Programmatic Monetary Policy for Protocols with Max Einhorn of Valence

Transcript

igen layer is to security what veilance is to liquidity multi sigs aren't great for a lot of reasons but one of the underappreciated reasons why multi sigs aren't great is that they can't respond in real time you can't have efficient markets for these sorts of deals especially uh in situations where you might want to create a market for borrowing a protocols liquidity the endgame where I think this is going is that every single crypto native organization that has a token will be borrowing and or lending liquidity to other Crypton native [Music] organizations welcome to the interupt

today my guest is Max Einhorn he is a co-founder of time wave and a contributor to veilance veilance is an upand cominging protocol that enables other protocols so blockchains to engage in economic programmatic economic activity or Commerce amongst each other it's a really interesting idea and this is actually the first podcast that they're doing so we're going to go deep here and really understand the backstory what is veilance and what it enables long term before we get started so though make sure to subscribe to get notified when new episodes drop every week and remember none of what we discussed here on the interrupt is investment advice and if you like this content please consider sticking with us we're validating on a handful of networks nebula Summit is coming up in

July in Brussels that's July 12th and 13th is the interchain bilders conference where developers and Founders get together to talk about Big Ideas in the modular ecosystem and Cosmos if you haven't got your tickets yet you can get them at n.b Builders and actually Max will be giving a talk there uh will this be the first time you talk about veilance uh up on stage this will be the very first talk about veilance on stage yeah man so many firsts um I feel like this is like lots of alpha here is going to happen today so yeah let's start off with a bit of background um how did you uh start time wave and start building veilance yeah uh I've been in crypto for the past seven years I've been uh doing

a little bit of everything and a little over two years ago I just reached a point where I wanted to start uh embarking on something that I felt as though I was uniquely capable of building and uh my co-founder of my first uh crypto company um he was a a core Dev at Olympus and we were just jamming on uh on algorithmic monetary policy and bonds and I was asking myself why doesn't Cosmos have this and so I started implementing a kmm um version of Olympus and as I was doing that uh I met zucky um zucky thought it was really cool he introduced me to all of the a lot of the the core Cosmos guys they

thought it was cool and they invited me to co-author the cosmos Hub white paper and when applying these ideas to the cosmos Hub there was this opportunity to really expand uh the scope and scale of uh this initial idea and my main contribution to that Cosmos Hub white paper was uh the interchain allocator and the idea there was about programmatic economic activity between blockchains protocols daps dows crypto native organizations wait you're talking about the Adam 2.0 white paper that was the Adam 2.0 white paper right yeah okay and when the proposal failed um I maintained conviction that the interchain allocator was going to be uh

really important and so uh together with some of my co-authors on that paper Sam Hart and UD Vera we just had a weekly call where we just kept this idea alive started sharing with others in the cosmos ecosystem some of the things that we were thinking about uh and uh we've just been uh building it ever since yeah cool I mean we we talked a lot about Cosmos 2.0 here on this podcast uh I feel like we beat that dead horse uh for a pretty long time in fact like I I interviewed Zaki uh at cosmoverse you know like minutes after coming off stage so I feel like uh I I I got sort of the you know all different perspectives of uh of that paper um and

and the allocator Really to me was like felt like something that was was needed uh you know at at that time when when the paper came out um there was a lot there were a lot of questions around uh the cosmos hubs um uh community pool and and the ability of the community to be the right uh stewards of that that that capital and being able to properly allocate it I feel like there were a lot of discussions uh Circa you know end of 2020 when was that 2022 beginning of 2023 uh around how to make Capital allocation better with like subd Dows and Dow Dow and all this stuff but it

has kind of subsided there aren't that many conversations around that anymore I think I mean from my perspective I don't know like do you share that um do do you share that sentiment and you know why why do you think that is yeah I mean there there were a lot of people that contributed to that paper and my main focus on it was from this more really deep defi perspective of the allocator and so because the the allocator and this whole idea became so politically charged with what ended up going down with Adam 2.0 I've really focused on sort of like staying in my Lane of okay I think this allocator I think the the ability for protocols to

interact with other protocols is is very important we already have IBC so you can send assets from one chain to another you can then send it back from that chain back but uh doing it programmatically and then um making sure the destination might be U some sort of positive sum destination so um for example one protocol putting in a million dollar of its native token and another protocol putting in a million dollars worth of its native token and together creating $2 million of liquidity on a decks things like that would really unlock because without something like this uh you might be sort of a in in a standoff where like hey like I will do this but only if you do that but who's going to go first by

having trustless smart contracts do this you you don't have that standoff situation and also like right now these these deals are possible but only with intermediary multisig and multisig aren't great for a lot of reasons but one of the under appreciated reasons why multi aren't great is that they can't respond in real time if you can't respond in real time you can't have efficient markets for these sorts of deals especially in situations where you might want to create a market for borrowing protocols liquidity um so we can get into all all this but uh that's really been my focus that's what what my team at at time wave has has been focusing on uh time wave is the development company uh veillance is

uh the protocol that's the the relationship there um and in veilance it's it definitely is different than the allocator but the allocator was the original origal idea veillance is now an upgraded uh larger more expansive uh protocolized version of of the allocator right well let's um let's get into that uh a protocolized version of the allocator so from that I hear that you know the the allocator was sort of like an initial idea about how we can be more efficient at allocating um protocol owned liquidity and into like a VAR like various different use cases and applications for that and how do we transform that into something that is

programmatic uh that can be controlled by governance uh that can be interoperable across different ecosystems um what like how do you get from the sort of allocator idea to uh like the end game and what what does what does the end game look like maybe we're starting from the end here but like you know I think it will help us uh get a better understanding as we go through like what veence is and you know how the protocol works but like what do you see as the endgame veilance fully deployed and like connected to different chains and protocols yeah the end game where I think this is going is that every single crypto native organization that has a token will be borrowing and or lending

liquidity to other crypto native organizations I think that is where we're going so similar to how in trafi it's it's not just individuals doing doing business with each other there are also businesses and governments so institutional Capital markets that exist and these institutional markets are are usually larger uh like the institutional debt Market is twice the size of the individual household market for example almost all of crypto is pretty much just that individual household Market um we don't really have the crypto native institutions so the DAP sty protocols engaging in Defi and they're not engaging in defi because they have these stral disadvantages you know you have a often have a public uh trading policy

and so you can get front run like I said you need multisig and multi aren't great um and you also have these really clunky big one-off proposals with arbitrary numbers inefficient negotiation lack of clarity lack of standardization and so there's just a lot of value being left on the table but these deals are still getting done at a surprising rate because there is so much natural demand pushing us uh in in this direction um and so one of the ways I often describe uh what the work we're doing at time wave to to build veillance is that and we compare to to igen layer and just shared security uh generally um so igen layer is to security what veilance is to

liquidity and we we have this comparison because people have been talking about data da deals for a while you can see things as early as like 2017 2018 talking about this but it's only now with the rise of shared security and reaking that the this protocol to protocol Market is really becoming obvious to people and uh this like reaking it's it's protocol to protocol right one protocol is borrowing security from another protocol and uh shared security induces demand for shared liquidity and we've seen this with the The Stride deal and the cosmos Hub a condition of stride borrowing security

from the cosmos Hub was getting 450,000 atom in protocol in liquidity that stride isn't allowed to just spend willy-nilly uh it's it's going to a very specific location to bootstrap atom State atom liquidity on on astroport so the this sort of shared liquidity is going to become an increasingly important part of uh these shared uh security deals and I know we started at the end here but just to bring this to the beginning uh this really started with a set of core values that uh my co-founders and I and our team share and these really pil down to three things which is long-term permissionless collaboration we want to play long-term

games we want to have like long-term relationships we want to do long-term business uh in terms of permissionless we see this as wanting to contribute to this infinite Frontier you know like like meritocracy like Let Let The Best Man win like really preserve that as an option and then collaboration so working together with each other to build something that would be impossible alone that is is more than the sum of our parts and that's evident in how we got here because I embarked on this journey just solo building this uh Olympus sty clone I met zucky and he gave me this opportunity and so let me make sure that I build something that is conducive to to zucky and and his goals then I met um uh the rest of the core Cosmos team and

I was like okay what can I what can we do together that's positive some and now this continues like how can we build veilance in a way that others who share our values of coming together collaborating build something better have the tools to do so so it start that's where it starts with these values and that that that endgame of institutional capital is is where we're going no that's clear uh so with regards to what you were saying that like most of the crypto defi market right now is kind of the you know the retail Market uh or like the household Market you if compare it to traditional Finance uh looking at that comparison and and going sort of deeper in that comparison you know bringing in crypto institutional Capital introduces like a

lot of benefits you have like extra liquidity markets may be also um you know better funded more stable um but what uh kind of like systemic risks might that involve and the systemic risks I mean I'm not talking about like the systemic risks that we know about kind of trafi but that are uh um that are unique to blockchains right like by by introducing this kind of crypto institutional Capital the underlying liquidity that is securing the market itself uh into uh into crypto markets like what kind of systemic risks do you anticipate that might um create that that's an interesting question so first to to clarify so there

are traditional institutions participating in crypto like uh these ETFs being obvious example so um I'm not referring to those institutions when I talk about Crypt native institutions I'm talking about uh Crypt native organizations like dab stows and protocols and so when these Crypton native organizations begin participating in financial markets are are some obvious um advantages and then there also some some risks so in that example that I shared earlier of um let's say it is uh this is a real deal so uh Neutron and osmosis each put in equal dollar value amounts of their native token and are bootstrapping liquidity for the

neutron osmosis uh pair uh when they're doing this uh from one perspective this cost neither party any money to now increase the liquidity of the pair between the two I think it was a quar million dollars each so I think that there's half a million extra liquidity uh for uh this Neutron osmo pair uh Neutron and osmosis they they had these tokens on their balance sheets it cost them nothing to put this in and so now there's more liquidity so there advantages there but there are risks so what if um osmosis were to just dump on uh Neutron and neutron would then have all this impermanent loss that might

eventually turn into to real losses like that that is a real situation that's a real uh possibility and so when it comes to these deals um they are like trust minimized in the fact that that there is no multisig in the middle I think in this specific example there is a multisig but with veilance we are eliminating the need for the multi- so the actual mechanics of this might be trustless trust minimized but there's still some trust that like your counterparty will not dump or that the the members of that group will not dump so there still is risk involved and so you need to be um smart about it but there are also additional mechanisms that you can put in place to to reduce that risk um for example uh perhaps you

make sure that your counterparty incurs any impermanent loss um or you might uh one party might charge the other party interest so that now it's not just uh fees on that LP position that are are going to be needed to uh cover any permanent loss but fees plus interest um and that deal structure makes sense when one party has a more liquid token than the other party all else equal the one with a less liquid token is getting more out of the deal uh since now there's more liquidity and so in situations like that charging interest would make it worthwhile so there there are new risks involved when crypto native organizations participate but it's always an opportunity for a massive

design space for mechanisms to help give protocols uh unfair advantages to counteract their structural disadvantages when uh participating in in defi so so talking about this design space can you expand a little bit bit on the types of things that uh veilance enables that have not been possible up until now with the kind of traditional manual sort of deals that protocols have had to uh engage in that don't have this programmatic uh you know trust minimize kind of property that veilance enables yeah so this so again this started with this big idea this research concept called the interchain allocator

and when when we shared that there there was just a lot going on um with atom 2 and all that and and one view on that was that it was just a littlee its time a little a little too big and so we uh we took that as our feedback and as a Next Step what we did was break up the allocator into two smaller pieces that could be of immediate value to uh protocols today and those two pieces were the Covenant system and the rebalancer the rebalancer is portfol folio management for Dows so you can set a desired portfolio and then this the rebalancer will will get you there gradually over time or fast whatever

speed you want um and then the the Covenant system is uh for just the the deployment of liquidity or the lending and and borrowing of assets so when the Hub wants to deploy 450,000 Adam P unilaterally to that Adam St Adam position on as ports uh they have been relying on uh atom accelerator Dow as the multisig to facilitate that deal and soon they will be able to migrate off of that multisig onto a set of smart contracts so you will you will not have um trusted humans in the middle uh it also trusted humans can't trust those humans trusted humans I mean if you trust the humans great but we do

so much work to remove the humans in the middle and there is so much potential for uh active monetary policies and this institutional layer of crypto you're not going to get there if you have like humans in in the middle uh dealing with these Mission critical uh things so you're you're going to want smart contracts in there so yeah it handles these unilateral situations where like one party just chooses to deploy liquidity there it handles bilateral situations where one protocol will do something if another protocol does something like that two-party protocol and liquidity situation I was mentioning before and so we we've built both of those the rebalancer live on on Main net uh today uh covenants live on Main net today

we've we just completed our third successful Covenant the other day between neutron and shade and now that we have sort of created these two separate products we are now in the process of REM merging them into one integrated ho it's it's not the interchain allocator it's it's the veilance uh protocol and you can go to veilance dozone today and check out beta versions of these so that it requires a little less imagination to understand what it is that we're we're talking about and where where this is heading is that right now these are compatible with any um Cosmos chain that has basically any chain that has interchain accounts or uh polyone if you have either of those uh uh the

rebalancer and uh the covenants work for you um however we want to learn lessons that came in the past and something that the cosmos Hub did did was build their shared security offering in a way that you could only borrow security from the cosmos Hub and that gave a lot of room for igen layer and others to come in and really eat their lunch uh from a shared security perspective and so with us doing shared liquidity um we we're starting in this Cosmos way just because that's where a lot of our friends are that's where uh we think this technology is going and is is the most scalable TCH stack for this but we we're we're now building this in such a way where it'll be just as useful for a Bitcoin L2 or an eth protocol or salana da uh to use this

and uh we we can get into some of those details if you're interested but uh this this is uh the our goal for this is not just to be a cosmos thing this is a liquidity interoperability layer across all of of crypto okay so just kind of like looking at the covenants and rebalancer so the the rebalancer uh allows the the um well the protocol to like get in and out of position so I think one use case here is let's say you're at the cosmos Hub you're holding atom um you might want to like sell that atom as uh as the price is is going up right like you

might want to be getting out of that position as we're entering like a bull market to have like dollar liquidity and not get wrecked on the way down um and and similarly like as prices are coming down you know the Hub might be selling its dollar position to get to get back into atam into a more vol volatile token um is is that like kind of the main use case here to sort of like rebalance the portfolio in a way that allows protocols to be smart about how they manage their treasury uh depending on like market conditions so that is the initial use case but not the primary use use case so we wanted to start with something very

simple very straightforward that people would understand and it is ex it is exactly what you described like I want 5% of my treasury to uh be in stables and so rebalance me into that my my treasury into that gradually quickly whatever you want but we'll do that as efficiently as possible uh so that's how we're starting because it's it's simple um however the place the direction that this could go is saying Hey I want to direct 1% of my inflation to um this pool and at that pool I want uh half of that to be like P into Neutron a quarter of that to be P into osmosis another quarter of that to be p with with a liquid staking

token um just coming up with your portfolio this doesn't have to be raw tokens these could be strategy tokens it really could be anything the the real key here is that um uh bringing covenants into this so the machinery for covenants are is essentially going to become the Machinery to start to initiate these protocol or protocol relationships and then the rebalancer Machinery is going to be Machinery Machinery that um maintains these relationships over time so we have these initial immediate value use cases for for each of them but these are just going to be subprotocols of the veilance protocol okay that that's more clear so it's it's more like a uh you we can do

much more than just like allocate a certain uh portion of the portfolio in Stables or like this token or that token but also allocate liquidity into liquidity pools and rebalance that portfolio based on um like the amount of tokens in the pool like you know uh sort of like uh um managing in permanent loss Etc exactly we we uh there's a dow that reached out to us the other day and they were saying hey uh we want to buy Bitcoin when it is less than $55,000 um things like that we we can't support today but we are in the process of supporting that so you can Define

whatever sort of strategy you want and between the Machinery we already have and what we're going to be developing over the next few months we will be able to uh do that no matter where the chain is all right and and so the Covenant uh can you describe like what that part of the protocol does so the you can think of uh the rebalancer as mostly like this um single party tool like I as a Crypton native organization I just unilaterally use this rebalancer and it manages my portfolio it might have I might want exposure to different chains but this is something I my organization just just uses uh the the Covenant system it can

be a single player game like what the cosal subub is doing just unilaterally deploying liquidity uh into this atom Stak atom pair on asort uh but it could also be bilateral it could be multilateral um and what what it is is basically programmatic deal making between Crypton native organizations so uh Osmos could could say hey Neutron we will give you 250,000 atom of our uh sorry $250,000 worth of osmo if you put in $250,000 worth of neutron and once both of these happen we will then put all 500 Grand to bootstrap osmo Neutron uh liquidity on asort on osmosis you can

you can choose the decks uh so the the Covenant system is what enables that to happen uh programmatically okay and is there like particular interactions between the Covenant system and the rebalancer that might not be obvious here so right now these are in completely separate products and we we did it separately just so that it'd be easier to communicate it'd be easier to execute it would be a clearer value ad for each one and it doesn't require gigabrain thinking we don't uh need to do all that so today they are totally separate products um they are both featured on the veilance website because over time these will merge into just subsystems of

the veilance protocol and so machinery from uh covenants will initiate these uh Dow toow agreements and then Machinery Machinery from the rebalancer will uh adjust these over time based on the conditions that are are set and a as these integrate uh we're going to be able to unlock things where you don't just need point-to-point Integrations because right right now it's only U really compatible with asort and to some degree osmosis um and from a liquid staking perspective it's integrated with stride and persistence we've gotten a lot of demand for some pretty exotic uh positions and uh just some very creative things that

we didn't really anticipate and so to keep up with this demand it isn't it would not scale for us to continue integrating protocols one at a time and so instead what we're doing and working on today is an intent based architecture where basically a protocol can approach veillance Express an intent to say hey I want to do this if someone else does that and then we'll have a Marketplace of of solvers you can think of these as arbitragers that will bid on the right to execute that intent that solver will then once they execute that intent they will then capture the spread between what it cost them to execute that intent and what that protocol was willing to pay uh and that is how we will get to any chain any

anywhere we offload a lot of the complexity uh to these solvers but still have the onchain logic necessary to ver verify that the required actions have have happened uh and and release the funds accordingly okay so then Valance sort of in its end State kind of becomes this uh Marketplace for solvers uh that have a very specific kind of purpose right and that purpose is to uh rebalance uh portfolio positions of protocols and um execute these Covenant transactions um like is that an accurate representation

of like what the end state is is like all that programmatic aspects of moves onto the solver Network so you you you are right but I wouldn't necessarily call it the end State i' maybe call that the medium state so so right now um you can use everything that we're building for free these are for for the most part public goods and uh you can use it totally free of charge we we really want like the we want to see our our values out there we want to attract the people in projects that share our values um in the medium term we are going to be working towards this uh intent based architecture and we will have this uh solver market and that is just a stepping stone to where we

actually want to go and the step thereafter would be offering leverage on these assets and so it's you you you as a protocol you might have assets in the rebalancer you might have Assets in various covenants and what a lot of protocols have have told us is that they don't necessarily want to like sell too many of their tokens um because their Community might feel like they're being dumped on they might want to sell a small amount as um for a certain amount of Opex and uh payment but uh what they really want is is leverage and so once we get the ability to do deals with any chain anywhere uh you might want leverage to do certain situations and our goal is is to enable uh veilance to

give leverage on assets uh that are in in the system and so you start to uh do things um uh such as like liquidity as a service which i' I've done a forum post on where uh you might charge interest for the borrowing of product owned uh liquidity uh there are a lot of things you can do once uh leverage and uh interest can be charged right okay and one one thing I wanted you you mentioned in uh you know and and like a a protocol expressing an intent how does a protocol Express an intent how do how do we get to to this point right human being can express an

intent but uh what are the different ways through which a protocol can express their their intents yep so just to stick with the same examples so the cosmos Hub has expressed an intent to put 450,000 atom into the atom stake Adam pool on ashort and to do that they have sent this Adam they did a community spend proposal to a multisig address and it's the people on that multisig that are implementing that intent like that is that is one way U of of doing an intent uh different ways I think a more more scalable way of of doing these intents are having a a protocol like a a framework uh that will enable a protocol

to basically say hey I have this asset here I want as much as possible of this asset there and by standardizing this you can have solvers that could standardize their essentially like their solving Machinery their their ability to Arbitrage and look for opportunities to get that intent there and the way the uh protocol would Express that intent uh it it could be anything you know for the cosmos Hub it the cosmos Hub has certain onchain govern there are some protocols that have proof of authority there there are various ways that Crypton native organizations choose to govern themselves but however they choose to govern themselves if that governing body passes something or

agrees to do something that can be um Express in the form of an intent that is compatible with our system and then have our solver Marketplace uh solve that intent right and so the the supply chain of of decision decision making that happens from the intent being expressed by a form of governance or um proof of authority uh uh multisig or something like that right like how does the how does that become binding uh the does the protocol have to have an existing relationship with veilance or you know this kind of like Cosmos SDK and IBC enable this this transaction to be

programmatically sent to Ence like how does that relationship first get initiated and then executed upon uh once the uh intent or the government's proposal passes or what have you this is a great question this is actually the question that we're answering internally right now we we have not finalized the specification for the veilance protocol yet but one way that the leading way that this is looking like it's going to go down is that uh let's say it is the um uh let's say the cosmos Hub let's stick with one example uh the cosmos Hub might Express this uh intent like we want um we want to deploy 100,000 atom to um osmosis uh what the what the Hub could

do is pass a proposal um that proposal would direct adom to a given address that might be an address uh that stays on the Hub it might be an interchain account on on Neutron or entertain account on on osmosis it's any any sort of account that the veilance protocol would have the authority to to to move funds from to to basically guarantee that those funds are available once veilance can guarantee that those funds are available like has those funds in an account controlled by by veilance veilance would then communicate the remainder of that intent to say hey we have 100,000 atom we want to get this to osmosis in a way that the Hub as a

governing body will maintain control over and then solvers will look at that intent and say okay I can get um a million uh I can get that to um uh to osmosis and they'll they'll bid and the highest bidder might be just like a hair short of that amount uh that bidder will then need to use their own funds to get to to to fill that intent let's say it's just the cosmos sub wanting it on osmosis maybe that solver will get 900 9999999 you know something very very close there uh once it's there and they send a proof to the veilance protocol that the funds are there that the amount

of funds that they bid they said that they would do have made it there uh once we get that proof once veilance gets that proof they will then veilance will then unlock the initial funds send those funds to the solver and that solver now captures the spread between what the Hub uh uh know the H initially sends and what they bid to to solve uh does does that make sense yeah absolutely um and so that this specification that you're building will that work I mean I guess like working in Cosmos and having IBC and everything that sort of I think people can wrap their heads around how that works but how does that extend outside of the IBC ecosystem evm chain

salana yep uh very good question and this is going to get even further away from what we've finalized in our spec so far but similar principles would apply so so long like if let's say it's let's say it's um someone on bitcoin has like one Bitcoin on uh this Bitcoin L2 and they want as much uh wrapped Bitcoin on some eth L2 as possible um so long as that initial party is able to get that Bitcoin to an address that veilance controls uh then veilance will be able to start an auction for that so that that address might stay on that Bitcoin L2 and the solver who solves intent might actually want that Bitcoin on that

same Bitcoin L2 so that that Bitcoin may never actually leave that L2 but what will happen is that the initial owner of that Bitcoin will then own this wrapped Bitcoin on the eth L2 that the solver had and then the solver will now gain ownership of the Bitcoin on that Bitcoin L2 that they wanted there in the first place all parties would be happy because the initial party now has the asset on the chain that they want at that destination that they want it on and the solver is also happy because they were able to capture a spread and also have assets where where it wants so there are ways to to to do this uh that really minimize the uh cross chain uh activity that minimize the risk minimize the the

gas needed um but uh the again we're working on the specification right now so um TB how this very first version of veilance will work but those principles apply so long as veilance can control the asset it can send the intent to the solware marketplace to then solve on behalf of the the users right so I want to talk a little bit about veen's architecture and um like what this looks like at the protocol level uh is veilance itself an app chain that uh you know has a validator set and sort of secures its own uh that that has its own Economic Security or are you building veilance as like some kind of an L2 or uh or is it

like an outpost model how how does how is veilance kind of structured so at the moment everything uh that is veilance is uh smart contracts so cosmism smart contracts on Neutron and so uh for the deals that uh veilance has done are ready uh so uh deals between shade and neutron stargaze and neutron no protocol and neutron we we've started there with neutrons that counterparty because that's where our Tech is we have a a partnership with them it's been a real pleasure to to work with Neutron um they they've been really great so everything is smart contracts uh there it'll probably uh remain that way uh for the for foreseeable future it's we're very happy

um on with our partnership with them uh years down the road uh TBD like this this could be its own chain it could be a rollup it could be anything uh but for the time being it's it's all smart contracts on uh Neutron it's essentially an in the big uh thing with Neutron is integrated applications we are essentially an integrated application on Neutron so that means that uh veilance is sort of enshrined in the neutron protocol um how would you like describe this sort of integrated uh idea yeah so I I the integrated by integrated application what I mean is that uh usually projects need to choose between

either riding smart contracts or building their own chain and the way that nutron has been been positioning itself is that hey you don't have to make this choice we Neutron will will give Builders the ease of building that you get from just doing smart contracts while also having the expressibility uh of being able to access things that smart contracts typically can't um access and so we're we are on Neutron leveraging a lot of these uh uh functionalities like I guess technically these could be um yeah its own app chain it could be elsewhere but uh uh neutron has been very generous with with their partnership their technolog is giving us everything we need it helps accelerate

our go to market by not having to develop our own chain it reduces our costs by not having to incentivize validators there's a lot of ways in which this is a very symbiotic relationship and um that's that's how we we've gotten to to newron um H how do you feel about like building on the cosmos Hub these days um I know that that might be a loaded question for some but uh you know last year at uh at nebular the the last panel of the of the conference was um something like is Cosmos going to make it or and and and during this panel Zaki said that the The Hub had 12 months I'm

paraphrasing here but like had 12 months to get its act together and fine product Market fit uh and um and find a way to ACR value to the atom token um looking at markets today uh maybe this is not the the most representative uh of days but but uh you know Adam is trading at under $7 um it has struggled to keep up with the rest of the market I think kind of over the $10 range for a long time I think it pushed at like 12 at some point but um my my outlook for the Hub has kind of shifted in the last couple

of months and I've become a lot less optimistic about it uh you know I'm still hopeful that informals uh taking over of Business Development and really allocating resources there uh particularly on partial Z security I'm hopeful that that will help attract projects more projects building on the Hub um but I'm you know as the days go by there's like less and less hope that you know the Hub can compete with the likes of Igan Lair and Babylon and all these new uh upand cominging uh shared security systems so I mean sorry that's just s like a big

rant there but uh maybe just to put things in the context about how I feel about about the Hub right now um what what are your thoughts on like what the future of the Hub looks like you know in in five years from now is is the Hub like a a a burgeoning sort of you know ecosystem of application in an economy and like atom being you know widely accepted everywhere I think that's kind of like the you know the uh or I mean Adam being a a form of collateral that is used on a lot of like across the cosmos ecosystem um or you know I guess like the the bare case is Adam becoming like

ethos right or not sorry not ethos uh EOS uh right like this kind of zombie ecosystem maybe there's like somewhere in the middle that I'm not seeing but like I typically like the things in extremes so but yeah sorry what what are your what are your kind of outlooks here yeah so first maybe some definitions you know like what what is cosmos so in my mind Cosmos is three things uh first it is a vision for an interchain so we will live in a world that doesn't only have many blockchains but also the connections between those blockchains and relationships between those blockchains is important um I think that is a consensus View at this point so I

think interchain is thriving uh has backing it is happening I think the second part is the cosmos SDK and this is the software development kit that makes it easy for anyone to create their own uh blockchain I think that this also seems to be doing quite well it seems to be the preferred Tex act to build your own APS uh Babylon is using Cosmos SDK various High high-profile projects are using Cosmos SDK so I'd say that also is relatively successful and then third you have the cosmos Hub which um teching actually wasn't the first blockchain but uh one of the first blockchains built using the cosmos SDK and in terms of the outlook

for the the cosmos Hub I mean I I really enjoyed working and meeting with a lot of of the people there I I I think there still is hope I think there's hope in the form of atom wars so this this is basically the idea of liquidity as a service can the Hub automate its deployment of protocol in liquidity in a way that will reinforce Adam as this uh this collateral asset also create a new source of upper pressure so the interest payments paid uh that the the tribute paid on uh the liquidity that you get could also be upper pressure on that token so I I I think there are things that that could be done there but all

all of that said um we like I I got a pretty big message from the whole atom 2.0 thing that like hey like we don't want this um and so and it it was it wasn't necessarily this specifically to the allocator but uh it was more the read I got was that this was just like too much all at once we only had a month and a half or so to digest this and so uh since uh that proposal failed uh time wave we at time wave have been very intentional about building this in a way that is not specific to the cosmos Hub it's not even specific to Cosmos like right now just as an early implementation uh it it does only work with Cosmos chains but uh immediately

this has always been in the effort of building something that is interchain uh Bitcoin e eth salana Every Chain is a part of the interchain every crypto organization crypto native organization is our our target market um we are bullish on humans coming together on the internet to form organizations and we are also bullish on those organizations coming together to create positive some uh outcomes uh for each other so I I I'm not necessarily Cosmos Maxi I am an interchain maxi uh I I hope Cosmos Hub does well I hope the whole Cosmos ecosystem does well but I think it's also really important to recognize the shared values we have with pretty much

anyone who's writing smart contracts believes in crypto they they we do have shared values and so far we've been spending a lot of our time almost all of our time uh building these um trustless situations you know 100% adverse leave no room for for trust and I think that's a really great Foundation to start I think that should be the goal for many things but uh in in doing so there there actually is a lot of trust in these networks that isn't being expressed uh uh like for example uh Neutron and osmosis like they they could have been totally at each other's throats been like totally competitive but by introducing this new primitive in there of of covenants of being able to share

liquidity wait now now they're sharing liquidity now there isn't vitriol now there's more shared alignment there that really changes the narrative changes the perspective changes what's what's possible and so if we can do that within the the cosmos like the traditional Cosmos ecosystem what's going to happen when we start seeing Bitcoin l2s partnering with eth l2s when we see eth protocols partnering with salana protocols like I think there's a lot that can happen here where we we think a little less on Purely tribal lines and think a little deeper about why is it that we're here how are we going to find people that share our values and that are going to help us achieve our goals and and that's really what we're we're working

towards yeah I think like similarly to you I see the vision and the technology as separate from the I mean there's no doubt that um Cosmos technology and the cosmos Vision which has really morph now into the modular thesis and vision for how we scale blockchains is one of the prevailing narratives and thesis in the space as an early adom holder investor uh believer in the hub and the prospect for for the Hub to be um a place where you know there's a lot of economic activity where Adam is a

collateral asset a widely accepted collateral asset that has been a little bit more disappointing and the the way I usually talk to people about this and I share it's like I see the cosmos vision and Technology sort of similar to the Linux stack uh in the '90s there were all these nerds fighting about how like which drro and was the best and whether you should use KDE or gnome or whatever you know window uh manager and like but all of that was built on this shared um infrastructure which was the Unix kernel and the Linux kernel and and and like the kind of Suite of

applications there as a result of all of that open-source uh work and those like internal battles you know we we got things like iOS and uh Mac OS and you know cloud computing and trillions of dollars worth of market capitalization value being built on top of this like on top of this great platform Android like nearly every connected device your car your TV whatever but you know if you invested in Fedora thinking that or like red hat thinking that that was going to be the next B big thing um I don't know what those I don't even know if those companies are public I I imagine they

are I don't know what they're trading at today um but you know those investors might be you know thinking today like all right that investment is is not like investing in apple would have would have done a lot probably a lot better than investing in in those other companies so that that's just kind of like my my perspective is like as as a really early believer in the hub I've been disappointed about you know its ability to really gather um enthusiasm about people like building there even even with you know shared security and paral at security you know maybe Adam Wars kind of switches things um you know there's there's still hope as you say but uh um you know that that

time window that zachie mentioned on that panel is it's getting shorter it's getting shorter and shorter and you know they're buying time I think the hubs buying Time by by adding these these like Adam Wars I think buys it some time Pro security buys it some time uh things like veilance right being built on the Hub also uh increases the value I think of of of this shared Economic Security Zone but you know other shiny things are attracting the attention of developers and you know those are enan Lair those are Babylon those are uh you know movement and and so on and so um yeah I'll I'll leave it there

unless you have something to add to that no I I think we we are building on Neutron we we've um we have a really great relationship with them again we have a lot of friends at at the cosmos Hub but um again like this is not um failin is not a cosmos project it is an interchain uh Endeavor uh there is a lot of value to be had in working across ecosystems that and IBC is great you know it it it really is a really great stepping stone we are building on IBC we're leveraging cosmism there's a lot of the interchain stack in the technology as you say that we're very bullish on so bullish that we're incorporating it into our own uh product but yeah we we are interchain

Endeavor whether you are on bitcoin eth salana or or a cosmos chain like we are there to to service you excellent I want to talk a little bit about protocol monetary policy a little bit because this this you know veillance is kind of enables um protocol monetary policy programmatic protocol monetary policy you know as you guys are building this technology um what what are some of the kind of early examples of monetary policy that you know makes you think makes sense for protocols and again kind of departing from from traditional finance and thinking purely in the scope of like blockchains and what they enable um yeah

what what kind of ideas are sort of emerging here the design space for monetary policy that you know might um as veilance grows and you know interacts with more and more chains start to become sort of common practice so maybe I'll start by describing some monetary policy that already exists and then talk about types of monetary policy that veilance will unlock so we have Bitcoin with its monetary policy right you we will have 21 million Bitcoin period we will issue it on this schedule that Hales every four years like that is a monetary policy um eth also has its own monetary

policy when do they inflate when do they burn all that uh Cosmos Hub has its monetary policy like the there there are already forms of monetary policy however if we're looking at trafi there is no Central Bank in the world that says hey we're going to print a trillion this year and half a trillion next year and a quarter trillion next year it doesn't happen like that um uh for example the Federal Reserve like they have goals you know the goals are low inflation 2% like low unemployment what what do we need to do from a monetary policy perspective with interest rates and whatever else to reach those goals and so I don't expect

Bitcoin to change its monetary policy I don't expect uh eth to change its monetary policy I think those have been very successful for each of those ecosystems systems but going forward if you have a new token if you're doing a new chain what are you going to do to differentiate yourself relative to what has come before and one of the things that you're going to want to do is use the latest greatest tools and really use everything at your disposal to carve out a new Niche for yourself to add value in in a different way and one of the ways that veilance is unlocking this is by uh doing these shared liquidity deals by being able to borrow and lend liquidity you know there are a lot of very big banks that borrow liquidity from the

Federal Reserve um there we could uh develop similar mechanisms for blockchains where uh someone might be able to borrow liquidity directly from like the cosmos Hub or Neutron or a Bitcoin Dow U like a Bitcoin L2 and right now these deals are happening um in a very clunky manner so you have to pass a governance proposal the number in that proposal is pretty arbitrary you know like why is stride getting 450,000 Adam and not 4. half million you know like where did that number come from who's responsible for negotiating these when you put it to a proposal it's it's it's an all or nothing thing you're getting all or nothing uh almost every single deal that

I'm aware of has been uh free of Interest you're just you're just doing it but um these are often situations where one party has a significantly more liquidity than the other party and the party that that has uh less liquidity all else equal is getting the better end of the stick uh better end of this deal and so uh what veence is doing is creating the tools to really rationalize uh this Market to lower the obstacles in the way of these protocols uh lending its liquidity uh creating additional tools for protocols to uh profit from The Lending of its liquidity so it's not just a giving away for free it's not P the cost center it's actually now way to

uh have upward pressure on your token and so uh there are many Dows protocols blockchain Etc today that would benefit from this again I don't think Bitcoin or eth are going to pick this up but a Bitcoin L2 an eth L2 salana Dows um if we are in interacting with not just big whales uh but rather the same governance entity that has the ability to change the inflation rate to change where that inflation is directed to Define interest rates functions where you will charge more interest as there's more demand for it all of these is are is are the design space that we playing in to help create this crypto native institutional Capital uh layer so max we've already talked

about the endgame earlier in the podcast um why is this the thing that you want to spend your time on like why is this important to you and why do you think that building protocols that are able to have program monetary policy that are able to engage in economic activity with other protocols is an important step an important evolution in crypto I I I appreciate this this question so this really starts with um our our values of long-term permissionless collaboration and if we have these values first we want to I have a desire to find people that share these values with me and I also

have a desire to make sure that uh those with whom I share values Thrive and so what is the thing that we can build to help ensure that people that share these values are able to outperform people who do not share these values and we've chosen to sort of instantiate these values if you will uh in this way because we also see this as uh arguably the largest opportunity in crypto at the moment and we believe that for for three reasons one is that institutional markets tend to be larger than uh individual or household markets and we're talking about the crypto native institutional Market two is that uh shared security has really been the

biggest winner of of the past cycle and we're we're big fans of them uh but we're seeing even more shared liquidity deals happening than shared security so we we think the shared liquidity Market is larger than the shared security market and three um unlike shared security that comes from a single ecosystem so you're either getting security from The Hub or from IG and ethereum or Babylon and Bitcoin a shared liquidity layer has a natural aggregation it is it is more Capital efficient to have a single liquidity interoperability layer you can get better execution uh it's it's it's more efficient and um we were the the first ones to see this opportunity we have a a

really exceptional team uh building it and uh this is actually going to primarily be a political challenge to to get this done but but what is a political challenge you know a political challenge is like meeting people and humans and uh getting alignment and that is back to our core values what we want to do we want to find those people in these various ecosystems that believe in including and transcending like being a part of something that is bigger than themselves so um yep sharing values finding those people and making sure that we Thrive together is is really what it's about great so where can people find out more about veillance are there white papers blog posts things that people should be

reading and um why should people should people be reaching out to you and for what purpose specifically yep so uh you can check out um time wve Labs on on Twitter you can also check out veilance Zone on Twitter again uh time wave is is the devco uh veilance is the protocol that we're contributing to uh our blog on the veilance uh website is probably the best place for information at the moment we do have some uh Forum posts scattered about that maybe one day we'll anthologize but uh right now veilance dozone will be your best uh best place excellent well Max thanks for coming on thanks for uh allowing the interrupt to be the first place that you talk about

uh veence it's been uh really interesting getting to learn more about the protocol and kind of long-term Vision here and this reson with me that the next phase is to bring in the crypto institutional Capital that you know crypto is not going to grow and uh become its own uh Sovereign Financial uh ecosystem if the institutions can't also become a part of the economic fabric U that makes up this this great ecosystem so uh it feels like the right path forward yeah Seb it's been an honor being here thank you so much for giving me a platform to be the first place to share about what we're building via

voice and not just via tweets or or or text this has been a a great conversation thanks and see you at nebular see you at nebul