LEVANA RELAUNCH with Jonathan Caras of Levana

Transcript

welcome to the interupt today my guest is Jonathan Caris founder at Lavana it's a fully collateralized perpetuals exchange on osmosis injective and say in today's conversation we will discuss today's launch of the Bitcoin ETF and the market reaction to that news we'll also discuss Lana's recent token launch and Lessons Learned we'll talk about the recent attack on Lana which drained about 10% of tvl we'll get into what they learned from that attack and how it has been mitigated and how they've recovered I'm also Indy to find out why he thinks eth won't be the best performer of smart contract Platforms in this cycle and today I'm joined by a

special guest co-host farmer who's my go-to defi guy in Cosmos he's a Trader and CEO of defi Dojo validator hey SE stok to be here great to have you before we get started make sure to subscribe to get notified when new episodes drop every week week remember that none of what we discuss here on the inop is investment advice and if you enjoy this content please consider sing with us we're validating on OS Quicksilver osmosis and Juno and you know what why not also give some validator love to defi Dojo validator just look for us in the active set my guest Jonathan Carris is coming up next right here on the [Music] interrup

[Music] we're here with Jonathan Caris from Lavana hey Jonathan how's it going hey how's it going thanks uh yeah madcaps SL I uh lead Communications at Lavana and Lavana is a uh well-funded Perpetual swap currently on Cosmos um uh deployed on osmosis say and injective yeah and I mean our listeners will know you from your previous uh appearance here on the podcast which was back in September since then it's been about four months have passed lots of lots has happened the token launched uh in early December and recently there was uh an attack and uh and a relaunch of Lana which um we'll

we'll get in into detail uh during this conversation but first I think we should spend a couple minutes here talking about uh the ETF approval uh this just happened today you believe it it's a it has been I mean I feel like I don't know what class you are I'm like class 2016 and we've been talking about this you know the institutions are coming for like what like seven years now absolutely yeah I mean I'm class of 2014 and uh institutions were coming then too right I mean um the the win boss twins uh I think had submitted their one of their early ETF applications U probably in 2014 but like at least we're working

on it back then if I remember correctly and it does feel like institutions have been coming for a long time and this is finally a moment where like the institutions are not only coming but they're invited to come and they have direct access and so I think it's going to be a massive moments I mean markets obviously have reacted very positively to this but I think uh we we're in for a crazy 2024 I think it's going to be such a massive year for crypto one of the things that I think is really interesting in terms of the ETF is that um people uh often compare it to the gold ETF and how gold really became an it only became an Institutional product um once you know an ETF existed and you could just buy it you know alongside uh

you know you're broker you could pick up a phone I mean I remember being a kid and my father would pick up the phone and you he'd be watching the news or something and uh he'd uh call his broker and tell him to you know place a stock order and um it uh you know that was really the turning point for gold and one of the and so there's definitely a lot of comparisons um to you know Bitcoin having its Shining Moment um you know with The Narrative of the upcoming having and and everything else um to Gold really um becoming an an Institutional grade product um with a similar listing and one of the things that I think is so interesting um is if you compare how the gold industry was

impacted by the creation of the ETF um it was uh it was not just a retail moment but it was an industrial moment for gold that now there was a gold like a literally a gold rush to be able to um you know to own more mining to to optimize Mining and I don't have the numbers offand but I saw some reports earlier today um that gold production went up you know significant mul multiples in the Years following the ETF and if you compare this to bitcoin it's like night and day that it doesn't matter how many institutions mine Bitcoin there's always going to be the

same block reward for finding the nons and we're about to go through the macro Bitcoin cycle with in in May with the having and so there's going to be a whole new class of investors that were uh that Bitcoin was not within their appetite when it was you know on coinbase or it was you know something that that wasn't being pedal by the same suits that were pedaling all the other Commodities that they were sweeping up um and then now anyone that went through the you know the the the the major cycle with gold uh and understands the correlation between the ETF and the the increase in in Supply um will be forced

to learn about the the having narrative and then the inverse relationship of the increase potential increase in demand or at least increase of availability with the the the mirrored aspect of the the massive uh decrease in stock so I think we're in for a wild ride that is at least in my personal not um Financial advice opinion has not it's it's not even possible to be priced in because the educational process um of the real money hasn't even begun yet yeah I totally agree with that I think the most bullish thing coming out of this is all the marketing that is being done right now pushed out all the commercials we're seeing that are coming out from uh like the most trusted institutions in the

world the institutions that my parents and grandparents would have used over the last hundred years like Franklin Templeton changed their Twitter page uh photo to uh Ben Franklin with laser eyes huge yeah I don't even know what any of that means I I I haven't seen a television commercial in I don't know years but I'm just seeing them on Twitter but yeah it's incredible and there's just so many like bullish things happening this year it's just like I think like the market has reacted like exactly how uh a lot of people thought it's like a lot of smart money front ran the narrative and then um you know maybe we'll see a little bit of cooldown in q1 and then after the having just kind of up only so it's uh it's super exciting

time absolutely makes me think of all of the Bitcoin that I you know sacrificed over the years you know to bitmax to various you know uh I don't know send and receive you know there was there a lot of mistakes made along the ways and uh but um but I'm I'm I'm very excited to see you know bit Bitcoin is still the the only asset that uh I I I let my kids uh you know buy so it is it's it'll be interesting to see how this uh perform how how it holds up in their paper wallets and now they can pick up the phone and call their broker and just you know place that order you know like pick up their rotary phone and call the

broker yeah exactly just when you were said your dad was was calling his broker I could just like imagine like you know a guy in his 40s sitting on a couch with a rotary phone like you know hey Jimmy you know like put in an order for exactly yeah so um yeah no it's exciting and uh yeah I think uh I think I also think that the q1 uh will we we won't see we won't see the real uh real Market action probably until after the having and um yeah I think when we do this again next year when we talk in a year from now the market will be in a very different place and um in a large part that'll be thanks to to this

announcement and um and all the institutional liquidity coming into the into the space Not only in Bitcoin but you know also in other assets as well hopefully yeah um it does seem that uh most people think that the eth ETF narrative full start now and that uh that that's the new hype cycle and the new narrative uh to push altcoins forward over the next few months I mean there's always kind of the you know the the the I mean what would this this is probably my fourth cycle now so I mean there's always the you know money flows into Bitcoin and then they learn about smart contracts and then it flows into eth and then it flows into alt and then it flows into um nfts and then you know and somewhere meme

coins kind of picks up um at everything that like kind of you know falls to the Wayside you know pouring from one bucket into the next but uh I'm I'm actually I don't know is this a contrarian view I'm not sure but I'm I'm not particularly bullish um on eth being the best performer of the smart contract platforms um just because I I believe that the uh that it's it's very hard for eth to um gain new users within retail um just because you know of the I mean the the scalability and the and the price point so you know if I had to put money uh and I guess I do um into

different um smart contracts you know I would be much more bullish on um you know the cosmos ecosystem which has its challenges because Cosmos doesn't necessarily have um a central token to represent it I mean there's adom but um you know that's that it's Adam is a different Beast than when you compare it to like you know avac or salana or or some of these other um much more homogenised uh uh tokens which represent the ecosystems yeah that's interesting even uh even with avac um as they got really congested and busy over the last few weeks and it's it's supposed to be like the gaming chain they uh transaction fees were up around $200 to $300 for one

transaction on avac so it sort of like gets into that of area where like you know it's not going to be interesting as a gaming chain for like someone to get on and buy a $10 skin and then pay a $300 transaction fee so I think you're spot on that uh a lot of retail is going to flow into like salana and the cosmos ecosystem we've already seen that at the beginning of this bull run um you can't continue your narrative if you have massive transaction fees I think that gaming probably the the the uh you know the ZK play amongst um you know polygon and immutable is um my favorite horse in the race or horses in the race from the gaming perspective just because uh you

know ZK Tech which and I I came from that world and I was I did BD at at starkware for um you know for a while uh and I think that it is um the most versatile technology to bridge you know centralized systems to trustless systems so it's you know but that I you know I think that it's it's anybody's game at this point to capture value there so yeah let's move on to Lana and specifically I think you we wanted to talk about the last five to six weeks um and uh you know before we get into the the attack and the subsequent re launch of Lana want to get a little bit of

retrospective on the token launch which was in early December now there were some issues around the token launch and wanted to ask you like what you learn from that experience and sort of you what are some of the um points of advice you give to other projects that are launching uh tokens this year oh for sure I think just in in recent memory of uh you know token launches that I can recall it was probably the messiest uh token launch that uh has happened you know in that I that in a while um a lot of uh learning experiences from it you know there's there's always going to be uh drama and um you know mistakes are are looking back saying like oh this you know what how could that happened or

what um I think that if I would you know I've started to put together some thoughts of uh advice for other projects that want to launch tokens but within the cosmos EOS system and within the um you know just uh just in general in in 2024 I think that um the the timing of events is really critical you know you really have to model um the flow of the launch and the volatility around the launch and I think it's it's probably safest to if you do have centralized exchanges involved first um if there's like Rewards or or airdrops as part of the launch on centralized exchanges it's

probably best to get that out of the way before you start integrating anything on chain um because there's going to be a massive amount of volatility associated with that you know most projects launch with some type of an airdrop so it's good to time the airdrop with uh you know uh with with the deck listings and not to to separate them which could be you know from an operational perspective could have a lot of um merits to it because you know teams I think that you know there were people on the Lana team that didn't sleep for like almost a week you know or slept Maybe 2 hours a day for for almost a week myself included around the time of launch and then you also have to consider that um the the launch because it's such a heavy um focus so then it also puts you from a

security perspective at a high level of risk because there's it brings a lot of attention to the project both you know for the good and and the bad and what it does is um it you know it it notifies you know potential Bad actors that the the team is under fatigue is primarily concentrating on the you know on the protocol itself uh or on the launch itself um and then that you know can allow for um you know nefarious actions to occur that you know very easily could have been caught under different circumstances so I think we saw kind of a you know Comedy of Errors where one m

M AK you know then created more stress and challenges which then made it easier for multiple mistakes to occur and you know we could yeah definitely um you know break that down then I think there's a whole Master Class you know to to go over and and you know and uh help the Next Generation to succeed here um but it's you know it's it's probably outside of the scope of uh of this call and I I'd probably have to you know put put things down on paper first uh more eloquently in order to accurately go through you know all of the learnings from it looking back on it now do you wish that you had maybe done something more uh like fully decentralized and left the centralized exchanges out of it

totally something like stream swap so I know that I've been using um I used stream swap for two or three of the streams this year and it was like by far my favorite way to launch so the market conditions were horrible so like the launches weren't as good as the founders hoped that they would be but it was a way that I could could securely get as many tokens as I wanted or as many as I was comfortable with as long as I was staying in the Stream without uh affecting the token price that would happen if the tokens just launched on osmosis or a centralized exchange when there so there's a there's a couple different facets to this question so one is a stream swap itself stream swap is a challenging product to

use from a comp Appliance perspective we spoke with the the Builders of stream swap we um you know spoke with you know uh you know compliance overseers from a number of different um areas that were you know very conservative about the the use of stream Swap and we brought this up with the stream swap team it was actually our our first plan was to use stream Swap and you know we worked out I think a very nice strategy that uh that leveraged that technology because I do think that it's um I I would say that my favorite is probably Del's um liquidity bootstrapping auction um which is very Sim similar to stream swap but instead

of actually receiving the token you actually receive an LP token for you know uh in in that in delph's case it was for astroport so imagine a stream swap where you might put in a stable coin um and then what you get back is a you know a PR share of an LP token which has some type of vesting associated with it so that was the ideal uh launch mechanism in my opinion which is very similar in structure and price Discovery as stream swap but stream swap is you know you directly um you know are you know you you arguably it's uh you it's much more of an Ico flavor um which you

know is depending upon who you ask um has um you you'll get different answers uh to to to the usability of that and so very excited to see um stream swap grow and mature and and hopefully adopt some of the the methodology like what uh Delia had created back in the days of Tera and I think more recently vertex um which is also an extera uh project utilized if I'm not mistaken but um yeah defin I'm a huge fan of what stream swap is built and I agree with you you know I've uh I've participated in in some of the I mean in one of the the previous stream swaps and and it was a wonderful experience now putting to the side um

the you know the the problem with trying at this stage um to cut out the world of centralized exchanges is it really Cuts you out from the onboarding and from the discovery meaning leana's been live for six months on osmosis and is the um by far the most successful third-party app that's been deployed on osmosis like I mean there's been $1.6 billion do worth of trading volume you know there's been 16,000 unique wallets that have interacted with it you know there's been um I think $1.8 million paid out to users on um osmosis to you

know to clarify not to osmosis stakers but actual users of osmosis um and ballpark of that I don't remember what the exact numbers are so you know in terms of awareness and growth you know if our if Lana one of Lana's goals is to 10x the active user base on osmosis and that is one of our active goals then that can't happen by only being exposed within the Walled Garden that is osmosis and is the cosmos ecosystem so while we were very you know proud to um be uh to Mint the token on osmosis and to be a Trailblazer there uh we were also very proud to teach a number of exchanges how to interact with

Native tokens on osmosis and uh and what does it mean to be a cosmos uh an active Cosmos participant uh from a d perspective not from an app chain perspective and personally I don't believe in the app chain thesis I think that it goes counter to um many of the fundamentals of you know successful startup methodology that it doesn't make sense to be both a startup and to run your own infrastructure or to pay the overhead um of uh you know of your own security when you could just rent it and so it's uh I think that what part of what Lana's goal is is to be a trailblazer to try things that haven't been tried before to have

kind of zero fear of failure you know you can't it's very hard to do innovative things if you are afraid of failing and leana's failed many times before and every time that we failed we've just gotten up dusted ourselves off you know spit out the blood and just kept on going forward so that's you know that's our our general methodology with whatever you know however the you know the project uh pushes forward so I think that um while it you know if I if I was to go back as I said before probably um would have over the the course of like a 72h hour period first had the um centralized exchange launch Then

followed by the airdrop Then followed by the dexes um and that wasn't the order that things went in and I think that that you know hindsight is 2020 but I think that ultimately you know if you just look at the the that the core metrics um of the goal of a token launch which is distribution of token holders a uh you know a comparative um you know uh a relative value you know amongst peers um and being able to create a path where the utility of the token is actually uh can be utilized uh within the user base that that cares um to be an active participant I think that

the token launch was a success you know so it had a lot of uh mistakes but if you look once the dust settled the token is currently being held by the people that are are most important uh to beh holders and the distribution is Broad and the utility which is being mapped now um primarily through um you know open building uh which is another principle that Lana goes through is that we build a lot in the open um so we do a lot of usability research we do a lot of uh of user feedback um we publish drafts of documents we uh open it for comments uh from the community so this feedback that we're getting through this form of

open development um by people that actually are currently holding the token um has been a really valuable experience from our perspective and we're we're excited to BU really continue building with the community these are great insights like I think anybody who's launching a protocol and launching a token should definitely you know take uh take note here uh on you know some of the lessons if there is anybody that you know is building or thinking of deploying or thinking of minting on osmosis or you know deciding between app chain or U you know Dap You know I would I'd be more than happy um to hop on a call and to

kind of give you the whole rundown um of the good and the Bad and the Ugly well I we'll we'll put your Twitter in the show notes so people know where to find you let's move on to uh the attack that happened um I guess just after Christmas it was like December it was in phases in phases but it started kind of it became public or you guys started uh publicly announcing that the chain was under attack uh I believe on the 26th of December but yeah walk us through the timeline here yeah yeah so it started 13 days earlier it really started with a ransomware attack on Lana um where we started seeing um you know DDOS attacks

and then on the 17th we were approached by multiple individuals that said that they were responsible for you know shutting down indexers shutting down the front end shutting down Bots and uh they you know wanted essentially to you know I mean it was a ransom so they wanted to get paid to stop attacking and uh so that you know we were in the process of attempting to resolve those issues while at the same time attempting to um plan the uh you know the to to push through with the token launch and uh there was a little bit of Co on the team involved in there so that didn't make things easier

but uh then by the the morning of the 26th um it was very clear that uh what was you know happening which we before the 13th um LP pools uh uh were Traders were losing more than they won so from the beginning of you know the launch of the protocol which I believe was on July 16th up until December 13th you know the average Traders I think had a 48% success rate um you know meaning that they lost slightly more than they won and so that Delta you know was an extra um APR aligning the LPS and then on the

thir 1th it shifted and the success rate uh average success rate of the Traders just started going up up up up up until it was like you know I mean until it like hockey sticked and then that was uh you know and looking back on it in hindsight um you know that there there should have been I think that if uh if well um you know again hindsight is always 2020 but there there were definitely ways that we could have been better prepared um moving up you know just having the forethought that you know as we move into the token launch um you know the team is going to be spread thin and that's going to expose us to attacks and then kind of coupling you

know that if there's DDOS attacks maybe those are distractions maybe there's are part of you know something more nefarious But ultimately what it led to um was on the um 26th there was a massive uh attack where you know over half a milon dollar uh was drained from the lp pools on Lana not all LP pools just specific ones and prior to that you know over another 12-day period um a similar amount so they had slowly bled for about 12 days um you know trying to just keep the keep us distracted you know as we went into the token launch um you know kind of like on uh you know Wild Goose chases with you know various Ransom attacks and

then they went in for the kill on uh the 26th and from what we can understand their their goal really was to drain the entire LP and because of numerous mitigations safety measures that were in place all they were only able to drain about 4% on that day so about 12% about 12 days it took them to drain um 5% and then um in about I'd say you know a few hours they were able to drain another 4% so it was roughly about 10% in total um yep wow so this this happened over about a two we period meanwhile they were keeping you keeping your attention occupied somewhere else by

dosing uh some of the backend infrastructure while at the same time like draining the pools well and it was it actually ended up being that the Dos attack um was what enabled the uh the the onchain attack as well uh so I can walk through that you know in in I can walk through through that in in detail uh which which pools were targeted and is there like anything interesting to learn from that like any specific types of collateral or anything like that so you know specifically like a liquid stake token as collateral might be more volatile than uh a large cap token so I just wondering if like that had anything to do with it or if it was

just the attack uh so the I mean the the largest ones you know when they went in the first ones that they started with over you know the the 12-day period were the smaller cap um synthetic markets and I think that those were just less frequently used you know some of them you know had you know less than 50k tvl in them so there it was just I think those were just kind of that was The Learning Experience from the attacker um and then you know the the majority of the losses were if I recall correctly were to the uh the Bitcoin eth atom and St adom pools but we've got uh you know we we haven't there's still more work to

be done um to go through all of the transactions I mean it's you know it's a non-trivial task to go through all the non-trivial tax uh transactions over those 13 days and to analyze you know each of the open close and update orders and say was this a legitimate actor like Trader um or or was this um more was this likely to be a malicious actor so there are um you know you there are seven wallets that profited significantly and about nine wallets in total that you know seemed to be involved in the in the attack um but uh you know it's still important to be able to if you're looking at this in terms of

the impact on the protocol it's important to Overlay that with that the time period that the attack happened of these 12 you know 12 133 days was also a time at the be very beginning of the bull run which uh when you have a system with counterparty vaults you know that just like how bare markets make counterparty vaults you know very wealthy you know we saw even like some of the counterparty vaults you know earned like 12% interest like a month so that's in addition to the fees that they were being paid so that was like triple digit aprs so also they can get haircuts you know during times where there's you know quick bull runs because it is a zero sum you know game that uh you know

Trader wins have to be somebody else's losses the system is designed to not you know to prevent insolvency so what um so I think that you know they again they went after some of the easier targets the less popular markets when they were um in the experimental phase and then when they actually went in for the kill to just try and you know get everything they they went for the largest uh liquidity pools so in terms of uh so about 10% of the pools were uh affected 10% of the tvl sorry 10% of the tvl uh was was affected how many transactions are we talking about here uh have you been able to account for all

I mean for most of the transactions I suppose but how many transactions are we talking about it was I don't know the order of magnitude uh so I'm just going to throw a dart out there and say you know tens of thousands to low hundreds of thousands of transactions wow okay that's but that's that's purely conjecture uh you know I'm sure there's somebody else on the team that's you know that's more Hands-On um you know and most of the uh we've kind of split up the you know the recovery into a few different phases so one is get back uh is fix the problem and get outside feedback about um the mitigation to the problem and then to get the markets back

up online um and then to continue with the progress um which was our you know existing road map which was to um Define the token economics build out uh the LVN token staking um build out governance uh and then launch the utility of the protocol and then once we've launched the utility of the protocol so then we'll be able to do an airdrop um to the LPS that were affected um you know and it's uh the details of that are uh are still vague at this point in terms of timeline and and exactly what will be the the terms and eligibility you know but the goal is to you know to to to to soften the sting you know as much as

possible and that you know a lot of that is just uh you know we're we're looking at a timeline of around Q2 of this year we think we'll be uh ready to you know complete a process of review you know of uh of analysis of you know separating legitimate transactions from malicious transactions and then also um you know being able to do a an airdrop focus on uh the LPS of the uh during that time period yeah well we'll talk about the staking and token economics plan a little bit later I I'd like to dig into the the how this attack works so uh this is an attack that doesn't I mean the the idea here isn't to uh find vulner

abilities in the smart contract but what this attack does is it leverages Oracles in order to uh to benefit from a discrepancy in price and there's there's other sort of mechanics to the attack but I'd like you to describe just how this attack works and how it involves uh the external oracles that you use I believe it's pith yep and I first want to you know say that you know pith did a great job you know pith worked exactly how it was designed to work you know pith is a great partner um and so I don't want to mislead or throw anybody else under the bus here um the way that the attack works is that there's a

concept of staleness of price updates you know the the the blockchain doesn't know anything outside of itself um and a blockchain needs to have information pushed to it there's no blockchain doesn't pull and so what um was uh you know what what happened uh what happens uh with uh price substantiation I think that's how you say it in English um is that pith will sign a price at a price point offchain and then anybody can take that price point with their signature and then write and then essentially write it on chain into Pi's

Oracle contract and then now that block block uh which on in osmosis is is you know is a sixc block um roughly that block um will now include this specific price point now it could also be a historical price point um with some type of staleness to it and what we saw at Lana was that just through regular use under normal circumstances a price point could a normal user could take about a minute and a half to you know to get out their ledger to approve it to connect

their wallet to unlock their wallet um and to you know to put an order on chain now um there are Bots which are Community run and uh and and also run by the Lavana uh core contributors which update the prices on chain um on osmosis far more frequently or with a goal of far more frequently and um and so what uh what was a big part of the um of the attack and I'll tell first I'll describe how the attack Works imagine that I imagine that there's a point of high volatility and I can write an order I see

that 30 seconds ago 60 seconds ago um sometime within the staleness window um there was a 1% price move okay um and uh it's not going to happen all the time but but you know it happens you know crypto will run so I see that previous price point and um I see the current price point and I see that there's a Delta so now if I can um issue within two simultaneous blocks this old price point which which is within the staleness um uh time frame meaning it's it's not

going to be rejected because it's too stale so if I can I can print this to the chain along with my order which then gets you know the opened at this price and the direction that I know because I know that the current price is up here um then within kind of that 12 second window I can both open a position at a low price um and then next block close a position at a higher price and I will deterministically know whether or not that Delta of those two price points um which I both created on chain will result in more profit than the fees that

I had to pay in order to perform those actions now if the profit deterministically is great greater than the fees then that becomes a risk-free trade and now it what also needs to happen is that because I'm not using the price point here I'm actually using a price point over here let's say that this was like a 30 second or 60-second time window I just need to make sure that nobody else no other users of Lana nobody else on the osmosis blockchain that pith that nobody else is um interfering or intercepting my two price points by publishing you know like let's

say that there were 10 blocks you know but from when this price point should have gone on chain um to when I actually placed the order so now I need to make sure that that nobody else during those 10 blocks publishes an updated price because then I'll lose that uh that low um historical price and you achieved that just by by kind of front running any other attempts uh by offering a higher transaction fee is this how that works no so that's so um there isn't so it's uh um I'm not sure if it's tenderman or it's I don't I'm not sure where to from the architectural Point um to answer this question but it

is a it's a fifo system it's not um a it's not a it's not Market based system right that's correct so tender is a fifo system as opposed to say like ethereum where if you pay more you know transaction Fe then you can front run so the front running has other you know uh methods but um but you know and and front running is also can be very expensive and um and so what happened also uh you know so so no it's just really what you have to do is is knock the Bots offline um and then you know disrupt like let's say that you you just got whatever it takes you be first so you

you you de all the B be first and only okay first and only yeah yep so I need to be first and I need to be only so now one of the other things is is that um after the Celestia launch um osmosis did something really awesome which I think you know shows and they did you know then and and Skip I think plays a role in this is that they introduced a scaling fee structure that when congestion increases um fees increase as well so this um adjust for like the fifo system that um that you have to pay more during times of congestions which you know is great you know that's how toll booths should work that's how you know that's how the free market Works um you

know water costs more in the desert you know than it does on a tropical island um and uh so what you end up with is uh what what we found on the 26 was that um that many Native user transactions um were unable to go through because of um idiosyncrasies amongst various nodes in terms of gas price optimiza a gas price estimate yeah I was just wondering if like you've heard or are interested or excited about any of the other like Oracle solutions that are uh Cosmos based and if that would be better and prevent this or uh not so I know like

you mentioned skip they've talked about building a proprietary Oracle uh on osmosis and I know like II already has an oracle Oho um although I'm not sure it has uh the amount of information that you would want to be is the is the issue with oracles that like pith has so much more information so that you can scale more quickly to like um newer chains to have more information or do you think think it's a better product in general um I think pith is a great product I also think that uh that umi's Oho Oracle is also a great product and we're excited to integrate that as well um you know we announced I think about

two months ago you know that we're interested in working with them there's two methodologies oracles can be written Oracle price uh you know updates can be written to the chain either as part of block production just natively built in to the blockchain you know that's what that's what uh Tera had SE has that um you know a few other chains in Cosmos have that or it can be pushed in um you know by thirdparty actors um you know in the case of Oho and and pith it's through third- party actors like Lana Lana users Leana Bots Lana bot operators Etc now the difference um there is that

blocks can Miss uh price updates you know and then you can get these types of you know precognition attacks and um and I don't think that a different Oracle with the same implementation as the push to chain through third through non-block producers uh solves this particular problem there are ways you know we're currently live with pith uh with the mitigation in place and I can talk a little bit more about how the mitigation works but the you know so there's ways to solve this with pith uh but the you know skips approach which is let's just

put Oracle price feeds at the head of every block and we'll have um you know decentralized uh you know group of validators that are agreeing on prices um I think that's a great solution but it's always going to be more limited in versatility you know that means that if you want to get um you know it's much easier for pith to just say oh guys you know there's um a new market let's just throw that in and now anybody can pull that price feed in and they have literally hundreds of prices it's not realistic at least as far as I understand to expect to fit at the head of every block you know potentially

thousands of price assets and leavon is an acronym for leverage any assets and uh and so the challenge there is that how do we build something where we want to leverage any asset where the onchain um canonical Oracle might only have five assets or 10 Assets Now I think that it need not be either or you know th those 10 assets that um that skip will be producing onto osmosis are a huge benefit because they'll be the 10 most popular assets or they'll be the 50 most popular assets or the 100 most popular assets so regardless that's a great solution I mean would osmosis just

be wouldn't it be beneficial for osmosis just to include the price of all of the assets that it is itself uh that that you can trade on osmosis I mean that would like at least cover all of the I mean all the cosmos uh chains Poss Doge markets and salana markets and you know we've got the Great British pound and Euro and all these other market so so yes it makes sense for osmosis to um include those you know all the assets that that trade or at least that trade popularly um on the osmosis decks but I think that that's going to be a subset of the assets that uh users want to have you know to to be able to trade within

leverage markets and to be able to short and hedge and things like that right right no that makes sense uh what do we learn from this attack I mean what are the main takeaways here for Lana but I mean also just for defi protocols that leverage oracles I think that you have to decouple uh Oracle updates from position updates that's what we that that's the mitigation that we um that we took and and we didn't even need to invent it you know synthetics had been through this road with a um you know very uh similar hack um you know a few years ago so you know farmer I'm curious

if you have any thoughts about the Oracle thing before I I jump into the mitigation no that was interesting that that clarified a lot of questions for me it makes a lot of sense like osmosis isn't going to run an oracle that you know does the price of corn and wheat you know which or oil you know and that ends up being uh something really interesting to 50 and 100x uh leverage Traders so or even just like some random meme coin on like you know it could be like some weird blockchain does a meme coin it goes crazy and people want to have instant leverage you know access to it well and the irony of like using the decentralized system is that um it really it becomes less decentralized

from you because then users can't list any asset that they want because that's the endgame right is that like a protocol or a user could create permissionless their own Lana pool seed it with their own money and then people could start trading that asset leverage without any permissions from Lana or oses that's the goal you know Al ultimately what we want is um is to be the the Unis swap of of Leverage trading and it's probably I would estimate it's about we're probably about three years away from that you know so but but that's that's the goal that we want to get to you know there's a lot of work that needs to be done um there's a lot of governance that needs to be done you know the the you know the the the the I mean there's a lot of there's a lot of

work there's a lot of uh like PS that you know um like automatic um there's a lot of customization for each market in terms of you know the artificial slippage the fee structure um the the the the max amount of Delta neutrality um H that that market is available is able to to take on in One Direction so a lot of those things um are done by you know Lana Architects and third party Architects uh that we work with and so we'd want to create one of our goals is to create a methodology where you know you could really plug in a coin gecko chart and then it will just analyze and

then you know wrap you know uh and and and configure all of these things without the need for like the white glove treatment what we have today so since this has happened uh you I mean the the the the protocol was markets were offline for some time over New Year's uh but they're starting to come back online again can you talk about the mitigation and then the relaunch which I I believe all markets are back up now correct yep all markets are back up I think it's 27 markets might be 26 markets I I to count again so all markets are back up we've been fully live for 24 hours um we people missed us

you know I had numerous people that just said like that wrote to us and we're like oh we're so happy to see you so glad that you know that there was a lot of positivity so it was very nice to see that currently clocking 20.4 million of trading volume in the last 24 hours how how much was that before uh before all this like what was your average trading day um average day depend on the day of the week and the volatility of the market it could have been anywhere from low days where $5 million to high days were you know $50 million but um you know and then obviously when the attacker came in they you know they just you know when when you know when you can pick every trade as a win so their

trading volume like shot up um but uh I I would say you know spitballing kind of like 15 to 20 was our average so I think that that shows that the core user base of Lana you know has been patiently waiting you know since I mean we were what is December 26 until today um you know what is that that's that's five plus uh plus 11 um so 16 days uh the protocol uh wouldn't allow for any new open orders the protocol was running uninterrupted the entire time it's just until there was um a you know until there was uh you know a fix to the Oracle the precognition attack no new

open orders were were um available what happened to existing orders that were open throughout the entire uh process I mean they you know the the they didn't pose any any risk you know because once an order is open for you know a few minutes the whole concept of precognition doesn't mean anything um and so what uh so those some of those orders you know closed I mean users could just interact with a protocol like normal they could close them they could um you know we didn't allow for updates because updates was also you know there's plenty of ways to kind of you know finagle it that updates is you know essentially making a new

order so they had the option of just keeping it open or closing it and so many people you know kept their orders open throughout the entire time period if if the market moved in their favor um but you know many people you know closed uh at the time that they felt right and and Trigger orders you know stop losses and take profits were also uh functional um at least as far as I'm aware um during this time period so many people just you know were if if the market ran and you had a stop loss you know that stop loss you know saved your butt and in the same way if you had take profits you know uh the take profits made you know uh made you a Chad so what I um so about 10% was uh taken from the pools and I I thought it

was a lot more than that originally so I think that's great it was like stopped and found uh within that amount of time so I think actually the system protected itself it wasn't you know uh because there were there's a few safety measures that just kind of go into um into Lana there's a max amount of open interest you know uh disbalance uh imbalance um that you can have and you can't um you also can't interact with other Trader wins so we Silo each um trade position so the attacker was actually competing with other Traders uh you know if and and that's also why they

became so aggressive at trying to block anyone else from using the protocol because they wanted to to to make sure that they got um as much of the uh open interest as possible but yeah you know I think look thank God this uh you know some many many protocols uh with far more tvl than 10 you know 10 12 million bucks have suffered far more cat catac climis um you know uh awful um you know exploits uh and I think that that was just a testament to a lot of the safety features that were just built into the protocol itself and um you know I wouldn't say the Fast Response uh you

know cuz 12 13 days is not a fast response time but uh once it became very clear that the that all of these pieces kind of tied together you know on chain congestion uh offchain ddosing you know and the the precognition attack once these kind of um the the once um it became clear that these things were all related then uh you know the you know various uh um operators were able to put on emergency modes which was also great insight that these emergency modes were just part of the smart contracts even with the subtlety of just just stop open orders just as long as you stop open like new open orders um you don't have to eject

everything you don't have to you know mess with anybody that you know like previously had a position and was in profit Etc just prevent new open orders from from occurring so that was uh you know that was that that was the I think a big part that uh prevented you know uh a really really nasty event from occurring um not to say that it wasn't nasty to to go into um the mitigation now there's complete decoupling of price updates and um order updates so creating an order updating an order closing an order uh they come on chain without any uh interaction with a specific price they go into a queue and then they're

popped fifo through a queue um and then paired with a future price update and the price update has to both be not stale and um be later than the position that was created on chain and this has some fundamental CH you know uh principles to it that even if an attacker controlled the entire chain they still would not be able to deterministically um create profit and now obviously there's things that they could do to you know mess with the odds in their favor but then it would be just a probabilistic attack Which is far different because you have um you know

it's always with blockchain it's always challenging um you know because at the end of the day if you say oh I can control the I can control every aspect of the chain so then you do have a lot of control but um but to ensure that there's nothing deterministic that allows for them to be able to win is uh you know is a is a big uh is is a huge Improvement to the security of the protocol and we were very you know I was very excited to see the team in you know in less than 3 weeks be able to get that out get it independently reviewed um and uh you know get it to tested and then into the market that's awesome uh well while we have a few more minutes I'd

love to hear your thoughts on and of course like none of this stuff is going to be nailed down and you're not promising anyone anything but um an obvious way to incentivize tvl in Lana would be to uh add LVN tokens to the already existing APR and then the higher the TBL then the higher the trade volume and whales could come in um another interesting thing uh I'd like to ask about is like Dow or some sort of staking mechanism that you all are thinking about uh different ways for governance but as well as I'm sure people are interested in uh how they can earn protocol liquidity through staking yep so currently you can earn LVN token

via staking to two pools on osmosis the the osmo LVN pool or the LVN usdc pool uh we do have polls on astroport on say and injective and those will be um incentivized in the future and then in addition we're you know we've been talking with both the dowdow and the um Enterprise teams to get um uh you know to get uh staking and governance voting um and and ultimately you know the protocol is as many perss are is incredibly profitable um and we're very excited you know to have functional you know active governance you know in the

future which were you know our Target is to roll out sometime by end of q1 you know you know uh mid Q2 and where the you know the the protocol Revenue um is governed by The stakers Who are then ear in APR which can be both you know be both uh inflationary APR you know through token emissions um and the non-inflationary APR um through the actual you know fees that are collected by the protocol and that's you know ultimately the the details of that are going to be worked out through governance but I think that the structure that we have looking at the osmosis taker fees looking at kajira um

APR um looking at you know Mars fees going to Mars stakers um astroport you know using their fees to buy back astr token and then distribute that to staking rewards um there's you know there's a lot of different subtle ways to AC you know to um uh align incentives and leavon is very excited to to climb on the the shoulders of giants of of these great protocols that have come before us but to also be a Trailblazer at the same time well it sounds like um You know despite everything that's happened there's a there's a positive outlook for Lana which uh which is great to hear I mean a lot of times when these things happen you know we've seen a lot

of protocols go through you know attacks or go through some hardships and never really recover from from those uh I I I I don't feel like this is the case here you know trading volume is up uh the community I think is supportive and uh and and so that leads me I guess to the question of trust like you know it's it's it's sometimes hard to you know gain the trust of users and especially when something like this happens uh to to recapture that trust you know why why do you think that um users and Traders you know sort of have kept their trust in Lana and you know are eager to come back to the platform because like you know there are risks here right and and um and uh certain absolutely I think

it's um you know first of all uh perpetuals and leverage trading is a um you know is a risk on uh environment and so I think to some extent you have to have platform risk as part of your calculation you know when you're look when you go 30 long on some altcoin like uh the risk tolerance has to be relatively high and I think that Lana has done a good job of just being open and communicative uh and you know we there were updates multiple times a day every day on Discord um you know answered lots of direct messages um and I think we're also just resilient you

know we've been building Lana for three years now um you know raised over $15 million we've got M you know now multiple years of Runway you know the team is like seasoned you know we cut our teeth on the terror crash and you know we we tried to launch on Juno and that you know kind of did its own thing and so I think it's just um you know it's Lana is a very like any dragon is a very hard Beast to kill and so I look forward to you know the Year of the Dragon which is starting in in a couple months that's right yeah um and uh yeah we've just got you know we've uh whatever whatever the the world throws at us we're just going to keep on

building well I think that's a great note to end on thanks so much for coming on again and walking us through the attack and sharing lots of great insights as well I think there's lot lot lot lot of good nuggets in here I think this will be a good chop up into CPS and uh and share on the internet and farmer thanks so much for for joining me as a guest co-host here I think um yeah you did a great job and love to do this again sometime