Osmosis Updates from the Lab, ft. Derek Hsue (Reverie) — Jan. 19, 2022
Osmosis Updates from the Lab occurs every Wednesday at 10 AM EST (3 PM UTC) on the Osmosis Zone Twitter Space. Replays are available on the Osmosis YouTube channel or the podcast.
After a pandemic hiatus last week we’re back at full strength, minus expected guest Ethan Frey, who was kept away by technical difficulties. We’ll have him back soon to discuss all things CosmWasm.
The ferment in the lab continues unabated. The Gravity Bridge chain is going live this week, the CosmWasm integration proceeds apace, superfluid staking is entering the testing and simulations phase, and Reverie has proposed an Osmosis Ecosystem Fund to massively build out our development capabilities. And if that’s not enough, Sunny reports that a mysterious new protocol is being built by Confio on top of Osmosis, codename ISOTONIC.
The Gravity Bridge will be going live in the next few days, bringing Ethereum assets to Osmosis. After being in the news last Updates for our all-time volume, liquidity, and token-price highs, Osmosis is being featured again in Coindesk’s and The Defiant’s reporting on the bridge. In recognition of the fact that the Osmosis team helped Althea with some features of the code base, there will be a governance proposal on the Gravity Bridge chain to airdrop some GRAV tokes to the Osmosis community pool.
The Gravity Bridge chain is live, which means we are just waiting for a front-end. The development team is almost finished with the MetaMask integration, which will expose Ethereum liquidity to the smooth UX we’ve come to expect with Keplr and Osmosis. The first supported tokens will be ETH and USDC, with more coming in time. Stable farmers rejoice! UST/USDC pools will soon be active. And deep ETH/ATOM and ETH/OSMO pools will make it easy for ETH whales to migrate to the Cosmos without going through a CEX. If I were an ETH whale, I’d be tempted to park substantial liquidity on Osmosis in order to have easy access to the interchain ecosystem.
The base version of superfluid staking’s core logic has been merged into the main branch of the Osmosis GitHub. Dealing with edge cases and fine-tuning will take substantial testing and simulations, but the initial heavy lift is complete. For those unfamiliar with superfluid staking, it will enable liquidity providers to stake the OSMO portion of their LP shares, thereby earning staking rewards in addition to pool incentives and fees. Combined with interfluid staking (superfluid staking the non-OSMO token on its own native chain), it is a revolutionary advance in Proof-of-Stake security, a decentralized version of liquid staking that allows you to earn additional yield on a staked asset without giving custody of that asset to a centralizing validator, exchange, or DAO. See Sunny’s Cosmoverse talk for more information (notes).
The Osmosis blockchain has been experiencing some instability due to arbitrage bots. Arbitrage helps the chain deliver accurate prices, but if the bots are miscalibrated or malicious, they can spam the chain for free, filling up the blocks and slowing things down for the rest of us. The devs have fixed the problem for now with a validator code upgrade that detects arbitrage transactions (from their looping behavior) and charges them fees. For now, at least, our free transactions are safe.
We are trying to keep the fee switch off as long as possible, both to preserve the amazing UX of no-fee transactions, but also as part of general Cosmos principle of minimum necessary fees. Blockchain fees will tend to zero as infrastructure improves, so Cosmos and Osmosis drive value not with rent-seeking fees, but by being the most useful and scalable. If fees do need to be activated, the UX will not be too badly affected because fees can be paid in any governance approved token.
Derek Hsue (and Federico) came by to talk to us about Reverie’s proposed Osmosis Ecosystem Fund. Reverie is a company that works for DAOs, creating community-led governance initiatives with a focus on organization and clear communication. It consists of a four-person team with institutional market-making, ops, and venture capital experience, and they have previously set up well-reviewed grants programs for the DeFi blue-chips Compound and dYdX.
The goal of the Ecosystem Fund is to be able to spend our massive community pool more strategically and aggressively, without taxing the community’s powers of governance and tying contributors up with red tape. The suggested budget for the program is $3m per quarter, to be managed by a Program Lead and supported by a seven-member multi-sig elected by the Osmosis DAO. The proposal is meant as a flexible conversation-starter, so if you have suggestions, please make them on Commonwealth.
The idea of the Osmosis Ecosystem Fund has so far been met with near-universal acclaim. Because Osmosis works so well in many ways, it is easy to lose sight of the fact that much remains to be built. For example, applications that use CosmWasm to build out the core functionality of Osmosis, infrastructure like IBC relaying and Keplr development, and other tooling, data analytics, and governance.
Crucially, we need developers other than the core team to do this work. We want to make it easy for would-be Osmosis developers to see what needs to be done, make a pitch to do it, and get funded, instead of having to either 1) painstakingly develop the social capital (and OSMO deposit) necessary to push a vote through the DAO, or 2) work on goodwill and hope to be retroactively paid.
While we have so far been able to rely on volunteers, it has been a haphazard process. It will be far more efficient to have a DAO-elected executive team manage the Requests for Proposals, project milestones, payments, audits, and all the managerial functions that invite bike-shedding if presented to the full DAO for a vote. Under this managed grants system, the DAO can still practice oversight over the grants committee without having to over-bureaucratize the process.
Our competitors will not stand still. It is crucial that we continue to draw in new talent so that the core developers can focus on implementing ground-breaking technical advances like superfluid staking, interfluid staking, threshold encryption, and the best wallet in the ecosystem.
CosmWasm Integration
In Frey’s absence, Sunny provided the CosmWasm updates this week. The vanilla CosmWasm 1.0 integration is nearly complete, pending the release of Cosmos SDK 0.45, which came out today (Jan 19th), so the final commits should be going on chain this week. The ability to permission CosmWasm smart contracts will come next. Sunny likens this permissioning model to the iOS app-store: Apple reviews apps stringently because they want their users to have a good experience with everything on their platform. Osmosis should similarly strive to include only premium apps, and our governance-gated CosmWasm integration will allow just that.
This gating also has the potential to work well with the Osmosis Ecosystem Fund. Projects approved, carried out, and audited under the aegis of the OEF might have an easier time in governance, and could perhaps be voted through on the model of Unity’s semi-automatic incentive adjustments.
After finishing the vanilla integration and contract-permissioning system, Confio will integrate cw20 swaps, build out the Uni-style TWAP oracle system, and productionize the cw20-ics20 standard that allows cw20 tokens to be sent over IBC. The team is trying to get cw20-ics20 ready by Feb. 1 for the NETA airdrop, so that users will be able to send their NETA to Osmosis and its pools. For the moment, this will require a whitelist for cw20 tokens, to protect the chain from potentially buggy tokens. This whitelist would be append-only, so once whitelisted, a token could not be removed, making the system relatively trustless. In addition, once we have tested the cw20-ics20 system with Juno tokens, it should only require some additional tweaks to work with aUST (Anchor), bLuna (bonded), and the whole universe of Terra cw20 assets.
Finally, just a quick note to say that Osmosis has hired some more great people! Dorian built the info.osmosis.zone front-end with the Imperator team, and he’s now joined full-time to continue with the info site and also with dashboards for the main site. Adam and Daniel created get.osmosis.zone, a node installer for Osmosis, that eliminates the hassle of syncing a node from the distributed snapshots. We appreciate all of you!
All in all, another great week for Osmosis! Stay tuned for information about an AMA with the Reverie crew that will take place on Reddit. Enjoy the Gravity Bridge, and we’ll see you next week!
Enter the laboratory at Osmosis.zone, the first decentralized exchange powered by the Cosmos SDK and IBC. See our published lab reports at the Osmosis blog, our bench notes at GitHub and help plan future experiments in our Commonwealth
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