Episode link:
https://www.citizencosmos.space/ericwaisanen

Episode name:
Eric Waisanen, game theory, inflation & token value.

In this episode, Citizen Cosmos talks to Eric Waisanen, tokenomics lead at Phi Labs. In this episode, they delve into the nature of inflation, how it is dealt with in different systems and how it can eventually lead to the death of economies if managed poorly.  Eric explains at length how the rewards are structured at Astrovault and how they plan on building a sustainable rewards system. Citizen Cosmos and Eric have a heated discussion on how content creators should be compensated and Citizen Cosmos gives a beautiful bit of history on how one used to have to apply for funds in the good old days.

Citizen Cosmos
Good space time yall. In this episode of the Citizen Cosmos podcast, I speak to Eric Waisanen, tokenomics lead at Phi Labs Global, helping to facilitate economic innovations and Archway the Cosmos L one, designed to reward developers, along with Eric we discuss counting cards, token utility, monetization, innovation versus Ponzi schemes, economic philosophy, game theory, rewards and liquidity.

Eric Waisanen
Just trying to find a nice niche in a place with great tech and terrible economics.

We were having developers build economies and that is not their forte.

What they were doing to print money was not different to what the US government does.

I don’t think everyone is going to make it, but what does make it out of this dot com bubble, will be the next Amazon or the next Google.

Citizen Cosmos
because you had to do a photo of your arse and a fingerprint of the head of your penis. Send them that and then maybe, maybe, maybe they would give you like 2 or 3 k.

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Citizen Cosmos
Hi, everybody. Good space time to yall as I’m used to say welcome to a new episode of Citizen Cosmos and today I have with me a guest from Archway and from Astrovault, Eric. Eric, hi, welcome to the show.

Eric Waisanen
Hi, seriously, thanks for having me brother.

Eric Waisanen
It is nice to have you. It is a nice evening for me and a nice daytime for you, so, it's good time on the time zone converter thing. I don't know if you know when you put different times zones there's little smily faces and for both of us it's now show a smiling face so we should be happy and it's great timing Eric can I please ask you to introduce yourself and let us know what you're working on currently or anything you would like to add about yourself in general. It’s all yours.

Eric Waisanen
Yeah, thanks man. Yeah, I’m Eric Waisanen I am a co founder of Astrovault,a new AMM being built on Archway and upon meeting the Phi Labs team at Cosmoverse in Columbia recently joined Archway as well as their tokenomics lead. but aside from that I also do quite a bit of tokenomics consulting in a lot of the Cosmos space and beyond. A  bit of background, I studied economic philosophy in college I do some masters courses lecturing for tokenomics as well. so just trying to find a nice niche in a place with great tech and terrible economics.

Citizen Cosmos
That is not easy,but you have found it right after all.

Eric Waisanen
Yeah, so far so good I’m just working with Phi Labs has been amazing. Astrovault’s development is going fantastic and we all know that we're where the future is going to be it's just a matter of how to build it properly and sustainably amid so many crashes that we're finally seeing and will continue to see, the way things are currently set up.

Citizen Cosmos
Absolutely man, absolutely and I have some questions for you about Astrovault and Archway a little bit down the road but first you mean mentioned one very interesting fact which I also want to talk to you about the economics and philosophy but before that, how did you even get to that point? How did life end up so… I’m joking but how did life lead you to where you are today, I mean what did you do apart from studying and then suddenly working for Astrovault? Was there definitely, there was some route in between you know whatever else again you want to add in there throw in there feel free.

Eric Waisanen
Yeah, great question so while I was in college studying economic philosophy and a lot of other things I had good a scholarship so I just dabbled and took my time during my four years. I started working at a casino you know applied game theory, why not. I started dealing cards, found some issues and applied game theory at some of their games. Solved some of their problems and got into game auditing, game creation, everything game theory. I got banned from card counting from all the casinos which was my side hustle and so I was looking for a new side hustle and got into defi so it was 2016 when I got pretty much banned everywhere from card counting and so early 2017, I started getting into crypto and I’m like hey this is cool look at all these Ponzi’s that I don't have to invest in to capitalize on and did okay as a trader and it was just kind of frustrating seeing things not develop while developers kept doing brilliant, brilliant things and technology kept getting better and better.

The economic attempts being tried were just, like Olympus DAO gaining popularity and crashed. Look at Tera Luna like things weren't growing economically and we were having developers build economies and that's not their forte and so I worked quite a while to show case different projects where issues were they didn't recognize and also show them how they can solve them. Networked my way up and eventually got the opportunity to work with my business partner Ethan for a Master Vault to build Astrovault which will be lunching on Archway shortly after they go main net and get quite a few consulting opportunities to help develop the space to match economically where development’s going technologically.

Citizen Cosmos
Nice well a lot of things talk there about and let's start with counting cards. let's start with two thousand seven, of course of course, I mean, I had it prepared but you know it had to come from you know. I’m joking you know, but all the good stuff has to come from the good people. So, you know I remember the 2017 early 2017 in crypto. I remember very well, and I had a buddy back then, he would run private consulting and funds and it was a small private fund based on some up to like twelve ten people. I don't know really to be honest how many people there was but the point was that all of these clients who were new who came 2017 were all card players well or poker players and I was like well now you say that it must be some, there was a whole, I think they had like a server on Discord where there was just like card players who would like talk crypto trading and crypto stuff. I mean people who can count cards obviously have to be good at trading or is that just a misconception?

Eric Waisanen
There's definitely a strong correlation there actually. Downloaded Discord the first time to link up with other advantage players, which is the generic term for people who gamble to invest. I mean gambling and investing are the same thing with different connotative ROI but if you can use gambling to have an expected positive EV then it is investing likewise you can invest all you want with a negative ROI and have it really be gambling it is all the same. So, yeah people that figure out how to be net positive poker players and net positive blackjack players some people can do it with gaming different, different give aways or what not with things like video poker. Any way you can consistently beat the house, anyway you can consistently make profit investing good on you.

Citizen Cosmos
But can you consistently beat the house. I mean how consistently can, how often how far would it go right. There’s got be a stop to that.

Eric Waisanen
Depends, there are ways casinos mess up, banks mess up. I mean card counting like you're not cheating it is a legal way to beat a beatable game

Citizen Cosmos
And if you were to if you were to take this from that to I mean I know it's not a direct correlation but you did mention Luna of course and you know I think, and one of the sentences. I’m going to take a slightly different way. There was a sentence you say, I even wrote it down, Developers not equal economies I like that. Let's go into that because I mean, and I don't know what to call Do Kwon here a developer or a bad gambler. I don't know I’m not the one to make the decision. I mean even though I am kind of affected I was but what’s your take on that what's your story here? Is that an example of bad economy or is there an example of bad gambling or what else?

Eric Waisanen
It's a great developer that's dabbling in economics that took off because it didn't really have you know, it did have proper auditing just the people that were doing the auditing weren't invested so you create your own echo chamber. I mean what they were doing to print money is not different than the US government does to print money but it is at scale a direct competitor, if Luna can be burned for UST and UST could be spent at a store then Luna is an alternative to the Fed and if your goal is to be a Fed competitor, then go for it. But any time you're self-collateralizing, that’s assuming that your entire market cap is collateral for this token, but realistically the only money you have access to is the liquidity provided against your token which is far far less than the market cap for absolutely anything. So that's necessarily under collateralized and we're going to see more issues as we see new stable coins set up and arise. Any time you want anything over collateralized that's incredibly inefficient use of funds and it's very rare for incentives to align line for somebody to do that properly.

Citizen Cosmos
When you say properly, let's talk about properly and I mean you're welcome of course to mention how you guys do it at Astrovault. I mean this is what would be a good example, but what's properly out there in your opinion?

Eric Waisanen
So what it would take to properly collateralize or over collateralize a stable coin like right now, you see with like maker they'll use things like Ethereum. Well Ethereum has access to far more liquid ty therefore if it has a market cap of sixty something billion dollars but it has at least one or two billion dollars’ worth of liquidity then now you're really collateralizing it with that much which makes it under collateralized, but collateralized enough to make the token work at least like a scale for a decent amount of time. An ideal overcollateralized coin would literally have more dollars backing it than dollars printed but why would people choose to just leave dollars in this basket not really doing anything other than backing this new dollar they create. It doesn't really align incentives but if that's what people want, somebody has to figure out a way properly pay for that. Astrovault is not launching a stable coin but would be better positioned to than pretty much any other group I’ve seen because we will have a basket of treasury slash liquidity that week could liquidate in order to redeem this token which other groups don't really seemingly have or if they set up would seemingly be set up really crony, like I don't have a great view of stablecoins in general.

Citizen Cosmos
I think you're giving a very great overview and so thank you, for that I think whenever a person underestimates what they saying usually it's good. So, even though you said that sentence I’m still going to try go a little bit more down there like one more question if you don't mind.

Citizen Cosmos
For them, I mean I’m going to use those those words, for the average degen out there right, even not a degen but you know like a normal crypto trader who doesn't jump into any any any crazy whatever farms or whatever. We're not necessarily talking Cosmos here I think we can talk in general crypto. You have just in theory described a very good way of how you could do like an audit in a way to understand here's the liquidity, here is the basket, here is the liquidation points that that you know but what can an average person like even if they know all that you know it's quite difficult to find all the data to understand it yourself unless there is somebody helping you to analyse a lot of things. What can the average user do in order not to get themselves deep in debt if they have chosen the way, I mean of course one is not to gamble, not to trade what you don't understand. But you know we're talking about crypto so we are already here. What would be the advice to those users?

Eric Waisanen
My advice is understand the actual business models because there aren't many we have lots of businesses in the shape of DAO’s now and these businesses don't earn revenue but they do have perpetual debt in like whether it's team operations like infrastructure provision like there's perpetual costs that need to be decentralized but there's no revenue to back it and there's this idea this speculation that there will someday be revenue but if they ever get to that point how much revenue will that be and will that justify the current valuation and the answer for most things is no. The reason that we build Astrovault is because we want defi to be accessible to everybody we don't want like right now in the United States you have to have a quarter million dollars in order to invest your own funds and lose them. Like right now if any but regular person has to pay somebody else to lose their money it's ridiculous. Give people the freedom to do what they want with their own funds and not have it be trusted by these third party businesses that will just steal your funds anyways leave you with nothing like we're seen with FTX.

So I love the ethos but it's not built sustainably and large DEX’s with a nine figure valuations earn zero dollars in revenue and then in order to work they have to have this high valuation governance token which doesn't govern anything, it doesn't earn any rewards, it doesn't have the potential to earn any rewards and even if it did would it even justify its current valuation let alone a potentially gaining value and it's frustratingly dire if you truly look at the business models of most things being built. So as a consultant, as an employee, I’m trying make sure that the products that I’m working with not only do contribute and create substantial value but properly capitalized on that value with their token kind of driving in value to the token stead of to equity in companies which is why people would continue to use this token that truly does have utility at scale.

Citizen Cosmos
Would you say that you understand right now what would be, in at least how you see not the perfect model right but at least a good model to change that I mean you talk About ways to drive value, about how capitalize on the token you know about a lot of things really and those are really important things, things I think a lot of people in crypto especially if you're in this industry you know for more than five years. I think you understand that even if you're not an expert on that you kind of begin to see those things and you think okay there is a problem, there is nothing to feed this chain nothing to feed this, there’s no capital out there so how do we change that, what do we do?

Eric Waisanen
Yeah, I think as far as layer ones go, so I’m not a huge believer in app chains in general, note that we are launching Astrovault as a layer two on top of on top of Archway not only does Archway have fantastic incentive models to reward application creators which still won't be our primary revenue model but also if you just look at the economics, hosting individual ap chains is just higher overhead for perpetual infrastructure provision costs and like if another chain already hosts this infrastructure for us and we don't have to pay that, might as well cut costs. That's not how it's currently viewed by investors but I’m trying to think more than a year more than two months in the future. I’m trying to look at the ten, the thirty, the fifty year plan and currently I think that's the better way to go.

As far as Layer Ones go, if you're going to have this high inflation you have to be able to counter this high inflation with some kind of combative deflation through utility of the token EIP-1559 did a fantastic job with Ethereum. I think that is the best current market standard for a Layer One. In Cosmos people aren't going to like to hear it, when you get compared to Ethereum, Ethereum has lower inflation with actual deflation and general token utility we get compared to Polcadot and it's like at least Polcadot’s making revenue from the software they created. At its base Cosmos created absolutely brilliant software and gave it away for free and if you think of that as a legitimate business model like that that's not what happens if people are software developers they sell software as a service, they rent it out, they do something to capitalize from that's utility and the beauty of the decentralization of Cosmos is also what's drive this frustration as you see voiced in Atom 2.0, Atom 1.0, attempt to give the ATOM token more inherent value because it doesn't exist, other than governance and that's really common for a lot of things in all of crypto right now.

Citizen Cosmos
TCP/IP doesn't have a token right and I mean it works.

Eric Waisanen
Yeah

Citizen Cosmos
I’m just saying, I’m trying to be devil’s advocate here a little bit to be honest I agree with a lot of what you said you know and in fact with probably everything pretty much you said. I would go even further to say that the businesses that are built on those Layer Ones and Layer Twos often don't run themselves as businesses and often don't understand the costs that they have to incur over that, I’m sorry incur over years and years and then suddenly they kind of disappear and people are like where did that validator go, where did that project, go where did that guy go well, because they need to cover that somehow.

Eric Waisanen
And the users don't understand as well, I saw Twitter thread recently people comparing Kujira and Osmosis and they're like well even if you're only getting so much of the Osmos staking rewards you're still getting two hundred and thirty dollars a year, no you're getting more Osmo. There's still only so much liquidity provided against it and now Osmo has a ton of liquidity the way they position themselves with the Osmosis DEX, which is fantastic for them, but you still only we have the amount of liquidity pitted against it. If enough people wanted to sell you can send the price to zero there's only that much money available and so not everybody is earning that two hundred and thirty dollars or something, they're all earning more Osmo. They're all earning more opportunity to be the one to siphon a way that liquidity.

Citizen Cosmos
I understand where you’re coming from, actually we had debate one of our formats that were do for YouTube, is like a debate format, and who only did like two episodes so far, one was the Atom 2.0 paper and one with liquid staking and the liquid staking there was it was actually there was a very interesting point about what you say now. You know the guys were talking about rewards or rather I asked them the question about what is the future holds and we had people from Persistence, from Stride, from Quicksilver and from Lido, from Lido finance and my question was but don't you guys kind of like when they were explaining it was like what I mean all the rewards are coming from inflation, all of them, like one hundred percent. That is like bound to fail model sooner or later. It’s a bit of…

Eric Waisanen
It's worse than that and I’ve seen Jae Kwon come out and talk about the governance risks or the protocol of risks of these liquid staking programs. It's worse than that it's completely non-viable and we actually Just went public with our white paper if you check the Astrovault white paper section six we go into the math behind auto compounding liquid staking derivatives and then what we're doing with Astrovault which will have a liquid staking component that does not auto compound but liquid staking derivatives will always trade for so much underneath the underlying asset and it's just it's mathematical like there is no like, oh this is an arbitrage opportunity, this staked Atom is trading at four percent underneath it's underlined value and then four months later, the same account like oh what an amazing arbitrage opportunity this staked Atom… like maybe you're eventually going to realize it's just going to trade at four percent underneath its underlying value and if that's the case then it's not liquid and if it's not liquid then why are we using it, how is it better you can have something auto compound and not add a governance token which isn't really earning rewards if something is earning more rewards that means it's taking more from its users and everything is just really really extractive and it's just not economically feasible.

So we're trying to coin the term protocol earned liquidity and have have protocols actually gain value from the TVL they associate with what we're doing with non-auto compounding liquid staking derivatives in order to justify evaluation of the AXV token where if users liquidity farm on Astrovault and they earn AXV. Now you can stake AXV to earn Atom, you can stake AXV to Earn Juno, to earn Archway and you can also use the AXV token to have the liquid staked assets governance power in those layer ones directly which right now we haven't seen DAO’s have massive control over layer one networks and the AXV token will actually, the more liquidity we generate the more service we're providing to the Cosmos ecosystem and beyond this we expand to Avalanche, Moonbeam, Polkadot the more governance power the AXV token has. Meanwhile the way the proof of stake’s set up we earn rewards from them directly to our DAO and sort of like you keep your staking rewards you get AXV, AXV gets this set up as a Panamanian foundation so that the token holders are legitimately the beneficiaries that own this DAO owned treasury

Citizen Cosmos
Aren’t the staking rewards still coming from inflation? so like we're kind of still going the same direction no?

Eric Waisanen
Yes, but it's one thing to earn your own staking rewards it's another thing to earn somebody else's staking rewards. So, we will be earning staking rewards from other protocols which would then count as revenue for us. Now it's still up to them to justify having a high valuation, but I mean, right now, one of the top DEX in the Cosmo eco system has like two hundred and fifty million in TVL or so and like twenty million daily volume give or take. We'd be earning seventy-two seventy three million dollars in annual revenue with those numbers and our tokenomics and the error being zero. So there's a lot that's economically possible without making technological advances that we outline pretty well in the whitepaper and then at that point as we build this autogenic treasury we're earning these staking rewards that go to liquidity provision helping decentralize his payment for liquidity provision which all these layer ones have it's then Astrovault’s job and any other DAO that uses this model of protocol earned liquidity to be a VC that helps justify, helps make connections for these Layer Ones because if these layer ones do fail, if they don't sustain their valuation, if they do rug then there goes that part of our treasury.

So, we're actually we actually need them to succeed where incentivized to go and pro bono help them succeed, because that's what our treasury is based in. Right now there's this idea of we're all going to make it in Cosmos which I’m sure you can tell I don't think everyone's going to make it, but what does make it out of this dot com bubble will be the next to Amazon, the next Google and things will do great and so we think Cosmos has the best tech it also has this opportunity of proof of sake that we can easily utilize and as long as anything in the Cosmos eco system is what succeeds long term then Astrovault and the AXV token will justify its value by having that in its treasury.

Citizen Cosmos
I think that a lot of like seen with three or four bear markets, well this is the fourth one I believe that I’m seen since the 2011. So I mean you know that was the first one right eleven, twelve and then from there… it's interesting that so far the revenue and survival haven’t been going hand to hand. So far you know haven't revenue you didn't well or rather not having revenue didn't mean that the project is going to die. I mean but it was always more or less the tokenomics. Tokenomics model really really does play an important role and if at least the system can’t survive on its own juice kind of so to speak for several years it just dies out and we’ve seen it already a lot of times. What is in your opinion the best or one of the some of the ways as somebody who works with tokenomics in your opinion to incur more value to Atom rather than the proposed solution that we already mentioned.

Eric Waisanen
Yeah, Atom has to develop something that other people want to use and charge them for it. If they're going to give out these massive grants or what not they need to make sure that there's an air drop to token holders. If the purpose of Atom is for an airdrop, then great. If they want to be this collateral, they have to make sure that Atom is the primary on and offramp for the rest of the Cosmos which also petitions them to have constant sell pressure from the more things that uh that are developed. like something has to be that fiat gateway and right now that's what Atom is best served at. Theoretically I think if they are able to set up some kind of like super relayer set for IBC that people want access to, kind of like Polkadot has these limited spots and they can incentivise people that use ICS for that reason. Like right now I’m nervous about ICS. Why wouldn't people do is somewhere else, if they choose a do ICS, like I don't think that it's going to provide the value for the Atom token that they think it will and frankly I think that quite a few other ecos like quite a few other tokens are better positioned to profit off of what Atom wants to do than Atom is itself.

Citizen Cosmos
I don't know if you know I mean I know and I guess it's because of atom 2.0 and that's why I mentioned it I mean because I haven't spoken about it for two years until the last month and I’ve mentioned it like I think twenty times, but I cannot not help to mention it again. It’s prop twenty-six I believe behind, I was aye, it was rejected was the prop for 2020 where we came with the I used to help cyber and system develop in Bostrom and our proposition back then I think it was fifty thousand dollars an Atom for them to send to multisig dadada in order for when Bostrom will launch they will transfer a certain locked value during that deal right then tokens to the treasury to them to the treasury, whatever, community pool doesn't matter of Atom, and we spoke that our main proposition of value behind that was of course the diversification of the money that the chain has and of course to build incur value that proposition, that prop failed actually, didn't fail heavily and a lot of people since then who have voted no they came out and said now I kind of get it, what you were trying to do but kind of you were like two and a half years early with that and we're like well but fuck like you have to understand that if you have nothing to back what you do, sooner or later the food is going to run out and yeah but you said one very amazing point, I mean interchain security.

Cool, but why wont I go somewhere else and hire interchain security over there especially let's say if I’m a close small chain I’m probably going to go to Binance or somebody like that. I don't care about KYC regulations. I’m kind of the guy who, let's imagine for a second right, probably I will choose them because they will probably provide more safety nets then Atom can, right, Osmosis, Juno, you know.

Eric Waisanen
Osmosis, Juno, Archway, Neutron, like anybody can launch their own ICS and then they can offer more incentives and they can bring more like, they can have gates of like this is only accessible, you can only have access to this if it's with us and Cosmos by being so neutral and by giving everything up for free, has less that they can reserve to people that choose to use them. I agree with all the points that like there should be a neutral hub and it is in everybody's best interest but in a laissez faire society nobody wants to pay for the neutral hub but it's better for everybody if everyone pays for it, which means it has to be mandated and they can’t now.

Citizen Cosmos
This is like me you know, jumping around here was talking was talking rubbish for most of the time, myself. Is there such a scenario where the Atom token doesn't to have all those things and it stays the TCP/IP kinda thing, were we're okay but having this token gives me access, well to nothing really but it kind of gave birth to this whole great IBC thing which then developed and had its own value but Atom, the scenario where atom has some value just because well like Bitcoin for example does but let's not go there but I don't know are the are there scenarios where it doesn't happen that the apocalypses that we're talking about.

Eric Waisanen
Yeah, I mean it's never too late to save almost anything. Just Atom needs to develop a really really strong…

Citizen Cosmos
But without that. Without developing an incentive model I’m talking about like let's for a second not incentive model is the right word.

Eric Waisanen
I’m talking new software, something new. That without developing something new that's for sale or rent, then no.

Citizen Cosmos
No okay okay that's what I meant. I was saying let's try to keep out of the picture sale or rent here but so you're saying that is the only way okay I see. Let's not back to but kind of skip forward from this to Archway because I’m curious also to hear on the front because last time we had Archway we had two or three, three people from the team I guess and it's been a while since then and I don't know I assuming because you guys are building on top of Archway you will be more familiar with the current scene and what's going on and if you could update as would be cool.

Eric Waisanen
So yeah, first and foremost none of my opinions are those of Archway, Phi Labs or anybody associated with them. I am an employee of Phi Labs, I’m their token economics lead but there are plenty of other people higher than me there doing more. They wanted to separate their platform with being focused on economic innovation and they're doing a great job and I just had the experience of being able to help put that on spread sheets, on papers and what not. To help iron it out and help lead them in the direction that they were already going. So their, Archway is far bigger than I am but what I love about them is from an economic philosophy perspective which is my background. Economics is focused on optimizing the systems in place. Economic philosophy is understanding why the systems in place were created and then ideally optimizing those systems before then optimizing the system that is in place and the idea of this pretty token… What does inflation mean to you?

Citizen Cosmos
Well, I think to me personally and I’m going to cut corners of economics here and there is two meanings to that word one is of course inflating the monetary supply. So inflation as in literally blowing into something and it's inflating, and I guess if we're going more into economics inflation is when something loses value because of something that is not there is no ying and yang or balance so to speak I’m gonna like again cut very much corners and go into philosophy as well so something is losing value and that's basically a result of inflation and it shouldn't lose value at that point so two meanings I guess.

Eric Waisanen
Yeah, you are one hundred percent spot on and so the second one you're talking about as something loses value is like what in the US where I’m based they'll have the CPI and they'll measure basically how theprice of the dollar depreciates compared to commodities and global assets and those, oh gosh inflation’s at nine percent oh gosh, it’s at ten per cent that's really high, but at the same time the first one you mentioned it's called monetaristic inflation or inflation of the monetary supply and we've printed fifty percent or one hundred percent of the dollar supply since then so realistically the price of the dollar has not depreciated even close to how much the monetary supply is increased. We're basically raising the arbitrarily inflating and raising the market cap of the US dollar because the price isn't depreciating enough, which it might eventually but I am much more a proponent of looking at monetaristic inflation instead of the price effects which is how we naturally see things in crypto like oh we’ve got Atom token has a seven to twenty per cent inflation rate. Well is a monetaristic inflation according to the US the inflation would be how the price changes arbitrarily because we can't audit the Fed.

So, the purpose of monetaristic inflation is to decentralize network goods, to decentralize payments for things that everybody needs and requires and when you look at how the Atom token was set up the idea behind it was to incentivize decentralization in the security of the network but it doesn't actually do that. It gives this inflation rate to these validators so now you can run a computer that costs you like eighty bucks a month and profit a hundred thousand dollars a month, if you're like one of the top validators and by doing so you're lowering the Nakamoto Coefficient and not securing the network. What they actually did and I like where their mind set was but again it wasn't economist. What they actually did was they set up infrastructure costs to be decentralized through this monetaristic inflation and they did it incredibly inefficiently.

So there are a lot more costs than just infrastructure, but infrastructure is the only thing that it was really optimized for and it was not done efficiently and so what Archway had in mind is now setting this up like more things than just infrastructure, like security of the network is integral obviously we're still going to be giving like this monetaristic inflation to decentralized payments for infrastructure. We will be giving these staking rewards to these validators, but maybe we should do it in a way that's not just incentivizing the top validators more than the bottom validators. What we have to do some kind of price of risk formula or negotiation or what if we want to incentivize more than just infrastructure provision. So part of Astrovaults purpose was to decentralize the payment liquidity provision retroactively for all these networks. which we do. For Archway however we need developers to get paid. The whole thought process behind it was like why go build on Ethereum when it brings value to the Eth token which is held by whales and doesn't bring value to the people actually building it.

So everyone's grant farming, we wanted them to get rewards from the gas directly as well as reserve some of this monetaristic inflation to help subsidize payments for these developers so that regardless of your current economical status, regardless of having to buy your way in, everybody is incentivized to go and build something new, build something useful pretty, that actually gains traction on Archway because right now everyone's grant hopping. They don't really usually have the incentives in place to have their app really be used and so we see a bunch of apps that don't get used. But now if somebody comes in and they're getting constant rewards from the utility of their protocol, perpetually. Then things that previously have not been marketable or profitable now finally can. Tooling, DAO’s, things that are network goods that nobody wants to build because you can maybe get a grant for a while but that's it can now be built and used indefinitely to progress Web 3 in a way that it hasn't been done before.

Citizen Cosmos
and what is the latest because the last time we spoke with Archway this was more or less the idea and the guys were just before another release. This was a while ago I believe this was over a year ago and I’m curious to know what has been the progression since then like how is the network looking now. Is there a lot of for example yourself you're an example of L2 building on Archway. Are there many other projects right now that you are aware of that are building anything on Archway? Are there a lot more active users than there were a year ago and so on and so forth? In general, not in numbers of course but in your own perception.

Eric Waisanen
I’m aware of a good couple of high-profile high-quality applications that are building out there and so far, it seems their focus is more of getting a few really good teams instead of just a ton of teams that are going to build something to not really be used, which is what we've seen a lot of in general in this space but things that will get adoption and traction because it makes sense for them to build an Archway will have more content calculators to see like kind of rewards you're looking at through the utility of your apps coming out pretty soon. I built them. But yeah it's gaining a lot of traction as well as what they're offering with area fifty two and these new CosmWasm contract classes and partnerships that they're making with block chain clubs at universities. More talent is being on boarded to build on Archway and they're really seeming, I don’t want to put words in their mouths, but they are seeming to position themselves as a profitable access point for the interchain hub.

As more app chains come out and more brilliant things are developed and there's more that needs to be done than is allotted in one chains block space. As interchain accounts become a thing if you access everything from Archway it's more profitable for the builders. So, if you go build something Secret Network or Injunctive or Axelar and you want it to work inter chain, then have access it from Archway. Set a premium for it and you can get paid for people using other chains without with a seamless user experience which will be built out on Archway.

Citizen Cosmos
Since we mentioned ICS, interchain security and you mentioned something like, well if you know Atom creates ICS, anybody can create ICS and you know I can then go to anybody who offers me ICS we do talk to a lot of chains and of course I mean but by the way area fifty two is something I personally retweeted the shit out of, just recommend to anyone who wants to get into smart contracts and doesn't matter if it's CosmWasm or anything else but of course if it's CosmWasm specifically because it is about CosmWasm. Area fifty two guys, it's fucking amazing website done by I believe guys from Archway right and really really great tooling like to learn what's going on be behind CosmWasm under the hood sorry of CosmWasm. But back to the question sorry for that moment of advertisement. It was coming from deep inside the heart I swear. You mentioned like well anybody can go to ICS interchain security right and it's true, anybody can really do that, but then the same we can do with what Archway proposes right I mean you can divide and create as many multiple pools or community pools, developer pools. Whatever, you're there reward of the token you can divide into a million different small partitions and actors. Why will I go to Archway as developer? Why would I choose that over other changes that are already now starting to offer similar incentives?

Eric Waisanen
A lot of it will be how good and resourced the team is. They raised twenty-one million dollars. They are a lot of the core members of the Ignite and Tendermint teams, so their connections are fantastic. They're well resourced, they're also well purposed and they know what they're doing. They know why they're doing it. It's not like oh let's go do something and we'll figure it out along the way. They are taking a very like top-down approach of like this is what we need to do to get where we want to go, in a way that's regulatorily compliant and safe and I for one really appreciate that.

From my experiences in defi and crypto in general but yes there needs to be some kind of stickiness, some kind of user retention and if no other chain can offer substantially more or something substantially unique than Archway and Archway is the first mover to build out this kind of, not Cosmos hub obviously but potentially like developer hub, then it will gain the traction. Why do people still build in Ethereum when it's one of the really like one of the worst tech wise of the smart contract platforms, because other people are doing it because it's what's known and it will still be profitable even after even well after Archway is established. It will still be rewarding to go and building new application on Archway in away that’s not the case for something like Ethereum. So barring somebody else offering substantially more in some kind of unforeseen non-economic way then Archway will have a very strong level of stickiness in my expectation.

Citizen Cosmos
It will be interesting to watch those developments in terms of the battle of L ones especially like related L ones. So like let's say so to speak para chains or zones or whatever or rollups or on the same play ill be interesting how those competitions will develop and I mean you mentioned validators making a hundred K per month, that is by definitely not the top of the numbers to where they can go during bull market and I’m talking at one zero is very very modest and I know personally because as well I mean

Eric Waisanen
To run a computer

Citizen Cosmos
Yeah yeah, I mean we've never been a big validator of a word we were a small validator we ran like four including Cosmos hub, four chains I guess but even for us during the bull market it was, of course we never saw numbers like that, but nowhere near close but it was numbers that were substantial and that as validator you understand your business on the specific blockchain your idea is to try to put the capital back into using the capital again into the cycle and that's one more question actually where I’m coming from is, I mean you said Archway is heavily focused on developers. I mean validators and other actors still do exist. So will Archway as far as you know again of course and I’m taking into account what you said before that you're not a member of the team but still

Eric Waisanen
I am

Citizen Cosmos
well

Eric Waisanen
I am now, but I’m not speaking as one.

Citizen Cosmos
I’m sorry Eric, I meant you don't represent the opinion and I’m sorry, I apologize

Eric Waisanen
yeah

Citizen Cosmos
let me correct that here you don't represent you mentioned that you don't represent the opinion of the Archway team but still, in your opinion, personal opinion, is that heavy focus on developers around development and I’m kind of wanting to remember Ayota here in a way with the very heavy focus on scientific like thing of course different things question down the road sorry for the long thing because of the heavy focus on developers, can that cause a problem to attract other actors around the eco system?

Eric Waisanen
Yeah, coming from my experience working in the token like as the tokenomist, it's not something that's gameable in a way that can hurt the security or sustainability of the network we've made sure of that and we'll have more releases coming close as we get closer to mainnet which should be nice and eye opening and good conversation starters for the rest of the Cosmos eco system. Yes, I suppose validators will earn less tokens proportionately compared to a network with higher inflation where all of it goes to the validators but that doesn't make it not profitable and even then, validating itself isn't very hard. What these validators do to earn and attract business usually is something else but that's because we've had to adapt to the really the poor economics that have been in place where now like oh well, my business is marketing and being an influencer but my funding for it is coming through delegations since like if you're going to be an influencer or get paid for being an influencer. Have it be paid from the community pool like why do influencers have to run a computer when that's not there expertise which might make it a little bit less secure. Why is everything so tied into infrastructure providers being the only ones getting paid. It’s kind of weird.

Citizen Cosmos
I think that the point here for my personal opinion here and I will speak from the other side of course. I don't think that the amount of influencers today are who are validating is anywhere near as high as those who have started validators in their own garage you know not even in their own garage but in their own mom's bedroom fifteen years ago well not fifteen years ago sorry but, that was of course 2016 yeah it was a thousand I’m not going about like 2016 you know, like first like de post nodes kind of thing, pictures. And then from there, I  would personally and of course I’m biased here but our business at first was always content and then becoming a validator because we realize that getting grants for example for various things or back then it was literally impossible to go to the community pool and the best example is prop twenty six there because people would not give you one penny back then from the community pool unless you were a developer and you going to the foundations was pretty much impossible because you either had to do a photo of your arse and you know a fingerprint of the head of your penis send them that and then maybe maybe maybe maybe they would give you like you know two or three K and you'd be like okay well where the fuck do I get the money from to create the content?

I’m having the team you know so I think a lot of the influencers and I understand what you're saying but I would rather see some of those influences run validators than, I’m going to be honest I have seen some… I’ve personally run my first node in the 2016 and I remember how it was and what it was and you know sometimes those guys at least their business focus they take that as a business and they run it and they put the value back into networks where the other guys well all they care about is like you said attracting a little bit of rewards getting a hundred k down demands putting it down get changing that to another token and  changing that to fiat and you know buying a couple of lambos. So I’m not sure which one is worse here.

Eric Waisanen
I don't disagree and I’m not attacking content creators who are running validators by all means they should that is the current way to get paid for this kind of stuff. I have also done it. What I am saying is it's weird that that's what they have to do. If what you need as a network is perpetual content creation, then that should be a network good that stems directly monetaristic inflation and now that's difficult to do and to potentially quantify and so it's simpler to do from validator but it is weird that like literally the entire monetaristic inflation is going to infrastructure providers in a way that does not optimize for raised Nakamoto Coefficient. It does not optimize for actual decentralization, does not prevent against civil attacks like things currently like from not looking at anything subjective but from an overview perspective are not set up in a way that's logical or that one would set things up in a vacuum without any names or faces attached

Citizen Cosmos
Of course I think that that's the best example of a free market. When the market offers an opportunity that's what you do. I mean in an ideal world would it would be I mean I’ve launched the first… I had the experience of launching the first in like 2016 and since then you know I’ve seen a lot of economics, tokenomics, validators, come, go, up, down, you know like do different things think that what they doing is the number one thing unfortunately though, end of the day in my opinion what turned out to be like the most realistic model that really does make sense is actually what you're saying that in your opinion you don't think it's the way it should be.

It's interesting that the we come in here from different perspectives but I do honestly think that currently and I actually it's funny that you say that because a lot of them, you call them content creator as well I say ecosystem developers there's a big difference between you know creating I don't know YouTube videos and between actually being able to use your network in order to bring value to the system whether it's via partnership. Why are, I don't know connecting the founders with the right marketing team or with the right developers or getting the right developers coming to develop on the specific network. So to me that model still seems very and by no means I’m kind of I am defending it by no means I’m taking it as an attack but I’m just kind of trying to base to be fair and show two sides of the medal because you're saying one and I’m kind of okay there is another side of the medal and the other side of the medal is that there is literally no other way to accrue value for those people right now. So that is reality and that's yeah well we'll see of course in the future how things going to change.

Other than that it will be of course of course interest to see what like I said already what would new models what kind of actors they would attract I was talking to one of the founders of Like Coin the other day um not the biggest project of course in terms of capitalization but very heavily in development and it's interesting that we were talking about very similar subject about the subject of validator sets and the diversification of the people who validate in those sets and you know she would saying very interesting point that it's cool to have a set where you know fifty of your validators are professional node runners but you've said yourself a very good sentence developers not equal economics and I think here to have a good chain okay if your chain is really apps, if you're an app specific chain maybe you want to focus but even then you want to be able to have like an opinion in my point of view of wide range of minds and that would create the decentral well as much of the decentralization as we can go I don't know if agree with that.

Eric Waisanen
Yeah, decentralization is a net good but it's not the only thing that's optimized for a lot of things that get overly decentralized get nothing done so some kind of fine line needs to be walked, but we're making good progress general in the entire Cosmos eco system but also Archways making good progress at ways to better what is currently in place. Lots of big thinking even if there's small changes that will have a large impact and I’m excited for it the kind of economic revolution that we're starting with Astrovault, where we're getting protocol earned liquidity and show casing solid business models with dapps will hopefully cause a wave or more going for protocol earned liquidity instead of copying croniistic or ponziistic things that have been done in the past. There is innovation, there is success in future in crypto in defi, in gamefi and NFTs but it's not what's been done you have to take those next steps, you have to develop them in away that's sustainable. You have to have tokenomics that will drive value to the token through the utility of whatever you build and that's being built in quite a few places and that's encouraging.

Citizen Cosmos
I definitely agree with you as long as it doesn't end up like what Do Kwon because he also promised it all but that didn't work out very well. Eric a quick quiz, a quick blitz quiz it's not very quick but it's up to you of course know which depth you're gonna answer the questions you welcome when feel free to answer as much as you want. Three projects outside the top twenty that you find technologically interesting.

Eric Waisanen
In the cosmos echo system Dimension you briefly mentioned rollups. I think dimension is brilliant and really really interesting I’m not a huge fan of the ap chain model currently being pursued and think that that might be the real way to vertically scale the Cosmos eco system. I mean Archway is a lot of the basic Cosmos SDK stuff but they're launching their technical paper soon show casing what models that they added to the Cosmos SDK which it is a lot of the original builders as well but it kind of takes some of what exists in Atom that hasn't really been able to be properly utilized and it expands upon it in a way that's economically brilliant so I care much more about the economic innovation, obviously Astervault but Alter’s doing some really cool things as well if you've heard of them right now they’re a private uh kind of like communication platform that uses technology of Secret Network, but they're doing a lot of really brilliant development work. Their CEO Oscar Yepsis, truly a brilliant mind in the space. So he's one to watch for.

Citizen Cosmos
Two things that motivate you to do what you do in life

Eric Waisanen
Oh my family I’ve got a wonderful wife of eight years and three beautiful daughters and well yeah I like putting food on the table for them and I like my wife being able to be stay at home mom and to teach them I want to be able to do something that they can look back on and say like hey like my dad helped to make a difference my dad helped better the world in some way shape or form.

Citizen Cosmos
And last one, one person. Doesn’t have to be from crypto, it could be a developer, could be an economist, could be a content creator, could be a writer of a book, anyone that you recommend to follow that would help people to achieve their goals and be successful in whatever they do.

Eric Waisanen
You know what, follow Griffin Anderson, CEO of Phi Labs on twitter he actually as a really small following right now but he's going to be more active, coming pretty soon so that would be a good person to start following early because he's a really really brilliant person that has often preferred to stay behind the scenes that I’m excited to see a step out of his shell more. The dude is fascinating to listen to.

Citizen Cosmos
Eric thank you very very very much for your time let's be hopeful in your development and your launch guy sorry and not just the development but also launch of course and then further the development of the protocol and its life and Archway included not just Astrovault. Thank you very much for finding time to join me. Thanks

Eric Waisanen
Thank you Serj love hat you're doing

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