ZK Podcast: Analyzing Osmosis & Preventing MEV with Sunny and Dev

Transcript

[Music] welcome to xero knowledge i'm your host anna rose in this podcast we will be exploring the latest in zero knowledge research and the decentralized web as well as new paradigms that promise to change the way we interact and transact online this week tarou and i chat with sunny and dave all about osmosis osmosis is a cosmos zone dex that uses ibc to allow enabled assets to be traded pooled and staked we talk about their journey to osmosis what this means for the cosmos hub

and how they aim to provide an mev solution that differs from the one proposed by the flashbots team wanted to quickly highlight that the zk validator the project running validators on some key l1 pos networks is also now running on osmosis i didn't get a chance to mention this at the time of recording as we hadn't yet confirmed that we were going ahead with it but i did want to let you know now that the zk validator is live on osmosis we are powered by our new staking partner course one and so if you're thinking of staking your osmo you can find us in the osmosis staking interface now i want to thank this week's sponsor leased authority leased authority is a leader in the security of distributed systems

they provide security consulting services develop open source products and contribute to the advancement of learning and research in the field in addition to the recent security reviews of innovative projects such as chia network mina and vendor labs wrap protocol they will soon be releasing a white paper on zcaps or zero knowledge access passes zcaps is an anonymous token-based authorization protocol that facilitates an online exchange of value while disconnecting the necessary payment data from the day-to-day usage service data of customers they have adapted the privacy pass design and implemented this for something called private storage a soon-to-be-launched cloud storage service

designed with privacy and security features to give you control over who has access to your data if you'd like to be notified of the zcapps whitepaper and the latest security research projects sign up for their monthly newsletter at leastauthority.com newsletter so thank you again least authority now here is our osmos interview with sunny and dave so today i want to welcome dave and sunny to the show to talk to tyrone and i about osmosis welcome to the show guys thanks for having us on again thanks pleasure being back on yeah and it's funny because like you've both been on the show but you've been on completely different episodes um this is the first time that you're actually here

together i had sunny on first i believe and we did an episode way back where you shared with me an introduction to cosmos i think it was the first episode we did on cosmos actually and then dave you came on the show for a deep zk episode where we looked at fractal i think actually maybe the first time we did it was at ecc like two three years ago when remember you were doing those governance like combo ones yes that one was so much fun okay oh so it's your third time on cool i guess technically yeah that was that was one of my favorite like interviews i've done because you just had like such cool questions about governance i remember you were talking about like cosmos is the united nation of the yeah is it the united nations you had

this like interesting metaphor going on there yeah i think i think it was cosmos was nato or something and yeah something like that yeah do you still believe this analogy like a couple years later yeah i think so i i specifically it was about the cosmos hub like everything that does shared security with the cosmos hub is nato and the cosmos hub is like the us who's just like helping everyone everyone else out but it's more voluntary it's not this like thing that's like you're not allowed to leave why was that asking because what happens in a pandemic in this analogy like do all the cosmos chains start fighting for validators with each other um

maybe there's fixed vaccines like so i you know you've both been on i want to hear from both of you what what you've been up to since those interviews and maybe how the cosmos ecosystem has also changed and your roles in it have also changed so sunny why don't we start off with you what have you been up to what's what's new in cosmos yeah sure so i guess we did that maybe two years ago so since then so that was after the launch of the cosmos hub and everything so you know i've talked about that i think what happened was most of 2019 was really spent working on like getting ibc uh up and up most of 2020 sorry was spent on getting like ibc

up and running and like stargate which was this like huge upgrade to like the cosmos sdk and like because sdk v1 was just like you know it worked well for like launching this thing but it's like we needed to like basically build this like v2 where like okay we had these like weird encoding structures in the first one and certain things were just very unintuitive yeah i actually did a whole episode on the stargate upgrade from like four different perspectives and we we heard a lot about that i'm going to add the link to that in the show notes oh perfect yeah so you were part of that that's actually i was curious like how how active were you during that thing were you already starting to work on osmosis then or were you focused primarily on stargate i was helping a little bit on the

stargate side but not yeah it wasn't really my main focus so what happened was you probably heard about what we like to call gore 2020 which is the cosmos ecosystems great organizational restructuring of early 2020. gore 2020 never heard uh basically yeah i mean we had like you know what happened was everyone was working in this like one company called tendermint and then in early 2020 we basically all basically everyone or not everyone you know the tenement company is still there but then a lot of people sort of left the tenerman company and started working on other things like creating new companies to contribute back to cosmos and

you know what's really interesting was it was nice to see that like no one left the cosmos ecosystem as far as i can tell like everyone's still working on cosmos but like you know zaki went and like started working on through his filed a company called inclusion and now they're building a product uh you have like a lot of like chris and like a lot of people they went to like the interchain foundation and was working on stargate from there and so yeah dave and i sort of you know we already had this validator that we were running for a long time and i think we talked about that last time and so we're like all right let's just like yeah and so we're like all right let's just like you know run this validator and you know we'll do some a little bit of open source

development just like contributing back to the cosmos sdk in the meanwhile and then as we got into it we're like we realized you know running validators just isn't super fun at least it's not for us like you know i know there's some people who really enjoy it but you know i think we're just more we wanted to build something you know i started working a lot with like the flashbots team very early on so like maybe like last summer basically they got me really excited about like mev and stuff i'm like wow this is such a huge issue and then they like tell me their solution i'm like guys that's not a solution you're making the problem worse you're like productionizing the like the extraction of mev and it's like no no okay so then i went back we went back to dave and i was like all right let's figure

out how to like you know they're going to make this problem even worse let's figure out how to solve it and so we spent some time trying to like figure out how to reduce the mev and like we came up with a pretty good solution and we started building it and then along the way that we were like okay this is a really cool feature it needs a product uh and so that's sort of how osmosis came about where we sort of merged with a company called chainapsis they built the kepler wallet which is like the most popular wallet of the cosmos ecosystem and they actually built basically the base of what osmosis code base is today at a hackathon like last year and you know josh's was a really close friend you know we worked together at tendermint for a while and you know he's been in the cosmos

ecosystem probably as long as i have actually so we sort of merge forces with them and we're like all right let's launch this osmosis thing and then use it as a vehicle to like add in all this like front running resistance and privacy and all this kind of stuff we want to add on cool cool i wanna i wanna dig into osmosis really soon but i wanna also hear from you dave like what has your trajectory been because last time we spoke you were like deep in zk world and i know you were also running sikka at the same time but like what was your journey to this yeah so i think the last time we talked uh i was still running as a validator but back then it was it was still kind of passive where we just help uh with some you know

sdk or tendermint designs because you know a lot of things are sunny and i had a core part of like building a lot of the core infrastructure that's decaying entitlement so then we provide advice on new designs there but i was mostly focused on like finishing college and doing like recursive snark research so we talked talked to us work on fractal and since then i was helping out with kind of building this the artworks rust ecosystem you got a oh cool you had a podcast on cartoons the other day or yeah maybe a couple months back a few months ago yeah cool and so i was helping out with that and uh you know trying to build up the ecosystem in addition to working on chris snarks then sometime like mid-2020 like sunny's comes to me is like any view what do uh [Laughter]

was there was there a moment in there where you were also looking at zk stuff in the context of osmosis or whatever this project was because i vaguely remember us talking about that yeah so i think the initial dream of this was like let's figure out how to make a zero knowledge of decks or like what's the most best way to get a deck just very privacy preserving and we're like okay well the sort of dream of literally not no information about trades is public doesn't really work out but how about this how about we have everyone uh you can hide who is doing a trade but the actual trade list of trades are still public yeah and we could do this like we figured out a way to prevent front running and uh like these ordering issues and then basically we ended up

just talking to people who uh about this and they were all like uh okay this front running thing is very cool like we want you have today in ethereum privacy is like yeah interesting but like not a today problem man this is so the problem of what i feel like we face this constantly and it's it's totally economic and it makes total sense like there is a reason why there's priority given to some of these problems but we've talked about this so often on the show like if privacy isn't baked in at the beginning it's super hard to eat to add later but i'm gonna leave hope that like you will revisit it because i know that you've gone further with the mev but dave i know that you have a deep background in zero knowledge stuff so i'm hoping you'll bring it back

in at some point yeah i think the dream is or my current dream is like there's this idea of having this uh i know some projects trying to have you know computation kind of done off chain and have that competition be private this is kind of like the zexty model well and i feel like what might actually end up being what happens is you still have the code be public and like some public input to the code but you just you're fully blind who's doing things like you break this linking i think that's kind of the dream we i have for like what happens in osmosis as well like we make a ways that you know maybe all these actions are public but who's doing it and ways to link actions other than like kind of metadata or like

side channel leakage of trying to figure out your strategies uh ignoring those you can't really link these together got it so i think we're we're at the point where we should really introduce osmosis because we are now mentioning it a couple times what is osmosis i've played with it i think it's really exciting but tell me exactly what it is and what people can do with it yeah sure so osmosis is a dex that we've built on the cosmos ecosystem um currently at the so this v1 that we launched is i would say it's basically most inspired by like balancer we the the hackathon project that was created like a year ago that was basically taking the balancer code base and putting it onto the cosmos

sdk okay yeah and so you know i mean i think that balancer has the most cosmos-esque mindset of all the amms or at least at the time it did and what that means is you know cosmos the mindset is just about like okay you know everyone can spin up their own zones and like you know they'll have their own governance and like you know well they'll compete and like if the market will figure out which ones work i think balance is a very similar idea but applied to amms right it's like all right you know give you as much flexibility as you want or i go make weird weighted pools go make like multi-passive pools and like you have multiple pools with the same pairs and like just the market will figure out which ones work out and not and so that's why we were you know we were just the most

drawn to balancer and so we took that code base and then we started you know just adding in ideas from other protocols as well like you know we really like the bonded liquidity that uh curve tries to do and so you know we integrated things from that we took a lot of inspiration from like sushi's token design and stuff and how they do like you know liquidity incentives so we added that on so yeah we just took a bunch of ideas from different protocols on ethereum and like okay let's bring this to cosmos let's launch this because cosmos needs defy like not like now yes and then yeah but and and then yeah now and now we have it and now it's now this is going to be a platform for us to start iterating and like adding in

all of these new features that we're talking about is osmosis a standalone blockchain is it a zone like let's talk about how it connects into the cosmos ecosystem okay sure uh so it is its own independent like l1 and in cosmos uh kind of the popularized way of is that you have a multichain world where every chain can talk to one another via this protocol called ibc yeah tldrs like you kind of just have both trains use light finds one another you say okay i trust your consensus is good so if i get a light client proof and i must finalize state we can transfer assets back and forth so we use this to connect to every other cosmos zone who has us

uh enabled and so assets can flow in and out of osmosis via ibc and then you can trade on osmosis and move things back out and one of the things that osmosis i believe unlocks and maybe there's another project that did it but at least for me it was the first time that adams could be like automatically trade like within like a cosmos product actually traded for other caught like cosmos network or cosmos ecosystem tokens it's the first time that i see that the first time that it at least becomes very easy without a centralized exchange is that the first project or was there anything like it before yeah it's basically the first project that does that uh first

ibc enabled dex and part of the problem was like you know for a lot of um a lot i think a lot of these cosmos assets were having a little bit of a tough time getting added to centralized exchanges because you know centralized exchanges have all of this infrastructure you know if you have an erc20 they can just press a button probably and it adds the usb2 but like you know integrating a chain a new chain into a centralized exchange there's definitely a lot more work because they have to run nodes they have to do all this kind of stuff even if it's just a like a cosmos zone and it's using cosmos sdk is it still are they so customizable that they'd have to really work on it well they need to do an etl on the data to be able to query it to to determine

like provenance and stuff and so they have to index each chain separately you know there's a million ways a million tools that auto index the different token standards yeah but i'm actually surprised it's slight tangent but i'm surprised there isn't like someone who like does kind of these like data management for cosmos chains and like do you guys see that as a problem like in the future for like people who want to do queries or like nansen-style tagging like so the classic sdk we have like we started adding rosetta api integration so that's like coin bases like what that they created but yeah we definitely need people to come in and add more of this

because for example yesterday was our first reward distribution on chain and there was no the reward just showed up in people's accounts and and then people were like oh my god how do i explain this to my like tax person that i just got an airdrop right like eight thousand dollars was dropped in my account and there's no transaction explaining why that happened and so you know this is definitely something that like from our side we have to be improving like the sort of events and logs that get output by the chain and then yeah i think they're definitely going to be companies that come in now and what you know once the d5 is there i think then these things are now there's an incentive to like put together all of this uh analytics now let's talk a little bit about what it is to use osmosis i'm like from

a user's perspective so that people can really understand what this is and maybe what it enables let's start the journey from like the hub the cosmos where where the atoms live what would it what would a user do from there they have atoms what do they do uh so currently the flow is you kind of go to this osmosis website with your kepler wall connected and and then you click on some assets page and you can basically have an ad on this field you if you press deposit in the amount you want to deposit onto the chain it'll do an ipc transfer underneath so like and so that means is one nice thing about cosmos is that we do have a standard for addresses and like pub keys

so i uh i can have an address on the uh the causes hub and i can actually have an address with the same pub key on osmosis so this access button when you hit deposit what it's going to do is it's going to like do this ibc transfer in order to move those uh tokens from the hub onto osmosis so i've seen actually i gave tldr earlier it's like like-mind verification of both chains there's a lot of details to it like there's things called channel ids for like allowing a chain to have multiple connections to another chain and these look like a a random hash basically so what's stored on chains actually kind of like unreadable for us what are these things one thing we worked really hard on or like the apps folks worked really hard

on was getting this ui to be such that uh you don't have the user doesn't have to ever learn about the fact that channels are underneath that you can just do this like ibc transfer right into that new zone basically as far as i can tell our front end doesn't even say the word idc anywhere it's literally just you know it says deposit and withdraw and like it's just supposed to mimic the ux that users are already familiar with well having used kepler to also play with this i did have to push a button that said transfer using ipc but i was excited to do it because i'd heard about ibc for so long and i was like oh cool i get to use ivc by the way i i have a question to both of you and this is something

i've asked a few times like you just mentioned ibc is this like two like clients living on different zones it's a it's a rule set for transferring tokens across different blockchains but is it a bridge is ibc like the makings of a bridge and i and i cuz i've i've heard it lumped in or maybe we actually actually on the show lumped it in with bridges as a like as a type of bridge or something but i don't know what how do you see it do you think of it as a bridge yeah it's basically it is a bridge it is a protocol for building bridges it's a generalized bridge protocol right now and by bridge depends on what you mean by bridge right like if you i don't know if it's like a tautology where i'm going to say if you mean a bridge is something that generalized to

have to change talk to each other then yes that's what ibc is i think bridges should be classified by how much date like what their bus is like do they need to have data availability on both sides any data ability on one side do they only do like metadata between them so maybe actually distinguishing in that sense would be useful yeah so what ibc is is all it knows is hey i give me a light client proof that something exists in your stage tree that's all it cares about now you build higher level protocols on top of that and one of them is we call it ics 20 which is the ability to transfer tokens and so that's like a higher level protocol built on top of ibc where it's

like okay what is what are we proving about your state it's like okay that you locked up tokens in this like specific part of state and then i'll accept that and then you know min 2 tokens here it's you know you can have ics's for all sorts of things you can just say like oh here's a proof that there's some oracle data that's on the other chain and prove to me that you know that that oracle data is in the state of your chain and is that is that classified as a bridge i don't know but that's what ibc does the other piece of ibc that's interesting is that it just makes it so it's just so standardized like the process of running a bridge is really annoying like you know because we're actually starting to run ethereum bridges on the cosmos hub suit and so as a validator you know we have

to like start running ethereum nodes and all this kind of stuff but with ibc it was lit you can make a connection between two chains by sending two transactions you send a transaction on chain one and send a transaction on chain two and you have a bridge it's like it's like just the fact that how fast and simple it is i think that's what's going to be like really game changing for ibc and one question what's the destructor process for ibc like if i want to close like a bus of like data being sent between two chains like i imagine it's something like you send one transaction that's like open receive from remote chain x remote chain x makes a transaction it's like send this data or metadata across but when you close things is there like a process

is there like yeah what's the destructor process is there a lot of state on both chains um so i guess we're talking about as an individual user or we talk about the kind of the entire channel or like the bus itself yeah i guess the bus itself because i'm i'm trying to think about like what let's say you're an osmosis and i want to route trades between like different chains and there's like many different routes right i may want to like deprecate some edges in that sort of like pairs of trades that you're allowed to make because they're like inefficient or like so i i could be wrong but i believe the base ibc protocol actually doesn't really do destructors in the sense where like if i open this bus it's like i don't really have to actively maintain too

much and what i'm maintaining is like a last header or of the other chain or you know last block cache and then after some period of time it's either it becomes too old like your weak subjectivity concerns and you need governance of the host chain to like re-update the hash the reason for this is like uh because you're proof of stake give this whole weak subjectivity issue where if i'm trying to like glancing to your chain and and i it's been too long i can't actually know is this the real chain or not so the ibc connections can never be closed and that's what the ibc you know that's the header part and then the ics 20 those take place on the channels on top and so

whether those can be closed is kind of up to the ics where like okay you know the ics can say okay we have a methodology for deciding to close it for deprecating a channel or not i don't believe the ics 20 one has one but you know you could build an ic ics that has that that can be closed what does like you've used this a few times but ics what does that stand for interchange standard okay so you can imagine this like uh you know how like for normal uh networking things there's just there's udp and then everyone kind of builds their own or not everyone a lot of people build their own protocols on top of udp you know now we're seeing quick very exciting actually getting deployed uh then um you have these things for video formats etc that are these are kind of protocols

on top of udp where it's like okay well here's this one way of communicating but me and you we know we're going to use we're going to send data to more advanced format so we can kind of do some like tricks in the structuring and coding of things to get better efficiency and so that's kind of like the analogy of what icss are where it's like okay well we have this communication route called ivc and then we can build together uh like me and other train can add more things on top if we want to and the way we and just standards for what are these more things we're building are called the ics's or same as ercs right ercs are just standards for how smart contracts talk to each other ics is there gonna be standards for how change talk to each other over ibc

awesome that's actually a great comparison that that helps give a good clear picture of what that is yeah actually maybe a little bit back to osmosis like how do you deal with routing across chains right now we only do direct connections right now so i think that i mean you know this might be a controversial opinion but i think that the cosmos hub vision of being the router for all chains is wrong like i think that all chains will connect to every other chain you'll have many many connections and everything will if you want to send tokens from one chain to another what you will end up let's say you have a token from the third chain and you want to send that from a to b well i think what's going to happen is they're going to unwind that first hop

and then you're going to send the next hop i i really don't think connections are going to be or assets are going to be like multi-hop i think they're going to most of them are going to be one hop only i think multi-hop is in some way of premature optimization unless we get this world of like thousands of different blockchains not not hundreds of actual thousands or tens of thousands yeah i mean i guess in ethereum it makes a lot of sense because there is there are actually millions of tokens on unit swap right and so you do actually have to care about this but i guess the idea here is your best unbiased estimate for how the market develops is you're going to have a small set of cosmos chains like sub 1000 that you have pair to pair or like connect to hub

trading basically uh yeah like i i think that osmosis should be able to connect to like a thousand chains by itself like it shouldn't have to go through another router to do that and if yeah actually are there any limitations on size so like how many dexes you can create or like it's is there like extra residence state that's sort of like common to a registry and the registry can't be too big or something like that um so actually the state for every ibc connections not that bad it's like it's basically what you need for as a like client so proof of stake it's basically just last verified header proof it works actually the same thing uh last final uh header that you believe is finalized

which is not that much data like a header should not be more than a kilobyte so it's like can you store a kilobyte for every chain yeah and you don't need to keep the history you could just prune away anything that's older than three three weeks or whatever the unbonding period is right but you don't have to store like data per pair right like it's not n squared storage for us most for the decks are you talking about for the ibc connections for the decks sorry sorry for the decks like what like how much state do you like i'm just curious like if i were to scale this like at a million chains would osmosis like have some performance or cost degradation and a billion chains would have that or a 10 000 you know just to get an idea of like how to think about it relative to

ethereum dexes where it's like you know there's like millions of tokens yeah i mean i think the solution is like you know you end up having base pairs right and that's just always been the solution and so on osmosis right now basically there's two base pairs being used there's half the pools are basically using atom as a base pair and half the pools are using osmo as a base pair so anyway it is permissions anyone can add more base pairs but so far no one's there there are some pools already that have been added which is like you know akt dbpn or something but it's like you know you see most of the liquidity is still concentrated on the atom osmo pairs actually is is anyone else doing sort of liquidity mining for providing liquidity to osmosis pools other than the osmosis ones themselves

yes uh well it's gonna start probably like i think i don't know depends on when they send the transaction either today or tomorrow but the akash network team is going to be adding additional incentives like the chain is designed to do this where like it's very they just have to like put some send the funds into a into a contract and then it will automatically start distributing at the same time with all the awesome rewards and i think there's a couple other teams who are also like you know the akt team and i think there's like two or three teams that are all trying to add in external incentives soon you just mentioned the sort of on a smart contract is osmosis like can someone deploy something onto that zone in that zone is it is it smart contract enabled itself yeah that's why i hesitated when i said

the word contract i use i use the term because it's like probably something that most people are familiar with but no it's not actually a smart contract it's like okay currently all the logic on osmosis is like you know part of the node code base uh and so you can't like add additional functionality i guess uh you know we're we're looking into like uh how to add more like customizability like especially for the amms because what one of the core goals of osmosis was to have very customizable amms and so to do that we're probably going to need some sort of vm you know we want to be like more staged in our rollout for this and so we want to make it like more a very like restricted sort of vm where it's like okay you're only allowed to

deploy a contract as long as it meets like the interface that we expect an amm should have and that kind of thing in some sense it's like it's really like a restriction for helping people who want to uh who want to get sexual functionality it's not like a real restriction on youtube whatever you build for a vm it's almost certainly going to be turing complete and you know you can hack in whatever type of functionality you want because turn complete just change inputs outputs as you please are you actually planning on making it like a full vm or is it going to be an interpreter or something like mine a tiny register mini register machine like how do you think about like what the minimum viable version of this looks like so what we were last looking at there is this uh

new kind of vm language kind of popularized in cosmos called cosmosome um which is uh you give it this wasn't code and then uh so you locally compiled your native architecture you trust this compilation process isn't going to introduce any non-determinism across machines so you do have i guess it's a vm in a sense that the vm one upon reception of code compiles it locally and executes that compiled code yeah so then it's using i don't really know how it wasn't registered system works but then the compiled code uses your uh yeah yeah no i mean the wasm interpreter does have sort of some mapping to registers i was just curious yeah where you're thinking about that because i i do think

that problem can get hairy if you so the reason we just wanted to start from actually like uh more interpretive code is it's actually hard to enforce any sort of api structure on the compiled code uh yeah or you know with like trying to get security guarantees yes don't look at the thelana virtual machine if you want to see a bad example of this before we started using cosmosm for this we were actually looking at this thing called selgo it's by like google and it's like this interpreted like non-touring complete like math interpreter and it's making it's pretty easy to write like like math functions into it and that's why we're like all right amms are just math functions right and so let's just like use that and then what we realize over time is amms are actually have to be way more stateful than like

we were expecting and so that's why you know that the whole sell go we switch it out with like something that is more like a traditional contracting system which is causing wasm i know that in the cosmos hub world there's also this gravity dex there's like uh there's a hub proposal around this what is that and how does it relate to what you're doing yeah so gravity dex is it's a amm that's being deployed on the cosmos hub directly okay um osmosis and gravity that's kind of about birth around the same time like near the end of last year who's the team behind it who's who's pushing that it's it's a team called bee harvest uh they're they're they're our validator and

on the console's hub i think they actually recently got acquired by tendermint okay weren't they doing staking derivatives at some point and then they'd stop and zk stuff i think and zk stuff and i see it sounds like sounds like a very buzzword hopping type of yeah and so you know so when we started doing osmosis we were like hey let's put this on the hub right let's go build the decks for the hub and then as we went into it we just realized for multiple reasons that like that's just not the right way to do it because for one we just want to be able to upgrade way faster like the cabin is a very much slower thing our goal was like you know we want to be able to upgrade

the chain like on a monthly basis if we wanted to not just something the hub doesn't do because if you did it through the hub you'd actually have to do it with voting and valid and here you have i guess but like with osmosis don't you also have to do it with the validators or do you do you feel like is there still sort of like a developer key that lets you move no no there's no developer key but it's just about the um the expectations that were set like we've told every validator that runs on osmosis be like hey like expect to be upgrading every month if that's not if you're not okay with that then like please don't run validator on osmosis and that's sort of like you know the hub is meant to be this more conservative chain and osmosis you know it's a science lab

right it's like we're pushing this idea that it's meant for experimentation we're gonna go just way faster and and then on top of that we also just needed access to much lower level stuff like we can't do the threshold the threshold decryption stuff we need to go like change how tendermint works a little bit and so having our own chain is useful is really important to like be able to move fast on those kind of things and then finally obviously you know just bootstrap a deck you need some sort of liquidity mining scheme and you can it's really hard to build a good liquidity mining scheme on an existing token like atom that's already so distributed like if we're building this dex we want it owned by the lps right and make sure they're incentivized and like part of the governance process and so the best way

to do that is to issue a new token that you give to the lps what is the plan for a connection to ethereum how would that happen for osmosis like i know that there's like a bridge being built but wasn't that bridge between the hub and ethereum yeah so there's a there's a team called althea uh they're putting together something called gravity bridge which is i think i was mixing those up actually sorry yeah okay that's why so yeah it's confusing because it's called gravity dex and gravity bridge um yes okay so gravity bridge is this like bridge from a cosmos sdk chain to ethereum and so it's like it's the name of the software and then the hub is planning on deploying it uh to connect to ethereum

and but then you know different chains can deploy it as well for example somalia actually which is aki's project they also are using gravity brick but they're adding in more extensions on top of it as well so you guys osmosis would just deploy the gravity bridge potentially potentially so i mean the original idea was we wanted to just go ahead and use uh the gravity bridge of the cosmos hub but okay we're a little bit worried right now about like the credible neutrality of the cosmos hub because if you have this this is kind of what i've always been pushing where it's like hey guys don't put this decks on the hub because you're gonna like harm the new imagine ethereum foundation built their own native decks like would people have built x's on top of ethereum probably not

so i don't know i think that hopefully like the gravity deck spins off onto its own chain eventually and then osmosis would be happy to use the gravity bridge of the hub but we'll see and if not and maybe we just end up deploying our own and uh you know there is some precedent for this vitalik did basically write on the uniswap forum hey you should just copy uma right and like i i feel like um sentiment has not quite recovered since that yeah i like tweeted that where i was like all right so yeah it was literally just like he was saying copyright it was really very very interesting more or less i mean with without without you know in more polite terms perhaps

yeah it's just like well um sucks at liquidity so unisoft you should just copy them was basically the tld you have high market cap uh you just do all the good ideas okay so i want to go back a little bit to the this user journey we started on that user journey we got them using kepler sending something over ivc but i want to go back to like what happens when someone arrives in osmosis like what do you do there um it's kind of what do you want to do so uh this decks now have the ability to like add liquidity to you know stake your tokens or to trade on the decks it's got a permissionless manner it has the same functionality as you know you can imagine on unisoft today you know

there's three buttons at the top right there's like the there's the trade pool and like govern or something i think they have gov right but that's the slight difference is that because it's a proof-of-stake chain of its own it's all that's what's kind of a little different at least when i was looking at the interface where it also looks like the interface of any proof of stake network where you're actually like you know using voting you're using you're staking you're adding liquidity and your trade like i guess it's the liquidity adding and the staking in the same interface that i hadn't seen before yeah well i guess i guess i have seen it when you have these like i know ave you can stake as well but i guess i know that in this case there's actually an underlying blockchain and so you're validating

when you're staking with somebody you're actually like validating this whole blockchain yeah you know right now there's like two options you know if you have osmo right you can go like lp it or you could go stake it and this is sort of like a choice that you have to make right now but over time we're actually going to make these these two things are going to become more and more combined so we're working on something called um code names right now called reverse staking derivatives we'll probably come up with a better name i think super fluid staking i think i think so here's why it's called reverse now you sound you really do you realize that your your choice of naming makes you sound like boring tradify people because like repurchase agreements are sort of like staking agreements and reverse repo is like when the

central bank kind of does this is the opposite now you need a new name we'll have a new name don't worry i'm working on the name but but it's not it's like a little too like trad five for you yeah yeah no i i i completely really i i'm liking the term super fluid somehow and i want to use that because you know i think i i think it comes from an elixir he gets i guess he gets credit for that right yeah so another reason is yeah because i really love dan's like post and it's basically based off of that so let me explain what it is first so what it is is in normal staking derivatives like what and it's also usually called liquid staking what people are proposing is you go ahead and you know you stake your coins you get back some sort of

derivative asset like you know like an iou to that yeah and then you go use that asset in defy but the problem is this is breaks the entire security model of proof of stake right like we spent all this time designing proof of stake and all these lock-ups and everything and this is like undoes it so the reason it's i've been calling it reverse is we're putting this in the opposite direction what if we take our staking coin use it in defy take our defy assets and stake them so in this example for us most specifically it would be imagine you have osmo and you know something else bitcoin you added to the goodie pool you get back an lp share and this lp share has some

underlying osmo value like if you were to withdraw it you could get out a certain amount of osmo and so now we're saying well let's just go ahead and stake this lp share and have it be treated as the underlying osmo value and you know the chain can query this every single block if it wants to like say what is the conversion between this lp share and the osmo obviously it wouldn't be like every pool can do this because that would get out of hand but you know the chain can basically vote to say all right these pools their lp shares are allowed to be state and so now if you're lp now you can be both lping and staking at the same time and obviously a lot of this is actually heavily inspired from tyrone's work as well where like he has a whole thing about

like how you can borrow against lp shares yeah that's cool it just needs a better name yeah this name super fluid has promo you know superfluids are nice there's zero friction yeah but if you stake you know you know there's also super solid which is uh it's actually been very hard to construct these things this is why i left physics like it just took 10 years to resolve this thing but there was a there was this guy who claimed to have made super solid helium 4. and uh super solids are like interesting like super fluids have no friction but they kind of rotate forever kind of like almost perpetual motion machine like super solids are like super liquids except imagine an ice cube in a

little circle and you push it and then it just rotates forever but it stays as an ice cube it doesn't melt or it doesn't like have all the atoms are like basically so anyway sorry slight tangent but you may you may want to like look into names like that i'll get to super solid but super fluid is cool because it's like you know liquid staking this is super fluid staking and then it's like it is taking dan's idea of like okay using the same collateral for many things and that is literally what we're trying to do here i wonder if any layer one would do this like uh i mean not saying that you aren't i just mean like one that is like i mean i want to be able to expand this to more and more d by assets i mean ironically i think lp shows are probably

one of the harder ones to start with but it's what our chain is but like you can imagine it's much easier to do this with something like you know like c osmo like compound if you had osmo on compound it's much easier to take that c asset and have that be steak uh lp shares are probably much harder because of the impermanence loss and all that kind of thing i think there's a whole new like paradigm here that can be done where like how we can generalize this and like have it be used for like many all these like different d5 assets that are based on osmo can still be used to stake the main like hard question here is how does the chain reason about uh the risk premium which will be taking but you know one compound elsewhere we'll say should not really be worth

suppose one awesome is collateral for this should not be worth a full osmo because there's some correlated uh concerns here right because liquidation that's not caught in time and it could actually not be withdrawn from also back it can only maybe it's 0.9 and how do you reason about this as chain governance seems actually pretty hard you have a validator set of your own that's the security of the osmosis chain but is there any shared security at all between you and any of the like tokens that are coming across ibc or is this completely separate right now there's no show security i mean this is also kind of what i was upset about gravity decks because i was like guys you guys should be working on

shared security we need to use it uh but at the moment yeah osmosis is just self-solver and then all the chains or other chains are also self-sovereign yeah does this not bring up that issue or that fear of like if there is a corrupt zone and it has deployed ibc and it starts to trade with other ibc enabled toke like assets but it's corrupt so like it's could that somehow taint or like screw up some of these trades like basically like minting things that aren't there and like having some you know could it could it be a rugged bull at some point i don't think so because only the people who hold or who are exposed to the asset from that chain

are the ones who are effective right because if let's say you hold atoms on osmosis and then this other chain goes corrupt they can't do anything to atoms what they could do is they could go ahead and mint infinite of the other token and then drain the liquidity pools and take out all the atoms so that yes but as being an lp of a pool with that token you you're still exposed to that and so if you're exposed to it you're basically you're it's the same as having held the token on the other originating chain itself right like you're saying like the atoms like the other assets wouldn't be affected like those chains wouldn't be affected but the lp tokens in osmosis and the lp token holders would be if they had that corrupt one

only for the people of that pool like to phrase a bit differently it is a fear if you in the kind of earlier overview obviously we're giving but there's a separate thing in ibc it says that uh you know basically tokens from one zone origin one zone can't be confused with tokens originating from another zone so like only tokens that are from there could have this kind of confusion so like i don't know zone c could not mint atoms or as they commit some tokens localize their chain and i mean it has the same like name because names are uh they're internally namespaced but it's can't be confused on osmosis or another chain as though it's from the hub goal of ics 20 and the styles of ics's that we want to design

are such that we want to localize anything that like any chain failure it should be localized to people who are like exposed to that change like they don't have to be opt-in right i want to now ask a question like what is an asset on osmosis though like i'm just realizing like it's not that the atoms are actually on osmosis they're just derivatives of atoms like through ibc right and so you'd have derivatives of this crappy chain would there be any way to block it like if that happened somehow i mean i don't know maybe that's impossible or any way to gauge like if all of a sudden there's like this flood of seemingly like more tokens than there should be coming into osmosis from this corrupt chain

would there be any like signifier to stop that so there is one safeguard thus far it's already deployed which is that i suppose i sent over the hubs and over a thousand atoms to osmosis if there was a bug and it was supposed to have like some corruption it could not send back 1001 items okay the the hub keeps track that we had 1 000 tokens flowing out this way and so you can only send back a thousand but then you know the changes only sent to could do some still do attacks for like changing who owns it but they could never mint more and there's some ideas for like boosting this where it's like okay maybe we want to rate limit transfer uh transfers back and forth uh for some reason because uh

you know it gives you time to catch a failure some ideas for doing some more tracking of like whale addresses or some but these aren't these are still very much in like kind of spec phase and not they're not such that they're always good whereas for this one of like ensuring its max supply per per uh zone maximally sent back to me that one's like deployed everywhere there's almost like no reason you know to not have that so like basically because of this like restriction if you're one of like the boomers who's keeping your atoms on the cosmos hub and not bringing them to osmosis you will not be affected if osmosis like fails for some reason like only the people who actively chose to bring atoms into osmosis will be affected got it and and remember this is true this is true in eath land

too right that's why if you unisoft moved completely to west and so once they did that it basically meant that you have the exact same issue right if if west failed then like yeah goodbye yeah everything and that's not just you swap so all the ammc's with yeah except curve but that's because it's using stable mainly stable i guess the fact that atoms are one of like the two base pairs right now osmosis should could be worried if like if if the cosmos hub gets corrupted almost all the or half the pools are like based on atoms and if you could just mint infinite atoms right now yeah you could drain like half the poles so but i guess your assumption here is the security model there is decent enough to make that your yeah your base for now if we get back to kind of like some of

the biggest problems with amms and constant function market makers in general it's sort of the problem of sandwich attacks and other things but i guess that's like the most prominent one and that brings us to sort of mev or minor extractable value or vev validator extractable value um both of these terms are uh are kind of uh mev and vev would annoy physicists one is vacuum expectation value and the other is like mega electron volts um electron volts or mil electron volt yeah it's just that usually whenever you're measuring an electron volts it's like it needs to be giganto uh but you know one interesting thing is

i think there's been this kind of huge philosophical debate about mev does it have to exist can we actually really find a cryptographic solution should we bother trying or should we only have an economic solution this of course led to this very public fight between phil diane and his advisor uh which you know usually in academia this people don't get along with their advisor but it's usually their advisor just shits on them at conferences but here it's like his advisor is like writing this public news article being like my student sucks effectively yeah and so you're on a very particular side of this argument so i think it'd be really great to hear your views what influences why you think it

is sort of like the way you believe and then i i'm framing it openly so you can maybe maybe do explain both sides too for listeners might be helpful yeah sure so okay for content i definitely agree with uh uh his advice is ari right are jewels yes yeah so i definitely agree with ari on this one yeah let me explain the the situation first so what is mev minor restrictable value what it is is it's the idea that whoever the block proposer is so in proof of stake its validators and provo organs minors the block proposer has certain powers that like no one else has and they can like use those powers in order to extract value right and like get some edge aka

front run front running is one i act in my classification of meb i would include things like time tracking like remember like you know those like things where it's like oh you get back when people used to use the time stamp as a source of randomness in ethereum it's like okay if you manipulate that that i consider that minor extractable value like anything that the miner can do is part of it now front running is probably the biggest class of uh mav attacks before that there's what i call a transaction ordering censorship attacks which is the idea that like the proposer can choose what gets included in a block and what order they're included in the block and so within this there's two categorizations

i call it absolute positioning and relative positioning absolute positioning is just saying that you know you're not trying to base yourself off of other transactions in the block you're just trying to have some absolute position in a block and this would be something like if there's liquidations happening right and someone has to be the one to trigger the liquidation and they get some profit by doing so the block proposal is able to say guarantee that they will be the first one in the block right and that way they can always you know they're guaran that's extractable value and this type of mev i mean you know we have ideas for how to restrict it uh and you know but it's not what we're focused on at the moment you know maybe we'll come to that in the future

and i think that there there's actually a reasonable philosophical argument you know i think there's a good debate to be had there where it's like okay someone has to be doing these liquidations um and they're not like extracting value from anyone it is really a positive something where they're like doing some they're performing a service for the network and they're just like you know sort of making sure that they get to be the ones to do it and profit from it but it's not they're not actively harming anyone else but then there's the other form which is what i call relative front running where like you're trying to base your transactions position off of someone else's transaction and so this is what like sandwich attacks would be like that where like you see a trade coming in a big trade you know you could go ahead and pump up

the value or put yeah push down yeah do something to the price and then you can like profit from it and for this i really do not see how there's like a strong like argument to be made that this is ethical or like i just don't see it this is like a privacy concern to me right i really do see this relative front running as a privacy concern more than anything else it's like if i'm able to hide what i'm about to do i should be doing that and so the threshold decryption solution that we're building is really meant to address that relative front-running and so to your point about like phil like honestly i don't understand where where they're coming from right now like he had in his like mev what do blog posts he's like there's a project

called equitas and they do like a bunch of like they're focused more on the absolute front running i think or they're not really really both they're they're yeah they're they're they're taking a different solution we're taking like a privacy focus solution on front running they're taking a more like fair ordering solution which you know they have some ideas there but phil like puts this like chart and in the equitas thing they have like four or five different like parameterizations of their protocol and each of them have different outputs and he's like well you know which of these should we do they all have trade-offs how can we decide and then it's like phil every single one of those are better than what's going on currently you can't be like oh there's too many choices that are better than the current to be like a reason not to

fix what's going on right now hmm what is the philosophy of flashbots though in regards to that like why what is that what's the difference like what you're describing is how they're critiquing these models but yeah what are they doing okay so front running and mev there's like there's like the mev itself there's value being extracted from users and then there's side effects to mev right and this is like the insane like the gas spikes and the like you know consensus instability and all this kind of stuff that happens from side effects of mev and i think the flashbox team is really focused on minimizing the side effects of mev but they're not

actually focused on tackling the mev itself uh i think it's been no this has been understandable right for things like sandwiching it does fix that where if you imagine you have this layer of all these transactions are encrypted via this like centralized three sgx's which is not right now by the way oh so they don't use sgx right now they just send to miners oh yeah no no there's no not for for the record and and there's a lot of controversy about this today on the flashbox discord twitter uh they are extremely centralized service that is attempting to decentralize via sgx or potentially some other routes but they already have like spam issues because they only have like three nodes and they're they haven't quite they're running into like

basically civil resistance issues right now oh this is the whole reputation thing right yes yes so wait but like so they were thinking of using sgx but are they using sgx to perform the same kind of thing that you wanted to do with threshold cryptography like create a private area where people can't see what's coming next and therefore not do the sandwich the auction should be private so there's an auction that takes place although it's kind of a they solve the auction greedily so it's not like the optimal solution when there's multiple things presented right now and that that's also led some attacks against it but if the auction is private then like no one can kind of see who the the winning sandwicher is or like try to front run them right before

and right now it's kept private by they run the node and you effectively trust them on that but yeah so if you trust there that they run the note you don't really have details of how much sandwich opportunity is there like you don't get to read everyone else's transaction before you get to make your bid yeah so they act as the privacy entity yeah effectively right now and obviously for a variety of reasons some legal some philosophical some economical you really want to not be centralized but they wanted to get to market really quickly and to be fair like they were able to aggregate an insane amount of hash power because of that because they were the first ones to do

it and they also didn't these cryptographic mechanisms are are quite unproven in practice and production like that that's the real it's like snarks like are we really sure we're ready to like actually deploy this on like hundreds of billions of dollars probably not give them credit you know i believe part of their roadmap is they want to use the sgx to become this sort of private mempool over time that each miner can just have their own sgx based mempool and normal users can use this so there's a there's something called mist x right now which is like it uh it's like uh overlay on top of unit swap which like it uses the flashbox system and so like i said no sdx right now but eventually if they just

do sgx you know you could use that as a way of like creating a mic private example normal users could submit transactions privately but then we have all these reasons why sgx doesn't work so dave can maybe go into that a bit yeah i mean uh sjx is kind of what it's doing is saying okay here's this uh compute device which enclave yeah yeah i mean i actually i would say like i think our listeners probably know the sgx battle at this point okay pretty well like it's a trusted enclave there could be a back door i guess the main well the thing that we actually are is for us it's like what is the security budget here right it's like okay how much will it cost you to break an stx maybe it'll cost 10 million dollars you hire a team of 10 top-notch engineers

like researchers and you know give them a year they could probably break it right and it's like okay well mev is so much more than 10 million dollars right now and it's like it'll it's worth it to break this i have a feeling breaking sgx might be a bit more expensive than that it depends what we mean right break right because there are um what you need is you're just gonna get the key out of one and we see like or or take one get one to be able to uh do whatever you want like you just need to break one sgx that's it you just need to get the key out of one and now you're able to de-anonymize the entire memo let's shift here because i want to talk about the threshold cryptography because like that you you know going back to the beginning of the episode

that was like one of the core ideas you had and something that i as far as i know is not yet in osmosis but will be eventually yeah good okay so let's talk about what like what does that do exactly and i know like we don't have too much time in the episode left and i will point people out of video and like a talk that you gave recently at a zkv event that we did so there is like some other documentation on that but yeah tell us how does threshold cryptography actually help with mev sure if all transactions are encrypted before they get into a block okay then that means if i'm someone on the p2p layer i can't know what's about to be in a block therefore or i can't see what the actual content is here so i can't front running like i can't do

any content to wear algonz which is what sandwiching is so if it's fully blind then gets it to a block block gets finalized then it gets decrypted and the decryption process is kind of trustless i'll get back that in a second then we know that i had no front running pos or no relative front running possible so the flow is then uh i spread an encrypted transaction it gossips around but the fee parts public miners use the fee check there's a fee enough for this amount of bytes then they uh get into a block the encrypted blob into a block block gets finalized sometime later transaction gets decrypted and then executed this prevents anyone from front running me

because before it was finalized all i got to see was an encrypted blog yes and this is this private aspect adding privacy at the point of like in the mempool i guess so that like ordering cannot be changed or you can't see something and try to get in front of it does it is it super different when it moves from proof of work to proof of stake is there any like difference in the proof of stake world for this the big difference is around finality so all proof work algorithms fundamentally have um some probabilistic finality or you kind of try to overlay some at some degree we just call it probability especially negotiable and call deterministic whereas in the proof of stake world uh we some

chains have uh guaranteed finality some don't so the key thing is uh depends on your solution but today like max security you want it to be decrypted after finalization but to some extent that's maybe uh not needed in that like suppose we have the one percent case happens where you know got some roll back okay yes it happened on ethereum by the way someone reorg and took something that was like a flash watch bundle once it got you know revealed they reorgan used it and so if it's sufficiently bad then you could have uh in this probabilistic finality you know someone might say okay it's worth me to try to attack this but at least you're still getting protection most the

time but when you have guaranteed finality you can kind of make stronger claims that we're always getting it given our security assumption holds and then you have multiple solutions for how do you encrypt at the mempo layer one is sgx's one is this thing called timelock crypto where it's like okay i'm going to make an encrypted transaction and that anyone trustlessly can decrypt it after running some sequential process on an asic for a few minutes the third one which i think we think is the best is like threshold uh decryption where you have some committee with some weights and they like collectively can decrypt a transaction like where we all two-thirds of us come together do some things together and then we can get the uh plain text out

and so that assumption is pretty similar to what is the tender proof of stake assumption which is that okay well if two thirds of nodes we trust them all like collectively or rather we yeah we trust two-thirds collectively to be act honestly whereas if they didn't act honestly we could detect it and uh slash them so if we make this consumption then uh we can get this uh decryption we trust them to like do this properly that's one of the things with the threshold thing is you do need a committee and that's why it makes a lot of sense and for mistake or at least entenderman-esque proof of stake because we have an obvious committee to give this job to timelock probably makes more sense if you don't have a committee to give this to but timelock has all these like ux concerns with it

where like you know you need to make sure the time locking process is sufficiently long such that it doesn't get decrypted in the mempool uh you need to make sure that like everyone has to be using the timelock crypto like in threshold you can it's kind of an optional thing you don't have to there's no reason if you don't want to be threshold encrypted you don't have to but like in timelock it doesn't work like that you need everyone to be using that system if as long as you're okay with having a committee which obviously we are in tendermint threshold is by far like the proper way to do it well it's pretty smart earlier we have to empirically validate like you know there is extra bandwidth happening we think so preliminary things we think that the bandwidth is gonna be fine but like yeah we do have to wait till we see it

empiricism does uh have some value and that's like let's wait till we see that the bandwidth empirically like was not a problem i mean i think the you know the main thing is just you know there's the latency effect ux effectively like in the long run do you think that's a valid trade-off for the end user so it's actually like the latency shouldn't be uh much worse give you given spam assumptions it shouldn't be much worse than what's going on today on osmosis is which is a sense that uh your block currently is executed after it's finalized but we can engineer the uh threshold encryption so that it it's done kind of as soon as the block is finalized as well yeah you know kendama already sort of pipelines where unlike ethereum works uh i see see

you're going to overlap the validators voting on the pool do you separate inclusion and ordering do they vote separately on like the set of transactions included versus the order no a proposer includes them and then they just vote on the ordering that the proposer did so we're actually building something called vote extensions which is like we propose that our team proposed this to tendermint we're extending like the functionality that tenderman has and with vote extensions you can have every validator contribute additional data along with their consensus vote so this is where the decryption shares are going to be shared so that's how we have them happen at the same time and the other one that we also want to do eventually is actually do you probably come up with a better name

for this one as well oh no uh this was called um oh joint proposals no it's kind of lame name name that that's all instead of being tradifying yeah so the joint proposal idea is just saying that like every validator can just include a couple of transactions in their vote and then the next proposer is required to at least include those transactions in their proposal and then you know it's okay if they overlap a little bit but they include those and then they can add in more if they want but it's like they have to at least include the ones that the validators added in so that way it prevents it so one proposer isn't the only one who has access to

you know inclusion all the validators can contribute to inclusion a little bit so it's actually a very kind of interesting sense of uh both in terms of that i didn't even talk about there's different proposer powers like one of them is choosing absolute order transactions and the second is uh for censorship reasons like if you have all the values getting to collectively add things to a block you now just need in some real sense you as long as one at least a third of them aren't trying to censor you your transactions should be able to get it going back to like you know what how we defined mev which was like the power that a single proposer has you know the way i guess we think about meb and solving it is move as much of that power to requiring a two-thirds

threshold so our threshold decryption is a system that takes okay one proposal can't do it you know you need two-thirds of colluding validators to do something or uh same thing with this like joint proposals right like one proposal doesn't control inclusion you need two thirds of validators to like do you think this can ever scale to more than a thousand validators uh there's some inherent like uh and squareds in here what that could be that might be like log ns if we're lucky well i just feel like you have n squareds but you're making the constant factor potentially a lot bigger as n gets larger by adding in the ordering but do you need a thousand validators like is that a goal of the project hey don't don't read any eth2 marketing

material well the main n squared is still just from the bandwidth side and like the p2p stuff but as far as i can tell the threshold side should not have any n squared uh are you doing the key setups parts okay the dkg yes the dkg is the hard part yeah that's sort of we're working with the uh anoma team actually to like collaborate to put together like a dkg that will suffice for what we're trying to do so you're right the dkg is uh yeah it's actually not ordering here this is giving n squared or if we don't talk about fair ordering i don't know if i want to but that's actually one of my problems with fair ordering in sense in the sense that uh does farrowing doesn't really move you to this two-thirds assumption the sense that uh you're kind of relying

on some mempool information to do this but you have no auditability here where if i lie no one can detect me lying it was very hard to detect so we have to assume that just two thirds aren't lying or some proof of stake you know we've come to those two thirds assumption because suppose two thirds do act dishonestly i can like make a uh double sign evidence and slash but doing this at for fair ordering is actually really complex like you or complexity you need to dump a lot of data from your like you have to add a lot of extra bandwidth let's and squares again and for all full nodes as well to in order to get these proofs and it's kind of like why we also dream instead of like fair ordering maybe moves random ordering where we try to

try to say like a proposer can kind of have some influence of choosing encrypted datas within a block but not even their order that order's randomized somehow osmosis is live it's been live i mean as of recording i know this is going to come out in a few weeks but as a recording it's been live for about a week like how have you distributed tokens what does this project look like and yeah should people actually know about because i i don't know that everyone who has atoms knows about this yep so you know the goal was we wanted this native token and distribute it to all the lps and people contributed to the protocol and this is sort of what you know look at you know all uni distribution balance distribution everyone does this and you know they show that like okay look at like

after four years this is what the decentralized distribution will look like or whatever but at t equals zero it actually extremely centralized where like the team basically owns all the tokens and that just does not work for proof of stake right because you need to have a decentralized distribution from t equals zero and so this is why we did this like air drop to adam holder should be like okay here's like your guys's like invitation to come part be part of osmosis and contribute but it also helps us get this distribution and i don't know i think it worked really well actually so i don't know people keep saying that air drops are dead but i don't know looking at what happened with osmosis i don't think that's true i think it's because of how we did it so one of the cool things we did was

we invented something called a quadratic fair drop and so what that means is uh we actually airdrop two people based off of the square root of the number of coins in their account so obviously we can't you know we could tell people about it beforehand otherwise people would split but this was a nice little thing where it's like what we expect is obviously it's like you know the adam whales are going to be getting the whale share of the lp rewards so we wanted to put more weighted toward the smaller atom holders as well and that's the point of doing that quadratic nature so maybe this is another sort of uh philosophically question but do you think it's possible to make a fair distribution mechanism where the

issuers don't hide information about the mechanism um i'm currently pretty suss about this because uh it almost feels like if you mean if there's an affair it's based off identity and until there's some like real decentralized identity schemes that we trust or reputation networks then i i always have a fear of sibling or like trying to gain the identity system so until we have identity or reputation networks that we are pretty happy with i i don't see how you do it for when the definition of fair is based off of uh like are you distinct humans right i i just mean like do you think there's like an impossibility result to that i don't know i actually have not thought about this much but i think that there's

like what about like uh off of people's djm score right like you could do an air drop of well now you're trusting the degen score creator though yeah yeah who who of course is now incentivized to to pay for play for d-gen scores right right right i have to think about it but i i i i've never thought about this question before and so i think that's it sorry it was a little out of the left field but i thought it was like because you mentioned on that you guys purposely hid this so that like people wouldn't like do all the stuff it was kind of like oh well if you just make a tiny extension like maybe it's just impossible to do without doing that i i think i disagree in the sense that uh it depends what what is identity you

want to be rewarding or what what's fair like i choose something easy like suppose you uh passport holders of some country and then uh as long as there's some or there's some database i can use to verify a passport like that would work this is when we try to go to decentralized definitions of fair that it gets much harder but i think if we had some web trust like model or robust reputation networks there's a tweet sitting in my drafts which says dex front-running resistance privacy web of trust my five-year plan so oh but but the there's a turtle all the way down recursive question here which is can you bootstrap the identity or or web of trust without

having some secret information ah or randomness yeah so okay this is gonna such a derail i built a web of trust on a hackathon like three years ago and it was like you know we won hasid was the judge actually and he's like wow this is cool question what's the incentives like why would anyone do this and i'm like good question i don't know and it took me like three years to figure it out and took and i solved it when i saw circles circles is circles ubi i don't know if you've had them on or no i haven't actually like you should have them on okay coolest project most underrated well the problem is you had martin on

oh from gnosis but we didn't talk about it i didn't know he's kind of known yeah okay yeah it's just like side project but what it is is it's like they built this like decentralized ubi that's based off of a web of trust but i think they're too focused on the ubi side of it right now what i don't think what they've realized is that they just created an incentivized web of trust and a decentralized incentivized web of trust and like they and the problem the way that they designed it is it's they parameterize it in such a way that they're trying to build a ubi but like if you re-parameterize it to be this like you know incentivize early adopters and yada yada yada i think you can actually build a proper web of trust that's like very hard to game and like i think i

think there's something really cool that can be done there and that's why the web of trust you know i think there's a lot of privacy things that need to go into making web of trust work properly and that's why it's the last on the list okay what the heck is ion i feel like everyone's asking so ion is this token that is in osmosis and it has a very similar graphical depiction as osmo the native token and no one knows what it is do you guys know what it is i don't know what it is you don't know what it is either like yeah i don't know what it is either it just just happened it just randomly happened okay

i woke up one day and it's like wow i made this github commit at 4am i don't know what i was doing last night but like all right i guess this is a thing now oh really okay so is this you don't know what look look don't blow up sunny spot as a magician all right [Music] he's like he he has he has some psychological like i code in my sleep impairment he just doesn't want he just doesn't want the world to ah i think i think it's really cool to see what the community is going to try to do with it like okay i think that they're i think there's like an entire ion community right now and i think they're trying to figure out like what is this thing you know how can we how can we i think there's a lot of people drafting governance

proposals for like adding utility to ions but in a way that's very like uh symbiotic with like osmo as well and and with atoms and like i think there's like i had this like tweet that i tweeted earlier which was like the father of the son and the holy spirit it's like adams osmo and it's like what is the whole thing right you know i spent time i think i went through the wikipedia page yesterday of the holy spirit and i still don't understand what it is sunny is going to be a cult leader and ion is the entry to his cult you have to own you must own this much ion to join the sunny part i'm working with the commonwealth team

right now the commonwealth team uh they're actually building like a forum for osmosis where like lp like pool specific forums so like people are lp they can chat there but i also asked them to like hey can you make a telegram group that's like limited by who's like only by ion ownership well if only we had tell the telegram open network all right so dave sunny to roon thanks so much for coming here and having this conversation exploring osmosis this has been super interesting and very excited about the project and congratulations for launching it so

smoothly and i mean at least from where i was sitting it looks like it's going really great so thank you so much yeah you you guys inspired me to write some posters cool all right so i want to say thank you to andre the podcast producer henrik the podcast editor and to our listeners thanks for listening [Music] you