Sunny @sunnya97 | Aaron Kong @aaronxkong

Waterspinner, OSL admin @xoxo_td | Jon Ator, Osmosis front-end @JonathanAtor1 | Jakub, Confio @ueco_jb

tl;dr

-v12 Upgrade was smooth: added TWAP and (re-)enabled Interchain Accounts and Stargaze Queries

-chain halt on Monday: fixed in 5 hours (was an old non-determinism bug in EndBlock logic)

-stablecoins: native USDC coming to Cosmos as soon as January

-decentralized stables like IST, IOU, USK also coming to Osmosis soon

-stableswap targeted for end of this month

-also building a Transmuter module for free 1-to-1 stableswaps (if stablecoin teams fund it with their stable)

-incentive wars on Osmosis incoming??

-mesh security: lots of hype around Sunny’s talk — the end-state of interchain security is chains bi-directionally providing security for each other (except for smaller chains that just want another chain to do it for them)

-at HackWasm, Jake Hartnell (Juno, DAO DAO) and Ethan Frey (Confio) worked with Sunny to smash out a concept with some functionality: a proof-of-concept could be out in a couple of months

-HackWasm: very successful — lots of teams building projects that use IBC

-First Updates in a while! Lots to cover!

v12 upgrade went through pretty smoothly (last Friday):

-added TWAP, re-enabled Stargate Queries (allowing CW contracts to interact with state machine properly), and re-enabled Interchain Accounts

-enables Quasar and Stride and others to interact with Osmosis properly

Chain halt on Monday, fixed in 5 hours: small bug, nothing to do with v12, has been in the chain for a while (before the June exploit, so didn’t get caught by new QA processes)

-was triggered by a prop to increase the validator size

-EndBlocker - code that runs automatically at the end of every block

-many Cosmos SDK modules have their own logic they want to run in the EndBlocker

-a couple of these conflicted and created some non-determinism

-some validators increased the validator set size first, then the other endblockers — changed the state/non-determinism

-was a mistake on our part: tried to pass in the correct version of the array

-validators coordinated quickly to find the bug and help update

-this is what Tendermint is designed to do: halt instead get fork-y, magnifying errors

-”safety over liveness” philosophy

Aaron: is this in any other chains’ code?

-Sunny: there’s a data structure in Go language called map that is non-deterministic by design

-one of the Juno halts was caused by iterating over a map

-Go recently added ‘generics’ — a way of making a new kind of map that is deterministic (SDK team working on adding this)

-wouldn’t have happened on Juno—usual SDK is to run everything in the EndBlock in order, which we changed to improve developer UX

Aaron: with mesh security, how would this affect things?

Sunny: it wouldn’t have much effect, bc that’s the point of not having a single settlement layer

-vs. Ethereum as a settlement layer for rollups

-in the sovereign-chain model, if Osmosis goes down, everything else keeps running

-same would apply to mesh security

-it’s security that’s shared, not the liveness properties

Mesh Security: Sunny’s Cosmoverse talk (Day 1, around 01:22:40)

https://www.youtube.com/watch?v=Z2ZBKo9-iRs

tl;dr - interchain shouldn’t be hub and spoke or multiple hub and spoke

-all chains provide security bi-directionally: Osmosis helps secure Hub and vice versa

-Jake Hartnell and Ethan Frey (CosmWasm gods) super hyped for this: worked on it at HackWasm — smashed out a concept with some of the functionality

-Sunny just helped with architecture, not code

-realized while architecting it: cross-staking is quite similar to superfluid staking

-Osmosis devs will be able to adapt superfluid code to this model + DAO DAO code

-very possible to get an MVP, proof of concept in a couple of months

Aaron: what breakthroughs did you make to get to this point?

Sunny: went through some iterations to get to the right abstractions

-but we actually didn’t run into too much trouble

-HackWasm in general was cool bc people were using lots of IBC interactions

-at the last HackAtom, this wasn’t quite as much the case

-winner of this one: ETF … [fetch from site/Twitter]

-new protocols, not just token transfers

https://twitter.com/josefleventon_/status/1577147763879743488?s=20&t=WxNNVxZGOBGWrfnRKmkbYg

Mesh security and stables:

Sunny: much-anticipated ATOM 2.0 unveiled

-lots of interesting things in it: interchain security, the scheduler, tokenomic changes

-interchain security is a subset of mesh security

-goal is to get all appchains securing each other

-getting competitive with any other L1

-interchain security is more for smaller chains with no desire to run their own validators, and just draw security from another chain

-it may be that chains ‘graduate’ from just the Hub security to participate in mesh

Stablecoins

-Circle is making a general asset issuance chain, not just USDC

-so native USDC will be released there and flow into the ecosystem through IBC — great bc less bridge risk for the ecosystem

-there will of course be decentralized stables as well: IST from Agoric, IOU from ION DAO

-the more the better: Osmosis launching stableswap by the end of the month

Aaron: with most USDC coming from Axelar at the moment, will this change?

Sunny: Agoric will provide incentives for IST

-as incentives drop, you will see a shift

-working on a transmuter module allowing a 1-to-1 swap bt stables: Agoric could preload the transmuter with IST (taking on the risk) and then people could do zero-fee, zero-slippage swaps

Aaron: what about the bonded liquidity?

Sunny: maybe governance should allow people to break locks: but only for the purpose of diversifying stablecoins

-just make it a rule that the lock break is atomically connected to a stableswap to a diversified stablecoin

-removing that friction might make sense: but that is an issue for governance

Aaron: how hard is that to implement?

Aaron: will there be lots of stable pools? or one big one?

-Sunny: if we’ve learned anything from the UST collapse, it’s that diversification is better: we’ll probably let the pools proliferate first, then once the winners seem obvious, start to merge some of the winners — a la Curve’s 3crv

-so we could make a 3-pool of our own, and then use that 3-pool token to make new pools

A: So what stables and when?

IST launching soon

USDC is taking longer than we hoped, but it will be after the release of interchain security: fingers crossed for January release as announced at Cosmoverse

A: will there be a stablecoin war on Osmosis, and will that be good?

Sunny: there is value in being first, so people are racing to do that

-we might see something similar to the veCRV wars: people trying to get their stables to have the most liquidity

-so there might be some external incentive wars (since we don’t have the veCRV bribing system)

-this will be good for Osmosis LPs

A: what will be the big three and what will be the losers?

Sunny: USDC and Tether will inevitably be big, since they’re big everywhere

-the Curve 3pool is USDT, USDC, and DAI

-so which decentralized stable will win here?

-the history of DAI is very interesting:

-appeared on Ethereum before Tether and USDC, so it had no competition

-and it automatically won the first Curve war, and so was integrated into all of DeFi

-this may not happen here

-DAI-like stables are hard to scale (tied to the demand for leverage)

-IST is doing a good job; excited for the IOU way of doing things

-the basket idea of all Cosmos assets is quite interesting, instead of tying to just one

-USK is mostly tied to the Kujira platform for now: they haven’t brought it to Osmosis yet, so not sure if they’re planning to participate or just keep it mostly siloed to Kujira

-in general, we’ll probably see a balkanizing of stables in the coming months