Osmosis Updates from the Lab, ft. Justin Kilpatrick (Althea / Gravity Bridge) — Feb. 2, 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.
Last week, the big news was that Confio and the chain dev team will be building Isotonic, a novel lending protocol that will be built into the Osmosis trading engine. We’re still waiting on the further integration of CosmWasm to get that rolling, as well as the ION DAO so that the Ionize project can get started.
Today, Justin Kilpatrick, co-founder and CTO of Althea, came by to talk about the Gravity Bridge. He last stopped by the Lab in mid-October, when he announced the imminent launch of the Gravity Bridge chain, which went live in December. The UI came online last week. For the moment, withdrawals are unavailable in the app, though power users can move funds off-chain with the CLI.
Moving forward, Updates will include a rotating cast of Osmosis community members and developers. Hopefully this will give Sunny a bit of a break! Many thanks to Kevin Berrey for the MC energy he brought to his co-hosting, as well as his willingness to assist in drawing out simpler explanations for our listeners.
Today we welcomed Cosmos HOSS, one of our social media admins. He announced that the Support Lab is asking for its next round of quarterly funding, 100K OSMO. Please submit your feedback before this goes on-chain. Hoss has also been co-hosting the #IBCGang #CosmosSpaces on Twitter on Fridays and Sundays.
Osmosis Updates
The ability to send CW20 tokens (i.e. coins created with CosmWasm instead of the Cosmos SDK) over IBC is coming in the next day or two. Once the cw20-ics20 contract is working, we’ll be able to send tokens like the recently airdropped NETA from Juno to Osmosis and pool them in OSMO-incentivized pools. This will be the first CW20 token pool on a chain other than its origin (UST and LUNA are SDK coins). Update: NETA is live and Proposal 140 to incentivize Pool 631 (NETA/OSMO) is now on chain!
February is superfluid month! Testing and simulations are coming along well. The front-end refactor continues to modularize and standardize the code-base, which will make future upgrades easier and faster, especially for new developers coming on board via the Osmosis Grants Program. Impending upgrades include direct deposits from non-Cosmos chains (once bridging is fully functional) and the ability for the Osmosis front-end to bring up non-Cosmos UIs. The code for version 2.0 of the Liquidity Bootstrapping Pool is largely complete, save for some tests. We need your help coming up with a new name because 2.0 is no longer a standard LBP, but a continuously streaming auction. Finally, Sunny has seen some mock-ups of the new data dashboard, and they look great!
In keeping with the core Osmosis goal of serving as an AMM laboratory, Sunny has the students at Blockchain at Berkeley working on a Volatility AMM. This would be an entirely novel AMM (Opyn, of Squeeth fame, had a similar idea, but no further information could be found) that reacts to changing market conditions like market-makers on traditional order-book exchanges. For example, when the market is crashing, market-makers remove their liquidity and widen their spreads. Current AMM models cannot do this, but since market-makers are just employing algorithms, AMMs can be programmed to do the same. You could, for instance, give the AMM a rule: if net liquidity has moved X amount in 5 months, remove Y% of liquidity, and hold it in reserve. This would resist Impermanent Loss without the need to hand out incentives. One can imagine many sorts of rules that could be implemented into experimental pools. This is not in immediate development, but it is a fun research design project that could have an outsized impact. Updates will be forthcoming.
Bridges as Service Providers
Following the controversy around incentivizing a potential ROWAN/rowanETH pool, which the community decided not to do, the Osmosis Labs team put out their updated thinking on bridges and token representation in a Medium article entitled “Thoughts on Osmosis and Bridges” by Osmosis Labs. Their policy on bridges has always been that Osmosis should avoid building an in-house bridge on the model of Injective (their own Gravity implementation), Thorchain (Bifrost), and Sif (Peggy). Bridge-work would have bogged them down, and a credibly neutral bridge is better suited to provide the canonical representation of assets.
We need canonical representations. Osmosis is trying to compete with centralized exchanges; therefore its UX must be amazing. Multiple representations of the same asset are confusing and they fragment liquidity, leading to increased slippage and an overall degradation of the DEX. There are medium-term solutions involving stableswap pools to make different representations fungible, but these will take considerable dev-work, and perhaps more importantly, they risk having the worst representation of an asset wreck the stable pool in case of a hack or a de-peg.
The argument against this is that choosing a canonical bridge for Osmosis would violate credible neutrality. Does an ideal of credible neutrality mean that Osmosis owes it to all bridging systems to incentivize their pools with OSMO and to privilege them on the front-end and asset-lists? It does not because a bridge is a service to Osmosis in the same way that oracles are. Does credible neutrality force Osmosis use every oracle service? No, because doing so would be hugely expensive, redundant, bad UX, and would increase the number of attack vectors on the chain. The same is true of bridge service providers.
The Osmosis DAO is free to choose its providers according to the criteria it chooses: namely, a bridge should be functioning, easy to use, permissionless, low-cost, trust-minimized, and secure. Additionally, it should possess a strong team capable of delivering fixes and upgrades quickly, it should possess network effects and a good reputation among Cosmos ecosystem users and developers, and it should have a clear, timely roadmap for integrating further EVM chains (and possibly others) as well as non-token transfer messaging such as NFT transfers and interchain accounts.
Therefore, Osmosis governance should choose one bridge provider per (non-IBC) chain to furnish the canonical versions of that chain’s assets. That provider would be privileged in the UI and would receive OSMO incentives. There is a post on Commonwealth aiming to get Bridge Service Provider RFPs (Request for Proposals) on-chain for the DAO to approve so that we can move forward.
Justin Kilpatrick from Althea stopped by to update us on the Gravity Bridge. Althea’s goal was to make the best, simplest, cheapest, most secure and decentralized bridge. See Jehan Tremback’s article for a mid-level overview of the Gravity Bridge design. One strong advantage of the Gravity Bridge is that it batches transactions in order to save on Ethereum gas fees. Given sufficient volume, this means bridging with Gravity will be cheaper than actually transacting on Ethereum.
Graviton (GRAV) tokens have been distributed among the validator set and among Cosmos community members who helped to launch the chain. Justin says that we can expect more detailed information about tokenomics soon. Similarly, any airdrops of GRAV will be controlled by existing holders of GRAV, so we should watch for governance proposals on the Gravity Bridge chain.
For Osmosis to integrate the Gravity Bridge as its service provider, it would need withdrawals to be available, as well as direct deposits from Ethereum. Justin reports that the timeline for these is by the end of this month.
When the space was opened up for questions, someone asked how Gravity Bridge compares to Axelar. (See this brief write-up of Sergey Gorbunov’s visit in early December.) This led to a discussion of the Axelar UI, which has a clever design feature that abstracts some of the bridging process. When you want to deposit ETH for example, Axelar creates a deposit address that is automatically associated with your main account, e.g. on Osmosis, much like how a centralized exchange operates. Justin says that the Gravity Bridge by contrast uses IBC forwarding to deposit to addresses. Both are permissionless, to the best of our knowledge, though Sunny has not examined the Axelar codebase.
Find out more about Althea and Gravity Bridge on their webpages. The Gravity Bridge Discord is far more active than the Telegram. Check out Althea and Gravity Bridge on Twitter as well.
See you next week in the Lab!
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