from Osmocon Video Part 2: 00:00:15 - 00:21:37

Emery Andrew, Kado “kah-doe” (fiat onramp)

Dean Tribble, Agoric (hardened Javascript DeFi, IST over-collat. stable coming soon)

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

Zaki Manian, Iqlusion, Sommelier (similar to Quasar, building actively managed yield vaults [started with a heavier EVM focus])

tl;dr

Better stablecoins are coming in bulk to Cosmos, 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. This will grease the wheels of the economy and help unlock the value in all the lending, perps, derivatives, strategies, options, etc. 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.

Zaki: There is a void in the stablecoin ecosystem of Cosmos after the UST collapse. How are you thinking about this?

Emery: we originally wanted to on-ramp UST, now working with Axelar to launch the first on-off -ramp for axlUSDC into the Cosmos

-also axlUSDT, axlDAI

-also looking into how can you swap directly into OSMO, buy an NFT directly with a stablecoin

-vs. traditional on-ramps that don’t interact with bridges and smart contracts

-it takes 5 days to settle from a Coinbase account vs. axlUSDC and soon native-USDC

Dean: there are tens of billions of capital assets in the Cosmos (OSMO, ATOM, etc.: if we can use these as collateral with the appropriate safety mechanisms to back a stable we can grow the Cosmos economy — stablecoins grease the wheels of the economy

-IST (the Inter StableCoin) from Agoric, will be minted with Cosmos assets locked as collateral (similar to DAI)

-then IST will be used throughout the ecosystem

Brent: UST crash was no fun for anyone

-very boomy mic: hard to hear

-he’s talking about DAI’s early problems (Black Thursday)

-and then their subsequently implemented stability mechanisms

-Umee wants to use tried and tested, safe stables

Dean: distinguishing account backed, vs. CDP stables, vs. algo’s

-the CDP Maker DAI model is well tested now

-their early struggles of May 2018 was bc the liquidation pipeline wasn’t functioning properly, but that has been fixed (it wasn’t a fundamental problem)

-there’s a non-trivial advantage to there being more than one good stablecoin

Zaki: Thus far, Cosmos DeFi has mostly meant DEXs. In the wider ecosystem, DeFi is perps, stablecoins, so much more. How do you guys feel about the expanding maturity of Cosmos DeFi? Where is it going to go? Does Kado think of itself something that will be used by the front-ends of DeFi apps or as an app in and of itself?

Emery: we connect fiat ramps to protocols. it’s going to be about building resilient, flexible systems on top of applications

Dean: there are evolving answers. right now, fiat on-ramp is key. when perp markets come online, there will other mechanisms for reducing the over-collateralization of stablecoin — increasing economic efficiency while still having a sound currency

-insurance: people want established, regulated financial institutions to provide insurance:

-this will allow institutions and pension funds to participate in DeFi

Brent: agree. lots of important infra being built. DEXs appeal to a certain mindset - e.g. equity and FX traders

-the missing piece is this other mindset: fixed income, debt/bond ecosystem

-this is more about lending and capital allocation to different groups

-Umee is interested in this aspect

-Aave and Compound and Maker have laid a good foundation with variable arm lending

-we need to add things like fixed rates, perp structures

-this will really tie the space together

-IBC is the best interoperability protocol

Dean: in order to have an economy you need currencies

-the US dollar is just an algo-managed coin tied to long-term mortgages and contracts

-fiat on-ramps help us leverage that

-that kind of economic glue across multiple chains will enable non-DEXs to participate in interchain DeFi

-stables helped propel DeFi summer

Zaki: Another big part of DeFi is staking derivatives (which I’m helping to develop). Thoughts on their place in Cosmos DeFi?

Dean: Staking derivatives are another way to unlock the underlying value of assets of Cosmos chains.

-that’s just the beginning—where do you take it?

-has to be connected to exchanges and then to lending/borrowing protocols

Brent: we want leveraged staking, we want to be able use a stable derivative…

-leveraged staking is when you have, e.g. stakATOM and use it as collateral to borrow normal ATOMs, and then stake those again

-Ethereum has not done leveraged staking well

-stETH from Lido is trading at around .97 ETH bc people are losing confidence in the merge: this isn’t good for people who want to use stETH

-Cosmos has a significant advantage in staking derivatives

Zaki: we’re imagining a world coming this year where you can liq. stake your ATOMs, take those to Quicksilver, get a synthetic staked ATOM, take it to Umee or Agoric and leverage that, and mint IST (e.g.) against it

-Cosmos DeFi was harder bc we had to make our versions of everything instead of copying Ethereum — but it’s coming together