Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Ethan Buchman & Zaki Manian: ATOM 2.0 – Deep Dive

Episode Date: October 24, 2022

Since its announcement a few weeks ago at Cosmoverse in Medellin, Atom 2.0 has sparked intense debate in the Cosmos community and throughout the blockchain ecosystem. It proposes three pillars for the Cosmos Hub: Interchain Security, the Interchain Allocator, and the Interchain Scheduler. However, parts of the paper have been contested and debated over fears of token holder dilution, potential treasury mismanagement, and even the collapse of the Hub. We chat with Ethan Buchman and Zaki Manian to dive deep into Atom 2.0 and its vision for Cosmos moving forward.Topics covered in this episode:The ATOM 2.0 announcement and follow upThe goal of the whitepaperInterchain Security and its role in Cosmos' futureInterchain Security vs. Mesh SecurityCosmos scalabilityLiquid staking in the Cosmos ecosystemDistributing funds through the AllocatorAtom issuance modelThe motivation behind the Interchain SchedulerThe governance process - voting on the whitepaperNext steps to community adoptionEpisode links: Atom 2.0 WhitepaperAtom 2.0 forum postAtom 2.0 Debate episode on The InteropEthan on TwitterZaki on TwitterJoin Epicenter!Sponsors: Tally Ho: Tally Ho is a new wallet for Web3 and DeFi that sees the wallet as a public good. Think of it like a community-owned alternative to MetaMask. - https://epicenter.rocks/tallycashThis episode is hosted by Sebastien Couture & Brian Fabian Crain. Show notes and listening options: epicenter.tv/466

Welcome to Epicenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution. I'm Sebastian Guizio and I'm here with my co-host, Brian Crane. Today we're speaking with Zach Manion, co-founder of Exclusion and Ethan Buckman, co-founder of Cosmos and head accountant, head informal. No, he's a CEO of Informal, but based on how he's dressed, he could be the HR manager. I would be talking about Adam 2.0 and diving deep into this topic, which I mean, I feel like I've been just talking. about for the last three weeks nonstop on like podcasts and Twitter spaces and everywhere. But hopefully we have to the bottom of it today. Before we talk to Zach and Ethan about the Adam 2.0 way paper and some of the recent changes

there, I'd first like to tell you about our sponsor this week. And that is Tally Ho. And Tallyho is an open source wallet, redefining the wallet as a public good. With Tallyho, you can safely connect to DFI and Web3 with everything you need from MetaMass Plus a lot more. you can view your NFTs in the wallet across Ethereum, Polygon, optimism, and Arbitrum. There's also no need to manually add these networks as they are already plugged into Tellyho. Tallyho is the best ledger support around and built a community of developers that listen to users.

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We're looking for a community manager to help grow our audience and take. epicenter to the next level. If you're a passionate about crypto and creating great content, we want to hear from you. Full details can be found at careers.coris.1 slash o slash epicenter dash community dash manager. That's a bit of a mouthful. We'll put that in the show notes. And please show this with anyone you think might be a good fit for this position. So thank you for joining us, guys, for this very important conversation about Adam 2.0. Yeah, give us a bit of a, give us the arch of how this, how we got here. You know, Adam 2. Pointe was announced like Cosmoverse, I guess now three weeks ago.

What's happened since then? And did it go as you expected? I mean, I think the main goal was to kick off a vigorous conversation about our Adam's political economy. And I think that has clearly been achieved. This is the most, you know, vigorous set of discussions we've, we've seen to date. And it's quite delightful to actually see all that and, you know, to see the passion and enthusiasm about the project. And there were some very bold, you know, offers, let's say, in the paper. And so there's, you know, rightly so. There's, that's kicked off a lot of discussions, some controversy. You know, there's going to need to be changes.

But, you know, we wanted to kick this thing off with a bang and put out a really strong vision for what the future of the Cosmosub could look like. and that should include some, you know, potentially large controversial changes that might need to get worked out. And so I think we're really excited about the level of engagement we've seen. And, you know, there's work now on a charter. There's a lot of discussions around, you know, how we're going to do governance moving forward and all this stuff. And so, you know, at Cosmoverse, I sort of talked about how there's these sort of three big phases of Cosmos, you know, start with this initiation phase, which we completed, which started with a white paper, which we shipped in completion, right?

And now we're moving into the integration phase. And this has its own white paper for the hub. But there's a lot more to it. And it's really about upgrading the overall political economy of the interchain ecosystem, of the Cosmos Hub. And that process is kicking off now. So this podcast and all the other discussions are kind of a big part of that. So yeah.

And what's the phase three? Phase three, I call the illumination phase where we're all finally awakened to the reality of the payments graph. And crypto finally has its impact. on the world and we can break out of our, you know, speculative crypto bubbles and actually, you know, meaningfully restructure the global monetary system. So, of course, I'll have to be wearing, you know, I might need a different tie for that. You're going to need a three-piece suit for that one. Yeah, yeah, yeah, exactly.

That'll be the tucks. Maybe one thing we can also, I think, make sense to ask about at this point. So we have this white paper, right? And there's a lot of authors on there. There's like 10 people. And then I think there's like, you know, other people that were involved in some way that, you know, aren't even on there. So can you talk a bit about like what, first of all, what was the goal of this white paper and what was the process of writing this white paper? Okay. So maybe I can, I can come at the two things.

One, the goal of this white paper is to, is to split out a vision from that basically takes, I think there is a group of people. who work on Cosmos, who feel like the Cosmos hub has been abandoned. It was just collectively abandoned over the last few years. It did not have any strong vision. Everyone, so many people who used to work on, you know, Adam and the Cosmos Hub started their own chains. You know, you have this vast post-all-in-Bits diaspora. You certainly had a team at the Interchain Foundation, but their mandate was a much, more like maintenance and following a relatively conservative roadmap, not, you know, change what

Adam is, change what Adam means, all of this stuff. What, like the whole, you know, the whole political economy about Adam, we had an ambitious roadmap. Try to try to even imagine what Adam would look like as like a top top 10 crypto asset, what Adam looks like as a driving force for change for like all of like economics generally. Like how do we? So there's like just sort of this abandonment and whack of ambition that was like pervading the Cosmos Hub as a culture. Also the political economy of the Cosmos Hub was never ending sort of back and forth between All InBits and the ICF over who is supposed to even be involved in charge of this thing with neither party really wanted to be in charge. And so like that was that's kind of the framework.

The framework was break out of that cycle. The second component of it was, so then it was the process like. The process was like in sort of, I would say, so, you know, the liquid staking work that occlusion has been working on has been going on since 2021. It took quite a bit of, you know, it's been, it's been a slow burn to bring, to figure out how to make liquid staking. And it, liquid staking always seemed like a very important primitive because of the fact that we don't want to have defy on the hub, we needed to figure out, like, liquid sticking is a very

natural solution to the problem of how do we get out of an exponential issuance regime. And if you're, as long as you're locked into the exponential issuance regime, like your ability to change anything else is very limited, right? Like the potential capabilities of the hub. So we, we have this, like, sort of long-term thing where, like, the inclusion co-founder there's me, Christy, Tony, Schella, a team at inclusion have been like diligently pushing forward liquid staking because of the fact that it unlocks a lot of other possibilities. But the other thing that we saw during the sort of, you know, 2021 cycle is we saw a lot of new crypto-economic experiments.

We saw MEB become go from being like a thing that people have been in the cosmos community have been hypothesizing about since 2015 and 2016, becoming like an actual industry. We saw like, you know, Sunny was tweeting about, and like Sunny and me and Taririno like DMs about, you know, how fascinating the like Olympus Dow mechanism was. And all of these things kind of got sort of eventually started to come together as a set of building blocks. And then an R&D effort was kicked off with many, many people,

many of whom are authors, but many more people are not authors. We also, you know, we like Christy and myself, we invested in Mechatech, we invested in Skip, we were talking to all of the MBB people. I spent a lot of time to the FlashB people. There's this whole research effort that, like, was just kind of many different people. I met Max, who, you know, really turned the allocator from being just like a set of bullet points for a long time. I met him at the hallways of Osberg on, and Max and Sam were able to work together to turn the allocator into a fully fleshed out idea, or at least a partially fleshed out idea. You know, the idea of, you know, Jahan and, like, the informal ICS team became, like, big contributors to the idea of the scheduler.

Sam also was a huge driver of the scheduler idea, but we all talk to our friends at Skip and Mechetech extensively. So like there's just this whole sort of somewhat organic, community-driven R&D effort to try and bring all these pieces together. And then we decided to set ourselves a hard deadline of having something big to announce a Cosmoverse. And we were able to get a draft of the White Paper out by then and kick off this conversation. Yeah, I think this is one of the things that stands out regarding the White Paper. It's just there's a lot in there, right? There's a lot of different, you know, things that have been worked on. and new things, right?

So some things I think are like reasonably well known and some things I think we're very new. So I think maybe what makes sense is we can talk a little bit about some of those changes that, you know, either are like coming and in works or that are, you know, being proposed here and then talk, you know, then maybe take a step back, talk also about governance, this entire process and maybe,

but I would say let's start with interchained security. I think interchained security is something. We've actually never talked about on this podcast. I think in the cosmos community, it's like reasonably well known, but I think I wouldn't say it's something that's well known in the large crypto community. So like what's interchained security and what is the role that interchained security will play in cosmos in the future? So if you don't mind, just before we go into interchained security, just to add a little bit more framing to the structure of the white paper and, you know,

and why we would jump right into interchent security. at a high level, you know, the white paper is really putting forth like three key pieces that of like how to think about the future of the hub, right? The first is that there's a new secure economic scaling layer that includes interchained security and liquid staking, right? And it proposes that interchained security is the way to build new functionality for the hub and liquid staking is the way to extend the economic zone of the cosmos hub like Sertazaki was referring to before, right?

And, you know, occlusion did all this work on liquid staking, and formal did all this work on interchained security to set this foundation for how we could extend the sort of economic reality of the hub. So that's the base layer, right? And in some sense, everyone kind of knew or was supportive of these two kind of key features. But then the question the paper wanted to answer is, well, how do we build an actual product out of this and a vision for the hub that is built on top of this new secure economic base layer? And so, you know, the next sort of key piece of the paper is that, okay, we can create an economic flywheel on top of these two things, using these new proposals of the interchained scheduler and the interchain allocator,

which we can obviously get into in a lot more in a lot more detail later on. And then in order to make all of this work, it's going to require basically a new governance system and treasury to oversee development and to facilitate the sort of on-chain, on-chain coordination. So those are really the three pieces. Secure economic scaling, the economic flywheel with the scheduler and the allocator, and then the governance and the treasury. And they're being proposed as an integrated whole because the idea is that we kind of need

all of this to put forward a new, a new vision for the hub, right? So, so that's the kind of higher level, higher level framing. And then we could start going through, you know, all the different, all the different pieces. And so starting with interchained security, the crux of interchained security, you know, just base layer is, you know, we want the hub to be a simple, minimalistic, low surface area, high security, trusted, reliable place, to custody assets, to, you know, enter the ecosystem, to integrate against, and so on. And that requires a particular kind of care around its software development life cycle. And because there isn't a virtual machine on the hub and there's general agreement that

there ought not to be a virtual machine on the hub, the idea is that the proper way to extend the functionality of the hub is to follow, you know, standard good software development principles of modularity, you know, and build things, you know, in separate modular components. And because we have IBC, because we have the power of tenement and all this amazing, stuff, we can actually build additional functionality for the hub as separate blockchains, where the validators are the same as the validators for the Cosmos Hub, right? And that's the sort of core base idea of interchained securities. It's a way to extend the functionality of the Cosmos hub by spinning up new blockchains that inherit the same validator set. And that can resolve a lot of

tensions we've seen in the past over governance proposals. Some new feature wants to be developed. Someone wants to ship, you know, Cosmosin to the Hub or something like that. There's, you know, a big contentious vote. And there's a lot of concerns around the security, what kind of service area this would open up on the hub and so on. And so Interchange Security allows us to preserve the minimalism of the core hub while still allowing the functionality to expand around the hub using all the protocols and all the pieces we've already built in the sort of bottom up way.

Right. And so while we see many other projects in the ecosystem pursuing shared security solutions and charting and all these kinds of things in sort of a top-down way, You know, we built IBC. It was, IBC is a general purpose communication protocol for, you know, arbitrary state machines essentially. And it was always sort of known that on top of IBC in a more bottom up way, we would build these more complex cross chain protocols.

One obvious one being interchained security where you can simply inherit the validator set from another chain. So that's the, that's the sort of high level, high level initial framing. Of course, you can do a lot more with interchained security. It can become a vehicle for other chains that aren't just trying to extend the functionality of the hub per se, but are, you know, looking for a secure validator set to launch an application and will maybe spin out into a sovereign chain over time or existing sovereign chains want to spin in and sort of join the economic zone around, around the Cosmos hub.

There's a lot more sort of political economics that can play out once you have this feature of interchained security, but it's really a sort of base functionality that enables the economics, economic zone around the hub to start to expand. Yeah, I mean, I think that you brought it up, right? Because I feel like that that's one point where it's maybe a little bit confusing, sort of, you know, what is the main vision for interchained security in the future, right? Because one is, okay, there's a hub and, you know, there's this idea, oh, let's put Cosmosm on the hub, and then there was resistance.

And it's like, okay, let's put it in this separate chain that's still secured by the Cosmos hub, by atoms, you know, but it's kind of decoupled. So it's just sort of like maybe good compromise. And you can imagine like different types of things where like, okay, the hub says we want to have additional functionality and we put it there. But then the other thing is, okay, you just have some chain and they don't want to run their own valid data set, right? And they want to use their valid dataset of the Cosmos Hub.

And then they're kind of like buying basically not that dissimilar from something like in Pocodot, right? Where parochain basically leases this slot and then gets this valid dataset and, you know, there's security and processing of transactions. So how do you see this in the future? Do you think there's going to be, you know, going to evolve into, you know, some marketplace where, you know, like lots of new chains can come and kind of bid for places or? So first thing I would say is empirically I was wrong about interchained security.

I was wrong in a couple of different ways. So one was, so like the reason I supported Prop 69 was I. I thought that the demand for interchained security was going to be low for sort of external teams that we wouldn't actually be able to grow the developer base of the Cosmos Hub. So we would just end up in a situation where you had like the same Cosmos Hub team

supporting like 15 chains for each, like for features that we wanted on the Cosmos Hub instead of, and so that was kind of a little bit of like why I thought Prop 69, was a good thing. And I was completely wrong about this. Empirically, like, we have attracted an enormous and expanding set of builders into the Cosmos Hub ecosystem through the feature of interchained security.

Like, I was completely wrong about it. Empirically, you know, just from talking to all of these, this entire universe of potential users, there's an enormous amount of latent demand for interchained security as a product. People are very excited about it. And that is a huge factor in how we have, how we have started, you know, and basically going through the sales cycle. Like I think the sales cycle of actually trying to convince projects to join, to use intertran security, like kicked off seriously. Maybe in the spring of 2020 of this year.

Yeah. And so when we when we kicked that off, initially I don't think it was going, it was going about as badly as I was. expecting. And then we just started hitting user after user after user. And it has just been, so that, that like really reshaped, that was a huge influence on the white paper because it said, hey, like, we really do see signs of product market fit here with interchained security. We should design the white paper to like, to like, you know, push down on the gas and go, go as fast as we can. And like, essentially this become, you know, in some sense is like we're investing in the growth of interchained security because we have such strong signal.

of product market fit. Yeah, I mean, I would say I was somewhat uncertain about the product market fit of interchained security for other chains. What I was confident in, and the reason I didn't support Prop 69 at the time was because it certainly, I always felt that the interchained security was the right way to sort of offload the risk of developing the hub and, you know, have the hub be able to serve as this sort of stable, mature kind of minimalistic anchor where you could extend the function, right? So you could extend the functionality with interchange security.

So even if there wasn't the sort of demand from other chains to use it, there was still a base case just from a better software development life cycle, kind of long-term development of these systems that made interchange security make sense just as a way to expand the hub and expand the teams of the hub. And once a formal sort of got building interchange security and we had something real that people could actually start to believe, oh, this is really coming soon. Then we started going to market and we started to see, you know, maybe somewhat to our surprise. Some people thought it would be, you know, in high demand. Others were kind of less sure. there seems to be a huge amount of demand for it. And that's going to change over time. We don't know exactly how it's going to change over time.

We think we could build out a very healthy economy around the Cosmos Hub. And that's part of, like you was saying, part of the motivation for the paper was to kind of build on that, on what appears to be, you know, strong product market fit for interchained security. But even without it, you know, you have to keep in mind that there's still this base case of this is the right way to extend the functionality of the hub from a pure like sound software development kind of principles perspective. and one of the things we are trying to achieve is to transform the way software is built and deployed, right, in the long term. And that's something Cosmos has been working on for a long time. That's like part of, you know, informal systems mission statement. And that's something we're doing. I mean, the way people are building blockchains today is, you know, unlike anything they were doing five years ago.

And we hope that's going to, you know, continue to have an impact on the wider software development community. And, you know, we're trying to prove that out with these new, you know, these new ways of building on the internet of blockchain. So one of the things that I find interesting about internet interchange security. I don't know if this is still in the roadmap, but it's these different versions that have been kind of laid out for how interchained security will roll out. So the first version, I believe, is this where a chain that's on interchained security inherits the entire validator set,

and then there's a second version where they can inherit a partial validator set are more like an opt-in relationship with validators. And then there's a third version where they can have part of their validators, be the interchained security set, so like the set that's securing the Cosmos Hub, and then they can also onboard their own validators externally, right? So if another validator that's not on the Cosmos Hub and part of the Interchain Security set, that validator could also onboard and be part of that chain security. When I first heard this, I thought there's a logical version 4,

and that version 4 is where, like, chains are just validating each other. And this idea has been put forth recently by Sunny and the osmosis team. And their vision for how we arrive at, say, a more interconnected interchained is through this mess security model. And I wonder, I'd like to confront maybe with this mess security idea, does interchained security at some point become more of a mesh? rather than this more like hub and spoke model that I think the hub has been carrying for like a long time and seems to be carrying in these different versions or at least in this vision that's been laid out, does it arrive at where everything's just validating and securing each other at some point?

To some extent, I mean, you know, if you look back at the original at the original causal hub white paper, yes, it's proposing a hub and spoke model, but it's not just proposing one hub, right? It's proposing a multiplicity of hubs. And it's saying we're going to start with, you know, we're going to build one hub, but there ought to be others. And and that's in the paper. And so in some sense, the topology of the cosmos network and, you know, what we're now called the interchain was always left open and was always expected to be a mesh, right? It's not just a pure hub and spoke model. But if you look at any, any, you know, network in the real world, they tend to have kind of power loss scaling. They tend to have nodes that are more, you know,

well-connected than others. They don't have singular hubs, but they do have, you know, it's not like a pure hub and spoke, but there are, you know, nodes in the network that are considered more hub-like than others. And being a hub is sort of a fractal pad. You can look at airports and things like this as an example. And so, again, that's always been sort of part of the idea of how the interchain would emerge, that we would build this permissionless communications protocol. Topology would sort of emerge from it.

And there are many ways to share security over the interchain and to have different chains sort of participate in each other's security budget. Like you've sort of articulated here, there's interchained security. V1, which you can at the very least think about, you know, just as a way for the hub to extend its own functionality. There's the fabled V2 and V3, you know, which you were referring to. And then, and then there's this, you know, V4, I guess you could call MESS security. If you like, I don't know if they like calling it, calling it before. It's also a very interesting idea. But there's much, there's much more too, right? There's other ways to kind of share security across the interchain. There's now ideas around heterogeneous tendermint, right, where you can basically, this is something we're talking about for a few years now, especially with the, as well, with the Anoma team, where you can leverage, overlap. that exists between the validator sets to get stronger guarantees out of the consensus and out of the ordering and so on. And mesh security is sort of a start at that, but it's really just about, you know, some slashing and, you know, it doesn't really do much for transaction ordering,

whereas we could do a lot more. So it's certainly always been the vision for, for this interchain to be a mesh, the same way the internet is a mesh. But like any mesh in nature, there, you know, there will tend to be some kind of power loss scaling. There will be, there will be nodes within the mesh that are more more hub-like and the Cosmos hub through its, you know, through its mission to be a stable sort of anchor in this thrashing sea intends to be one of those hubs, not the only hub, maybe not even the biggest hub in the long term, but at least, you know, I would hope the longest-standing hub. And that's what's important to me is that kind of long-termism. If you think of the, I mean, of course, one of the challenges, at least with this initial

version of shared or interchange security is that, you know, if you're running a validator on the hub, now you're also going to have to run, you know, this other client, right, for this other chain. And so sort of like, you know, your demands increase a bit. Now, maybe that's like not that bad, but then if you imagine, you know, 100 chains, then like, complexity grows a lot. So I'm curious, like, what's the, you know, like how, how much does scale? Like, yeah, I mean, there's a, there's a lot of work happening to start thinking about, um, how to make it scale more. Right. And so. So we can imagine, I mean, validators today, you know, there's some validators that are running a dozen chains, dozens of chains.

There's a lot of work now going into tendermint and the SDK to make them just more vertically scalable. There's, you know, optimizations kind of all over the place that we can be doing to improve things. And then there are some, you know, there is some research going on directly in at the interchange security level of how we can make that, that more scalable. And so there is a lot of opportunity there to improve the scalability. But it's funny because the cosmos vision and approach is always the same. It's like, do the simple thing that works, you know, that will likely, that will likely have product market fit and unlock new opportunities. And then things you, you didn't really know before will emerge to solve your scalability problems,

right? And, you know, as we did that with application specific blockchains, everyone's like, how's this going to scale? And, you know, no one's asking that question anymore. But now we have things like roll-ups and all this other, you know, ZK Brooks and stuff to help things scale. So we're doing a sort of similar thing with energy security. It's like, let's do the simplest basic thing, building on type of IBC that it allows us to extend functionality in a secure way and we'll sort of,

you know, be able to take care of scalability in the longer term with all the R&D that's happening within our teams, around our teams, and so on. So yeah. Moving on here to another component of item 2.0, and that's liquid staking. And so, you know, if we look at, you know, liquid staking is this mechanism by which one can leverage their staked assets in, in defy, and other like financial activities. And so the idea is that you solve the staker's dilemma by allowing staked assets to become liquid or at least some derivative of that staked asset to be liquid. And liquid staking has been, you know, tried and tested in Ethereum with like platforms like Lido, also like in Solana and lots of other chains. In Cosmos, we've been talking about liquid staking for a while.

And there's a number of participants like companies and startups in the space that are building liquid staking. solutions. So Stride is one of them. P-stake was early to this market as well. Quicksilver, of course. What does the cosmos implementation of liquid staking have that's unique? And what are the characteristics of the cosmos ecosystem as this kind of grouping of layer ones have that makes the implementation unique compared to something like Ethereum where you have one layer one and basically everyone's staking on the same chain? Yeah. Okay. So inclusion has been working, has been sort of spearheading the liquid staking. Well, what we, what occlusion has been building is specifically a primitive for liquid staking to make liquid staking adoption easier. So, you know, in, in most chains that have liquid staking, liquid staking was sort of an afterthought in the sense of, hey, we, we built the system. had staking, we need to have stake in order to have to drive to like secure the consensus layer.

Maybe there's this desire for have liquid staking on top of it. And then whatever programmability your platform enables, you can glue on some liquid staking components on top of that and do it. What I think of is maybe like the occlusion perspective and what I hope to become the Cosmos perspective of on liquid staking. Is liquid staking is not just interesting from a individual staker trying to optimize their returns point of view. It actually unlocks the dilemma that like was sort of, I think like one of the most clear,

was very clearly articulated in the original Cosmos white paper, which was, hey, you have this problem, right? Is everyone, everybody likes the idea of, you know, cryptocurrencies have been very attracted this idea of fixed supply assets, deflationary assets. These are very powerful ideas. But if you have a staking system, you will have other economic use cases for your stakeable asset. And you will constantly have to be an equilibrium. And the only way to stabilize that equilibrium is to constantly mint an exponentially increasing amount of those assets. And if you actually get to a world of large scale adoption of liquid staking, i.e. everyone, nearly everyone in your staking

ecosystem is using liquid staking. You basically have created a new security ecosystem, a new security system for the chain that no longer requires exponential inflation in order to be maintained to be stabilized. And that's sort of, that's one piece. And so what occlusion has been trying to do is been trying to make adoption within the staking model because basically if there is a world in which to adopt liquid staking you have to wait 21 days unstake give up 21 days of rewards just the workflow of oh I'm a user I'm going to like click a button on a website wait 21 days come back to that website in 21 days then like adopt liquid staking like the the adoption of liquid-staking staking will take forever.

And what inclusion has been working on and is slated to be merged to the default Cosmos SDK staking module is a set of primitives that allow you to have like sort of a layer in which people are able to adopt a liquid-staking solution instantaneously through a transaction without having to wait an unbonding period to join the system. Do you want to talk about the expectation that liquid staking is actually going to be carried out by blockchains themselves rather than by centralized providers or interchained accounts and sort of how that how that connects yeah yeah that was my next question actually I think there's a there's a real user experience challenge here that we're probably going to end up

facing which is that you'll have these kind of ecosystem level liquid staking providers like the ones I mentioned earlier but then each chain may also opt to do their own want to capture those assets and do their own liquid staking then we end up in in this situation where where you have all these assets that essentially represent very similar things, but that aren't fungible. And we already have this problem with USD stable coins, maybe not so much in Cosmos, but in Ethereum, there's just like a ton of different USD representative stable coins that aren't fungible.

And for users, it's very hard to reason about, like, what are the security models behind those coins? So how do we solve this without creating like a huge cluster fuck? So I guess a couple of things that are, I think are important. One is, so I think that the fact that we have many USD stable coins is a good thing. It's good for decentralization. It's good for the economy. Because basically what you want to have for like every, there are multiple categories that naturally occur in stable coins.

Optimizing for, you know, different tolerance, risk tolerance on minting mechanisms, different regulatory stances, different, you know, affiliates. and brand affiliations associated with your stable coin. There's a very large, like, high dimensional space of stable coin designs, and it's good to actually have market leaders kind of optimizing for each different thing. What we, what I suspect is the case with liquid staking is it is a similar sort of thing, where there are, where it is actually like, there's a lot of different dimensions to optimize for for liquid staking solutions.

And the whole point of the occlusion liquid staking module is to make it possible for people to spin up projects explore all possible sets of optimizations around creating a great liquid staking product without specifying or picking winner, just making life easier and the UX better for all of them. And I think the optimal outcome for Cosmos is in many ways probably, at least for Adam, is going to be like a liquid-saking provider that like wins the market as like the permissionless retail-oriented, decentralized, no KYC sticking provider. Another liquid-staking provider is going to hopefully win the like institutional KYC, everyone involved, like the entire pool is KYC model.

And, you know, there may be other variables here about how governance works or about how liquidity is incentivized in defy and like whether or not you're interchained secured and whether or not the treasury is helping secure liquidity for your asset or you're an independent sovereign chain and you're using your own governance token to incentivize liquidity there's so many different variables here that I think it's particularly it's it's probably a good thing that we have a lot of that we have a lot of different choices just at a higher level like again you know we built we built IBC, general purpose protocol for communicating between blockchains. And IBC allows other blockchains to stake on each other, right?

And liquid staking is kind of an inevitability. I mean, you can, you know, stick your head in the sand or think you're going to play, you know, whackamol until the end of time to stop it. But it's, it's kind of inevitable. And so you need to, you need to account for that. And, you know, we're moving into a world where ideally more of the liquid staking is going to move from the centralized providers to blockchains themselves that are staking the asses. sets back over IBC onto the hub. And the module that occlusions build that gets deployed on the hub makes it easier for folks to sort of take their stake position from the hub and move it onto those liquid

staking providers. But it does so in a way that they're initially non-fundable on the hub. So it's just like a, you know, a kind of transferable delegation token, but not really a fungible currency by any means that could then get moved into these liquid staking providers, pooled, you know, have the risk managed. and so on and made liquid in various different ways, according to different criteria like Zucky was saying. And so having blockchains themselves play a larger role in issuing basically a medium of

exchange token to circulate within the wider economy that's backed by staked atom is kind of the approach here and to build that representation directly into the system, right? Where there are realities that exist kind of potentially outside the system, you want to represent them a little bit better in the system so that you can manage them and monitor them and so on. That's also kind of part of the cosmos philosophy is to try to better represent, you know, the reality of the world within the structure of the state machines and not just like deny something, you know, that you might not like or you might think, you know, has risks or something. You actually try to try to bring it on board and manage it explicitly. Absolutely.

I think this is going to be very mind-blowing when people see these interchained account applications that are going to come. And I think it's going to be really amazing, right? And one of the power of things here is too is you can build your liquid staking protocol. on your own chain and then connect to different cosmos chain via interchange accounts and basically it's just like liquid staking out of the box which is very different from the way liquid staking solutions have worked

so far where basically each time for each chain something is developed deployed, you know, it's a lot of effort in there and so I think that kind of scaling is going to be like super powerful. People just still probably think of IBC as like some simple token bridging thing but it's really not. It's general purpose communication protocol for state machines

And with interchange security and interchained accounts and interchange queries and, you know, a lot of these things that are starting to come online and, you know, we'll start to have like real product usage next year. I think people are really going to wake up to a new breed of interoperability that will really, you know, really shake things up and get them to kind of really understand where Cosmos is going and kind of how far ahead we are in thinking about, you know, the inner chain and inter blockchain communication and so on. Yeah. So that's very exciting. So we've talked about two things so far, right? interchained security liquid staking. I think actually both of those things are things where basically like everyone's on board

and it's been in work for a while and there's not much like controversy or discussion about it. Maybe there's like I don't know some minor things but like overall right, pretty much consensus and I think the white paper basically sort of describes the state of where we are

if that describes what's coming what's been in the works. But then there are other things in the white paper that are I think very new very novel. And so let's get into those. I think that's also where most of the discussion has been. So interchain allocator, right? That is something that I think before this white paper, probably hardly anybody's heard of, you know, that wasn't maybe directly involved in the creation of this. So what is the interchained allocator and what's the idea behind it? I'll come up with it from my point of view, which is when we started Cosmos,

everybody was like there was this ongoing the most common critique of Cosmos and the atom token was the technology stack works amazing like this seems like you have product market fit among builders like lots of teams like want to build on you why does the atom accrue value and so you know even from like the very beginning

when you know PolkaDov basically forked the white paper they were like okay we're going to have scarcity and parot chain options that's going to align incentives between like the security layer, the beacon chain rare, and the application layer. And my immediate criticism of that idea was, well, no one who is a really great builder is going to pay to join your ecosystem. They're going to like, like sovereign chains will exist.

You will be able to build outside of your ecosystem. Like you're not going, you're going to adversely select out the best builders for doing that. And we've constantly struggled with, hey, like, what would make, what overcomes adverse, like how can you align an asset with an ecosystem without introducing adverse selection? And there's a second problem, which I would say is going on in the Cosmos ecosystem, which is we want to figure out a way of generating revenue for the Cosmos Hub to pay for the security budget and pay for, you know, the ongoing development and the ongoing R&D and all of this stuff that isn't generally basically like printing new tokens,

like that is genuine cash flows. And so as we've seen as sort of DeFi took off over the last two years, we've actually seen that both MEV and some forms of yield like providing liquidity, especially in stable coin assets can be, it's reflexive, but like do represent real cash flows and not just people buying speculative assets in the system. And so the question has been, okay, what we need to be able to do, like the theory, the architecture of growing the Cosmos Hub economy

is having the ability to strike deals with builders, with new chains, with new applications, to be like, hey, we want to support your application. We want a partnership between Adam and the application. And then we want to leverage that partnership to make sure that Adam holders are getting access to real cash flows that are coming out of your application, whether they are transaction fees, whether they are MEV,

whether or not there is a source of true, like, cash flow positive yield that is coming out of your system. An example would be like the liquidity between a bunch of different variants of ICS secured and state data. So if you have a whole bunch of staking derivatives, there are liquidity pools between them. That is actually like sort of real yield and real cash flow that can be tapped into by KOSOS Hub. In the same way, like if you're originating those state assets and then doing a transaction,

providing like best execution as a service by the scheduler is real cash flow. So, like, the idea is this whole thing is one system, but it's basically how do we get access to real cash flow within the cosmos ecosystem. And basically, we think that, like, no other blockchain has ever really tried in a serious way. Probably Ethereum with some of their economic changes have probably been the closest to try and tap into real cash flows as a way of sustaining the security of your blockchain. But I think we all know that, like, the blockchain space cannot survive. if like that is not the frontier of experimentation. And so this is like been like the core motivating factor of the allocator, but the allocator is just a piece of this whole system of trying to get access to real cash flows

and the security budget of the Cosmos. Yeah. So I mean, to add to that, I mean, like, you know, the interchain is obviously going to be way bigger than the Cosmos hub and already is. And the hub is, you know, is, is positioned well to lead and steward the interchain and to help it grow. And we've already seen, you know, there's, always been a question around alignment between the hub and the rest of the inner chain. We've already seen a kind of natural approach to incentive alignment with the Cosmos

Hub, with the atom holders, which has been through airdrops, right? And I sort of like the way Zucky framed it in his talk. And some other times heard him talk about, you know, the allocator and what sort of happening there is like air drops are a kind of informal off-chain, you know, way to do incentive alignment. But we've seen a lot of them. They've obviously, you know, a tremendous amount of value and bootstrapping within the ecosystem in very, very powerful ways to do that. And the idea behind the allocator is to actually, you know, formalize that better, build tools around it, make it something that can be arranged kind of more directly to create incentive alignment and more concrete sort of political economic relationships between

different blockchains, again, over IBC using all the native kind of tooling we have, governance functionality, IBC functionality, and other kinds of modules to be built to actually enable the hub to to help grow the whole interchain and build something that's, you know, that continues to be much larger, much larger than itself, right? So the hub as sort of being seen as something that helped initiate this thing, that is stewarding this thing, and can remain somewhat incentive aligned with something that is, you know, whose goal is to be much, much bigger than it and ultimately, ultimately kind of successful on its own and the allocator is a way to sort of, you know, help continue that process that was sort of bootstrapped

with with airdrops, but to become more formalized and something that could start to be, you know, reasoned about in more, more sophisticated ways and could build out, you know, additional kinds of products and infrastructure and offerings that can help change that are booting up or that are, you know, entering new phases in their life cycle for leverage the benefits of the hub, you know, to help them sort of go off into this, into this thrashing sea of the interchain. One of the things that the paper talks about is, talks about the structure, for funds to be distributed through the allocator.

And so I think this is the thing maybe that was the least understood. At least I went reading the white paper. It wasn't clear like how this would work. And I think the thinking around this has also evolved in the last couple of weeks since it was announced. So can you give us an example of like what do you, like when the allocator is deployed and there are funds in the treasury and those funds are meant to be effectively allocated? what is this going to look like?

Talk about these councils and this community council and how is that governance process going to work and what are the assurances that Adam holders have that funds are not going to be misallocated or misspent because I think that's been one of the main criticisms of this is the fear of misallocation of funds and things like that. Yeah, I mean, the goal is to be setting up much more mature governance processes, right? And that's something we have to do together. That's something that's going to have

to be architected between core developers, atom holders, community members, you know, people who are, who can oversee, oversee funding. There's a lot of work happening, for instance, on the ICF side now to restructure things to, you know, we're setting up the TAB, the technical advisory board. We're bringing these, we're bringing folks together to try to mature the funding process. And, you know, we're using new language to describe the commitments we make to each other, the promises, how we follow up on things. And so there's a lot to mature there, and we want to bring a lot of that on chain as well. And the reality is it's not all entirely, entirely specked out yet. It's something we have to, we have to figure out together over time. And to get started, you know, the proposal is to have

some, you know, concrete things we can do that include some limits, include some checks and balances as a way, you know, to start kicking things off, right? Because we have this situation with the Cosmos Hub. We have, you know, we have a community pool. It's very small in the, in the grand scheme of community pools and there. It has funded a few things that have been actually quite successful, but it hasn't, it hasn't funded core development. It hasn't funded, you know, it's funded a little bit of core development, but not, you know, not really, not really much in the scheme of stuff being developed for the hub. And it hasn't really funded larger, larger projects. It's starting to with Prop 72 and funding some of these interchained security projects.

And that's the sort of kind of success we want to build on and build structure around. And so the idea with the councils and the sort of assembly structure and the new issuance is to kick all that off to actually start having, you know, more sophisticated on-chain governance. And so, you know, the new updates to the white paper have a little bit, especially with the new charter that's sort of being drafted, you know, has sort of more detail on what those constraints will be and how governance can start to work in a in a more sophisticated way. Yeah, maybe just briefly, if I can sort of maybe a little bit of a simplistic description that like I would make of this allocator ideas, like, right?

Then the community pool, we have like funded some things, right? There's been some funding for like different chains or different projects, right? But this has been like small. And also the decision making process like doesn't work so well, right? like having this everyone vote on it is, I mean, can work well, but doesn't scale well. And the due diligence is problematic. And then, you know, you have a proposal. You can just vote yes or no.

But like the negotiation doesn't really happen. Right. So like the way I do, I feel like a simple way, my eyes to describe is, okay, we want to like do this at the larger scale. And then also create processes and, you know, decision making where. where you're able to make those decisions in a better way at a higher scale, leveraging people's expertise better? I think that's basically right. Yeah.

One way I've heard this described is as Juno sub-dows, like similar structure to Juno sub-dows where the sub-dows are tasked with allocating treasury capital to individual projects. And so we could see a future where there are. multiple kind of councils. These are effectively DAOs. These DAOs have some amount of money that they can allocate on projects that is within this DAO's particular expertise, right?

So it could be like there could be a DAO that's funding core infrastructure, open source software, a DAO that's funding like conferences. And maybe there's a DAO that's funding. people doing marketing and producing videos. And there could be another DAO that's funding a specific type of, like I know, like funding Dexas or DeFi protocols or, you know,

similarly to see the kind of ecosystem of DAOs that we've seen on Ethereum, but only a lot and most of the funding would be coming from the treasury, from the allocator. Does that sketch out a little bit of the vision for what this might look like in the future? Yeah, I'll say a couple of things. Like, one is on its head, like we want to move more of the, like the process and like essentially the bureaucracy of growing the cosmos hub, maintaining the cosmos hub into the cosmos hub itself. Like this is this, this vision of the cosmos hub no longer serves the masters of the ICF and AIB, but it serves, it becomes its own master. So that's like one piece.

I would like to like a little bit dig a little bit more. into like these ideas that are in the white papers of like allocator dows and covenants and stuff like that because one thing though that we want like the councils to be doing and the um is like one aspect of it is this idea of going out and like essentially running like a strategic initiative or like a long term incentive align develop like a growth plan for some application right where you're like, okay, like, we're going to, like, this is a more complex deal. Like, we're going to, like, this much governance token is going to be distributed to stakers. This much governance token for your application is distributed to, uh, to the treasury. Uh, we, you are a scheduler and able to chain.

Um, like, like, organizing and managing, like a much more complex deal is something that the, like, covenant idea sort of floats as like the hub can really do partnerships, right? Like, one of the biggest challenges has always been. Another challenge that Cosmos has is because we are so decentralized, like, how do you partner with the Cosmos Hub has been like, like, people will come to us and be like, hey, we want to do a partnership with Cosmos and we're like, hi, we don't have a way of doing that. Like, there's no what to talk to. Whereas, like, you could do a partnership with Polygon or you can do a partnership with Avalanche. If we have this mechanism, if we have this council mechanism, there will actually be ideally councils that you go and talk to and be like, hey, like, we actually have a procedure for doing this. We could actually structure a long-term. economically incentivized alignment with the cosmos, but the atom holders. So that's one piece. The other piece is we do think that a big piece of this stuff is going to be just, you know, an allocation that probably should be small in the beginning, but is just going out to teams

to go out and try and, you know, maximize their revenue and maximize their ability to, you know, maximize profit in an aligned way so that there's essentially like a rev shareback with the treasury. So you're like, go out. So like, we're going to allocate funds. You're going to people who participate in those systems are going to have to essentially like bond as like a surety bond their own liquid state assets, their own liquid state atoms. You can think of this as a form of like leveraged investing where like or like where the Cosmos hub is essentially like an LP and a fund. These are all like trad-fi terms.

But like these are this kind of model is a way of actually going out and like doing a little bit more looser, a little less centrally planned. growth by just picking teams of people and encouraging them to go out and find the best way of sort of generating value in the ecosystem. Now again here, I don't know if there's, I guess there's been some discussions about this, some concerns about this, especially when it comes to, you know, how does this decision making work and is there accountability and control and like, and I think that's, of course, totally understandable since this is like, it hasn't been done before. I think where the most discussion has actually been is in, I think in a few aspects that are like, you know, related to this allocated dollar thing, but not exactly it, right?

So one is the question of how it is being funded and two, the question of the magnitude of the funding. So in the original paper, and I think this has been modified a little bit now, there was this idea of, I think, putting, well, I guess first of all, right, there's some fundamental economic changes that are also being proposed, right, where the amount of atoms started being issued is going up a lot in the short term. And with most of this money going into the treasury, at least this was the original white paper. And then it's going down. And basically the staking rewards going down dramatically. And then in total, right, I think there was something like 56 million atoms, if I remember correctly, that would go into this treasury in the next three years. But again, I think there's been, yeah, maybe you guys can talk a little bit about, like,

you know, what was kind of the idea behind this, the thinking behind it, what has the feedback been and what are the modifications that have been made so far? So at a high level, the thinking behind it was, you know, let's correct the position of the hub having a pathetic sized treasury in the form of the community pool by, you know, by a large mint into the control of the atom holders that would give it a treasury that is, you know, competitive with the largest treasuries in the market. So that, you know, put a ridiculous number in and initiate a conversation about what people think. And that's where the way paper started.

And that was very effective for, you know, actually starting to have that comment. I will also say that part of the perception was, is if you mint a very conservative amount, like, one of the goals of the ad in white paper is to move to a more credible policy around issuance. If you mint a small amount, no one will perceive that your issuance as credible because they will say, oh, you will, you were just minting a small amount and then you will come back for more. And like, where does this end? right and so a big part of the of the intended messaging which many i think a lot of people appreciated but it's uh the optics of around it didn't land maybe as precisely as i was expecting that like the idea was like enlargement over three years it's just supposed to last you till the end of time basically and then uh and that gets you under the the basis of a of a much more incredible

monetary policy the revision is basically realizing where the communication around the intent of this went wrong and basically saying, okay, so it turns up that, like, from my point of view, atoms that sit in the custody of atom holders and are the same thing as atoms that are not minted that could be minted by atom holders. But I think we've gotten from conversations with lots of people in various, in the forums and various chats that, like, there's a significant set of the population of Adam holders who view these things really.

differently. So like atoms that don't exist don't exist and atoms that are minted that they are held by atom holders do exist in some sort of conceptual way and there's a big difference between these things. So it's great. Like it doesn't matter. Like we can just, we, we introduce the tranching concept. The tranching concept implements the kinds of controls that we always anticipated being in the charter. We never anticipated, you know, a deployment of 50 million atoms into the into the economy anytime soon. But, you know, like we, we, we, we, we, we learn from the, uh, from how people interact with the communication.

And I think, um, the charter and the, um, updates to the white paper now more clearly communicate the intent while getting to the same point, which is communicating to the market, that Adams are intending to move to a more credible, lower rate of issuance. Um, and that like, we have, we have sort of upper bounded the expected issuance in a way that the market can then, uh, set expectations from it. Yeah, I mean, at least in my eyes, you know, kind of, I mean, Bucky himself, right, okay, the community pool has been kind of like, you know, very small. And I think that was one of the maybe mistakes in my eyes that was made when the, I think in general, like the atom economics in my view, when Cosmos was launched, was really good and has worked very well. But I do feel that it was one thing that should have been done differently, which is I think,

the community pool should have been larger. And I think if there had been a much larger community pool, then I think they would probably also have happened earlier, right? That there's some organizations that are like, oh, how do we use this now effectively? So I also feel like here, okay, like the obvious thing would just be like, okay, it makes sense that more money is deployed and there's like ideas for how to do it and structure to be built.

So why not just, I don't know, like, you know, I was writing a street threat, why not just put a community pool at the moment, 2% of inflation is going there, put that to 20%, which I think would be much easier for everyone to understand, to accept, just like, okay, it's also easier for like, let's say, say, say, and say, me was going down by 20%, but it's going there, which kind of makes sense.

So, yeah, I'm curious, like, why not this path and maybe talk about a little bit about, like, the logic behind this monetary changes, that, you know, going beyond just funding there, they allocate it, right? Because that's one thing, but that's not the only thing that's happening here. Yeah. I mean, you know, what we're, what we're not trying to do is make a few little tweaks to the Cosmos hub to just like move forward a little bit, right? And sure, there's lots of little tweaks you could do. You could you could, you know, make some small proposals for

this or that. What we wanted to do was come out with the material upgrade to the Hub's political economy to set it up for this new, this new phase of the Cosmos project, the integration phase, right? Where the hub is going to be, you know, a steward. and a leader within this wider interchain, it is going to support the growth of that interchain, and it's going to work towards being able to actually make a meaningful intervention into the global monetary system in the long term. I mean, that's kind of the goal. This is a more sustainable monetary and financial system, right? And so sure, we could tweak, we could tweak some small things, but we wanted to have a more material upgrade of the governance structure, of the sophistication,

of decision-making. And, you know, that was the idea behind putting forward the Treasury. And so, you know, if you just minted stuff into the community pool and kind of didn't do anything else, then you're still sort of leaving it up to, okay, well, someone has to come along and build organizational structure and figure out all these things. And so we wanted to kind of put those more together and say, look, okay, maybe minting, you know, 50 million atoms into one undefined spot over the course of three years is excessive. Fine, you know, that's great. Let's keep talking about what to do. I think there's general alignment that there needs to be more sophisticated on chain governance. and that's really what the Treasury proposal is all about.

And then it's more a question of actually how we kick this thing off. And so the new proposal is that, okay, rather than just some consistent issuance into the Treasury, you know, over three years, it'll be broken up into tranches. It's up to Adam holders to vote to have those tranches actually enter the treasury pool. Maybe one idea which would be, which would sort of be, you know, a compromise between all these things that would actually maybe help kick things off a little better is to have the first tranche go into the community pool, right? And that might be able to allow things to get started more quickly, right? The first tranche, you know, ends up in the community pool.

And now we have a community pool of, say, you know, four or five million atoms. But future tranches are minted into the treasury. And the idea is that gives the community pool the initial kind of runway to get, make sure the treasury is set up in a way that it's comfortable minting into the treasury, right? Because the whole point of the treasury is that we set up more sophisticated, sophisticated governance structure to actually oversee, to oversee funding and, and so on. Right. So, you know, something like that, I think, I think would make a lot of sense.

but just tweaking the community pool tax, I don't think is sufficient because that doesn't say enough about the actual, you know, larger scale governance changes we need to actually set up more sophisticated decision-making coordination and so on. Totally. I mean, I do recognize that I think those governance changes are needed, right? I think my, the way I could have, I would imagine that was more like, okay, you know, the community pool is increased and then there's a proposal, right, to the community pool saying, like, hey, now, I don't know, there's five million atoms in this community pool. Now let's move like, I don't know, two and a half million atoms to this, you know, governance structure, control that can then maybe align with like exactly what's described, which I think would also give a sense of like, Adam holders still feel like in control, right, because they will have to vote on like the money being moved from the community pool there and it goes through this familiar process that people know.

Yeah. So I think what I would be proposing is that the structure is that the initial tranche goes into the community pool. And we can do that, you know, as soon as we can get an upgrade to have the community pool mint. But the commitment is that future tranches are going to go into the treasury. But it's the, it's the atom holders that vote. They actually have to pass a vote for those tranches to get unlocked, right? So the first tranche goes into the community pool. The community pool, existing governance, you know, has to deploy it to get the treasury built.

And they have to deploy it to get the treasury built in a way that they will be comfortable with future. tranches being minted directly into the treasury. And then, of course, there will be, you know, and as per the charter, there are ways for Adam holders to get funds to flow back from the treasury into the community pool, into the distribution module and so on. But that way we sort of, you know, set things up with the expectations that like, okay, we start out of the community pool, community pool funds, the creation of, of the treasury system, and then future tranches go into the treasury, but require, you know, an atom holder vote to actually, to actually create them. And that way, you know, beyond the first tranche, there's nothing else created,

but there is, you know, the sort of commitment that future things can be created by the atom holders in this, in this somewhat predictable kind of set way. I think that would be a really nice kind of balancing of all the interests and would give the Adam holders complete control over the initiation of this thing, but would be a credible commitment to moving towards a new system, you know, that they actually have to take responsibility for funding the development of, you know, up front. And that way we kind of balance all the interests, I think, quite nicely. Okay, but that like this sounds reasonable. What this doesn't answer, though, is this idea of like, you know, decreasing the issuance in this way that's proposing the white paper, right? Where it's basically goes up and then goes down a lot over three years and then basically goes to a sort of like minimal issuance. Okay, so this is a separate question, right?

Is the question of issuance to stakers, right? And, and, you know, right now, you know, the reason the issuance is the way it is, is with this exponential thing is to balance this tension between security and liquidity in the in the token, right? So you need some amount staked. And so to ensure that there's some, you know, some high amount staked, we have this exponential issuance model that, that adjust to sort of, you know, ensure that that staking stays around, around two thirds. But with liquid staking and, you know, those dynamics start to change. And what we don't want is just exponential issuance forever because that's, you know, that's unstable for various reasons. Ideally, ideally the, you know, the compensation for security is actually coming out of, the compensation for the security provided by staked atoms is coming out of the things

that are being secured. It's not just coming out of, you know, unsustainable, sort of infinite exponential issuance, right? And so the idea is that the drop off in issuance is more than compensated for by, you know, proceeds from interchained security and the scheduler and the allocator and all these sort of things. What is perhaps missing is a way to more directly tie those things together, right? So, you know, maybe in some ideal world, it's like, well, the issuance drops off in a way that is directly compensated by, you know, new flows from interchained security and so on. And if it's, you know, if it's not, well, then there's a risk because if, you know, if state, makers make a commitment today to say, okay, lower issuance, great, you know, take the money out of our pocket. But we don't, you know, interchange security is not live yet. We don't know how, you know,

so that's the kind of thing we have to, we have to navigate now. And the, you know, actually building out a system where the issuance drop off is, you know, commasurable to the new value flows, kind of directly and mechanistically is, is, is quite complicated. And, you know, so we didn't, we didn't propose doing that. But there's still quite a few levers that Adam Stakers can, can control on how this is going to happen, on when the issue and drop off will start on their ability to actually, you know, take funds out of the treasury and redirect them back to the distribution module to compensate. There's also the matter of if, if there's not enough issuance and people unstake, then once staking drops below the two-thirds

target, then the exponential issuance kicks in again, right? So there's a few different ways. There are a few different levers to kind of navigate this thing. And I don't think we have, you know, the full picture or the exact mechanics here, but there's a number of things that that can make this work to allow the whole system to move towards a world where the compensation for security is actually coming from the system being secured rather than just from exponential issue. That's sort of the overall goal we're working towards what I think is sound and necessary. And the question are the details on how we get there. There's a collective focus of the mind that is required to get to among many different

stakeholders in the cosmos ecosystem and in the cosmos side itself. If we really want to get to a world where we are securing the system via cash flows. Like, I think the, like, the cash flows appear to be out there. Like, there seems to be enough desire to build stuff on top of the Cosmos Hub, on top of interchange security, that, like, we could plausibly get the cash flows. Like, MEV is plausibly large enough, you know, across the blockchain space. Like, there are enough new assets coming. in, there are enough things that could potentially generate the amount of liquidity. So if we

believe, if we attempt to go for an exponential growth of the cosmos ecosystem, which, you know, a lot of sort of, you know, investors in the blockchain space are thinking is a very large possibility. And like hundreds of millions of dollars of capital have been committed to this as a thesis. If we believe in that as the cosmos hub and we sort of focus the, the, you know, the minds of Cosmos Hub stakeholders on saying, hey, like, this is a really important opportunity to make sure that we capture those cash flows into the Cosmos Hub. We end up, we can end up in a really strong position around Adam as an asset that then, like, is the driving force for this change in the political economy rather than just another

alt-clone. Yeah, one of the things that struck me here is, you know, there's a question. that no one's asking here. And I mean, like, these are, these are great ideas. And I think there are, it's great that we're debating them. And it's great that there's a conversation happening in the ecosystem. But, you know, the question is no one, no question no one is asking is what if atom holders are not to up to the task? What, what if this doesn't work?

Like, what if we decide that, hey, like, we need to relinquish control of that, like the ICF and sort of these organizations need to relinquish control of the hub to the atom holders? but in fact the in fact the atom holders are just not up to that task and failed miserably at doing this thing right that we're that we're talking about here have you guys given any thought to that at all i think a lot about that i and i have a very straightforward opinion on it which is we always built cosmos as a way that could succeed in like the cosmos ideas could succeed without adam succeed right and that is a little bit of that is a big part of the core goal and the vision is like, we should take bigger risks with Adam because Cosmos has the bigger idea, the inner chain as the bigger ecosystem, is not somehow solely dependent on the success

of Adam. And so therefore, Adam should take a whole bunch of risk, try to become something truly amazing, potentially fail, knowing that the core ecosystem that we've constructed, the, you know, Evbo's, osmosis, Juno, Agoric, and like, beyond, you know, penumbra and enoma and beyond, are all independent locuses of power and energy and are all going to be running parallel experiments. And so if the Adam experiment does not succeed, all of these other experiments might plausibly succeed. I certainly, this is certainly Adam's curse, right? blessing and curse is that it created this thing that it's that that that doesn't actually need it to

potentially succeed now I believe that that that Cosmos the inner chain you know will be have much more probability of success with a strong a strong chain committed to upholding the values of the wider interchain the way the way the Cosmosub is that that's positioned to be you know a sort of long-term chain that that's stable and and and simple and follows the kinds of principles that were laying out for its development, using interchained security to extend functionality, and so on. So the idea isn't to go and take some crazy risk with the hub or with the atom, but that's not to say that the system can't evolve and that it can't evolve in bold ways, right?

And that's what we're proposing is a bold way for the system to evolve, not, of course, to set it up for failure, but of anything to set it up for success in this new role in sort of leading and stewarding the interchange. And like any endeavor, of course, of course it might not succeed. or it might not succeed, you know, the way, the way we expect. When it comes down to, you know, this problem of are the atom holders up to it, right? And people talk about, you know, decentralized governance and all this kind of stuff. This is something we think about a lot.

And, you know, from my experience, the thing that matters very significantly is building sound organizational structure, right? And, you know, people like to throw DAWS out and say, oh, we'll just have decentralized governance and, you know, and everything will work. And, you know, pay a bunch of lip service to decentralization. And that's not a real thing. That's not how we're going to actually materially move the bar on decentralized governance. And what's interesting about the position that the Cosmos Hub is in, you know, kind of uniquely in the world, certainly in the world of blockchains,

is the level of decentralization around the core development group and the requirement that they actually figure out how to coordinate and work together to build this thing and build the organizational structure and the institutional structures to do it all. And so it's not just like, Well, throw it all up to the atom holders and, you know, let them figure it all out without any kind of support or institution building. The entire exercise here is to actually construct political economic institutions that can carry this thing forward. And it seems like we're doing it in a sort of deliberate and, you know, constructive and thoughtful way, almost unlike anything else, anything else we're seeing out there.

We're really trying to drill in on the structure of these things, on how you set up good governance on the language you need to use to facilitate that. You know, I like to promote this what we call the workflow language. Jackie thinks it's a cult. It might be, but every successful thing is a cult. So at some point in its life, but the point is to actually be very deliberate and not just, not just throw things up to decentralized governance, but actually to construct, you know, organizational structure and institutions that can support this thing for the long term. That's something, you know, we focused on quite a bit informal and something we're, you know, we're building out in the wider ecosystem to get all these organizations to work together because it's not just about some ephemeral cloud of atom holders.

It's also about the individual people that they are that are working together to do concrete things and the conversations they have and, you know, the commitments they make to each other. And so actually, you know, deliberately trying to surface all that and talk about it and cut through the awkwardness of, you know, making promises and commitments to deliver and following up on all these workflows is super important. And just how we're focused on making this whole thing a success in a way that's, you know, quite different from basically every other, every other ecosystem and chain out there. Let's move on to the interchange scheduler, which is the other part here.

And, you know, just to give a high level of the interchained schedule, as I understand it. So the interchained scheduler is a mechanism by which actors in the ecosystem are going to be able to bid on block space. So validers will be able to auction off their block space to market participants. So it's effectively a block space futures market or a mechanism that allows this market to emerge. It's a future block space market. Future block space market, not a block space futures market. And so this would effectively allow market participants to buy up that block space, probably do some sort of block ordering or like block construction, block building work

and reap the rewards of that MED work. So can you explain here what's the, what is the motivation behind the scheduler and why does it need to be something that the Cosmos Hub delivers as a functionality? And the reason why I ask that is I've talked to some folks who either directly or indirectly told me that you know.