Quicksilver and Liquid Staking on Cosmos

Transcript

welcome to the interop this show is all about exploring the decentralized economic networks that make up the inner chain and my hope is to gain a better understanding of the topology of these networks the technologies that make them possible and the opportunities for developers and investors my name is sebastian cuccio today i'm speaking with joe bowman joe is the ceo of quicksilver it's an upcoming liquid staking protocol for the inner chain it's a project that i'm super excited about because i think liquid staking has a core primitive for defy opens up lots of opportunities for innovation in d5 on the inter chain this interview was recorded in mid-march and at that time juno prop 16 was still being voted on

and we spent a good portion of the interview talking about prop 16 um and so some of this conversation seems a bit dated but i think fundamentally the core points we're trying to make about governance uh are still relevant and then we spent a good part of the conversation also talking about quicksilver how it works and the opportunities for defy in the interchain there were a number of issues here with this recording joe's internet kept dropping off and so we've i've tried to make uh make this as sort of coherent as possible uh with the edits and also the interview drops off a bit abruptly at

the end uh because his internet also uh dropped off uh towards the end of the interview but i i hope you'll enjoy this conversation nonetheless i'm still figuring out this whole live stream video thing i'm i'm a audio podcaster uh and so doing youtube videos is still something that i'm figuring out but thanks for sticking around as i'm learning to do this and um sticking with me uh also throughout the little mishaps so with that here's my conversation with joe bowman i'm here with joe bowman he's the uh ceo of quicksilver which is a liquid staking protocol on cosmos and i'm speaking to him today about

you know the interchange um interchange security uh interchange accounts and also liquid staking but i'm like i really want to like dig into some of the technical bits here because i think like a lot of people have interviewed you and talked to you about liquid staking and like i don't want to diminish any of that over what you're doing but like i really want to get deep into how this all works um particularly with all the updates and everything that are coming to cosmos and that make this possible and maybe also more of the more of the long-term implications for like a a native liquid sticking protocol on cosmos you were working at course one previously of course uh

you know um those who know epicenter also know chorus one so you know it's kind of keeping keeping it in the family here um what's the story behind like how you you know got hired i think you were the first were you the first employee there i was uh i think the third third employee at chorus um so felix obviously who is the the cco uh joined just before me um and i think i think there was uh another technical guy amma who joined uh slightly earlier um but yeah obviously things didn't work out with him so yeah i think between myself and felix we were the uh the long-term uh employees there that uh last of this day and uh yeah phoenix obviously lasted slightly longer than i

did and um yeah i mean so so i was looking up i was looking up before and i i realized i didn't really have a lot of your background but like you you came from more like web development php devops uh before uh getting into crypto yeah so my my kind of uh my training um from my master's degree was was in uh cryptography and forensics and i went and worked with a private firm but doing work with the police and central government for examining uh seized computers doing computer forensics on those um which was a absolutely fascinating uh job but also

uh there was a lot of quite macabre stuff that um it kind of coincided with uh the birth of my first daughter so kind of that combination didn't work so well for me so i kind of gave that in and um went back to web development which i was doing as a teenager um when i was at school so i'm kind of from there yeah i stuck in web development for a while around php for for my sins um and it was it was doing that i kind of i fell out of love with development a little bit i um i think this this whole notion of not building anything new and just coding something that other people have done a dozen times over um didn't really appeal

to me an awful lot so i started and this is kind of a long sign along the time of the the advent of devops as a as a culture um and i started i say looking into into devops and and with the same company and ended up progressing into a devops type role um and i said eventually ends up becoming the manager of the production environments of that company so that was kind of my my entry into devops i did a period of time at um a uk government health project called the hundred thousand genomes project which was in itself was a massively exciting um piece of work which was essentially

uh taking the the genomes of a hundred thousand patients uh with cancers and like chronic illnesses rare diseases um and kind of comparing those against a like baseline good human uh dna sequence um and then essentially using that for diagnostic medicine so this is something that is if the product's ongoing it's it's way surpassed this uh 100 000 mark now but um in terms of the kind of magnitude of that project i think the impact that could have in the future should be huge and then yeah from there um that's kind of when i came across i came across crypto and started dipping my toes in the uh the crypto pond um via by a friend i was working with at

the time and then uh yeah then i think i i was looking for a job and came across the advert of for chorus which was we need someone who can do devops and his interest in crypto and that kind of i fit the bill perfectly for that it was me indeed so so so there's other people from chorus who are part of the quick silver team uh i believe there's two other uh former chorus um employees that have left and are building quicksilver and now you've got like i think you said earlier team was six people yeah so we've got um roya and fish who are my co-founders with me they were both um with me at chorus um vish is on

the the product side caught uh roya on the operation side so between us we kind of cover most of the bases of uh only startup needs um and we've added to that team over the course of the last uh two months with um three employees so we've got uh valeria who joins us on the marketing side so she's heading up our social media campaigns and doing an absolutely stunning job of uh interacting with likes of yourself and uh getting the word of quicksilver out there all my interactions with her have been like very very great by the way so she she seems like she's on the ball that's good to hear i'll i'll feed her back [Laughter] and then um yeah and we've also then got billa and maria who have joined us in

the last month on the technical side and they're gonna um they work with me to to flesh out the both back end and front end of the application so that it's ready for these uh the folks that in the ecosystem that want to use it uh in hopefully in a few months time so yeah let's get right into it and like um i mean i think it you know bears outlining you know what is the problem statement here and what quicksilver does and you know i i uh i want to get into some of the technical stuff after but like you know for those of the people who are listening who haven't heard of quicksilver or maybe need a reminder of what it is um give us a high level overview sure so the kind of the problem

statement around quicksilver is one of capital efficiency so within the cosmos ecosystem and proof of stake generally uh for the most part you have obviously um delegates are delegating to validators and their delegation act as a security deposit you know this is probably all very familiar to a lot of your listeners um and this security deposit can get slashed in the event of misbehavior whether it's persistent downtime or whether it's uh double signing and with the advent of new protocols and there'll be different misbehavior elements that can be added to these to these chains but the the crux of this is that only five percent of that value that if a

delegator stakes to a validator is slashable which means you've got 95 of this capital just sat there doing absolutely nothing it can't be slashed it can't be otherwise used it's a liquid um and when it comes to the the fruition of a a new d5 ecosystem on cosmos that's a lot of capital to have locked up and not be usable so what we want to achieve at quicksilver is to give users uh the ability to stake with uh maybe their weather validator of choice uh to continue to secure the the blockchains that they have

obviously invested heavily in um but also to make use of that additional capital to uh using other using other applications now if we look at some of the numbers around this we've currently got i think in the region are like this they're they're 40 or ibc chains connected or in that region now um and this includes the likes of terror and osmosis and juno and cosmos hub which are themselves really big chains and across these chains these these 40 ibc connected chains we actually have uh in the region of i think 48 billion dollars of capital staked on these networks um now the average staking rate is around 60

50 60 slightly higher potentially but so there's a whole bunch there's a lot of capital that is there's not states that could be staked but presumably isn't because users want liquidity um and the flip side of it is that we have uh in these networks 40 billion dollars of capital that is staked that is currently not accessible we can't use now obviously if if we're trying to drive forwards this uh burgeoning ibc or d5 ecosystem uh on abc then an extra 40 billion dollars of capital uh in that market is going to be quite handy so that's that's kind of what we want to achieve at a very high level with quicksilver is uh essentially allow users to unlock that that capital and and use their capital more

efficiently yeah i think that's a great great way to put is like the capital efficiency uh uh aspect i i see it as um like a question of from from the user side it's like a question of choice it opens up choices and it opens up more avenues for how to use your capital and you know currently you you can do either one of two things with your capital maybe three it's like you can either stake you can you could you can uh participate in d5 or you can hold it which i guess like some people do uh but primarily you can stake or you can participate in d5 like staking is a low risk more conservative approach to generating passive income but you're also participating in

securing the network which is generally seen as a good thing um you know the rewards vary depending on the chains but you know if you're doing compounding staking that can mean a decent amount of passive income but there's just like all these opportunities that as a holder of cryptocurrencies you can participate in and you can opt for more high-risk strategies or more risk strategies depending on your risk appetite and um and staking kind of limits you from participating in these opportunities and i see it just as a a way from the user perspective um or the investor perspective to participate in in um in staking and securing the network

all that all of the kind of good karma that comes with that whether it's air drops or just having a stable blockchain and um and at the same time participate in d5 and actually make use of assets which which is what people do to live i mean you need people to utilize your assets if you're going to uh want to acquire things liquid staking has existed for for some time like everybody's familiar with lido and all the other liquid taking protocols that exist on like solana and near and what's like what's particular about cosmos in terms of you know implementation uh but also just because the landscape is so different than say you know ethereum where

all of your applications are on one chain you have one staking token essentially which is ether um you know cosmos is so such a much much more complex ecosystem where each chain has their own validator set so therefore each thing has their own staking token you know what give us the give us the kind of you know overview of how different and what are the blind spots here because you know i talked about a couple things that are a little obvious but there might be i think there's other blind spots around how staking is different in these two ecosystems there's a couple of things that spring to mind the first is is you you alluded to there where you have lots of different staking tokens lots of different

sovereign blockchains in their own right so if we follow the approach um that has been taken on other networks so nier and savannah and ethereum where you have uh these traditional liquid taking methods of stakeholders i can get back uh some some representative token um they can you use instead the problem with that in the cosmos ecosystem is that you need to have an implement an implementation of that per chain per person token so none of these existing solutions have had to deal with the fact that you can have 40 different staking tokens within the cost of the ibc ecosystem and so there isn't currently a a way to align

the existing liquid staking methods with with the interchange i think the second fundamental difference between uh the cosmos sdk-based networks and things like ethereum and solana is this uh this governance part of the network and obviously as we've seen in the last week um governance is incredibly powerful uh an incredibly powerful part of the commerce sdk network um and it's it's one of those things obviously it's now at the forefront of everyone's attention because of prop 16 but i think that's all that's done for the ecosystem is brought a lot more attention to governance and how important governance

is if you look at the participation rates on prop 16 that it was phenomenal the turnout for that vote however contentious the the choices and the result were um i think it's definitely become something that is way more more the forefront of everyone's mind than it historically was but i think it's one of those things that makes uh cosmos sdk really powerful is this governance model now the problem that comes with this the cosmos governance model is that as a delegator you are able to obviously you dedicate your stake to a validator and the default position is what whatever that validator chooses to vote in a

in a government proposal you inherit unless you other otherwise take action to vote and override their votes um and this is one of the things that we we saw with quicksilver is that um if we take a for example the existingly mistaking uh model of you or the the um smart contract or the protocol however is implemented uh controls your delegation and it means you a uh a representative token uh it is said now as is done everywhere else um the problem there is that you don't have that ability anymore to override your validators vote

now the that obviously means that you don't get the don't get the choice to override it you have to sit with the decision of the validator that you have chosen now this is fine if you get to choose the validator some of these liquid staking protocols enforce your your vote to be spread or your state to be spread across multiple validators so in which case you don't get to choose which of those validators you are closely aligned with so you get no say whatsoever um some of these protocols are very restricted in the number of validators they use for whatever whatever technical reason there is for it and then they are perfectly valid reasons for doing it this way but the implementation is such that in a lot of cases there is a small subset of validators um so even if you get to

choose which of those validators uh you specifically stake with or which whichever inherits your vote um you don't get a say in uh in the outcome of a vote you you are very much uh at the behest of that validator's choice um obviously we saw what we saw with juno um again again probably because it is the first really contentious vote that's happened uh in these i mean they've probably been others but to a much smaller scale and much less public scale um the number of of users that did override their vampires choices goes to show what a big problem this is the the final issue with this governance piece is

if you combine these two concepts of a very small subset of validators uh that are essentially whitelisted by protocol and uh in addition not being able to override that renovator's vote you end up with an awful lot of governance power assuming assuming protocol a becomes the the dominant liquid saving solution you end up with an awful lot of voting power in a proposal in the hands of a very small number of people now these companies are generally kind of the top 10 validators anyway within these companies there might be one or two people that that handle a per company that handle their governance stuff so actually what ends up you end up

having is a massively disproportionate amount of power in the hands of not only uh a small number of legal entities but actually a small number of human beings that get to make those choices and that's not good for the future of the the governance and ecosystem yeah i think that's the thing that i i hadn't really thought of so much as is when yeah it hadn't occurred to me that you know in the end there's like there's a person right that's working at a validator and maybe you know the team gets to make decisions but ultimately you know there's one person that's making that's that's signing the transaction to vote on a governance proposal and without

um the ability for users to override the like you said like you you uh you reduce that to like an electoral college sort of thing um something that looks like kind of like an election hasn't worked in international politics yeah so you know i i did want to ask you about the juno thing and um yeah it was wild watching that i mean like i i i was i was paying attention to it over the weekend and i i hosted like a brief twitter spaces to get different opinions across on what was happening and my my position was that i felt that the arguments that at least people were

making on twitter that i was kind of arguing with on twitter were coming from a bad place like they were made in bad faith you know i think my my sentiment was that the adversarial the adversarial model in which we exist means that this thing can happen right as long as you're if you're if you're making an air drop on an open decentralized blockchain where civil resistance is nearly impossible you have to live with the consequence that this can happen unless you put in better um you know better protections against it and the the whole argument about you know there having been written rules that would prevent this from happening i think it's like just an argument a nonsensical argument in the context of

crypto um well i'm curious what your position isn't it i think more more broadly what do you think this signals for the ecosystem what kind of precedent do you think this sets and you know what are the long-term repercussions going to be here um i was very vocal back in when prop for it about what kind of precedent it could set to confiscate tokens from from any user um now one of the reasons that i feel very so strongly about blockchain is is the fact that it gives everyone a an equal footing and it gives everyone this this censorship resistance

you you cannot be censored by a single entity whether it's a government or a bank or any kind of organization doesn't have the power to say you cannot have a vote you cannot have you cannot hold tokens you can't whatever so i think yeah i was quite vocal back in um i never brought before here this last year's turned into a bit of a blur but about how how potentially dangerous this could be i don't think my position has changed well how much how much weight cordev's opinion has and how important it is for those governors proposals to be written in a way that is effectual not based on supposition

uh without emotion and i don't think that happened this time around and hopefully that's something that will come out in the wash and we'll see a few more of these uh these proposals come through and we'll get to a place um throughout the the interchange where there is a standard de facto standard of this is what a good governance proposal looks like i know that gav from figment was was working on this early in the days of cosmos with the cosmos governance um working group i know that they did a whole bunch of work around this uh and it would be good to come to some acceptable standard across the ecosystem that all good governance proposals look like ex yeah i think that's uh

that's important you know mind you like even though i was opposed to the argument like i thought the arguments weren't good and like the the information provided and so the context for the governor's proposal was was um was inaccurate this is also part of the adversarial model right like this is also part of like the model in which we exist and if if government if governance exists it can also uh it's also um perfectly fine for it to have this this impact it's just it's just too bad i think for the junior ecosystem that you know we essentially had a governance proposal pass on you know i'd say some amount of misinformation and and um and uh a badly drafted proposal but um

yeah let's um well i'm curious to see what will happen now because now we're gonna have to have the implementation and uh i think lots of debates can happen until then as to how this actually gets implemented if it does i say from from my personal point of view uh just just seeing um how how engaged the community was uh is is absolutely fantastic to see that kind of response on something that was so contentious um it's really awesome to see it all in progress yeah so let's bring it back to quit silver i just wanted to talk about that real quick but um so quick quicksilver is i think if i'm if i'm right here there's two fundamental technologies that make quicksilver possible interesting

security and interchange accounts am i missing other other things that i'm missing here or that is that's kind of the crux of it there's so interesting security in itself is not a required uh dependency it's something we've chosen to use and who can't that kind of in a in a i guess a later piece but um insane accounts is there is the crux of it that's the the main thing that makes this possible is the fact that a a sovereign zone uh in the imt system can now using interchange accounts as of ibc version 3 can control accounts on other blockchains and this is something that previously you could you

could do some uh implementation of a multi-sig that was controlled by a bunch of different validators and that's one of the technical reasons that some of the existing solutions have a small subset of validators is because they use a multi-sig to control uh where where deposits uh or how it was handled in other chains so the fact we can have this this validator set of 125 plus no however however many 100 plus validators um and they come to consensus over what this account is going to do because of the logic on the chain on the that's implemented in the module um and then they can take actions on behalf of the chain uh on on some remote blockchain um

and that's that kind of technology underpins everything the quicksilver does there's another key piece to us that again isn't an absolute requirement um but actually it does make uh the whole quicksilver proposition that much more attractive and that's the work that zaki and the team at occlusion have done on this liquidity staking module so again this will be something that comes into the row release of cosmos sdk so 0.46 and this essentially allows you to tokenize your delegation and convert the delegation without unbonding into uh into tokens that are specific to you and the validator that you have um delegated to and then you can send those tokens to another account

so what we do with when you're onboard to quicksilver is those those tokenized delegations get sent to the quick server deposit account that deposit account is an entertaining account that is controlled by the quicksilver validator set on the quicksilver zone you then get minted to the corresponding number of queue atoms for an example of the of cosmos hub internally that those tokens then get re-constituted back into delegations and they are managed by what we call delegation uh buckets which themselves are entertaining accounts so there's a whole bunch of entertaining accounts used for deposits and and delegation management um and we kind of rebalance things across them to make sure that the distribution is as equal as possible but it's those fundamental technologies

of internet accounts and this liquid staking uh liquid is just liquidity staking module from a collision that uh underpin quicksilver now we could have done quicksilver without liquidity shaking um but it just you you would have had that that age old issue of having to unstake and forego rewards before you can uh jump back into the protocol so so uh quicksilver you know consequently quicksilver can only launch after the row upgrade i thought it was theta but i guess now so what you're telling me it's actually row that will make it possible so theta theta brings the ibc version three so it brings in chain accounts so theoretically we could uh

and launch a working quicksilver zone at that point once our dev's done obviously and test it with unstaking and like all the all the complexities of that yeah you you would only in that at that point be able to stake native tokens and not existing delegations the existing delegations it requires this liquidity safety and the problem here is by the way it's just like the problem is that you are unstaking and so therefore you know for the duration of the on bonding period you wouldn't get any rewards and so you have to kind of like figure that out the costs are worth it yeah and of course you're you're not securing the network at this point as well so if you unbom unbond and and currently take uh i just no no you're no longer staking then you're not securing

the network and you're not getting rewards which is exactly what we're trying to solve is that problem of if you want to use circumstances where you have to understand so i i want to come back to the to the understanding accounts thing but i was really i was a bit surprised that you guys are choosing the interchange security route it's it's an interesting strategy um [Music] why why did you choose to go this route and i mean you guys could certainly attract uh you know a strong validator set uh with with all of your your connections i'm sure and um you know launch your own chain with your own security um why interchange security so the the main uh concept behind instagram security is obviously that you

can you can share the security of another zone another larger zone for example the cosmos hub now the cosmos hub has currently got uh five and a half billion dollars of uh stake state against it uh that gives you a considerable amount of security and a lot more than we would be able to get as a new chain launching at genesis now if we were to onboard a whole bunch of smaller chains um then uh under our invalidated set that the risks there are minimal um if we were to start on board the cosmos hub with a low market cap and then essentially a significant amount of atom value is then uh essentially controlled

by the quick silver zone then there is there's the potential for economic attacks and we just wanted to be able to head that off at the past and say no from day one we're going to have a significant uh amount of security behind the zone that's going to dwarf any of kind of any locked value that we have on the chain so it's purely from a security point of view now obviously there are some some negative sides of this of course in that we don't have our own validator set um for the duration uh of the period between interchange security version one launching energy interchange security version three um there won't be staking for the quick token in in the traditional sense we're working on various um solutions to to

this problem so you can you should still be able to earn uh rewards for locking up uh quick tokens for governance purposes uh we don't know exactly what it's going to look like yeah we're still working on it but yeah staking in the sense of staking won't exist uh up until the point that interchange security version 3 launches now interchange security version 3 allows you to not only use an external validate set but also supplement it with your own validators and that's what we want to do uh and eventually potentially transfer to our own validated set once the market gap is sufficient to do so but having a having that that kind of big buffer of uh security is is critical for not only the security of the quicksilver

zone but also all the zones we operate okay yeah i'm i'm thinking about this like um and just how interesting security is going to play out and um you know recently a lot of i've been talking with a lot of people about the differences between cosmos and polkadot right and so polkadot has this um this more of a cathedral model where the shared security is imposed and cosmos had the more of the bizarre uh model where you know interchange security was to be uh um implemented by by by market participants and i i like the kind of this this this idea that we could have a market potentially of uh shared security zones

right right now the cosmos lab is the only i believe is the only chain that is meant to implement shared security but i don't know let's say like uh osmosis or regen decides also to implement shared security could a chain like quicksilver uh use or any other chain you know that's that's leveraging security could they use the the shared security from different chains at once or like be pegged or be secured by different chains and then also maybe you have their own value or set so basically you know a shared security zone is just a like a validator a very strong one but where you could have multiple uh shared security

chains securing a chain is that in a kind of hub and spoke way that's not my understanding of it i i as far as i'm aware and i'm more than happy to be correct if i'm if i'm wrong on this and i'm sure shahan will will mention it if i am wrong but the when you uh when you when you add shape or have a zone that that's secured by shed security you are consumer zone um you have to have that uh parent or host zone it's gonna be a single zone so that essentially what happens is that every validator on the hub for example will run a quicksilver um binary full node binary as if they were running a validator of their own right um but they don't have any of the the

key the key management set up side of it on the for consensus keys essentially what happens is that the um the validator set that is securing and signing or signing those proposed blocks comes from the hub itself so that the the hub essentially agrees that these blocks are valid and that is how they set grades these blocks are valid and kind of sends this this proof to the the consumer chain so that kind of chain security version one is such that we essentially end up consuming the entire hub validator set i think version two of interchange security then allows you to at least just a subset of that related set um so yeah if you if you are if you're a smaller zone and you only want i mean

only require a billion dollars of security as if that's a small number yeah and you don't need to essentially pay for five and a half times that security then you don't need to uh interchange security version three then essentially allows you to supplement uh either the full value data set as in version one or as a subset with your own validators and that's kind of where we want to get to in the long term is once once entering security version three is is released um and we certainly hope to dedicate some resources to kind of getting that over the line um as and when time permits yeah we want to we want to have our own validated set we actually want to have our own validated community i think it's it's a strong core piece of any

um of any cosmos sdk chain and i think there's no reason why over time once the zone is it's bootstrapped and it's doing well and the market cap is sufficient there's no reason to be dependent on in chain security forever um but certainly for the the short term future it is the it's the safest route for for everyone involved so yeah entertain security feels like a it feels to me like it's it's a usual bootstrapping mechanism i'm curious how that will play out long term and when chains start having their own validator sets if it will be economical for them to still continue paying for insecurity

um i i don't know if if there's any like good opinions uh in the space about what this might end up looking like because it's so new right like um i've heard i've heard different opinions about it yeah i definitely feel that um it it's probably not going to make sense for most zones to have the entire validated set and their own validators as well like i mean that that's you're paying for an awful lot of security at that point i definitely foresee that at some point uh zones paying for a subset of of the hubs validated power and plus plus their own validators on top of that is is a useful mechanism to supplement that that security if you find yourself

in a situation where your the value locked on your chain is more than the market cap of the chain um just to kind of put off any any potential um economic attackers yeah well i think i think we haven't mentioned here in the bearish reminding is that as a consumer of a shared security chain the validators um you don't automatically get all of the validators of that chain uh the validators have to choose to uh validate your chain and so it's at best you know all of the chain but you know probably more like a subset of

the validators we'll choose to validate those chain to value the the consumer chains yeah i think i think that opt-in opt-out comes with version two interchange security um version one is is the whole validator set or nothing and obviously uh if through governance the hub the hub votes to onboard quicksilver as an in-chain security consumer um and and for whatever reason validators then decide that they don't want to participate and choose not to run a binary they'll find themselves being slashed for downtime uh as a result that i suspect so um yeah i think i think version one is going to be very much uh and it's early stage obviously it's gonna be in new tech but it's it's all or nothing you

don't get that choice on either side of the fence um interchange version two gives you a lot more choice over uh whether you want to participate from a from a hub validator perspective um and also whether you want everyone to participate from a consumer chain perspective um how close are you working with the cosmos sub team um are you involved in the in in um bringing some of your work upstream or um so there is a specific piece of work that we are um working with at the moment uh with with jack and some of the other guys who are um playing around with sorry some of this crosstrain stuff so one one thing that

is is required for in for quicksilver to work properly um is what we call interchain queries and this is something that has been kind of discussed on and off a few times and there's never really been a use case for it until now um but essentially we within chain accounts obviously we can control we can submit transactions to an account on uh on the remote chain but actually there's no way using ibc to say what is the balance of my account and actually because it's a query and you're not submitting any data to that chain it would be an incredibly inefficient and expensive uh way of doing things if you were to submit a transaction to that chain every single time you wanted some data so interchange queries

are essentially half an ibc transaction where you submit a query to or emit the query to the relayer the relayer then queries an rpc interface gets the data returned gets the cryptographic proof of that that data's authenticity returned it then packages that up sends it back to your chain as a transaction where you can consume it for whatever you need it for so we use it for for balances for um rewards balances for our dedicated delegations we use it to kind of just do some sanity checking that all the allegations that originate from our delegation accounts actually match up with our own internal records um just as a fail safe

and obviously when it comes to people making deposits to the deposit account uh we you know we we essentially watch that account for inbound transfers so that we can see when those uh those those delegations hit and we can handle them appropriately so this is this whole concept of interchange queries that hasn't really uh been a thing at the moment we're kind of working at the front of that um with so with jack zamplin and there's been some other folks involved as well um and hopefully that'll get wrapped into the the go real layer before too long but there's a whole bunch on the uh ibc spec side to nail down to make sure that it's something that's going to be consistently implemented everywhere but yeah hopefully that that code will get pushed upstream sooner rather than

later and we'll have a uh a nice consistent uh implementation of it for everyone to use and so with regards to interchange accounts the um the way that quicksilver uses interchange accounts is it effectively you know the stake that is uh on the host chain so so we have atoms those i you know i've got some staked atoms uh i want to um i want to participate in liquid staking so i will use the liquid staking module uh well the liquid segment module once enabled will will provide me a a staking derivative that represents my

stake one uh once i've got that i i i put it into quicksilver and then with interchange accounts you're able to interesting accounts will be used to control that stake whether it has whether it's like governance for example like participating in governance um you'll use interchange accounts to be able to send messages to the other chain um what else like unstaking i guess but what but the interchange accounts essentially allows you to control the stake that is locked on the other chain yeah so the essentially the delegation or the tokenized delegation is controlled by this entertaining account the interchange account is then

able to do delegations and delegations um uh withdrawal withdrawing uh rewards and then obviously delegating and auto compounding those rewards which we do on any popular basis voting governance oh that's cool so you're going to do auto compounding yes yeah absolutely so essentially a a q atom and an atom uh when the zone when when zone is first on boarded there will be a one to one um percentage ratio between the values of these uh assets um those assets will differ uh as soon as that first epoch has uh has hit and we will draw the rewards and we recompound them then the uh the queue assets then essentially

have a greater number of underlying atoms that they represent so that ratio changes when you want to kind of cash out your your original assets you burn your your q atoms you will then get the number of q atoms you held times this what we call redemption rate which is obviously now greater than one and then you'll get one like one point zero something uh atoms per q atom back again so you you get your your original capital back plus any any rewards that have been gained on that um on that capital in the in the meantime um slashing works in the same way in that if there is a slashing event on on any of the accounts

any of the delegation accounts or any of the delegations uh the quicksilver controls that that slashing event will cause this redemption rate to be reduced so you then uh post slashing you wherever you can to cash in your q atoms you'll get slightly less atoms back as a result of that splashing at them that by by virtue of this redemption rate it means that both rewards and risk are socialized across uh all users of quicksilver so actually um regardless of what you can signal which validators you want to you want your your stake to be synced with you get the same reward regardless of uh of who you stake with so you're you're you essentially you get a proportional um

return from the the rewards of the entire protocol withdrawals for the epoch as a as a token holder again i like to put myself in the perspective of like the user and what what this is going to look like from like from the user's perspective so i've got some steak atoms let's say okay a hundred every every epoch those atoms get um compounded and so therefore whatever q atoms i i i had access to the you know 100 q atoms i had access to when i delegated it first uh well there's more atoms in in the you know being delegated there than i have q atoms uh am i as a user can i just say like will that show up in

my wallet where i can now take those q atoms and move them out um or yeah is that how it works yeah so if you uh if you you hold your q atoms um and you know you want to exit your position you essentially you submit a transaction um called uh message redemption request uh you specify the number of few items you want to burn and then your you essentially get credited back the requisite number of atoms your original classical plus any rewards you've earned in the meantime and sadly mine is any any slashing that's happened uh unfortunately as well but um yeah you essentially yeah you get back this redemption rate times whatever

you burn basically what's this gonna look like i mean what's you know what's the user interface um will it be integrated into kepler or will you have kind of your own website uh your web app uh with which do you connect with where you connect with kepler what's the ux look like yeah and so at the moment this is kind of very early stage um but there will be a web app for sure that's that's absolutely uh guaranteed that web app um you'll be able to essentially manage any file you've got to be able to manage any uh chain on which we have onboarded so if you want to

on any any uh onboarding chain want to convert your existing stake uh and move over to quicksilver and then some q assets for that chain um and it should be a in theory a two signature uh job i think yeah if you do the education on the transverse is yeah two signatures to um to get that uh or two transactions to get that to get onboarded um and then once you're on boarded um there'll be w places uh or there'll be pages within that application to do governance on that remote chain obviously to do governance on our on the quick silver chain as well that's going to be a key part of of running the chain is making sure that we're voting to do things like uh you

know tweak parameters if if we want to decide to do different proportions of rewards or whatever um uh to onboard new zones for every new new zone that we onboard and every air drop that gets um but through will be a result of a governance proposal so that quick token holders will get to choose how the how the chain progresses um and then the other plan is to uh in the process of speaking to a whole bunch of d5 projects in the space around using q assets as essentially base based collateral for for those projects so whether that's lending protocols or whether it's put in liquidity pools whether it is synthetics exchanges any of these things where you can use

where you can currently use native assets as as collateral we want to be able to offer q assets as collateral for these things as well yeah in the same way that you can use like sd ethan ave or like absolutely exactly the same yeah um so yeah all those integrations will be uh integrated into application as well so that we um can then get all those use cases for q assets you we have one one single place that you can access everything that you could want to do with a with a with a q atom um in one place this is the plan uh yeah we'll kind of see how that evolves over time you know the d5 use cases for this here are

okay so you know you can use your q assets to as collateral you know in a lending protocol you could probably also participate in liquidity pools are there other because of the architecture of cosmos and the way that each chain is is is application specific are there other use cases that quicksilver enables that are cosmos specific this is this is where i would normally defer to vish and uh i'll ask him what the answer is i mean there's nothing that springs to mind i think fundamentally for me it's the the initial or the early vision for quicksilver is is to be able to use these assets as essentially the d5 base

pairs for cosmos ecosystem um but i mean i guess who knows what comes out in the long term of the zone um in theory anywhere where you are able to use uh these these q assets for oh sorry whenever anywhere where you're able to use native assets you should be able to use q assets other than staking uh native staking like you should be able to use q assets um it's it's worth mentioning the other than staking thing because uh we had various questions around what's the risk of kind of rehabilitation of assets and restaking queue assets and things but obviously you can't you can't you can't stake eq atom on the on the cosmos hub so um directly there is no

kind of real qualification risk there yeah yeah of course that wouldn't make any sense um you know one thing one thing that um i think is a bit problematic and we see this you know i think sunny was talking about this uh with the whole like sift chain bridge debate around osmosis was the um the legibility of uh of having all of the derivative assets sort of on one in a uh swapping pro like an amm and it's like for for a user it creates so much complexity to have you know all these ust

in us ust usdc usdt tokens um staked assets etc and one thing he he mentioned which i wasn't aware of is that like on binance um you you just trade us dollars and and whatever underlying assets is you know uh obscured for the user and then you can withdraw whatever asset you want uh do you do you think that there are uh ways that will allow us to arrive at this kind of user experience in on-chain apps because it feels like it's unsustainable to have a million different assets that

represent the same thing maybe one differentiation would be to have like the native asset and like with the derivatives but at least you know be a little bit more legible i guess there's potentially potential ways around it by i mean i think it's been discussions in the past by having kind of these these multi-dimensional uh liquidity pools where you can put in a uh a q asset and take out also a q atom and you can take out a a p there is um and now essentially you're not changing the value of the pool you are just swapping one asset for another but this pool just consists of different uh derivations of atom um from different

providers and they're all going to have roughly the same value i mean plus or minus uh some some some element i guess it probably doesn't work so well with with q assets um because the q asset because the q assets aren't pegged to the underlying asset you have this redemption rate i mean that model maybe doesn't work quite as well so there's yeah there's a i think this there are probably ways around it that involve uh clever things like that another potentially interesting solution is something that that we have been just thinking about internally for a while in in in a slightly different uh feature and zacky kind of mentioned it on um especially the atom a few weeks ago is

is this uh concept of indices so now you could have a uh i mean essentially synthetic or not synthetic but like state state atom index that where the the conceptual parts of the index are different um representations of atom that are staked through different parties so potentially there is there's and then and then then that becomes a the main pair um i think that's largely going to depend on how many of these uh protocols are successful um how many kind of just end up being small and unused and how dominant the larger ones are um now i i what i don't i don't want a uh a

scenario where quicksilver is the only lucrative solution and it wins out right and because it doesn't it whilst it's great for for everyone involved in the project actually long term it's it's somewhat detrimental to the entire ends the ecosystem as a whole and and also in terms of how can we create the best product product for the end users that comes with competition more than more than anything else so um now if if there ends up being two or three kind of dominant liquid satan solutions for the the entertaining ecosystem i think that everything becomes stronger but the system and the and the individual products will become stronger as a result of that so i think that there

will be some some form of financial product whether it's an index based or whether it's uh these kind of multi-faceted a ms that uh that end up making users life a bit easier when it comes to swapping between different different uh representations of atoms and other other staking tokens yeah i think it's so necessary i mean especially as d5 starts making its way into more traditional financial products or even kind of fintech products you know we're going we're going to need um these these sort of indices right or like tokens that um are just entertaining where there's there's no uh there's no issue around

interchangeability and it it kind of comes down to interoperability right like you want all of your usd tokens to be interoperable and um and i think you know if we're all building in the ecosystem it's because we believe in interoperability it's not only just on the transactional aspect but it's also like tokens should be interoperable when they represent the same thing yeah i mean it is it's a fundamental fungibility question again isn't it it's it's the early implementations or the early poc of liquid staking were like you didn't have this fungibility between validators and that was problematic because again you have your atoms should be fungible with other atoms um and it's it's the same problem it's just one layer removed um so yeah i mean i think but it's the same problem as you

said that faces stable coins currently and that you have five different types of usd at the very least um and i mean from from a nu's perspective if we ever want a decent amount of non-technical adoption like having usdt and uscc and ust and governors what else um doesn't really doesn't really help and aid our goal so how much i mean we talked a while ago about the 5.5 billion dollars worth of staked assets that uh that quicksilver uh makes you know liquid how much how much extra liquidity will quicksilver bring to the ecosystem um when it launches and what's the what

do you think is the target or where do you think this can go to i mean yeah that's a hard one i obviously the 5.5 billion was was uh was cosmos alone so we know across across the entire ibc space currently is it's like 40 billion um that is it's down quite a lot from our kind of when we when we first started looking at this towards the end of last year obviously numbers were bigger although change the number of chains are smaller but actually as as the chain as the number of chains connected to obviously increases now you you start looking at the numbers of like 100 200 plus chains and we're talking hundreds of billions of dollars of increased liquidity that not just quickly but liquid staking as a whole

and it brings to the table and if we want to have this this massive d5 boom similar to what we saw in ethereum a couple years ago we need to have that that liquidity now the flip side of it of course is it's not just ingress liquidity it's it's actually we can also start going towards 100 um uh state supply because if everything is liquid uh you don't need to not stake it anymore to be able to use it so you could you could potentially you know we can we can increase security and increase equity at the same time it's it's not one or the other um in terms of how much will quicksilver do oh amazing that's a hard question i i mean i i would be absolutely stoked

if we had like 10 10 of of uh a decent sized chain uh on something like quicksilver um now i think i think obviously as it starts getting much bigger than that questions need to start being asked around uh centralization of course um and how we how we avoid those kind of issues um but at the same time if you if you're then control your zone is controlled by 100 validators there is there's uh there's protocol risk but i think the risk of having one individual party run away with uh the the the prize isn't isn't a concern um yeah no it does raise a whole bunch of other questions around uh how how big can a liquid safety protocol safely get

um that will i'm sure we'll come out and we'll have to answer it in the long term look forward to those yeah yeah i mean i'm also looking forward for you know competition in the space i you know i i think that competition will only make um everything better and uh yeah we'll we'll make every every every protocol uh compete for like a better better product better ux um so yeah um [Music] i think uh yeah i think we covered most of it uh we're at an hour and 10 minutes um yeah thanks um thanks for doing this and um like really really happy

to be uh yeah to be taking part in um in this uh this adventure um and uh happy to help you guys any way i can and um well yeah look forward to having this come out in june i think june is the june is the release date right or is when you're targeting to launch yeah late june was the original intended release date um it looks like it's because of the the row release isn't due isn't stated to the end of june whilst the rail release doesn't block uh quicksilver from launching obviously any any changes you want to onboard do need to have this uh this this release or the rather the constituent parts of this release

integrated now there's in a lot of cases the liquidity staking module is already being audited so assuming that uh it goes through without a hitch but there's no reason for the chain has to wait until 0.46 it will just make intuition much easier if they do so um potentially it could be it could still be uh gym time i think likelihood is that it's going to be july