Felix Lutsch: Chorus One – On Proof-of-Stake, Interoperability & Crypto Markets

Hello and welcome to episode of the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution. I'm Brian train. And I'm here today with Felix loge, who's joining me today as a guest host. So we're going to speak about Lots of different topics today, maybe we've happy days. So Felix, I've been working for years for many years now. Over four years at that correspond. So you joined us about four years ago, as a research

analyst. And now he's the chief commercial officer. Of course, one is super knowledgeable about lots of crypto stuff, including staking industry and other things. And today, we're going to have, you know, a bit of a discussion. Just what we talked about. We sort of try to answer the question of like, you know, what's interesting. Thing in crypto right now and you know, we have a bunch of topics that we want to cover things around, you know, decentralization proof of stake,

interoperability crypto markets. Phoenix is going to tell us the crypto prices at the end of the year so you can make your trades based on that. But before we, before we go into that belief about our sponsors, first of all, well, very fitting course one. So, you know, if your crypto assets are sitting around idly you're losing out so you can start earning rewards, contribute to network security

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First of all, how are you doing? And welcome. Hey Brian, so great to be here, and be on the kind of gas side of a podcast for a change. I guess you already introduced me. So, not much to add and looking forward to the discussion today and talking to you outside of work about crypto. My favorite hobby. Yeah, yeah. Well, I mean, I gave brief I gave some intro, but maybe maybe it would be nice. If you can sort of give you your own life story. Yeah. Yeah. Totally told me. No.

Yeah, so I started out basically getting interested in crypto and I was studying. I studied Finance in Germany and I just realized more or less that I didn't want to join a bank or become one of the big four companies. And I learned about crypto through, kind of the internet, just being active, internet lurker. And I learned about auger initially kind of trying to write my myself Master thesis about Prediction markets on and auger, but then obviously auger wasn't like ready at that time.

So I wrote about that kind of another Block Chain topic, ultimately kind of automated decision to work in the crypto industry. That could leave found the chorus 1, add on AngelList. Now we have positions again on AngelList. If you want to check it out, but yeah. Found her at their, it was like super fitting to my background. One of the kind of rare at that time to have a role that wasn't like super developer Focus. And yeah, just was super interested proof of stake.

And now and started as a research analyst as Brian said, been kind of trying to make staking. Yeah, like understandable for people initially wrote a lot of content steak economy newsletter. It may be some people read that and kind of did work on more and more things than course. One ultimately also like this is development and just kind of things on the Business Commercial side now for over four years as Brian said and yeah, that's basically. So I'm here today.

They've been looking at a lot of different networks. A lot of things that have happened in crypto through the bear market and now the start of the bull market or wherever we are right now. So yeah, I guess that's, that's background. Cool. Well, yeah, proof of stake. Let's talk about proof is take. I mean, I guess we've thrown about to stake many times. Mostly from the perspective of speaking with proof of State

networks. I think that has been probably the most, you know, the dominant way that we have a type center-right have sort of address the topic. I guess there's also been I mean we didn't episode about Li do once, right? So we've covered like liquid, staking a little bit. Not too much. I guess bison Trails. We had a one point on as well. So maybe it's a bunch of different but you know proves takes basically gone from A concept.

I mean, I remember we had batalla con, you know, 2015 or something, talking about how it gave me some space, if we stay quiet. So, like the notion proof saying, it's been around for a long time, but now it's become something different right way. It's actually like an industry. So what's going on today in your view? What are the most important sort of Evolutions in this taking

landscape? Yeah, I think one thing that has been a topic since I started in blockchain over crypto and probably even longer was this idea that the institutions are coming. I guess they are still coming slowly, but surely and I think it's it's also reflected in the staking industry and the landscape where essentially.

Yeah, the the industry has matured a lot over the last three years from Um, basically, I guess game of sakes where most of the validator operator started out or tasers initially, right? Where there was like, basically some people that were interested in this in this technology and started to run these. Validator someone even really

knew what they're doing. And in the meantime, like a lot of best practices developed, and just prove sake, networks grew a lot first of all, in number, but also, in terms of market cap, and kind of Money to be made from staking rewards and commissions for the node operators. And I guess in general, the concept then became widely understood in the kind of broader market and because of its nature of like relatively easy to understand and relatively risk-free yield in the proofs.

I guess. It's where that's that's I guess an interesting field for institutional customers, and they Have entered this field a lot. So I guess to say what that means is in the end that these customers have like different requirements in the end. Then maybe thus takers that started out in 2018-19 to stake where they would. Yeah, basically just delegate from their Ledger or through metal mask or whatever.

They wanted of their choices. And now there is a whole like other process involved due diligence. And compliance for these players to. Yeah, and the note operators that want to work with these because clients that are on the institution side. They need to adhere to their kind of or to these rules in a way. I mean, I guess we can get into that a bit, right? I'm sure you also have some

thoughts on that. Yeah, I mean it is interesting, right because when I when I became interested in both in cryptos, 2013 and what sort of this Bitcoin is Bitcoin, bubble started one of the first ones and even then one of the main stories that there was is over, the institutions are like coming and it's like, even that they're going to like, and of course, there were some examples then, right? Yeah. Like, Overstock starting to accept, you know, Bitcoin is payments and Course it in the

end. Well, now we hear many years later, right? Nine years later, almost eight and a half years later or something. And yeah, it's still a slow, so slow process, but I think you very much right that the, he's actually mini. If you think about, you know, what do institution is do with crypto. I guess, the first thing is sort of The easiest thing is like, okay Bitcoin. All right, you can just hold Bitcoin.

I think that's that's kind of like the the first thing you can do. And of course hold that is also something that we've seen happening, you know, for years and, you know, maybe some corporations holding it on the balance sheet custody, right? Being a huge topic. And again, the custodian have generally been like, okay. First of all, you know, let's live people to just hold Bitcoin or something. Maybe hold some others. Maybe enable like trading a little bit.

But then if you go like beyond that, you know, staking is very attractive. I think, because it's, yeah, it's easy to understand why it's low risk. It is, you know, it feels like a bone, right? With some save interest rate. It's quite different from defy, right? Also, defy move so quickly, right? Then if I have something here and then next month is gone and something over here and I think that's like very informal. Regulatory perspective also seems probably like more of a mess.

So I think staking is is probably or he's one of the ways that institutions kind of get into it. But of course, it's still very slow. The other thing. I think that stands out to me the most sort of like one of the themes, I think when it comes to staking is it's just the increased in complexity. I mean, you mentioned this from different types of customers who are in compliance. This is like an interesting topic. So we at course one, right?

We've been doing a lot of work on compliance and it is huge amount of work. I to basically then, you know measure up to some of these institutional standards and comes with a lot of implications. So that's those are some things. But then there are other things too that have brought like more complexity to develop to staking in the valid rule, you know, one is just the Diversity in

different roles, right? So we have the kind of normal value, the role of you checking the validity of transactions, creating the block, checking the other box. Proper propagating in P2P Network and kind of, you know, creating those box, right? But then I know already displaying all the rules like, you know, oracle's and in new ones coming up, how how do you think this is? What do you think? Either, that's going to be. Yeah. Yeah, it's very interesting

question. I guess we started, I would like originally, like a long time. I think there were a lot of roles that people or protocol designers start off for crypto economic protocols. A lot of them actually never came about or maybe maybe didn't like take office as planned. Like, for example, the polkadot fisherman. It was for a long time. A thing. I don't know if this is actually even implemented or how these work. But in general, right?

People get creative with the the things that the note needs to do to make the network work and in the end, I guess, as more applications also, like, if we think about the networks, as this base layer applications run on and then more value is just on this chain, these roles become actually. Yeah, quite important. And there's more competition. I guess around fulfilling whatever this role is designed to do. So, I guess in the validator sense. Normally you're just looking at

your you're up time. Usually. And I mean, that's also not the easiest thing so it depends on the network, right. The Network's nowadays actually also increase in demand for Hardware. So for example on osmosis, right, you there there's a lot of computation happening at the epoch boundary that needs like Servers or better servers and I guess there's more State needs to be saved. But then there's also another dimension where, for some of these roles.

There's also like a certain optimization needed and I guess, yeah, what were what we conceptually thinking? It's probably that this optimization obviously will, like some people will be better suited to, to kind of fulfill or optimize these these for these roles. And then they I will basically take on a lot of the market share of these roads. So like if it's like a competitive market, probably like only a few players will be suited to, to do that. Some of the examples that come

to mind. Of course, maybe like, familiar for people in the defy space. Is liquidations. We're essentially. Yeah, there is some loan at risk if the price moves. Now, the person that is the fastest to I'm kind of get that transaction, the liquidation, transaction, and we'll make the money. So obviously, there are parties that probably better suited to do that. Then the average. Yeah. Told her that, that was a participate in this. So I guess that that complexity.

I mean, I mean, yeah, makes it kind of harder for smaller players. Maybe to compete in a way I guess. Brian. I don't know. What's your, yeah. And I think that's it. Also sort of brings up this other topic, right? That's become, you know, one of the most talked about in crypto. It's also something that we've been bringing up, you know, guests various times. And you know, like people are thinking about it a lot. It's topic of Mev. And, you know, I think anyone we

have on the podcast. It's like you're building a Krypton Network thinks about this. And I mean, what is Mev, you I'd be have also done some podcasts about it all, but any of these Circle around the, the ability of the block producer to, you know, decide on the order of transactions, although, I guess the term is sort of used in different ways that sometimes also includes, you know, people who are not actually the block producer, right?

So when you, you feel emotion, they would talk them as a Searchers, right? So the people who basically look for some kind of opportunities to like reorganize the transaction to put in particular. Stir to make money and then, of course, if you think of these roles as well. Now, let's say there's some crypto economic mechanism and expect some transaction. And for somebody who like putting that transaction, they

can earn some money. Then of course, if you are the block producer, then you can basically, you know, you have to Monopoly, right? You can say it. Like you can say like I'm going to put my transaction first, right? And if there's that money to made, you can make that money, you know, examples of that are like, let's say liquidation right on maker.

You can have some CDP or basically, somebody borrow money, you know, put up collateral the cloud or drops in value and somebody can liquidate it and earn something. And then, whoever does that first, right? Basically gets like free money and then of course, if The validators or the minor right at the moment, but the validating

frou-frou sake networks. It has the ability to do that but has the ability to do that does require like understanding, you know, the contents of the block analyzing those things. May be analyzing the transactions that coming in, then, you know, executing that and some kind of real-time fashion Society, pretty complex and something. That who does that today? It's I think probably just in, like, small amount, it's being done.

But if you think, I think of the future of staking light is going to become like a very big thing. And of course you didn't have also the counter Trend that and I guess that's where I mean. He's very, you know, controversial stand people say, oh, but maybe that's bad for the network. Sometimes it can be good for the Oracle bath but network, but at least it's something that they need. And also protocol designers application. Design is no try to deal with in different ways.

I mean, for example, right, we've had cows swap on here before, right? Or I think and their, their Twitter handle at least is Mev protection. I don't actually understand like, but so, you know, specific decks developed around that. So, but I think that entire thing is it's just a huge. Topic that's going to, you know, be something that will give work for many different parties for, you know, like many, many years and your the outcomes kind of, you know, it's very, very little heads.

Yeah, I guess like from from the node operator perspective, in terms of you. You're kind of forced to deal with this topic in a way because yeah, most people realize that this is big because we saw it on the theorem. We know there is definitely a market already in it, will probably grow. Of course. There's also people building tools to like, make it more accessible maybe two smaller. No debris. So I guess from the perspective of who is well-suited to do

that. Maybe there is some scenario where You know what, operator can work with searches through some tool and still have the same opportunity as like a bigger operator, but still just in terms of like it's one of these things where that you have to think about as an operator.

So it's not just about you know, keeping your server up and there's there's a lot of things that that go into being operating these nodes and at scale especially so I guess our one of the topics we want to discuss with Rhino me talked earlier what we Gus is kind of, this is idea of yeah, decentralization. What are the kind of forces that help it? That has a temperate? And I guess Mev seem just one that probably is a centralizing for is in a way. I think.

We also just came up with a few other things or I guess we could discuss some other. Yeah things that maybe increase or decrease in Translation, but you what it's like things that you. So we actually mentioned compliance to mention Mev. Other things to come to mind. I mean, there's definitely various things that I think are driving towards the increasing complexity of validation and

then increase. And of course, that means that if you can invest more in it, you know, you can provide a better product, and you can get more customers and you can become bigger, right? So that you have those kind of Dynamics. I think, they're there. Of course. You also have other Dynamics. I mean, you know, one thing is just That, you know, when we started with course one, but we didn't like there was not really like a template for how to do it.

Right? So there was, it was a lot of work to figure out how to run a validator. But today there's lots of Open Source tools like lots of guides right like so that to that, I think that barrier initial barrier to just, you know have a value to run on the network has gone down, you know, a lot right there mean. I think in Cosmos for example, it Like very easy to do it.

You know, that's one thing. Yeah, I guess there's liquid staking to. Like, it's taking could be sort of like decentralizing and centralizing in different ways. Right? So you can have, let's say if you have something like light or as an example, right? You can have on the one hand. It distributes the steak too many note operators. So that's kind of more decentralized, right? Then what?

Would you have as a normal outcome, but then at the same time more control that shifted to, you know, like the governance of that governance token and so you can have sort of like some some degree of centralization again at there. And so that's that's also interesting. You know, that interplay. Yeah, I I found this always very, very interesting and I guess we saw the stay key mechanisms shift, a lot since kind of taking came around

right? Like I guess early Cosmos and Tazo started with this model of Delegation. So you're actually able as a total order to stay even though you don't run the nodes which enabled, I call this these businesses that now run notes for others. And and then I guess here, I'm kind of made a shift from that.

Where it's like, oh, you have to hold the ether yourself to validate, but then of course, someone came around and realize there's no opportunity to build like a delegation protocol as a smart contract, which is essentially Idol and and give that liquids taking Dimension to it, which even makes it more attractive than the native staking.

So I think, from my perspective, what this is also like I guess if we're thinking about protocol designers, designing their protocol to minimize, Mev. I think they should probably also think about Out designing the protocol to minimize like having other protocols take like share from their core mechanism, which in this case, I guess it's taking where now it shifts to lie to as you said, right. The governance is now with lighter instead of the portal called 7.

Maybe it would would make more sense. I mean, I don't know. Actually, if that's true, but that's kind of like what I was thinking that maybe if you have this kind of natively in the protocol that the steak is already liquid, then, I guess you're taking a little bit that opportunity away from On to make like a drastically better staking model, then you also will actually curious to hear Brian. What do you think about that?

You mean you mean because if you have an outcome where you didn't have like, let's sail, I do which controls a lot of the stake that then apply those in a strong position to basically, you know, extract, Mev, and that's kind of your point. Yeah. Yeah just that also like distribute the steak. How lighter one and maybe maybe it would have been. Yeah, like better that the the from the start we have like a protocol that is like liquid

staking. I think it will go on one of them that now comes around slowly to it. I guess it's Cosmos where there will be these delegation. Voucher is design where now you can't organize your delegation on the on the Hub or you will be able to and then That can be used in different composable ways. So that's kind of like natively built into the protocol instead of having a separate thing. And I think that's a pretty

pretty good idea. Yeah, I mean, I think one thing that's like interesting sort of like on this point is this, you know, like you wasted so like I'm Cosmos, right? That's anybody can like spin up a validator and you have to have like whatever one atom or you know, one token and whatever the the coin is and and then people can take with you and you don't have to have Capital right now. Tasers was already kind of

different there, right? Because tasers required, the The validator, they call the baker to have 20% of the of what other people steak with you in their own wallet, right? So now if I'm like, some random guy who wants to start like the tasers Baker. Well, that's kind of creates a big barrier because if I don't have to taste these myself, like I have to go and like figure out some way to get tazed. He's before people can actually stay with me.

So like I guess the idea of tasos was that there would be some sort of, you know, skin in the game for them and maybe hire security but I don't think that played out like that, right? So I thinking practically speaking, there's never been an issue. Let's say on the cosmos networks that you know about it is don't have their own steak up because first of all, there's not really any attacks they can do that will give them money and They reputation Sookie.

So if they did anything, then people just like go elsewhere. And so I think, but the but the effect is been right at then the the violators or the baker's have to have a lot of extra work. May have to find Wheels create legal contracts. Actually. We have kind of dealt with that and and I think in the end, it has a crazy barrier to entry and instead kind of like, the centralizing thing and And of course the theory.

Mm, I mean, it here, I guess that's there was like, so one guy we were in touch with quite a bit in the beginning Cosmo. So I could see was running Cosmos validator at the gaming space and the launchers Ryan Adams. Who, of course, has become. It is done like fantastic work with bankers and graded like, you know, really great podcast and media thing around mostly theorem and defy. But you know, he was making this tweet. They are like, oh, you know Cosmos staking is a cartel and

too centralized. And yes, interesting compare that with like if urea, right? Because only theorem of course you gain have this thing, as you said, right? Like I mean, yes, it's easier right? For me as somebody who has, let's say, 32, 'if and I want to run my own validator, right? Like I can do that, right? Whereas in Cosmos, you know, the least valid or may have like, let's say, 2 million or Nothing like that of Adam to take down

the Christmas holiday. So, you know the barrier to get in there is higher but from that perspective, but you have to have the capital right and And that's a huge as the huge centralizing effect. Yeah, I guess, on that, right? I mean, for one in Cosmos. Also. The nice thing is, there's many Cosmos chains, right?

The ideas. We have many networks, and there's also like networks that have a lower barrier to entry where you can get started and start a validator and get familiar and make your reputation. So I guess that's one point and the other is also write as you said you need the capital. So what I think Happens. Is that sure there's probably more people that run like notes on their own with their 30 to eat if they have that much,

which is also like already. I guess it's pretty substantial amount and and then but that's kind of like a very long tail of node operators or like in terms of percent of General steak. I feel like that's a very small minor fraction.

It's probably not even very clear how much it is, but I would assume it's less than 10% and we'll probably Never be progress at five Yuan. And so what is actually the impact of that is probably not that much and then on the other hand on the more extreme side as I guess you have more centralization because it's so hard to build this delegation model on a theorem that really only lie do as like a because taking protocol can do it and maybe like centralized exchanges

can do it. So, there's really like, only like a few very big players that than get a lot of steak and probably, in terms of Of kind of how many people it takes or entities. It takes to reach that threshold of something going wrong. Like, I guess that's what you should optimize for, in a way for the proof of stake Network, right? That it's hard to attack the network. You may be Distributing the

entities. I would almost say that probably in terms of this Nakamoto coefficient or however you want to call it. Maybe the costume design is actually doing better than you theorem at least right now. And so, yeah, that's kind of my view on it. Yeah, I mean the thing that seems pretty clear. I think if you add up like whatever coinbase cracking and finance or something, then I think you are going to be above a third for sure on each cerium. And and your cause.

And also I think one thing is I actually theorem hides a lot of it. Like you don't really have that much visibility what's going on. Because, you know, of course, that's also one of the nice things about the cosmos model is that there is this aspect of like I can look at the value. Layers and I can, you know, there's like the not the name and the website and you can like steak with them.

So there's this, you know, in a way it's like this advertising board where like people can show up, people cannot do something. And, of course, it's not so easy to get delegation, right? You have to stand out somehow but much much easier than to, you know, convince some, some institution, I guess. Still like, you know, basically, you know, build some solution where you can, you can take a 8th.

Yeah, I think that the upside of that is also like, now you have this, the validator has some kind of identity, right? There's a reputation as you said attached to it. There is all that I think if you get rid of that again now all the valadares and animals so really they don't care about anything. Maybe about about the Yeah, there's steak. And I guess that is also like

maybe less secure, right? Because now with this reputation of your thing is on the line, your brand, is there you actually kind of increase the security I guess, because you have all that on the line. Whereas, if you're just like a string of numbers, like, let's say on Avalanche where right now, if you run a note really, you just see like a string and you don't really know who that belongs to.

So if they misbehave you wouldn't really know who was it and they could maybe like launching, you know it again and get steak again. And That probably wouldn't happen customers like that. Right? Although, like, I guess the flip side of that is that, you know, the if you look at like a cosmos Network, like the entity is running that are basically identifiable, like you can be, you know, you can figure out at least for most of the okay. Where are they? Who are they, you know, where's

that company? So I think in terms of You know, pressure from government. So, you know, maybe some regulatory, Crackdown it may well be that the theory or model might be more resilient. No, I would say it's still probably for a government size actor. Easy to identify it. No, it's Lydia. So, we talked to me about liquid staking.

Where do you think that's going? Yeah, I think it's still, I mean, we've been feels like a long time but I guess even people that were really in the space is like only two years since people started like thinking about it and then probably like bit more than a year that something is life. And I guess most of it is like I do, right?

And lighter on. If you, I'm kind of being the poster child for a liquid staking and a lot of things designed around that, I think there's been a bunch of innovation since then already, and I would, obviously expect there. To be a lot more Innovation coming since. I mean, I guess it was taken for me is also just like a extension of General staking design that kind of takes into account defy. And yeah, right. Like we've seen a few things already, like some Innovation.

I guess we'll see more and we'll hopefully I have competitive market and see different models play out and succeed and probably it will. Yeah, definitely be. I mean That's why I guess, of course, one. We're also very interested in because it's like, Also like the destroyed, we have to kind of deal with it because it kind of changes the model. Like who is your customer now? Now you have to stick with taking protocol, I guess as a customer which two years ago didn't exist as your customer

potentially. Yeah, and then these protocols can all have like different ways, how they steak and you could probably yeah as an operator you would like try to optimize to get in that set. I guess we talked about about light. Oh how it works there. Where it's more like a Ninh space decision.

And essentially you need to like prove that you have your of your setup of kind of track records and send the application and it's a bit more like that the whole system and then there's like some algorithmic solutions right now.

I guess like, primarily like some, some people that innovated are essentially, what, okay, so originally this lot of foundation itself with the, their stake pool design, that kind of try to look at uptime and Different kind of objective measures to to decide where the stake is delegated, and then marinate and social. I think kind of build off that and built like liquid saying protocol that does a similar thing now, sure. There's like more designs to be

explored there. And I mean, I'm just excited to see some of them one that comes to mind. Of course, where we have explored is now being implemented by quickserver. Kind of Spin-off, of course, one where they are building a system where essentially, the holders of the of the liquid s open can kind of signal their preference when they initially meant the Sega talking to which validated the state should go to and through that basically the

validator set is formed. I'm sure there's like a lot of other designs. One thing I could think of is also like maybe there could be something that just mirrors the existing valid. It said and distribution error. I mean yeah, Lord knows what's there? I guess. Yeah. What's your thoughts friend? How do you expect? It's a good question. Right?

Because I think at the same time it's a I think the pieces around liquid staking think is also a little bit that, you know, you gonna have this liquid staking asset, that's being created. Let's say, steak beef. And you know the ambition of Li the and I think this is true for, you know, many proofs, take many existing. Protocols. Is that then This token actually becomes kind of, you know, the

token that is used right. So, you know, I hold safety for my role at not, if you know, maybe you have poodles on a M&M's that have, like, safety pairs. It's used as maybe some sort of Base token in defy applications. And of course, as big benefit, right? Because then all those tokens wherever they are basically, you know, like accruing saving Rewards. Amen, I think the, I would say the thesis is a little bit that, then you have this, you know, sort of ossification right.

That becomes like the standard becomes like, super hard to disrupt becomes, you know, like it also winner-takes-all Dynamic, potentially, at least can work out like that, but I guess we'll see. But I think there is, there's always SLI a benefit to having, you know, a lot of liquidity crew around. A particularly good taking acid. So it's interesting, sort of asked.

You know, how how much evolution is it going to be, or is it something that kind of, you know, become sort of solidified and, and it's then dislike layer and then all the things are happening on top. I'm yeah, I'm so, I guess I have a little bit question if the same EB change things,

fundamentally Maybe Not right. Maybe, it's, maybe it's sort of like, let's say I hold steak beef and then on a somewhere else and maybe happens and maybe changes what mistaken rewards are and what the valid is do, but doesn't really change, you know, that your C20 a hold. So maybe it doesn't fundamentally change the liquid staking model or like, but, but

maybe I don't know. So, I think that's so kind of like an open question because I do Think I mean, he's gonna change a lot and so I'm wondering if that's going to impact, you know, kind of bring new new models like you saying that maybe are able to out-compete and really existing ones. I think a, for example, I guess now some of these liquids taking Solutions. Look at The algorithmic ones at least.

Try to like, find the most performance validator, which often is just the one that has like, zero percent commission rate. So, I think a lot of the algorithmic solutions on Solana right now, they basically delegate a lot to, like, loafy validators and that. Also, I kind of obviously means that these operators of these notes actually don't really learn.

So, like kind of the money goes away from the note of where it is, and I don't think that's the long-term a good idea in a way, but I mean, maybe if I'm Evie is there, then they would pick notes that do better on Mev. So it could again kind of lead to that because I guess if your liquids taking protocol really like your main product is the apy of your and the Integrations of course, which is mostly the goal of the degrees is also to

increase the apy of your, the holders of the liquids taking acid. So yeah, like yeah, remains an interesting to see. I think we have I'm still very, very early. I think that's another, you know, another big Trend right big thing. That's happening is just a tea, you know, interoperability is really no really starting to happen because there is I mean been work on this for, you know, a long time. We had early things like what was it?

Like the beat go, you know, PTC only Theory, mm, that was like, you know, custodial stuff like that, you know, but then, you know, then you had You know, bunch of different Bridges, but now I think, for example, IBC write a scene like pretty massive adoption. I haven't seen, like, I'm not I haven't really looked at the numbers recently. I think the house Moses did like 120 million, IBC volume in the last day, I guess overall 134 million and one day over a

hundred thousand transactions. So, yeah, I mean, that's Because I mean remember when it launched and then it was like new, a million transactions within like a month very quickly. And now, you know, it's mostly Sloan doing 100,000 a day. And and so I think I use he's obviously doing tremendously well, like getting like a huge amount of adoption. A lot of new cars, must change the launching. And I think the interesting thing there right is that IEC

still? L. You know, IBC is a generalized protocol, right? Where you can pass messages and then you can do different things. But like, right now all that's happening is basically token transfers, right? Like nothing, nothing else like but you even now I think it's, you know, it's not life right on the cosmos up this entertaining, count swing and the ancient accounts things pretty cool.

I think the ancient accounts basically means that you can have, you know, an account and one That's like controlled by a messages from another chain. So like you could imagine, for example, let's say Cosmo. Stop holding awesomo on osmosis and likes taking it or like vote. For example, you could have like, you know, cosmas how could by osmosis and geike both in the governance on the osmosis Network? And that's just one example,

right? I mean, I think there's this and it quick Silver. Right, that example, right is is where you basically say that, okay, you're going to have this one chain that has an account on another chain with weights, taking through it. But then issuing a liquid taking asset on the host Jane. So let's say you have like, let's say quicksave were staking atoms on the cosmos hop and then, issuing some sort of, you know, Quicksilver atoms, which

is another token that Similar to the steak beef and I do. And so I think that's digital use cases that this opens just gonna be mind-blowing. Actually hard to wrap your head around. What exactly will happen. I guess it will. I mean, I remember some years ago. That was the web was he called the polkadot conference and then, you know, someone a

deguerin gave a talk. And someone asked, I think it was Dennis from, he was a security at a time, but he has like, what about composability, you know, you have these different pair chains and then like isn't the great advantage over here, IAM, right? You can you just build on top of each other? And, you know, somebody bids me, you know. Safety first.

And then you can put the steak even to curve and somebody else build something else on top and like how does that work across chains and until now it doesn't work so well, but I think we are on the cusp of that starting to work, you know, pretty well and maybe one more point on this. Like one thing. I found super interesting. I recently did a podcast with the near guys. And they in their smart contract model. Actually all of the Crofts

contract interactions. They said kind of working this asynchronous way in the same way that like, let's say Cosmos Hub would interact with something on as Moses or something on Tara. That's how even on the same chain on near like this works. And and I think that was like very interesting and it's kind of like A good case for just how well that might actually work.

So I think this composability thing on being on the same chain is going to be it's going to look a lot less like a lot less of a Advantage. I think I mean still going to be some Advantage but I think it's yeah that beer design is really cool because I guess in the end of the thing they're trying to solve was that people would want to be on the same chard as some Popular application and everything crowds there because

it's faster, right? So, you avoid having that which I also find pretty interesting and I guess yeah. Nowadays. There are a lot of solutions. I mean IV stands out because actually I said it's protocol. It's very trustless or trust minimized. I guess versus I think, on the other hand, we have kind of

other things. Emerging also, like, I guess it seems, there's a spectrum, always right, but I found But very interesting from Terra from the start kind of Trailblazer in that space initially with Tara shuttle a bridge, which was very very centralized and then but like starting to get assets from other chains into Tara to kind of supplement.

This anchor yield, right? Initially, I guess III so B. If and now for example also be sold soon where they actually switched, also the bridges from that fair. Bridge to Wormhole, which is, at least, I guess another is another protocol. It's again, another Network in and of itself, but I guess it's more distance than having one and then IVC or like other protocols, like this being being like, the ultimate may be a solution of of about Warhol is also that he has an insurance fund it.

Yeah, IPC has unpaid re layers. That's the yeah, so Yeah, I guess yeah, a lot of things are happening and and sometimes you know, the bridges are like a slower than the demand for cross chain applications. I think that's what Tara realized very well or like trusted collateral.

And they really that's that's I think a big part of why became so popular right now is like, so dominating so much because it really like after cross chain bringing both UST to other trades, but also bring collateral. Other changes to Terra itself. So I it's really fascinating to see. See what's going on there. Yeah. Yeah, I mean, in a way, I think it's a good point because in a way, I think Tara is like, the most advanced cross chain application even even something

I could samosas. Okay, like I mean you have a lot of other assets coming on to, as Moses you trade them. But like, actually tear our has a lot more sophisticated use cases, right? Where you have to, you know, you see going elsewhere and I think they are. I am personally, me know, there's a lot of like questions around UST often how sustainable is it?

And but I think it is a I think it's absolutely brilliant strategy to use other crypto assets as like, you know, some kind of backing in addition to Luna so that you have both the scalability of being able to like increase the UST Supply fast, but you have This like decentralized kind of acid pool backing it. And I think if you think of like the if you think of just how massive this use case is like a decentralized stable coin, which is enormous use case, right?

So I have been I think it's very cool and still terrible confirmed. Yeah, I think personally, yeah, I it's a great strategy and I think the one thing where I, what I would find cool because in the end now it's a lot reliant on like the the assets that cover the other trains are through Wormhole. Mostly. And I think that's also like a big risk, of course, to to Anchor. If there is something really goes wrong. That could also be a problem.

And I guess that's where the Entertainer counts kind of come in. Because, in the end, ideally Tara codes use that. And have like osmosis or IBC enable the essence there and maybe they have like a little bit or like at least diversify the bridges. I think that that would be cool. But ultimately like have a bridge that is probably like yeah, IBC based. And obviously, Tara is build on the cosmos SDK so should be possible. I guess.

I don't know exactly the details but I would fight that pretty cool. And I hope someone in Terrorist looking at that too. Yeah. I think this is the other thing that has been like into. I think that's interesting about bridges right? Where R. To me, it seems that you have two very different. Approaches.

Right? Like you have IBC, basically have like like client on each side and then, you know, you can just put asset in between and of course, the nice thing is that, you know, the cosmos are validated. For example, they don't also have to run validator on, you know, some other chain. Nobody has to basically do anything on the other chain and you still can have this connection between the other chains.

So it's like, you know, very permission is very open like, you know, Fantastic Model. And working super well, but of course, a big downside is you have to have that light client and the light client works. Well in, you know, between Cosmos as UK in kind of comes out of the box, but then you try to do that with, I don't know if you're IAM or like a lot of other chains Solana and it's super hot.

Actually, we did a bunch of work of course or one drive to basically do this kind of cell 0 Cosmos and building, you know, Cosmos like And then solidity and, you know, kind of work. It was, you know, very challenging and, and I think that's where you have to the power of something. Like, you know, the Wormhole axle are where you have, you know, Central set of actors who can like, run lots of different chains. And then, yeah, and of course, you have to path dependence either, right?

So, that's something they get is. So I think in the end, both of them are going to be like, huge Success, I think both approaches. Yeah. Yeah, I agree. There's even like I guess even more approaches with the optimistic Nomad design which is like Southern between one. Yeah, don't make me try to explain it. But I guess. Yeah, I mean in general I think yeah, definitely been I guess the Hot Topic in the last few months or actually even weeks disparate interoperability.

And will remain. So and I guess IBC is still kind of under the radar in The Wider sense. I mean, we were also at the Avalanche conference and of course, we have a something Avalanche fans in chorus one, but I guess they are also, it was, you know, there's the something that was kind of similar to the cosmos zones. And then there is also supposed to be a interoperability protocol, but it's kind of not there yet, of course, and I've seized there is being used today.

I guess they're then there. Yeah, we'll see. We'll see how that goes. And even maybe how how the interoperability between because I guess between finality fast finality trains, the IVC connection should be easier this like client design. So I guess more chains could that have that could adopt IVC by. I guess it's always like the thing with standards that you have to convince people to use yours. Yeah. No II do think that makes sense.

Right? So I definitely think IBC will spread Beyond. Cosmos SDK networks part. Of course, it's it is always never going to be a solution for like connecting to bitcoin or, you know, various different Networks. Okay, so the other thing I wanted to maybe final topic, I wanted to touch on is sort of the topic of crypto markets. Now, it's something we like hardly ever talked about on this podcast and also something like I don't feel I have You know, like great insights in.

I'm basically always optimistic, always thinks, always think things are going to be fine. And then like, you know, in retrospect they can look back and like, 2018 is like, should have been obvious that this is like a bobble iron hat. I mean, kind of kind of like kind of recognized it the like but then I was now, of course we do have Interesting times like in the world. So maybe, you know what? What are the interesting times? Probably the most interesting

one. I think the most interesting aspect maybe inflation now, because I think that's mean, maybe there's, you know, the one is, is monetary tightening, right? That lucky. I've had for many many years yet. I Central bank's, you know, like issue, you know, basically, Is the money supply. And then, of course, what happens? We've all the money like that has to go somewhere goes to buy of assets as the prices go up and you know, it's interesting think of real estate.

Right? Like if you're like in a real estate investor, then probably you entire investment career like the 30 years. Let's say you've been around for a long time, right? You can invest in for 30 years. You spend the entire 30 years investing in an, Iron meant we're basically interest rates were going down. And of course, if interest rates are going down, then it means that if you just do this like discounted cash flow, right?

You take all the future income streams and you take and you basically say what's the present value of those future streams. If the interest rate is lower, the value of the streams in the Futures is goes up. And so you guys, you have this situation that basically, Because of the change in interest rates, you kind of bound to have continuously increasing prices. I think we. So like used to this and I mean who remembers like Kaiser High inflation. Like I mean that was in the 80s

right in the 80s. You had that high inflation in. And so now it's weird right now, you all of a sudden having a higher inflation, having this monetary tightening. Of course, you have the whole war and Russia and stuff. So, and I was, I was reading, like, Arthur Hays, you know, he wrote a great post fantastic writer. So that, you know, the big makes it makes founder, you know, he was, he was basically being very bearish, right?

He was like, okay. It's I think for other reasons as well, but it's just been like thinking a little bit about, you know, what is this interplay between this macroeconomics and crypto and was going to mean for crypto markets. He's like a bear Market ahead or maybe not. Do you have any thoughts on that? Yeah, I guess we come to the section where we predict a price first. What's the Bitcoin price on on New Year's Eve? I can only I guess I'll say

that. I mean for the longest time right there was this scenario that like everything will credit. It's been around for a while. I guess. Now, we're at a point where we also have this war on top of everything and I guess we had covid. I guess that was also already. The first time where we thought maybe Now, everything's falling apart in this asset. Bubble is crashing. Now. It's kind of the war, but who knows if it's actually going to happen, and then I guess it's

the second thing. Let's say, if we come from that, what was happening to crypto, when that happens like, for the longest time, right? It also at some point, the, The Narrative was that the a Bitcoin is just hedge against the other assets because that fails, then everyone will flee to bitcoin as

the safe haven. I would actually say, I think if If this all collapses, then probably it will still also mean Bitcoin. And crypto would also collapsing wouldn't be that crypto does good in these times. So I think it will still be correlated then in terms of like, you know, it's this the Mania over. Can we further increase everything? I guess? I don't have a Good opinion on that and what time frame that is or what's the, we know in the world where it just keeps going like this.

Or does it have to fall apart at some point? Yeah. I mean, I think you, of course. Do you have a bunch of trends that are like very bullish crypto and they're not stopping right? Like I think, first of all you just have the advance of the technology and you know, like We talked about a bunch of stuff, right? Like Hoover staying interoperability like so many other things and if he's experienced everything's getting better scalability rights

capabilities getting solved. I think it's pretty clear like so you can have like abundance of cheap transaction. So all of those things are progressing and there's so much money in this space, right? So much funding that even if there is like a pretty traumatic bear. Even if there is a big crash, it may slow down things a little bit but it's still going to progress, right? Because also many companies in the Crypt space they have, I

mean all the exchanges, right? They have like huge more money than you never spend. The many startups have raised so much money. So I think that's just progressing, right? And then I also think mainstream adoption. You know, we have seen nft. So I'd bring in lots of users. And and I think that's also going to kind of continue. I would like, new New Year's experiences, new maybe games. Like, I don't think that's gonna stop. Even if the market goes down,

right? I still think you're going to see more people doing something crypto related. And then the institutional the option, we talked a little bit about it, right? Okay. It's very slow. But of course, the I think the flip side of that is also that it may take these institutions, like a very long time. To decide to do something crypto, then take some long time to like move, they move slowly, but they're not going to just stop, right?

Taking a, I need you might slow down how much money they put in. Yeah, there's also like I guess they have certain, you know, you have a van that has that many millions that you kind of need to deploy and then maybe they would continue that or they just take so long that yeah, I guess it will be continuous. Stream coming in, maybe not as big or that wasn't actually. I saw some person treats. Unfortunately, don't remember who that also can can can give credit here, but shout about.

Yeah, but basically, you know, kind of pointing that out. I just like, how much money has been raised by, you know, like crypto VC funds, equipped investment funds, like, be deployed. And, of course, that's going a lot into, you know, this private funding rounds and of course,

Seeing private funding answer. That, you know, huge valuations like, raising lots and lots of money, you know, everyone's raising money and I mean, that does mean, I guess that you're going to have a lot of, you know, funds being deployed. But at the same time was also sort of the point was okay, but who's going to be like where does it demand come from afterwards? Right? Because, like, okay money goes in, they built something.

They go live. Now. There's some token trading and like, who's buying that token right for in the end of January to return for this mess. This thing took the go up like, you know, ten times by covid-19. So yeah. Yeah. So I mean, I guess that reminds you little bit maybe after 2017 18 thing, right? Where there's also like a lot of money going into these Ico projects and then, you know, they may be came out, but then there was like, nobody there to buy it. Yeah.

I think the question is just, yeah. Where are you in? Are we in this cycle? Right? I guess. Is it already? It's always there still like another wave coming. I do think it denied. The nature of this Market is that it like creates exuberance

and it goes too far. So this reading and it is newsletter from that Moorhead and you know, he was pointing out where then use some sort of, I don't know what it is, like some kind of, you know, moving average thing progressing, you know, going to the Moon Over time and then seeing like where we are compared to this, you know, inevitable labor. Yeah. Yeah. Yeah. I don't like that.

Yeah, it's basically activating bow chart and you saying like, Okay, if you look at that, but I feel like you know, 56% underneath the you know, trend line. So this is like cheapest cheapest ever kind of, right? So I guess that's so definitely know the face of like crazy exuberance, right? That's that's pretty clear. I mean, I guess it in terms of like I guess there's there was this vitalik post ones, right? Like crypto markets are at this point. Have we earned it or something?

And it's very hard for me to like, kind of put into context, how much of it is like actual value and or like, sustainable, obviously, it's kind of not sustainable some things. And yeah, where's the exuberance? When is the point where it's gotten too far? It doesn't feel like it right now. I mean, maybe that's that's why it is the case. I guess that's there's always the problem with these with these things. But I mean, yeah, I mean, we'll see. I don't have too much Alpha to

leak here today. Cool. All right, then. Well, thanks so much for your service fun. Enjoy this conversation and thanks so much for. Yeah, thanks for having me. Didn't expect to be on an epicenter that soon. I didn't even build anything. No. Yeah, it was it was great. And yeah, looking forward to what's to come and Yeah, see you tomorrow at work. Yeah, absolutely. And thanks so much for listeners for tuning in and let us know what your thoughts are.

You can tweet at us at epicenter BTC and yeah, thanks so much. We'll see you next week. Thank you for joining us on this week's episode. We release new episodes every week. You can find And subscribe to the show on iTunes Spotify, YouTube, SoundCloud or wherever you listen to podcast. And if you have a Google home or Alexa device, you can tell it to listen to the latest episode.

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them. Well, thanks so much and we look forward to being back next week.