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Osmocon 2022 Recaps — Bite-Sized & Complete

Stevie Woofwoof
Osmosis
15 min readJul 5, 2022

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The first-ever Osmosis conference showcased many of the projects building in the Osmosis DEX Ecosystem — fiat on-ramps, yield strategies, ETFs, DCA automation, NFTs, bridges, fiat on-ramps & payments, carbon markets, tooling and analytics, and more.

The fully edited videos (with better sound) are coming out within the next week or so, but for now, we have two three-hour videos: Part 1 and Part 2.

I have summarized the talks and provided rough time-stamps at the end of each. The fuller notes/semi-transcriptions on which these summaries are based can be found here.

Table of Contents (hyperlinked for skipping around):

Sunny Aggarwal: Osmosis after One Year — Achievements and Future Directions

Sunny’s opening address was a highlight reel, so compressing it further would only make it harder to understand. I have instead written it up in this post. (Part 1, 01:20–35:24)

Membrane Protocol

Membrane is launching on Osmosis in September. Membrane is a CDP (collateralized debt position) protocol that produces an asset with dampened volatility (like RAI) instead of a pegged stablecoin. Membrane believes that this type of dampened volatility asset provides a better combination of low volatility, censorship resistance, and scalability than the current options of centralized stables, CDP stables, and algo stables. It is thus the ideal collateral for lending and derivatives protocols. Further, users and DAO treasuries will be able to mint this dampened vol. collateral against Osmosis LP positions (and in the future, LPs on other protocols). Finally, they will also be able to collateralize baskets of assets, which should be more robust than single-asset CDPs. (Part 1, 36:30–51:18)

Andromeda Protocol

The bulk of the introductory info in this talk was in a pre-recorded video that does not play in the YouTube video, and I couldn’t find it elsewhere. Hopefully, it will be available when the fully edited content comes out.

In brief, Andromeda aims to be “The Wordpress of Cosmos,” like this video from October: “Building the Wordpress of Blockchains.” They will do this by creating libraries of interoperable smart contract pieces (Andromeda Digital Objects) that can basically be plug-and-play, making development easy, even for inexperienced developers.

From their docs: “Andromeda technology allows bundling multiple ADOs in one App contract to build the project the user desires. All of this and more will be available to do on a friendly user interface with a few clicks. We have a very wide variety of ADOs that are expanding on the daily, from very simple escrows to complex Defi contracts.” (Part 1, 51:38–59:15)

Bridging Panel:

0xBrainJar, Composable Finance: connecting Polkadot to IBC
Matt Bell, Nomic: bridging Bitcoin to Cosmos
Sergey Gorbunov, Axelar: inter-ecosystem bridging, transport, and messaging
Leland Lee, Galaxy Digital (mod.)

Basic philosophy

Axelar: bridge as safely as possible to outside ecosystems as quickly as possible: focus on building transport and messaging layers outside of IBC and to IBC

Composable: focused on bringing IBC and light-clients as the transport layer to Polkadot and Near and Ethereum 2.0 — other ecosystems harder and will happen later

Nomic: light-client to BTC, and nBTC (nomicBTC) within IBC

Bridged Asset Fragmentation

All three participants agree that initial fragmentation will be followed by consolidation into canonical assets. They disagree slightly on the mechanism by which this will happen: that is, whether DAOs, apps, and their users will decide canonicity by governance, or whether canonicity will follow market arbitrage by expert users. All agree that it will be easier to tell as the market matures.

Generalized Message Passing

Axelar: assets may eventually not even move cross-chain very much, as apps either sit on bridges, or as generalized cross-chain message passing takes over (e.g. borrow on one chain against collateral on another)

Race to zero fees?

Axelar: No. There will be different pricing structures based on risk, speed, guarantees/insurance, amounts being transferred.

Nomic and Composable: Yes. There will be a race to zero fees.

Composable: Relayers, transport, and bridging infrastructure will eventually make money with MEV rather than with fees.

Nomic: We just like building cool stuff with/on top of Bitcoin — it’s the largest and most untapped market in DeFi. (Part 1, 1:00:00–1:29:50)

Osmosis Grants Program Fireside Chat: Lily Liu (Osmosis core team); Derek Hsue & Federico Daffina (Reverie)

The Osmosis Grants Program funds projects that add value to the Osmosis Ecosystem. The Reverie team, which is running the program for the Osmosis DAO, is focused on bringing aboard dedicated, skilled community members across creative, technical, analytical fields, and more. If a prospective grantee can add value, the Reverie team will help them shape their proposal, and when it is ready, recommend to the multi-sig that it be approved.

Tracking the progress of grantees is extremely important; therefore, Reverie funds projects by milestones, and also requires that grantees publicize their work, open-source it (generally), and regularly make themselves available to the Osmosis community for feedback. The Reverie team has been impressed with Osmosis governance, and with the level of projects that have been submitted. (Part 1, 1:30:20–1:59:50)

Dan Lynch (Cosmology): “web3 tools for osmonauts”

Dan is working with Osmosis to build composable front-end tooling for the Cosmos (on the composability-focused model of the Cosmos SDK and IBC). To get mass adoption, we need good UX, which requires a great dev experience. That is exactly what Dan’s projects — Telescope, OsmoJS (a collaboration), and Cosmology — are designed to accomplish. At a high level, Telescope takes the best elements from various Javascript libraries across the Cosmos and uses them to generate new libraries that automatically piece together the elements that devs want to use: e.g. trade w/ Osmosis, buy carbon credits on Regen, mint NFTs on Stargaze, deploy UIs with Akash. Finally, it is easy to see in the video how hyped Dan is about the open-source, collaborative spirit of the Cosmos and Osmosis. (Part 1, 2:00:03–2:15:50)

John Patten (Partnerships at Osmosis, founder of Treasure): Introducing WosmoNFTs — Creating the Cosmos Identity Network

Building on his experience with the massively successful Treasure NFT project, marketplace, and community, John is heading up WosmoNFTs for Osmosis. His vision is for Osmosis to use them to create an over-arching identity network for the Cosmos. This identity network, whereby users express themselves online by showing off their status, accomplishments, tastes, and most importantly, their sense of identity and belonging within a community is crucial to making a blockchain or blockchain ecosystem successful. This is the reason Ethereum and Solana have hitherto outperformed Cosmos, despite Cosmos’ better tech.

No longer. WosmoNFTs have an innovative mechanism by which every wallet gets a base Wosmongton. This base can then be customized with accessories based on the history of the wallet. So if you provide liquidity to a certain pool at a certain time, or get a certain airdrop, or do a certain number or type of transactions, stake on different chains, etc. you can earn different accessories. Your WosmoNFT will be your Cosmos identity, and it will allow Cosmos to feel more like a home to users. (Part 1, 2:15:51–2:28:25)

Shane Vitarana: “Stargaze, The NFT AppChain”

Stargaze demonstrates why appchains are great. They can customize the entire stack of their blockchain, from consensus to SDK modules to CosmWasm smart contracts, as well as interoperate with IBC. Now, with the (draft) ICS-721 standard, NFTs will be able to be moved around the Cosmos, and even be locked on other ecosystems’ chains, with synthetic versions minted on Stargaze.

Other features enabled for Stargaze as a result of being an appchain: a randomness SDK module for ensuring truly random mints, true NFT staking that secures the chain, and a fair burn fee mechanism, half of which is paid to stakers and and the other half of which is burned. Overall, appchains allow better UX and scalability, which will enable Stargaze to incubate gaming and other NFT-centered projects and ultimately send them off onto their own appchains while Stargaze supplies shared security. (Part 1, 2:28:25–2:42:37)

Tarun Chitra, Gauntlet: “DeFi Liquidity Management and Optimal Control”

Attracting liquidity makes DeFi protocols useful, but managing incentives to attract and retain that liquidity can be difficult. Underpay and have little liquidity. Overpay and you inflate away your token’s value and create feedback loops where the rich get richer and liquidity does not flow where needed.

Olympus bonds provide one interesting example of feedback control in liquidity management. Feedback control refers to systems that dynamically adjust to on-going real-world data based on certain parameters, which themselves may be dynamic as well. Tarun and his co-authors discovered that, in the case of OHM, having many different durations of bonds that are priced along a pseudo-yield curve reduces the volatility of the underlying asset (OHM).

This feedback control theory can be generalized to include more parameters, like trading volume, fees, percent of OSMO staked, limiting inflation, sizing different pools differently, capping pools, making sure all or most pools have at least some incentives, etc. With more parameters, the intuitions stay clear, but the math gets more difficult.

[Gauntlet and others (including the Osmosis DAO incentives working group) have worked to research and implement these types of feedback control into Osmosis incentives] (Part 1, 2:42:40–2:56:40)

Valentin Pletnev, “Introducing Quasar — Customizable, Sovereign Investment Vehicles for Cosmos”

Quasar is a vault-based yield strategy protocol building on Osmosis that is looking to eventually migrate to its own chain. They want to onboard non-degens into Cosmos/Osmosis/DeFi, which means they are focused on ease of use and actively managed strategies (in vaults) for passive liquidity. The strategies will be independently created and governed, and each will pay a portion of its earnings to the Quasar treasury, which will thus act as a Cosmos Ecosystem Index. Investors can single-side stake a coin to the treasury to participate in this Index fund. (Part 1, 2:56:40–3:09:43)

Panel: DeFi Over IBC

Emery Andrew, Kado (“kah-doe”): fiat onramp & streaming payments

Dean Tribble, Agoric: hardened Javascript DeFi, IST over-collateralized CDP stable coming soon

Brent Xu, Umee: cross-chain DeFi protocol connecting Cosmos, Ethereum, and others: pools, lending, etc.

Zaki Manian, Iqlusion, Sommelier (mod.): Somm. is building actively managed yield vaults [started with a heavier EVM focus, Uni v3 auto-liquidity management]

More stablecoins are coming to Cosmos, both on-ramped by Kado (currently/soon axlUSDC, axlUSDT, and axlDAI, and eventually native USDC) as well as the Agoric’s IST, a soon-to-be-launched over-collateralized, CDP stable that will unlock the value of Cosmos assets like ATOM and OSMO. These stables will grease the wheels of the economy and help unlock the value in all the lending, perps, derivatives, strategies, and options protocols launching on Osmosis, Umee, Agoric and others throughout the Cosmos. Similarly, the speakers expect liquid staking derivatives to help unlock the capital underlying Cosmos assets. (Part 2, 00:15–21:37)

Alpin Yukseloglu (Osmosis), “Transaction Fee Abstraction”

Osmosis has developed both transaction fee abstraction for Osmosis and as a service to the rest of the Cosmos. Fee abstraction allows tx fees to be paid in the token being transacted, rather than the chain’s gas token. This is significantly better UX, because users do not have to worry about being stuck without a fee token. When used as a service, Osmosis will use IBC to receive the tokens, convert them to the fee token in batches, and send the fee token back to the originating chain. This is better than other potential solutions, such as making either validators or appchains perform the same function, which would essentially force them to become their own DEXs. In addition to providing better UX, fee abstraction allows for better fee capture to the native gas tokens of both Osmosis and other chains. (Part 2, 0:21:38–0:35:15)

Phase Finance, Luke and Lex: “Automating Investments On-Chain”

Automated strategies provide ways to have your capital earn yield without having to be looked after: e.g. dollar-cost averaging (DCA); value-averaging (VA), which is similar but buys tokens that dip more aggressively; grid trading, or laddering bids; as well as more custom parameters.

Phase Finance, building on Osmosis with an eye toward starting their own appchain, will automate these strategies and allow users and other entities (DAOs, institutions) to deposit lump sums and direct them into various strategies, where they will earn yield that can then be directed into further tokens and strategies to earn more yield.

If I am assuming correctly, DCAing differs from vault strategies in that the assets are not aggregated into strategy vaults, but rather, the automation happens at the individual account level. Phase is working to solve on-chain scheduling with CosmWasm contracts. A potential problem to DCA-type strategies exists in the form of front-running known on-chain strategies, though an Osmosis threshold encrypted mempool should mitigate this in 6 months to a year. (Part 2, 35:16–48:02)

Jack Purdy, Messari Biz-Dev, Stablecoins on Osmosis

UST was essentially the only stable on Osmosis, so the Terra collapse hurt. $280m essentially vanished overnight. The Osmosis ecosystem is slowly recovering based on new stables coming in across the Axelar bridge: predominantly USDC and DAI. Expect continued growth in these assets, and expect stable pools to be more capitally efficient than volatile pools because almost everyone wants to trade in and out of stables, giving them much more volume per unit of liquidity. (Part 2, 48:03–57:00)

Gregory Landua, “Regenerative Finance on Osmosis”

Carbon credits are only the tip of the ReFi iceberg, but they are first-to-market and serve to illustrate the desirability of ReFi assets more generally. Carbon credits are valuable because they have real-world use, institutional adoption, broad public support, and as a commodity tend to be uncorrelated with regular crypto tokens.

Further, on-chain carbon credits serve as a model for how Regen and Osmosis are working together to develop high-quality regenerative assets with deep liquidity that can serve as collateral in interchain DeFi. (On that front, see also the green-wrapped BTC that Regen is developing with Axelar.) In fact, Regen and Osmosis have been working together since the start of Osmosis (before, if you count both teams’ work on the Cosmos SDK), with Props 101, 176, and 182: respectively, a REGEN grant to the Osmosis community pool, the offsetting Osmosis’ carbon footprint, and an agreement to start a carbon market with Nature Carbon Tonnes (NCTs), whose inclusion criteria were developed by Toucan Protocol (on Polygon) in concert with the Regen team and others.

The NCT market on Osmosis has been delayed because the bridge between Polygon and Regen needed to be more robust than originally thought. Regen is working to complete the bridge by late July, after which liquidity can start to be built on Osmosis.

Also coming in July is the Regen Network Marketplace for eco-credits. If you want to participate in governance about these things, or about the process of developing standards for high-quality regenerative assets, as well as the fungification/basketing/bundling of these assets (which start life as independent, non-fungible positions with different characteristics), you can check out Regen governance on their Commonwealth. Or wait for the ReFi boom on Osmosis starting at the end of July! (Part 2, 57:50–1:18:37)

Panel: Osmosis SubDaos and Governance” Mike Barb (OSL, mod.), Stephen94K (OMM), EmperorOsmo (Hathor Nodes), George Beall (Commonwealth)

Commonwealth Governance Tools

Commonwealth will be continuing to roll out new tools, like crowd-funding, and a mobile-app featuring push notifications that can be subscribed to by governance topic, so that not all users have to read all governance posts. Other areas of research / potential future integrations include sybil resistant voting (e.g. using Twitter attestations) and quadratic voting.

George suggests that Osmosis could benefit from more structure and formal process rules in the forums and in governance, taking as an example fellow Commonwealth user (and soon-to-be fellow Cosmos app-chain), dYdX.

George is a big fan of the simplest possible governance, and of the DAO hub-and-spoke model, i.e. what Osmosis has implemented with its Support, Marketing, and Grants subDAOs. More subDAOs will develop as the community/DAO desires.

[It will also be interesting to see how apps built on top of Osmosis governance that have their own governance will act as subDAOs of Osmosis, and whether or to what extent the interests will remain harmonized, particularly when they spin off into their own appchains.] (Part 2, 48:03–57:00)

Working in a subDAO

The subDAO panelists agree that to join a DAO in some capacity requires only that you involve yourself in the community and find a way to make yourself useful. You will thereby build up a reputation as someone who helps, and opportunities will come your way, since the DAO and the subDAOs almost always need more help. If you can’t find your niche right away, be persistent, because new governance needs (and therefore groups) often spin up, while at the same time, some people move on.

Coordinating across time zones and different work schedules can be difficult, but having regular structure helps, as does recruiting skilled, enthusiastic contributors. (Part 2, 1:18:38–1:46:14)

Jacob Katsof, “Levana, Rekt on Terra”

Getting rekt on Terra was awful, but it brought out the strength of the community. There was nearly 24/7 Twitter Spaces support, and everyone banded together. Levana doesn’t know where it’s going to end up yet: Osmosis, its own appchain, or elsewhere. (Part 2, 1:46:15–1:53:57)

Tommy Johnson, PsyOptions, “Appchains and Scaling”

PsyFinance is an options and structured products platform on Solana. Building there, on a generalized L1, the team has run into many constraints: compute limits, inflexible account data structures, and worst, the inability to protect the protocol from spam txs on the main network. Randomly (or worse, at times of peak need) halting a platform meant to trade at sub-second speeds is disastrous for UX and adoption.

PsyFinance has therefore been exploring moving to its own L1 appchain, and will begin the work to move there in earnest in the second half of 2022. (Part 2, 1:53:58–2:02:00)

Dora Team, “Explore the Multichain Future with Dora”

dora is bringing blockchain ecosystems with different state machine models together in a single block explorer with ultra-intuitive UX. human readable transactions with wallet and chain avatars will help you easily navigate the context and flow of cross-chain interactions. dora also visually indicates the apps that each transaction uses.

The team is currently building out their proof-of-concept cross-chain explorations of Moonbeam (EVM+Substrate) and Evmos (EVM+Cosmos). They are also excited to provide support for Osmosis in the near future, hopefully with help from the Grants Program. dora has a lot of supporters and advisors connected to Osmosis, including Sunny, Dev, and Tarun (see his talk above). (Part 2, 2:02:01–2:16:56)

Decentralized ETFs Fireside: Chjango (mod.) with with John DiBernardi & Joe Schnetzler, DeFund Finance

DeFund is building ETF infrastructure that allows users to make their own ETFs. While end users will be able to use DeFund to automate their own strategies, John and Joe expect that larger market-makers will construct popular baskets of assets and turn them into shares — e.g. Cosmos Top 10, or Top Layer 1s, Top Staking Assets. These shares will then be traded on DEXs and CEXs.

DeFund expects ETFs to be popular both with end-users and, perhaps more importantly, with wealth managers, pension fund managers, and others with access to large amounts of relatively risk-averse tradfi capital. Because ETFs are well-known in the tradfi world, and because they can be used to quantify risk (to some extent), and diversify it among various assets, even more cautious capital may feel more comfortable investing and convincing their respective insurers, boards, and regulators.

This step of tradfi money getting involved will have to wait for further regulation, at least in the US, but it is important to lay the groundwork now. DeFund is in a private testnet, and when that is done they will move to a public testnet, and finally public launch. What is being tested is mainly the use of interchain accounts and interchain queries, the module for which Joe was heavily involved in writing. (Part 2, 2:41:12–02:50:01)

Zak Cole, Slingshot Finance, “Slingshotting into the Cosmos”

Slingshot is a DEX aggregator that breaks up orders and routes them through various pools for the best trading fill. They also have their own metrics (built by them with on-chain data), social, and NFT marketplace.

They recently integrated Osmosis, their first non-EVM DEX, so you can now interact with them with Keplr. They are bullish on Cosmos and will be integrating other chains like Evmos and potentially Juno in the future. (Part 2, 2:41:12–2:50:01)

Guy Zyskind, Scrt Labs — Keynote & Closing Ceremonies

Secret has been scaling up its speed, infra, and CosmWasm capacities not just for transacting on Secret but in order to offer privacy as a service to other chains. Guy envisions a world where, for instance, Osmosis users can tick a privacy box to route their transactions through Secret on the backend for privacy. Other appchains, such as launchpads and NFTs, can use this feature as well. Further, Secret also offers true on-chain randomness and can help improve wallet infra by offering Secret as a counterparty for user multi-sigs.

Cosmos has the best builders, best web3 model, and the best UI/UX — but we are still too small. Let’s collaborate and grow together! (Part 2, 2:50:02–3:06:18)

Thank you to all the conference organizers and speakers! If I’ve made any errors of fact or interpretation, please let me know. Some projects may have spoken at Osmocon that did not make it into this first round of videos. If they appear in the edited versions, I will add them in. (Part 2, 48:03–57:00)

Osmosis
Ecosystem
Defi
Cosmos Network
Dex

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Stevie Woofwoof
Osmosis

Written by Stevie Woofwoof

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