We'll hear me lab and clear tonight again. Chuck a little thumbs up icon or an icon of your choosing.
the peace on from rebel, I'll take that as a yes. Fantastic, so we've got aid non, we've got rebel on, we've got Riley on, is it anyone else that we need to get on tonight?
Hey, from our side is just around and I'm joining today, but all is you can you can make today, but hopefully you'll hear from him at a future space is fantastic. No worries in that case
what we'll do is we'll get this show on the road in the meantime. I'm going to see if I can share something from my personal Twitter. How you going there, Raiden? How you going there, Riley?
I'm doing great. We are in full sprint mode. We were up until like 7am last night fixing bugs on our testnet. We found one last tricky one. I think we're getting into the territory where we're like a week, maybe less out from
launch. So super exciting. All hands on deck. All hands on deck. Little sleepy but very excited. Fantastic. Well we'll get into all the bug stuff in that in a moment. If anyone that's listening as you listen to this conversation, if you are enjoying it, if you're finding it valuable and you're learning about
Along the way we do encourage you to share this, let other people know about this call so that they can also learn about stride. So stride is a monkey chain liquid staking. Actually, we'll rather than me saying it, how about I ask you guys what is stride first and foremost?
Yeah, I can jump into a little bit of a background here. So maybe I'll just give an intro of liquid saking quickly and what stride is and how we got here. Yeah, please do. So the core problem that we found in Cosmos D5 is that there's
a lot of incredible DeFi being built and cost most right now. So we have osmosis, which is like a super mature project. There was a lot of DeFi on Terra. There are other zones coming online. So there's like Umi, there's Mars Protocol. There's really an explosion of different DeFi protocols. But the real challenge for users right now.
If you want to go and use your tokens in one of these Z5 protocols, you have to un-stake your tokens and you give up significant yields in participating in D5. So right now you have this trade-off of, well, you can go and stake your tokens for 20 or 30% yields or you can go and LP
reused across protocols. It's purely a technical limitation. So you actually can do both. And this is something that you do see in other ecosystems like Ethereum and actually like Terra as well. So you see this with B-Luna.
on Terra and with STE on LIDO. So the core idea is rather than having to make this trade off between saking or tokens and using them in DeFi, stride is issuing LSDs or liquid saking derivatives and you can use the
So that's a little bit about what we do. Just super high level brief introduction. I can get into like kind of how we got here and what some of the differences are, but I'll just I'll pause there. Yeah, fantastic. Thank you for the quick intro there. When you say wait, tell us a little bit of
about the team, tell us a bit about your background and what you guys were doing in the past and if it is of any relevance and let us know a little bit about the team itself. Yeah, definitely. So I'll give a quick intro for myself and then maybe Riley can all go Riley and I'll talk all over about the
all as well. So, Riley and I met doing computer science in undergrad together. We've known each other for a long time. We're CS project partners throughout college. I had never heard of or really been deep in crypto back then. I was like deep into the software side of things.
So I ended up joining a B2B SaaS company out of school and I worked there for a few years So I kind of did the startup journey I joined as a very early employee there and scaled up some of our teams But back in 2020 I saw the sushi swap uniswap saga play out and I'm sure I
a bunch of you saw that play out as well. And it was like the coolest thing that I had ever seen. Like, Suzy Swap had like forced Uniswap and they had like done this vampire attack and it was like hugely dramatic and all in the open and just extremely cool. So I fell down the D. Fyraba Tal pretty quickly after that. And in
2021 I left my my full-time job to start building in crypto full-time So I built a little bit across a few ecosystems. I built a little bit in the Ethereum community. I built a little bit on Solana But Riley and I actually went down to Miami and we met some of the folks from the Cosmos ecosystem
And they really sold us on this app chain vision. So the idea being like the best way to scale blockchains. And the most effective way to build blockchain apps is if every application owns their own chain, see you scale things like horizontally. And then you have a really good interoperability protocol on top of that, which is IVC.
So we kind of like heard about this and we were pretty much instantly sold on on cosmos. So we started running validator infrastructure in the cosmos ecosystem and we pretty quickly realized that one there was a lot of potential for cosmos defying and two there was this
really painful tradeoff between staking yields and defi yields. So we started thinking about liquid staking and we realized that some of the IBC tech, namely Inter and Accounts and Inter-Chain queries, had just come online back in like March. So for the first time it was actually possible to build Inter-Chain and D5. So we started working on this.
I'll give a quick intro on Vishal and then I'll let Riley take from there. So Vishal worked at an early stablecoin project called Basis. So some of you may have heard of Basis protocol. They never ended up launching due to regulatory
But I think it was like a really interesting first for a interrupt over him. Given the project shut down after about a year, I think it was a little bit disillusioned and he left DeFi to work in Trag5 for a little while. He actually worked in the same lab at Bridgewater as Riley. So he worked at a large
touch funds and sort of a machine learning lab. He ended up going and founding a couple of smaller hedge funds from there and running tech and infrastructure, but I think he sort of became a little bit disillusioned with traditional finance and realized that DeFi was having this Cambrian explosion.
And it was like really possible to build a lot of the cool things that like maybe he had thought about a few years ago. So it was kind of just lucky he started thinking about it. Riley and I were like kind of already building in the space. So it was just a natural fit. I'm passed over to Riley to talk a little bit about his background.
Yeah, great. Thanks for the interlating. So as Edna mentioned, we did computer science in undergrad together at UC Berkeley. I wasn't really in the blockchain space at that point in time, but I overlapped with a lot of folks who were. I worked doing research directly with Dawn Song, who
I was heading up a waste's protocol, but we were actually working on machine learning research together. I was, I was crypto curious, but never really dipped my toes into it until a few years later. After graduating, I joined that hedge fund that, that, the Shaw was that bridge water in the ML live.
and work there as a quant for about three years. The last of which was on the crypto team. So we started building some of the original crypto trading infrastructure there, but realizing that they wouldn't really move in that direction long-term and seeing all the excitement and in cost most and parking
back to my origins of having seen so many folks from Berkeley go into this ecosystem and knowing that the App Chain vision is probably the solution we need. It and I started exploring and running some validator infrastructure toying around with a few small projects before
realizing that there was a proper solution we could build to one of the main problems in Cosmos, which is the DeFi-staking trade-off. So I left in January from Bridgewater to start stride and build with these guys.
Fantastic. Thank you for the background. There are a couple of big names being thrown around. Obviously Bridgewater, being one of them. And Basis 2, which is a name that I'm sure many people on this call will be familiar with and may have some questions about as the call goes on. One of the words that you could say was Cambrian explosion.
And I myself personally think that not only is it all of crypto having a can or has it been having a can for an explosion, but one ecosystem in particular is Cosmos. And so I'd be curious to know, you know, what is it about Cosmos that appealed to you in your 10?
Yeah, I'm curious what we're trying to hear things as well, but I'll jump in. So I think there were a few things that appeal to us about Cosmos, and I think they're actually reflected in the way that we built stride. So the first one is like,
All three of us are developers. Riley Vashallani, we all come from engineering backgrounds. And Cosmos allows you to do something really cool, which is it allows you to go into the internals of your blockchain because every application has its own blockchain. And it allows you
to turn some of the knobs and tweak some of the functionality tailored to your specific use case. So on Ethereum or on other platforms where you deploy smart contracts, you're kind of stuck at like this smart contract layer and your application has to live inside of an existing virtual machine. So you don't
get quite as much control and the space of things that you can build is much smaller. But we think with Cosmos, if you're building your own chain, you can really change anything. You have full control. So we've already started to see some really cool use cases of this in Cosmos.
like D.Y.D.X has talked about coming over to Cosmos and running an order book and matching engine on the validator software. That is like one of the coolest use cases of Cosmos that I've heard about. For us, we've added a little bit more
on the safety side of things. Like we've thought a little bit about rate limiting and we've added like a lot of underlying tech to our liquid-saking platform that wouldn't be possible if we were building the platform using a smart contract. So I think
From that perspective, it was just really cool. As developers, we're really excited to have this thing that we could go and dig around in the internals of and tweak and create a really excellent user experience. The other piece of it is IBC. I think IBC is by far the most mature.
and coolest and frankly promising interoperability tech. So we're already seeing chains outside of the Cosmos ecosystem or chains that haven't been built with the Cosmos SDK adopting IBC. So I think penumber zone just last month was the first non-cosmos SDK chain.
And I've heard rumblings of other chains doing this as well. So I've heard on GitHub there are some discussions of near protocol doing this as well. And I think IBC is like it has this really powerful network effects where it can
Once it hits like a critical mass, I think it could just grow to take over the entire blockchain ecosystem. So I think it was, for me, it was a combination of those two things. It was being able to go and mess around in the internals of your chain and build something really cool. And then betting on IBC is this interoperability protocol for all of crypto.
Fantastic. And so to the best of your knowledge, you know, are there many other projects teams aspiring to do what you're doing in this ecosystem? And if so, you know, what is your unique selling point? What is your key difference or point of difference?
Yeah, great question. So there definitely are as I'm sure you've seen it is it's heating up in Cosmos liquid saking. I think we have something like four or five different solutions all working on this in parallel, which for consumers is really cool because there's like a lot of
of competition and lots of different teams are making different design tradeoffs and building the best liquid-saking product. And for us, it's actually pretty exciting as well. I think we're sort of a competitive bunch. So being in this race to provide liquid-saking is actually very exciting. But I think, you know, like,
Cosmos is a very big ecosystem and it's possible that we actually have multiple solutions, but I'll talk about maybe like high level two types of liquid-saking providers that personally I've seen within Cosmos, so two that I've seen are there's kind of two classes of liquid-saking solutions.
The first is a smart contract base. This is something that you've seen with LIDO in other ecosystems. Currently in Cosmos you see this with LIDO and persistence. Today the way that they're designed is not natively integrated with
So they rely on smart contracts and bridges and they definitely work, but we think there's this other class of liquid-saking solutions and in general applications in Cosmos that we'll see more growth and these are native IBC appchants. So these are these are
that are designed from the ground up with IBC and minds. So this is kind of like working on and what Quick Silver is working on and I've heard of a couple others that are also working on this and maybe Neutron to an extent. But we suspect that at launch, stride will be the heaviest user of IBC, Interchain queries and Interchain accounts.
of any app chain. We think it's pretty likely that other chains move in this direction as well. That's a little bit, that's like 30,000 feet, what are the two classes of solutions? There's the smart contract-based solutions and then there are the IBC app chains design
from the ground up with IVC in mind. But a little bit about what we do and what distinguishes us. Our top goal is to provide liquid saking safely and effectively. So anything that sacrifices safety or product usefulness right now is just not a priority for us. I think with liquid saking
in particular, you really have to be careful about the safety just because the TVL of a liquid-saking critical can truly become massive. Like it's pretty easy to imagine a world in which 100% of tokens in an ecosystem like Cosmos are liquid-saked and this is actually
So if you have like 100% of tokens, liquid-saked in a protocol, the security of that protocol really has to be like, that is your first order goal. And that kind of leads into
our first distinguishing factor, which is at stride, we're keeping DeFi safety top of mind always. So we have ongoing audits, we have some novel rate limiting features that we're working on, and we've really thought a lot about some of the edge cases to keep DeFi safety top of mind.
So that's the first one that I would say. The second one is from day one we'll support redemptions on all chants. So this is really crucial to keep the Pag type between the ST assets or the Saking derivatives and the native assets. So one of the use cases of liquid saking is being able to sell your token.
or sell out about position rather than unbonding. It allows you to go from a state-bass to a native asset more quickly than if you were to unbond. The way that you do this is you go to a DEX. You can sell your ST token for a native token. So there's like a pool on the DEX's between the ST tokens and the native tokens.
And there's an exchange rate between those tokens. And if you don't have redemption, the peg there can kind of-- it's not very tight. So this is something that we've seen with STE on Ethereum, for example. It's like, deepag by $6.7 at times. And that's because there are no
If you have redemptions, there's a natural arb. So we have market makers that will come in. And as soon as the peg on ST add-on, for example, DPEGs by more than like 2%, so at like 98 cents, market makers will come in and they will buy the cheap ST add-on and they'll do that natural arb. And then the third distinguishing factor is
We're offering users an incredibly simple vertically integrated app UX. So those are three that I've thought about. I don't know, Riley, did I miss anything there? Are those the three that you have in mind as well? I do touch on it quite well and we could talk at length about
Sorry, Raleigh, you just cut it out for about 5 seconds on my end. I'm not sure if that happened to everyone else, but do you
Yeah, of course. I was saying that there's a lot of detail that we can go into on the peg mechanism.
Yeah, please do. Good luck to you more about that.
arb between the liquid-staked derivative tokens and the native tokens.
Might be losing him a little bit. Yeah, just checking in. Is it happening to you guys as well? Hey, and is that dropping out on your end? Yeah, Riley's getting rugs.
They're all Twitter space rock. It'll get you eventually. Yeah, maybe just check out your Wi-Fi connection Riley and if it is a bit patchy. Maybe we can find somewhere else. Do you possibly know who's trying to say the aid?
I think I do, yeah, I think Riley was starting to talk a little bit about the peg.
So I can jump into that or if Riley's got his, maybe if he's hopped off Wi-Fi until like, just sell your own network or something, let's say, he might be back. - Am I back? - I can hear you. - Incredible. All right, I'll pick up where I left off to the point. - The time to jump.
Yeah, you can hear me now.
Guys, for a bother. Great, great. The point I was going to make is double clicking on what Aiden mentioned about the PEG and Redemptions. This is something that Cosmonauts are unfortunately too familiar with, and something that we're not willing to compromise on.
There are a few design decisions that we opted to make in order to ensure that redemptions are available at launch. And in fact, these design choices lead to a slightly worse UX for users because they mean that users need to
to unbondled tokens before bringing them onto stride. But the flip side is that we have a much more robust tag mechanism and that's really something we're not willing to compromise on at all. I'll talk about that for a second. At a high level there are two ways to exchange staking
derivatives for native tokens. You can either sell them on a DAX like Osmosis or you can redeem them with the underlying token using the protocol. That would be stride. So selling on a DAX is obviously faster, but the price there is less certain. They're slippage, they're deviations from
the peg. There's too much selling with no redemption and that can cause a deep peg if you don't have reductions. So ultimately you see on Ethereum that even Lido is susceptible despite some factors that should have made their
They have a stable swap exchange curve, and they're quite trusted at this point. It's a pretty simple protocol, so it's less likely that they have a bug than some more involved blockchain.
The only con is that they have no redemptions. And despite all these factors that point in their favor, they depagged something like 6 cents very early and then 6 cents again pretty recently with all the market turmoil. So what happens when you launch a new protocol with no redemptions on AMMs?
These are called constant product amms like osmosis, which uses the uniswap V2 model as opposed to curve, which is a stable swap, and is optimized for keeping correlated assets packed to each other.
to eventually see is that the slippage is much higher. So if any one player sells out of their liquid stake derivative assets at a single point in time, you'll probably see the STS ID tag. Now if you have redemption, it's very easy for a market maker to come in and run the arbitrage that in
We've done a number of calculations about this. He mentioned the 2% number for most of strides assets, which means that if a large player sells out of ST Adam and it goes to 98 cents, a big institution will come in by the ST Adam, push it back up to $1 and redeem through the protocol.
It's kind of a natural self-correcting mechanism, but that doesn't exist if you don't have redemptions. So it's very possible that you encounter this kind of contagion and fear bank run effect that we've seen in too many protocols at this point for like with sticking derivatives that don't have redemptions.
So at a high level, that's the design tradeoff we made here to prioritize safety. And I think it will probably resonate with a lot of the folks in Cosmos who have seen this, unfortunately, play out in other protocols in a disastrous way.
So what I'm thinking here just to sort of follow on from what you're saying is obviously you've touched on you know UX is great. Safety has been a key priority in these atop of mind at all times and you've gone into a little bit about the how and pig maintenance. Safety and pig
maintenance for two really hot topics or really key considerations for people, particularly given the circumstances that have been unfolding across multiple trends. They're the last six months to a year, basically since the dawn of crypto. But shifting the conversation
And slightly, I'm noticing, we've got a few listeners who are actually validators themselves. Can you tell us a bit about validators that are working with you? How validators might work with you in future? Anything that might be pertinent to the validators.
Yeah, of course. So we obviously need validators for the stride chain itself. Stride is in its own L1 app chain. It needs to be secured and delegated proof of stake, Cosmos app chain ecosystem.
So we are looking for validators to run infrastructure there and willing to make delegations from the foundation if professionals come over. We also are
Obviously, staking on a number of Cosmos L1 options as host zones. So at launch, we'll allow users to liquid-stake Cosmos Hub atom, osmosis, and Juno.
I won't drop the Alpha here, but full Air Drop details are coming on Monday and tokenomics as well. But since you all turned up on this fine Saturday, I'll drop a hint of Alpha for you. - Ooh, yes, please do chase. (laughs)
So a hint of air drop alpha for you is get ready to LP on osmosis. We're going to have a large share of rewards here marked towards that. And again, this goes back to security, the deeper the liquidity on the pools, the more stable the peg, the more resilient
the liquid-staking protocol is, and the stronger the ecosystem can be as a result. And the only other slight piece of alpha, I know there are a lot of lunatics in the audience today, we're thinking heavily about that, but I won't say more today.
We're looking for validators for the stride chain. We're also looking for validators on host sounds.
The host zone validator sets are completely decided by stride governance. So stride token holders can vote any validator on any host zone into the set of validators to whom we delegate.
And for that reason, if you're a validator on the Cosmos hub or you're a validator on Osmosis or a validator on Juneau, it might be who you to join the community and start talking with dry token holders because ultimately there will be the ones to sign.
who receives delegations to restry. Fantastic. So, a little bit of cheeky semi-alpha there, alping on Osmosis and perhaps something to keep an eye out for on Terra.
Speaking of the community and also before we just to preface this a little bit before we migrate over towards questions from the audience and I'll even ask if Ripple want to ask a question a second himself. I have one question for you which is around
the full party and the testnet. I'm sure you've had certain people assisting you with that. You used to do it all the hands on the deck at the very start of the call. And so my question is, can you fill us in a little bit about the bugs and the full party experience of the last couple of days?
Yeah, I can jump in on this one. So the purpose of our testnet has been to actually get some real usage and find these sorts of issues. Luckily, they're slowing down significantly. I think we ran for a week and a half with no issues.
And then two days ago, we decided to test out a new scenario, which was we added a second zone. So prior to this, we had our pool party, our test not set up to liquid stake for a single zone. So we had stride connected to the cosmos hub. And what we did was we added, we
we added osmosis. So I think we're the first testnet that I know of that's done liquid staking on two independent zones. So we had it hooked up to our Gaia testnet and our osmosis testnet. And we realized there were like a couple of small edge cases that we hadn't thought about when you have multiple zones
So we spent the last couple of days like adding lots of testing and infrastructure around those edge cases and around like adding multiple zones. But this was like sort of the final thing that we hadn't tested. So we tested the forward flow, so liquid staking, we tested the backward flow, so burning STS sets
for native assets. And the one thing that we hadn't really tested yet was having lots of different host zones attached to stride. And now we've last night for the first time we hooked up the Cosmos hub, Osmosis and Juno. And we're running full liquid-saking flows on all three of those zones.
So, yeah, we're a, I think we're in a good spot there. Maybe just inside. I don't know. This may or may not be interesting, but with blockchains, there, if there's any source of randomness in a blockchain, it just like breaks the entire thing. So the bug that we found
yesterday is we were using a data structure that was like unsorted and Cosmos doesn't have much documentation. So we didn't know that this was an issue, but we swapped out that data structure, that unsorted data structure for a sorted data structure and the blockchain just came back online and started humming along. So we're
But we're still learning, but at this point, I think we've ironed out like 99% of our bugs and we're in a pretty good spot. So testnets should be back online sometime this afternoon. Right after this basis, we're going to hop off, push the upgrades to our testnet and relaunch it. So if we have any
test net participants in the audience get ready to launch your new binary in this afternoon. Funny enough, it is a very similar bug to what I'll did you know the other day that they had a malicious spark contract uploaded that emitted events
that were unsorted and stored back to memory in an unsorted fashion, which means that two different nodes running that binary might store events in a different order, which causes a consensus failure and a difference in the resulting app hash in the next block,
a very similar issue. So it seems like it's the kind of thing that's not quite fixed across the ecosystem at large. But we're thinking of releasing some additions to the testing tooling that might help detect this kind of thing in the future.
Yeah, good question. So we have three main testing libraries. One is kind of the basic unit testing that's used across Cosmos, and this is a standard must change use this. But because we're heavy heavy users of IBC, we're working closely with the strange left team to deploy
a new framework called IBC test that allows you to essentially send packets across different chains that your connects is to verify that they have been processed in the correct way and that the acknowledgement or failure of that packet to arrive on the foreign chain
is registered in a cracked way. And then the third testing framework that we're building in-house and thinking of releasing is a simulation testing framework. And the way this works is it spins up a bunch of Docker containers with a bunch of different nodes that are running your blockchain automatically. And then it creates thousands
of different user accounts, seeds them with funds, and has randomly submit a number of transactions at the blockchain. It's kind of like a spam or a DOS attack on the network, and then it verifies that the results from that test are valid for any single users, as well as for the whole.
Thank you kindly for you to lose a data. Now as I mentioned a moment ago, I'll shift towards community questions. But first I just want to check in with Rebel here and see if Rebel might be harboring any questions for you on the sidelines there.
Hi guys, I think we should just see if anyone wants to get their hand up. To hands up for questions, we've got another 25 minutes or so, but yeah, while we're waiting on some hands up
But I'm just wondering, you guys are starting off with Atom, Juno and Osmo. I'm quite a fan of Secret Network. Is that something that may come at some stage?
Yeah, good question. We have a lot of love for the secret network community. They are definitely coming. We're currently in talks about that right now.
you can expect that certainly within the year it's probably going to be one of the first chains we onboard frankly. Wow that's cool there's a lot that there's no vagueness there or ambiguity like yeah epic and I think did you guys used to run the validator or maybe you still do run a validator on secret
or mine mutlled up. We used to and still do run a validator through an A-NON personality on one of the Cosmos networks. I won't dox our validator calls, but yeah, we run a validator.
Cool, thanks very much for sharing guys. Fantastic. Rebel was a big fan of the secret and any chance he gets you, he'll try and get some alpha that is related to secret. So, you know, you've said Adam, Juno, Osmo, these are the first sort of ones, secrets right up there.
that I can see I've just actually brought up your one of your docs. I can see there's actually quite an extensive list of what you plan to onboard after those first ones and it's a good looking list. Also that with that being said again.
Now for time, if you are listening to this passively, now for time to get active. If you are a validator yourself, you probably have some questions that might be good, high-level questions to ask. And I think that being that we've got the gentleman from Stride here for the next 20 minutes, we're 25 minutes.
minutes to be forward to be specific. It'd be good to really not pit their brains as much as possible. So I do invite you if you are interested in finding out some more, jump up, put that hand up and ask some questions.
And myself, while that is happening, sometimes the questions don't fly into later on. People wait until the last minute we had a space last week and it was five minutes, ten, five, ten minutes to the end and then Sephy jumps up and everyone knows Sephy
loves a big yarn so the the timing was interesting but and can I just jump in there you said you were looking at some documentation I've not seen that would you be able to share that with me on telegram and then we'll add it to this add it to the space
Yeah, docs for stride. We can send those over on telegram so you can post them. Yeah, I'm just dropping an RCA chat. Yeah, if you go to, for anyone else on the call, just to make it easy for folks, if you go to stride.zone.
and then you click docs at the top. We have an overview of how the test networks, how to join as a validator, how to run a relayer, as well as how the protocol works behind the scenes, and which IBC functionality we use, how funds are moved around, some of the safety features, et cetera.
That was even easier, Riley. Thank you very much for that description.
So two audits have finished at this point, Oaks Security, who are quite good at cost and assistance to K audits. They audited the liquid staking module by Zaki. They audited a few other liquid staking platforms, so we chose them for that reason.
And the other audit that's finished is CERDIC. So they're pretty well known. I don't have to give an intro to them, but they have a huge team. So they're able to come to the code base in good amount of detail. And then we are working to get informal systems on board.
It looks like we are probably going to move forward with that to do ongoing audits. And their experts on the IPC side of things. So we're hoping that they can kind of review our code updates as they come in, as well as do some more in-depth IPC testing.
Fantastic, thank you for that one. Integrations, partnerships, collaborations, any intel there?
Yeah, so the first integration that we're gonna have is we're gonna launch pools on osmosis So I believe the first four pools will be the stride token against Osmo, so just like getting our base token out there and then we'll have
of ST token native token pairs for the three zones that we support. So that is ST, Osmo, Osmo, ST, Juno, Juno, and ST, Adam, Adam. And these polls will allow you to just buy the ST tokens and hold them and sell them, or LP.
those pools. So I believe those are the first four that we're launching with. What we really want to see for some of the more interesting integrations are money markets. So if you have a lending protocol, one really cool integration that you can do is recursive
And the idea here is, let's say you have a lending protocol like Mars or like Umi. Once those are fully live, what you'll be able to do is you'll be able to go and post your ST assets as collateral. So you put up ST out of them.
So if you just do this once, like you've now something like doubled your yield, but you can actually do this like a bunch of times so you can go back to stride, mint more ST Adam, go back to the money market, post status collateral, and then you can go back to stride, and then you can go back to stride, and then you can go back to stride, mint more ST Adam, and then you can go back to#
So, you can repeat this process. And because of the collateral ratios, every time you borrow, you get a little bit less. So eventually this process does stop. And it depends on where the collateral ratio is. If the collateral ratio is really high, if it's like you can borrow
95 out of them against 100 ST out of them. You can like go into this process a bunch of times. Whereas if it's lower, if you can only borrow 50 out of them against 100 ST out of this process, you don't get quite as much leverage. But what you end up with is leverage-taking. So there is some risk.
If the price of sd item against out of dpegs, the position can get liquidated. So it's not a risk-free strategy. But given there's this natural R with redemption, and given users can kind of set their collateral ratios and set their own risk tolerance, we think this is going to be like a really cool
First use case we just we need some money market to be live for us to use this So those are two cool ones that I'm thinking about The third one is probably stable swaps So these are these are launching on as much as soon and the idea is like today they use something like the uni V2
to curve, I think they use the balancer formula. So this bonding curve is not optimized for assets that are stable against each other. There's more slippage in curve than needed when you trade paired assets like two stablecoins, for example.
But they have stable swaps launching soon. And given ST Adam, Adam, and all of our other pairs should be highly correlated. Once we have them on stable swaps, you'll be able to go in and trade in size without too much slippage. So those are three that I'm thinking of. Riley probably has some more that he's thinking about too.
So I couldn't help it notice as you're discussing the looping components, I was having Vietnam style flashbacks of anchor protocol and anyone that you
maybe has just jumped on the call and didn't catch it earlier. Can we just do a quick TLDR explain it to me like I'm five of how we can mitigate that scenario happening in this case?
Yeah, that's a great question.
The risk to looping liquid-staking derivatives is that you
Take your liquid stake asset, you use it as collateral on the lending market. You borrow the native asset, you liquid stake that to get more liquid stake derivatives and your repeat. Now, the more times you perform this loop, the lower your collateral ratio,
on the landing market and the more likely it is that you could get liquidated if the liquid-staked derivative token price depreciates relative to the native asset. So to make that really tangible, if you were to take Adam and liquid-stake it for ST Adam,
lend that out or put that up as collateral on a lending market to borrow Adam and repeat and then the ST Adam price were to depreciate relative to Adam you might get liquidated and that would push the price of ST Adam further downward and the
can become a spiral effectively. You saw this on ETH when STETH was being used in AVE, the lightning protocol with a very, very risky collateral factor of 95%, which is frankly a little bit
ridiculous and something that we would not, we're planning to keep the collateral ratio more like 70 or 80 percent. But the key point is that on each there are no redemptions. So this vicious cycle of
The price of STE depreciating, folks getting liquidated and that pushing a price on further has a floor and that floor is determined by the arbitrage between ST Adam and Adam that market makers can perform if the price of ST Adam depresses
appreciate below 98 cents, market makers have a truly risk free arbitrage that they can engage in by buying SCIUM redeeming it for $1 through the protocol and at the same time going short item on essentialize exchange for some lending rate.
If we've done some detailed calculations and talked with a number of market makers about running this, it seems like there's a lot of demand to run this type of arbitrage and keep the pegged tight. So the core reason that things are a bit safer on Cosmos is that there truly is
on bonding period that's not infinite like a theorem. So you can redeem and thus arbitrage to keep the price in line with the native token but the other safety feature is we're not going to make the collateral ratio anywhere near where it was on theorem.
Fantastic and to be clear, are your future plans to only stay on Cosmos? Is that the plan or is there something beyond the horizon of perhaps branching out to other chains? And then would that potentially pose a risk?
Great question. So we can support any chain that has IBCB3, which today is Cosmos Chains. I think Aiden alluded to a few chains that are not natively built on the Cosmos SDK, but do integrate IBCB3. And we foresee that expanding in the future.
It do you know what the unbundings look like on those new chains? I think it's very much up in the air at this point what that model is going to look like. Yeah, I might not actually be sure. I think on virtually all proof of safe chains.
There is some on bonding. Ethereum is in this weird position right now. Well, now the merge has been announced. So we'll see if that happens in about a month. But for the past year or so, Ethereum was in this weird position where no one really knew when the merge was going to happen. And you could stake your Ethereum
But you could not unstick it. And I think this is actually like a this is an area that like no other chain has faced or will faced Like virtually all other proof of stake chains do have unbonding periods. So on Salana, I think it's something between like 24 and 48 hours on Salana. I'm not super familiar with other
But it's actually typically less than Cosmos Cosmos has a relatively long on bonding period in the world of proof of stake chance anywhere from two to four weeks like osmosis on the lower end of two and Juno on the higher end of four But most other chains actually have a shorter on bonding period and what's interesting is the shorter the on
bonding period, the less the ST asset native pair can deepag because the market makers, they don't have to go short the asset for as long. So to make the entire strategy neutral to the underlying asset, they have to short the asset, but if they only have to short the asset,
for a couple of days. That is not very expensive. So on Solana, if we were to integrate there, the safe floor where market makers would come in and roughly do a risk-free arb is maybe a little bit higher than on Cosmos Trans. And that's the general relationship.
So the higher the yield and the longer the on bonding time on a chain the harder it is to do this arm. Correct me if I'm getting this wrong. Now that's that spot on. Right. And so early at the very
started this call, there was a kind of which one of you, I think it was Aiden actually, we're just saying, we've got market makers, was the language you used. And I think you actually, you might be talking to market makers to assist with the art process. Am I correct in saying that?
Yeah, so I can touch on this for a minute. So we're in a process of finalizing SLAs with some market makers who would run this arbitrage and guarantee that they would run it. The infrastructure that we provide for them is
simply some on-chain monitoring software that would tell them a how far is the asset deviating from the peg and b was the lending rate for that asset on a centralized exchange and
And using those two inputs, it's very easy for them to calculate whether the arbitrage is profitable and then engage in it. We'll probably also expose some software for them to engage in it, but a lot of these firms are fairly sophisticated, so they prefer to build back on thing in-house.
Got it got it and I've had two questions come into my inbox while we've been chatting it seems people are trying to come up and have a have a a verbal conversation but they're happy to send a message to me so the first question is around stri-token Utility of the token
Yeah, great, great question. So at inception, the stride token is a governance token and it allows token holders to vote on the inclusion or exclusion of validators across the cosmos
ecosystem to any of the host zone validator sets. So if you own this dry token, you could put up a governance proposal that would, for example, bring the friends validator into the Cosmos hub validator set. If that governance proposal were to pass and you could vote on it with your dry token,
Then the friends validator would be included in the set and the Adam that is delegated through the striped vertical will be rebalanced to friends validator so such that they're included in the set Just to get one click more specific the way it works in the back end is we have a
in array of weights, that determines how much each validator is getting out of the total share. And each governance proposal would update that weight array. And then on an epochly cadence, the total amount state is rebalanced amongst those validators.
Awesome, thank you for clearing that one up. And the other question that I did get was, "Where did you go?" I'm just going to scroll up my conversation here. They must have called it earlier on in the conversation, they said.
He said 100% staking is a goal, but if that happens, how do you even try to add a deliquid staking token? Okay, that's the question.
That is a great question. If 100% were like with say you would not be able to trade out. So it's really not a realistic goal. The way you get out if you had 100% like with say it is through the protocol with reductions. That's one of the reasons why we're focusing on reductions.
have reductions and 100% real estate, there would be no circulating native token on the network at all. That is true. I will jump in though and say I think there is maybe an assumption
Like kind of baked into that question. So the idea that you need to trade out of a token at all the only reason that you need to trade out of SC tokens into native tokens is I guess like protocol risk will be the main ones
or maybe there's some reason that you need to use the native token. But if 100% of tokens are liquid-shaped and you're able to use those SC tokens for everything that you would want to use the tokens for, you can imagine a future in which you're actually able to pay for gas
with the SD tokens and use them in every protocol throughout the ecosystem, you may never need to trade out of the SD tokens into the native tokens. It's possible that the native tokens are just strictly worse. Yeah, it's a question of integrations today. If every DeFi app on the
us accepted ST tokens natively and every Cosmos SDK module such as a bankass or a number of other features used ST assets. You could envision a world in which networks would be extremely secure because you have a very high stake rate and for
that reason, it's very hard to launch a governance attack against the network because it'd be very expensive to buy up to the tokens. And at the same time, DeFi is flourishing because there's so much liquidity in the lending markets and in the AMMs and in the vaults and in all the other DeFi protocols that help us earn yield.
Yeah, that's a great point actually. I'm found to think of that. So of course the incentive there is a secure is the network everyone if they're able to try if they're able to effectively have the state talking that operates at a one to one. There's really isn't a need, especially if it's
sort of universally accepted across all IBC, all of IBC, then there's no real need to switch back to the native type. And I guess, and so this is assuming as well, I'm just wrapping my schmalbrain around my
around this for a second. This is assuming that the ST tokens are also tradable on markets for if I wanted to try my ST token back to a stable coin then back to Fiat for whatever reason.
then this would work. This hypothetical would actually work.
Yeah, I think Riley put it best when he said it's a question of integrations. Like the from a yield perspective, acetokins are strictly better. But from an integration standpoint, like you said, like if you if you can't trade this on on taxes or dexas, if you can't use a
it to pay for gas, if you can't use it to pay for real air fees, if native tokens are more integrated in defi protocols, then maybe you actually want to go back and buy the native token even though it's earning less yields because you can earn more yields in some integration or you have some use case.
But if you have full integrations, which is maybe like the 5 to 10 year vision, then I think you actually don't need the native token or the token that's not sick. The terminology is somewhat confusing. But just to double click on the
point about integrations, that there are a number of integrations that are nice to have and can earn users additional yield. But really the core core integration of a liquid-staking protocol is the decentralized exchange
Automated market maker pool so the Smosis pool between the native asset and the STS said if you don't have that you don't have anything and I think Lido did this very very well in the theorem They chose a stable swap curve so low slip is
and they put a ton of liquidity into that thing, which means that if users ever want to get out, they can do it easily. That's what makes the thing safe, and that's what allows them to have so many integrations across the ecosystem.
Amazing. Can you see a possible timeline with Stride Rivals Lido in size?
It's a good question. In our minds, if the aptune vision takes off, the sky's the limit. So really, it comes back to the question of, is the future of defying going to be on a monolithic blockchain such as Ethereum, or are we going to have
have app chains that are connected via ABC can relay packets back and forth, control accounts on foreign chains, issue queries to each other that are trustless and carry proofs back and forth. And each DeFi app is built with its own governance stack in mind, perhaps renting security from
the hub and perhaps tailored to that particular DeFi applications use case, for example, dy/dx/order books on the validators. So it comes down to a philosophical question of which vision you align with and where you think the future is going to go. But if the app-shade vision were to take off,
I don't think there's a limit for where liquid say he could go. I love what you're working on. I love the vision and I'm very excited for Stride and what's to come. Of course, next week, I think was it Tuesday you said, was when some action was happening?
We are releasing air drop details on Monday. Stay tuned. Follow the the stride Twitter. We'll be releasing it there. And we're releasing tokenomics early in the week. The day of the TVT. But keep an eye out for the air drop because that that's currently ongoing for any
who joins Tastinat or helps out in a series of ways that are listed on Discord. If you hop in there, you can find some details. Yeah, super exciting. So Monday, everyone's caught that one. You can jump into Discord, of course, you can follow Stride on.
Twitter as well. Just click the profile and click the follow button. This is easy as that. Stride on the scroll zone. With that being said, guys, you've been amazing of our specific every question I had here plus we had a couple anonymous questions come through. No one else jumped up just
speak but I feel like we got very much, well I know I certainly got enough information tonight to really really reminate on and mull over. And so all I want to say here is that I appreciate your time, your energy, what you're doing and encourage anyone that is listening to this call that if you've been
enjoyed it. If you're feeling more informed than you were at the start of the call. Obviously give this space a share and help spread the word of stride. Any final words here, Rebel, any final words Aiden Riley, anything that you want to say before we wrap up tonight.
Thanks very much guys for jumping on the call. It's been very educational. I appreciate it.
Thanks for joining today everyone. I'll put out one last question in the audience. If there are any particular Cosmos zones you'd like to see onboarded first, please let us know. We want to make this a community decision. So if there's a ton of demand for secret, we'll prioritize them.
it so forth just let us know. Yeah, can we perhaps get a poll or something for that is there's somewhere we can direct people so that you know there's some cohesion and we can sort of get the best inputs. Greg, we'll answer that.
Sorry, what was that one?
I was just saying great, great idea. We'll launch the Twitter poll right after this basis. Fantastic. I'll jump on that myself. Guys, until next time, go and look out for yourself. Have an amazing evening and best of luck with everything leading up to Monday.
Thanks for having us, guys. Thanks. This was a lot of fun.