgrade uh with uh opening the uw ui and also range liquidity which is similar to unicef version three so we evolved our uh amm but also uh included our uw ui so that users can use the this like freedom of market participation okay so so essentially you know you're saying like the the gravity decks back end um which people might also know as amorous which was a project that was um being stewarded by tendermint ignite and you know sort of branched off to become

its own project to become crescent that that backhand had an order book um mechanism in place and and also an amm mechanism what what's the interplay between these two functionalities how how do they practically uh work together to form you know sort of like the crescent decks and from a user perspective like when a user interacts with an order book decks you know they know what they're looking at they're looking like an order book and there's like you know buy orders and sell orders and it's like that's an order book decks and then when you look or an order book exchange and then when you're looking at an amm well you know that looks like two right it's like here's a token you want to

swap for this one and that interface i think was kind of pioneered like way back in the day by shape shift and then later by unisop but [Music] what what does it look like when you know what's what what's the user experience when you you integrate both of those things together okay so uh i can explain uh this hybrid dex as a order book based text uh with uh with liquidity from amm uh participating on the order book as a participant so uh you can imagine uh like you have like uh three different pools or for one pair then for each pair we

have one order book and within one order book uh there are three different pools uh providing liquidity on this order book uh so if they provide uh this like one of each uh pool providing uh liquidity on order book by placing like multiple limit orders on the order book so if you uh connect to our website you can see the order book there and then if you see the order book then you can see like very similar amount of orders like in each tick uh so that users can uh trade on so this liquidity is coming from amm so amm is like a person

uh participating in order book like a market maker machine on the order book so that they can place all this order based on the constant constant product model from unisof so they just provide this liquidity like a machine with their predefined order algorithm so this is like uh uh order book so basically this is just the audible but amen provide liquidity onto them so so essentially you have the the order book the amm at the amm liquidity pools are fulfilling orders in the order book so it's like a set you

so you have you have individual buyers and sellers that are matching those orders you have potentially market makers and more professional actors that are also matching those orders and and looking to you know profit on the spread or like participate in arbitrage but then you also have the amm uh the amms and the in the liquidity pools that are fulfilling orders in the order book as a sort of yeah like an order an automated market maker the same way that you would have like a professional market maker yeah what's the impact on the price like in on price discovery and how does this um new paradigm of having an amm also

participate uh affect like you know price discovery yeah so uh amm of uh discover the price by its own reserve uh token ratio so it doesn't uh have any other oracle to listen to the external price so uh the older uh the the amn price is very passive so they provide orders from their own uh pool price at first and then there's a older book uh which which the price is like moving on the order book and then there's a difference between the order book price and pool price then uh this

pool uh provide liquidity which is like a transactable or within this different uh difference area of the price so uh it uh converts each other to to become a single uh same price so this is like a continuous like convergence of price between order book and each pool so that they can find the the single price uh equilibrium price each other so uh this is how uh price discovery uh happens within crescent and when when an amm fulfills an order in the order book

um is that an automated uh how does that happen is it written um on the on the chain where there's certain criteria that uh allow those orders to be matched or is that a manual process where people are acting on behalf of the amm doesn't work so we have a exact mathematics or within the code base so that the amm provide uh limit orders for each tick with uh calculated amount uh so this is just like other limit orders uh from users so so that they are matched each other uh as a limit order also so uh if there's

no like prioritization or there's no like different uh mechanism to match or pull orders and users order so pulse order just uh treated as another uh order from users and they just met each other from the older book matching mechanism got it and um what's the like when you say that there's ranged pools is that essentially like this the implementation of unisock v3 or is there a different mechanism that you guys have implemented so the mathematics behind it is almost the same

but the difference is that it is acting on the audible so their liquidity is provided onto the book so that is a difference but the mathematics can be similar okay understood um so you you guys wrote this post about you know liquidity and efficiency and and i'd like to get your you know your thoughts about how how this makes liquidity more efficient um and if this is a model that will be adopted by like if there are clearly more efficiencies and with this model do do we think that other dexter's will also adopt this this uh

this hybrid model so uh if you see like different amm in cosmos we can see the farming rewards uh starting from like 30 percent to even like more than 100 percent uh so this is uh what lp is demanding right now but if you see like uni swap with concentrated liquidity feature uh the basic pool for ethereum versus usdc pool they have like less than ten percent api so it means that uh still well with like less than ten percent api lp investors i might be happy or not but they are

providing liquidity with this kind of like low earning because uh ranged liquidity this concentrated liquidity provide users to amplify this apr uh within their capital uh so that they can use more strategy smart strategy to earn this uh apy uh multiply the api from their strategy so uh that is a very uh great uh improvement of liquidity providing capital efficiency like uh like from hundred percent to one ten percent that is like ten times better so uh we we believe that this like ten percent is not a good news for farmers

but like ultimately taxes for liquidity providing not for farming machine so like uh lower uh farming rivers it's not a bad thing for decks it is a good thing for dex because they can provide liquidity with low cost so that is a efficient liquidity which can be survived in the future competing with unisop or other uh products so we we are in cosmos so we are comparing just like decks in cosmos but we need to compete with unicef in the future uh we need to compete sushi sub in the future then their apy is like 10 and then we need to deal with it so we

need to find better way to provide liquidity with less farming rewards but better capital efficiency is there an market makers have an incentive and i'm thinking more about professional market makers that can provide like a lot of liquidity do they have an incentive to put their liquidity in the amm as opposed to uh executing trades on the order book because in the emm they can not only earn fees but they also can participate in uh liquidity um yeah and sorry in in in staking perhaps uh through liquidity uh state liquor staking they can get farming rewards

like there's all these other incentives to be on the amm um what's the what's the incentive model there so from our inflation uh on on the total inflation budget uh we have more incentive for market maker than lp actually this is because we are hybrid decks and we are focusing more on market maker incentive rather than lp incentive because lp is less capital efficient than mark professional market makers so we we can just compare like this uh if a market maker place like limit order of 10k

uh within uh 0.5 percent price difference uh spread then that is like a four million basic pull tvl same liquidity provided so they just spend 10k but they are providing like uh 400 times better liquidity compared to basic pool so that is why i'm keep saying basic pool will extinct in the near future because this is like almost like unusable as a capital efficiency rate so we are gradually reducing the incentive for lp investors and we are increasing more incentive for market makers so this

market maker incentive will be alive october this year and then we will see much tighter liquidity uh within the market um how does how do you implement this though so like for i think like for an amm you know we're familiar with the model where you you put you put tokens uh in a liquidity pool and then you take the you take those the liquidity pool tokens and you bond them and then you get rewards and so you know it's like written in the contract that what what the rewards model would be how do you um how do you formalize this for like market makers is it something that can

be automated or do you have to like have partnerships with them like a more manual process yeah so we are we want to have like open participation and competition within market makers like whether their size is big or small we want to uh distribute the incentive for their participation and amount of liquidity provided from them so we don't want like big market maker having all the market share for our uh liquidity providing uh so we want like open competition so that's why we are creating an open source program uh to calculate the uh market making

score uh for each market maker so that they can pro they uh whether they are providing like liquidity uh with up better uptime and better spread and better depth of the amount of the orders so that we can combine this all these uh functionalities so that we can have like total score of each market maker so that we can distribute uh incentive upon this so we we are going to open source this like uh scoring calculator uh and then it can be calculated from uh blockchain data and then uh we can confirm this data from multiple points like our

validators can prove that the result is same and then from this result we are going to distribute this market maker incentive by governance uh so that the governance can uh verify that this calculation is uh right from our open source software and then we can approve this distribution so it'll be happen like uh once in a month so that the incentive can be distributed to all the uh participants okay very cool um we got someone in the chat here uh danman921 is asking this question and i was going to ask it i had in my notes here but

basically like i was thinking about you know in ethereum we i think most people and certainly myself like don't use dexa's you know i don't use uniswap or sushi swap like i just go to cow swap or paraswap and like and because i know that those uh products are allowing me to get the best price and they're pulling liquidity from all sorts of different pools and in the case of cow swap like it has the added benefit on ethereum of being mev resistant um you know when thinking about the inner chain it the maybe these products are a little bit harder uh to create because we don't have the same composability as an ethereum of course like things like entertain accounts and interchange queries are going to make those that possible um

right right now like there aren't it's not obvious to me what which products uh you know are sort of like the equivalent of a pair of swap on the inner chain um do you think that's coming though and then if when that comes like how will that change your uh you like your position in the ecosystem and so how would that change the dex landscape the inner chain decks landscape so uh i i believe that they're already here like uh there there is called uh rango exchange uh who's doing that liquidity from like uh tens of mark uh chains and also they have like uh slingshot uh doing uh on the

osmosis and other tens of blockchains but more will be coming i i also talked with another project uh coming to like osmosis and near and other uh blockchains uh connected to each other so i think like uh within like six to 12 months i think there will be more aggregator in customers uh space connecting but so just just is there like these products are maybe i i feel like they're different from you know a pair of swapper or one inch because they're not fully on chain are they like a rango exchange um when i use it uh or at least when i use that i i didn't think that this was a

fully on-chain product so even one inch exchange is not fully unchained because the computation from front end is uh used for finding the route so still it is like hybrid of both chain and on chain off chain front end and on chain execution so uh this is same as cosmoses cosmos but the difference is that ethereum uh space is synchronous each other for different nexus but in cosmos like uh if different chain has different block type so it's a asynchronous uh situation so you will need more time to be executed this transaction and also

like uh there will be like delay of time to confirm the short price of the each uh dex uh to be executed so there will be some challenges but ultimately if we have like multiple decks with liquidity better liquidity for other pairs so for this pair osmosis is better for this pair crescent is better then it is smarter to use aggregator to use different exchange every time uh when they swap because like different pairs uh will be executed better in different block uh blockchain and decks so uh aggregator will

change the competition of decks uh now nowadays like uh in cosmos like osmosis is the main decks and like 90 of like cosmos ecosystem users they're using osmosis front-end but in the future like more than half of the users will use aggregator rather than osmosis so that other decks like crescent or shift chain or kujera or any other taxes new taxes can have opportunity to compete with osmosis because this frontend is shared each other from this aggregator so that if you provide better liquidity then you don't need to invite

users to your front end because you already provide your liquidity well and then this will be connected from uh aggregator so this is this is where i see as a future uh because users deserve a better trading experience and osmosis is not always providing best liquidity for the users we'll talk about osmosis in just a minute there's another question here pusa is asking uh if you're going to implement derivatives products vaults covered covered call vaults etc yes so we see a lot of demands from users uh especially derivative products

but also like uh managing uh fund uh from professionals like uh covert calls is one of the uh passive etf kind of uh product so that users can have like specific uh position uh in the uh fund so that they can follow this like uh benchmark of like derivative products so uh also like uh in ethereum there like innovation coming from managing the lp so because there's a concentrated liquidity uh need to be decided the range of the price for the liquidity and then this is like subjective area so or

which range is good it is a open question and it it the professional manager should answer this question because like individual uh investor uh cannot understand the quantitative thing and statistical thing around this product so there should be more service from defy space where uh these professionals can provide their strategy and ideas of how to manage your fund so there will be like more demand and more product uh coming so that your multi-defined position can be managed well from professionals cool got it um interesting i'm looking

forward to seeing derivatives products um on more derivatives products on crescent uh yeah i want to talk a little bit about you know the the competition um and you know you mentioned osmosis and i think like all the people watching here are are familiar with osmosis and probably use osmosis on a regular basis um you know like sunny i've heard sunny say that uh osmosis will implement order book uh an order book um dex uh sometime i think like before the end of this year uh he he sort of leaked that at nebular summit a few a few weeks ago

and you know a lot of the functionalities around like liquid staking um [Music] you also share with uh with osmosis and i'm you know i'm not i'm not mentioning you know the other dexa so like you know junior swap or any of the any of the dexter's over on fmos but you know thinking mostly about like kind of app chain cosmos dexes i feel like you're in pretty direct competition with osmosis um what's your edge here like how do you uh compete with osmosis and are you are you um are you competing on the same types of users and customers uh or are you

targeting different uh different markets here like because i mean it seems like i don't know exactly what the liquidity is on uh on crescent but i'm i'm fairly confident that it's much much lower than uh than osmosis and you know to be able to you know when when you're talking about a an exchange a user will also always be incentivized to go where there are there's more liquidity so what what do you how do you feel about that yeah so i think uh it is not a decision making but it is more like a matter of time to improve the dex basic decks amm to a more

capital efficient form so i think like decision from sunny is like very obvious thing to see because they cannot survive with this basic amm so they should evolve uh as soon as possible so like implementing uh this like range liquidity or odor book is like obvious way they should follow so uh that is like very expected uh decision from sunny uh so we are um we are having a completely different direction uh compared to osmosis uh so we are uh having a vertical integration of d5 product rather than a horizontal

expansion like osmosis having like 50 different tokens so we are having smaller number of tokens and also we are going to have more tokens but these tokens are not native tokens but synthetic token representing ownership of d5 product from different uh blockchains so like tokens like uh representing like unisa lp position like tokens like uh position of sushi swap position this kind of different product will be uh listed on crescent and we were going to provide liquidity for them so you don't need to go to unisoft to invest into unisa you can just buy this unisub token

in our crescent then you can passively invest into the lp position so uh and then we can make this fungible token to be used as a defy product so that you can collateralize this synthetic token to land more tokens or leverage your position so this is called a crescent boost so uh this is like a in in uh united states uh the exchange have trading volume of one-third of trading volume coming from etf so these are synthetic tokens and there will be more and more synthetic tokens to be traded on in blockchain now this is almost zero right now but we believe

that there will be like more than one third of trading volume coming from etf so we are uh targeting this market uh we are creating a fungible token for different d5 product and then we provide liquidity for this because we have better technology and financial analyst within our team so that we can provide more capital efficient or liquidity for these complex uh financial uh assets so we are uh expanding this area which is i explain it as a vertical explain uh uh expect expansion rather than horizontal expansion but uh right

now we are like also approaching a little bit of horizontal expansion so we are reaching out to new project not uh existing project which is already in osmosis but this like new project which will launch their mainnet in the near future so we are reaching out to this team so that we can have like main liquidity within crescent so that we can provide like main liquidity for this like a newly uh launched project i believe that we are we have like more than 100 projects in cosmos like we will have like 300 more in next year and then there will be like thousands more next next year so we believe that uh

in the future we have more chance to recruit more liquidity from new project so we are uh approaching that so we are uh now currently like starting our business uh development actually we are developing our code base until now but now we are starting our bd so you mentioned that you mentioned that uh crescent you know positions itself um as as an exchange where one will be able to trade um more like synthetic tokens but from uh other chains so things like you swap lp tokens and things of that nature not so much

um [Music] uh not so much native tokens like in the way that osmosis uh allows you to do that uh that requires uh a ton of integration and uh interconnectivity with other chains yeah that may also exist outside of the you know the reach of ibc and so you know one of the things i want to talk about here because i know that you guys have implemented assets of bridged assets through axillar you know i wanted to ask you about your vision for you know cross chain bridging in the next couple years

and how do you think that's going to evolve and what is the role of you know companies and projects like axelr uh in in ensuring that like liquidity can move between chains um without risk you know less than a month ago like we had the nomad hack that uh has left you know uh me like quite quite significant um dent in uh in fmos and in that community it's been very detrimental to that community you know bridge hacks have been happening since there were bridges um you know are we are we gonna look back five years from

now and look at bridges as like this kind of blip of time where we we didn't have the right protocols and like thankfully that's behind us or we're going to continue to rely on bridges to provide liquidity uh crushing liquidity yeah so i have bright uh future expectation about connecting different blockchain so i believe that like uh ibc or expansion of ibc will connect uh most important blockchain within two years so that is a very positive uh future so like after two years like we we we don't um uh have any worry

on ibc right now so we are connecting different blockchain maybe ibc transfer can be delayed but we we don't worry about the fund because like ibc created this like uh ultimate trust uh between uh connecting with different blockchain and like bridges have different uh applications and they have they're always like upgrading their functionality like fixing the code base and then this is like done by humans and like humans make mistakes that's uh uh like uh on avoidable fact so uh if we have like different kinds of bridges uh upgrading too frequently uh having more features

and uh changing the features uh there will be more risk surface to be exploited so i believe that the bridge functionality is like a transitory utility until ibc connects all the blockchain and then this bridges should be stayed within the minimal functionality to transfer tokens and then they shouldn't uh like upgrade every month because like when they upgrade one time and then the users are having tokens within like tens of chains and these chains should review all this upgrade

for these bridges and it's almost impossible so right now we are reading uh gravity bridge but we cannot read all the upgrades coming from axler so we are we cannot fully trust the code base because we couldn't review all of them so this is the practical situation with this like bridge functionality and we need better security than new features because like token transfer is enough for crescent and we don't need a more additional feature which will make more risk to the users so we want security for the users and users only need token transfer

so we need conservative bridges and we are collaborating with gravity bridge so that we want to have like safety feature within the gravity bridge so we are going to appear a lot of like safety feature or within gravity bridge including like a daily uh bridget amount limitation and other like safety health when the numbers are not right so this is called like invariant checks so we are going to input a lot of invariant checks that if there is like one little uh weird numbering going on within the process we are going to stop the bridge and investigate so we are going to have of uh proactively

participate in this uh security enhancement of bridge and uh like persuade them not to upgrade too much so that is our approach so you work with gravity basically are you also are you also not working with xlr yes we are uh communicating with auxilia also uh but uh we still cannot approach uh proactively with this uh project because it is upgraded uh too frequently and it is very difficult for us to follow up the progress but the gravity bridge is very slow so it matches our uh demand

right one of the things that you know we've talked a lot about on this show with with different folks is the fungibility of bridged assets and the complexity that that the unfingerability of bridge assets creates uh you know especially for for an exchange where you'll potentially be listing lots of different bridged assets osmosis have gone have gone one way and decided to um put forth like one canonical bridge asset and at least on their main front end and you know perhaps on the secondary like a frontier front end they would have um other bridged assets yeah uh what what what are the what are the solutions that we have in order to make um

interacting with bridged assets i'm thinking like us dollar stable coins for instance uh smoother for users and um and also improving just i think the overall like liquidity pooling around those assets yeah so i believe that the responsibility of interchange x is to provide liquidity for trading different assets uh especially coming from different bridges also so we believe that our uh purpose of our decks is to provide uh trading um infrastructure for trading uh assets from different bridge uh including uh

gravity bridge and also axler and then also there will be more stable coins come within the ecosystem maybe like usk from kuzera or ist from algorithm and those tokens should be traded in one place so that users can swap different tokens within one space so we are providing that infrastructure so crescent decks will never uh like uh like making one bridge as a prime resource but we are going to provide any as met as many options as possible for users so that any users can come to crescent to sub their assets to different similar assets

cool cool i'd like to switch gears a little bit and talk about um you know governance and particularly um you know like i i was i was i noticed uh that the crescent only has uh 50 validators which you know for a cosmos chain is quite unusual because you usually have like more than 100 and uh also that new validators are approved by governance can you talk about your your validator um pool and like how it's cons how it's constituted how is it is is made up and uh you know why why this this governance uh proposal to necessary government's proposal to add

new validators so we have very structured uh process to uh like have a new uh validator in our validator set so we are scoring this uh with our open uh validator scoring mechanism quantitatively so that it can be decided with objectivity so we have like submission of participant from validators now i think like this month we have like 20 something more validators uh submitting uh to participate on our network and then we compare these validators with our open scoring rule

so that we can choose like uh i think it was like three validators and then we have a discussion within the community or whether uh which one is the best fit for our uh chain and then we have a like governance to like vote uh uh three or one of three validator from community so and then this existing validator cannot vote on this so only holders can participate in this voting and then uh holders will finally choose uh one validator who will be included in our list so we have very like structured and like fair uh participation uh methodology uh and the reason for this

is that uh like uh first of all uh like uh 15 validators and 150 validators seems like a big difference but if you see the power distribution like 30 top 30 validators have like more than 80 percent of power already so it's like uh like all the other like 120 validators have less than 20 percent power so it it it's it doesn't mean much for the decentralization but our validator set has a same validator uh power so that equal power for each validator so the power is more evenly distributed

uh compared to like cosmos up or other blockchain where like type three has like much more power than like top four to top ten so uh like quantitatively this decentralization does not have significant difference uh but uh this like a low number of validator allow us to have like better uh resource for this validate operation so that we can pursue better performance for the older book operation because this order book has a lot of computation a lot of transaction to handle so uh it has a lot of challenge and before we upgrade our

uh improve our tandem in core uh this uh challenge is real and practical because we need to handle like 1000 transaction or more for each each second and it is impossible with this like existing tendering core so uh before uh until we have like better tendermint core uh improvement uh we need to uh make this validator set as low as possible any thoughts on on this question here on on on potential censorship uh and front running i think like you know for a lot of people maybe who are like looking at this looking at only 50 validators

uh may may seem um like you know that's one metric i think that they look at for them for decentralization and you know certainly the percentage of network security that your top validators has uh plays a big role but you know the number of validators i think also enables people to spread their their delegations across you know as many validators as possible um like how do you how do you respond to the fears of um you know collusion with validators to censor transactions and i think this is especially relevant now uh you know given the whole thing around ofac and yeah in israel this is a huge problem because uh even unisa providing like uh

10 api you know the just-in-time attack uh like steal all this api from big trading volumes so uh like actually the the api for the uh normal individual investor in unisa they have like much less than 10 percent apy so that is a big problem uh coming from ethereum and that is like same thing happening in cosmos uh so that is a big problem so we uh discuss with skip protocol who are like inventing the mav feature for the all the cosmos chains so we discussed about the mev problem but the special thing about

crescent is that we are matching orders each other or with batch execution model which uh not compared to other uh daxes having like sequentially executed model we are having like batch execution models so that all the orders within a block treated equally without any time prioritization so uh the after discuss uh mva problem with uh skip protocol team actually we found that out that we don't have any mev problem within our autobook so only the censorship might matter uh so censorship is a big problem uh in pos any pos setup

so we are creating a monitoring system within our team so that we can report like uh statistical evidence of censorship or like a transaction manipulation from validator so that we can provide this statistical evidence so that the probability of manipulation from this validator is too high so that we cannot risk uh to have this validator in the future so we are going to fire him so we are going to have a governance to fire this validator and having a new one so this is like like a social mechanism for us to prevent this like manipulation i saw

that there was a governance proposal which i thought was interesting to implement a three strikes kickout policy with a number of uh criteria for for kicking out a validator can you describe that because that's that's quite novel i think i haven't seen other any other cosmos chains do that and certainly you know implement it um what what what is this kickoff policy and it does it also include things like uh transaction censorship yes yes uh so uh we have we need to request validators like um robustness of like participating in the consensus and also uh like better uptime and uh feedback and also like governance

participation uh so this kind of like scoring uh measurements will be in uh implemented in into this like system so that if they're if they are like uh not participating in a good responsibility way then uh we are going to uh warn them uh to be better of practice who's we by the way like is it is it crescent the company or is is this some sort of coordinated uh effort with with governance like yeah uh that would be um coming from our team but the uh the final decision will be decided by governors so we are

giving this like three strike and we are asking governance uh community so that our decision is right so if they say it is right then we are going to kick out this validator so we are giving them more responsibility than other blockchain because we have tighter number of validators and their commission rate is equal to 20 which is quite higher than other blockchain because we want to commit them enough uh return and revenue so that they can focus more more energy to the operation side so that they can have better performance than their their

operation in other blockchain right so so this policy this this this uh three strikes policy it's not enforced by the chain it's more like this proposal was more like a signaling proposal for you to implement this policy uh watch validators uh signal to them when they are going against the policy and then uh crescent the company would create a governance proposal when validators have uh struck out three times so it's more of a social uh consensus proposal than an actual like on-chain mechanism for kicking out validators no so like uh when we launch our blockchain the first

governor's proposal is ethos soap crescent so like we're asking our trust from the community about our leadership and the direction of our leadership so that we can describe all this like direction we are heading and like ask asking community to uh trust on this like leadership and then uh uh following our leadership and then we have like this kind of like validator uh setup which is also like a very um like a abstract constitution of how to operate this like validator set

uh so this is more like a social engagement from our team so that we can have better communication with community uh what we we are thinking of and who where we are uh heading to so we are like uh trying to have more communication and more detailed direction to the community so that we can let them know in advance before we are acting further and we want to ask community about the opinions before we decide further so this is how we communicate to community cool yeah it's cool i think it's like a cool approach to

you know creating a very engaged uh and responsible validator set um you know in in terms of the you know the number of validators and then concentrating like i think this is like a problem in a lot of cosmos chains right like you have you have a concentrated amount of validators at the top um crescent is no different i think like dokia capital is um like first there and they have like eight percent of the chain and then the second one also has like eight or percent or you know more than five and um and i i think when i was in korea i think i heard someone telling me about some chain adopting a mechanism where they would cap uh the percentage of a chain that a validator could have by some some sort

of mechanism i don't know i don't know if you've heard of this or if you're familiar with attempts to do that but i certainly think that that's something worth exploring so uh from from our validator set we are distributing uh equally each other for the validator so tokyo has like a little bit more because they have their own delegation but like from liquid second users the the staking is evenly distributed to validators so like all these two grids taken having the same power so like maximum decentralization within this 12 variator so that is how we do it so if we have like 30 validators then the

decentralization will be much better than cosmosome actually because we are evenly distributing this so top first will be having only like uh four or less power uh so uh that is uh how we distribute but like uh capping this uh it is like automatically capping this like because we evenly distribute like if we have 30 validators then like each one validator will have uh less than three percent so that is like uh just like distributing all the power uh with evenly so that we are already capping this uh so now we are capping as like uh eight eight point some

percent right now but it's not like enforced but it's naturally distributed equally okay understood um maybe on on a on a note to end here um you know you guys did uh an airdrop a couple of months ago i somehow didn't get any of these tokens like i think i think my atoms were on stake for some time too bad for me but um you know there you you also have this uh boost drop that people are uh you know waiting for and excited about what's the boost drop and uh i think it's on i was on the website earlier and it says still sounds like coming soon or something like that

so uh bootstrap should be uh happen when the boost uh functionality is launched so we are going to have a condition uh you will get this bootstrap claimed uh when you use uh boost uh functionality uh with like investing your own tokens also so uh it would be more like a little bit harder a condition for you to claim this bootstrap but still the bootstrap will be very exciting for all the users to participate in this uh new functionality uh connecting to different devices in different blockchains so i think it will be a great timing and then

i think more detail will be uh announced uh in the customer verse uh this year september uh so like uh end of september there will be like little bit of detail about bootstrap and then like uh we are going to launch this boost uh october so i think uh at that time you will see better detail cool well i guess i'll see you in colombia at cosmoverse uh very excited for that uh yeah thanks so much for coming on and uh you know uh widening my understanding of of crescent uh i'll certainly pay more attention to it now and follow uh the the updates and everything so yeah thanks thanks so much for coming on

yeah thank you for inviting and if you like the content that we are putting out there's a couple things you can do you can like and subscribe to the channel we're doing um live streams every thursday around this time so we had a bit of a hiatus for a while but uh we're back on track now to do the live streams every week and you can also uh delegate uh stake with interop ventures which is uh the staking infrastructure provider and fund that uh that i lead and currently we are live on evmos so you'll find the uh the state the the validator in the in the description so please stake

your atmos with interop thanks again thanks for watching thanks for joining us on the live stream we'll see you next week