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

Episode name:
Valerie Tetu, empathy, market strategy & public good.

In this episode, Citizen Cosmos talks to Valerie Tetu, GTM at Lido. This episode is fast paced and is packed full of information. Valerie’s enthusiasm and detailed explanations make this a great interview. It has excellent technical information on Lido and liquid staking as well as discussions on ethics and Philosophy, and as always Citizen Cosmos asks the tough questions and plays devil’s advocate.

Citizen Cosmos
Good space time, y'all. In this episode of The Citizen Cosmos podcast, I speak with Valerie Tetu GTM Strategy at Lido Finance liquidity staking provider across multiple networks, including Cosmos and Ethereum We discuss startups, Defi public goods, data storage, onboarding new users with empathy and the semantics around pegged assets. We also make a deeper dive into liquid staking how it works, the associated risks and pros and voting rights

Valerie Tetu
Immutable storage that is under my custody that can't go away. They're valuable records. I can transact them anywhere is very, very powerful.

Citizen Cosmos
What is go to market. What does it mean? Like go and buy vegetables. Go and buy fruit. Let's get deeper in it.

Valerie Tetu
So becomes this passive environment. And that's not a healthy economy.

Citizen Cosmos
People start to rip their hair and sell their shirts and their wife shirts and whatnot. So that's what I mean by de-peg here.

Valerie Tetu
Take ownership. I guess if your perception of your experience, I think it's really empowering.

Citizen Cosmos
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Citizen Cosmos
Hi everybody. Welcome to your new episode of the Citizen Cosmos podcast. Today with me is Val from Lido Finance Val. Hi, welcome to the show.

Valerie Tetu
Hi. Hi everyone. Nice to be here.

Citizen Cosmos
Nice to see you. Because we tried last week and we couldn’t to do that rather, but we managed to do it. Yay. So we are here.

Valerie Tetu
Yeah. I'd be happy to redo whatever.

Citizen Cosmos
I know. I know. I know. I know. I know. But still, it's nice to feel rewarded for something that is going on. It's like, yeah, it's finally happening. Anyways. Val, can I ask you briefly or not briefly? That is. Depends on what you want to introduce about yourself. Introduce yourself for me and for the guest, for the listeners, and let us know what you're busy with right now in terms of work and what is your focus right now and where is it?

Valerie Tetu
Yeah, so to give a bit of background, my neat style, I'm originally French Canadian, studied in the United States and in London. I was focus in business and kind of like tech entrepreneurship during my studies and I actually learned was introduced, I would say, to blockchain technology approximately in 2016. So I was taking it an options class at the time called Leading Trends in Emerging Tech in University.

Valerie Tetu
And the research project at the end of the class was basically, okay, choose an emerging technology that doesn't have any applications on it and write your thesis about what you think that technology will evolve into. And in terms of like applications use cases and business applications. At the time, when the professor basically asked us to did a research project, I had just picked up a book from the bookstore and it was like that book like Intro to Blockchains of like Blocks on it.

Valerie Tetu
For those who have read it, very basic in 2016, and I love to do that sometimes to like pick books in the bookstore and like to see, okay, I don't know anything about this. And I like, let's see. So I had this. I was like, Well, okay, great. This is a perfect example. I'm reading this book. Might as well, kind of like, do it on that.

Valerie Tetu
And then from there, what I started kind of like thinking about this more like deeply. I was like, This is really, really powerful. And for me, the idea that really kind of like stood out was really in terms of like disintermediated systems and having like, value flow straight to like where from one person to another and thinking about all of the inefficiencies between and the, you know, like humans love to intermediate processes, whether we see that I'd like D to C commerce with dropshipping, we see that with, you know, agencies, brokers, things like that.

Valerie Tetu
So see blockchain and like disintermediating through code, I was really, really interesting. That application that really got my attention was actually not Bitcoin or money at the time. For me it was ipfs. And the reason for that is I was studying in the United States and had to transition my medical records over from Canada to the U.S. and the whole process was basically, I realized a had no custody like control or even like permission to access any of my records that were in siloed databases and probably paper databases also across my medical providers.

Valerie Tetu
And basically they have to communicate with one another from Canada to the U.S. to basically chapter records and some records actually, for example, vaccination records or something like that were a bit scattered. And I had a provider be like, Okay, oh yeah, I think you got this one. I was like, Wait, it doesn't work like that. That's not how it works against biological data.

Valerie Tetu
That's really, really important. If you're to make decisions. So when I saw that, I thought, okay, in immutable storage that is under my custody that cant go away their valuable records, I can transact them anywhere is very, very powerful. So that was kind of like the first spark for me. Now I could see my studies and everything I actually diverted a little bit, went into AI was in a B2B South company, did technology partnerships, and then I transitioned to M&A because I was when the company went public, because I always missed kind of like that start up feel like I always love entrepreneurship and love to support entrepreneurs.

Valerie Tetu
So that's why I was going. But I was starting to see the applications of blockchain emerge. That was probably in 2019 where you saw Defi kind of like emerging and started using it. And then I was like, Wow, this is becoming like really real. And like, they're actually like consumers and users that can use this. So obviously, like many others, it started to consume a lot of my mind, started reading a lot of white papers, had way too many tabs open on my computer.

Valerie Tetu
I was thinking about building my own project. And so I thought, okay, this is kind of like the opportunity to leapfrog. Had a few was going around opportunities and then essentially, Lido I got in touch with Lido and they told me about their vision and what they wanted to accomplish and where they wanted to take it essentially.

Valerie Tetu
And more about liquid staking. And when I heard that, it was like a no brainer where I was like, this is really, really important. Actually, it's more important than what people think I can liquid staking is if we talk about the new proof of stake system that we're building, it's a very key piece of the infrastructure in order to properly align incentives with the chain with Stakers and with also the defi ecosystems in the applications that are being built on those on those and those layer ones essentially.

Valerie Tetu
So when I heard that vision for me, I was like, Wow, this is very powerful and this is something that I think is worth doing. So that's why I came into Lido my specific role is go to market at Lido So I focus not on the development side, but really like how do we bring this to our different segments of users.

Valerie Tetu
It's a different question then like what you would asking Web 2 because in Web 2 go to market, there's like sales, there's like kind of like marketing, all of that and there's like cycles and you're intermediating a little bit to access your product. And in this world, basically LIdo is just a permissionless protocol. Like anyone can use it.

Valerie Tetu
People don't need to interface with us to use the protocol. So our job is to say, okay, what's a role you're like your role is essentially to make it as easy as possible to onboard, to educate, to provide the right resources in infrastructure. So that we can build this protocol as a public good that can really kind of like serve the financial infrastructure that we're trying to build essentially with a lot of other protocols.

Valerie Tetu
If you bought this new financial system to really serve everyone in the right way, then we have to think about the different people that are using it. They're different needs, they're different technical proficiencies and everything like that, and kind of like try to create a system and strategy around that. So that's kind of like my role at Lido and a bit about my background.

Citizen Cosmos
I love when guests give a full story rather than, Oh, I work at the Lido finance. Okay, where is this story? Come on, guys. You didn't just wake up working there already. Do you remember the name of the book, by the way that you were talking about? The one you both in 2016, the Bitcoin book. Do you remember the name?

Valerie Tetu
So it was Introduction to Blockchains, actually. So it was not a Bitcoin book.

Citizen Cosmos
Okay.

Valerie Tetu
It's it's a white cover read like it was like Lego bricks on it or something. Primary colors.

Citizen Cosmos
I think I've seen it.

Valerie Tetu
Yeah. Yeah. I exactly.

Citizen Cosmos
When you said about the biological that was like, I mean don't get this every time I think I've been involved with and maybe this is of course a professional like bias, but I think since 2015 or roughly 16, every time I've been involved with lawyers or anything to do with medicine, you're like, Oh my God, Guy is really like, we really need to do something about this stuff.

Citizen Cosmos
Like lawyers, medicine, notary work. Can you like guys, what the hell is going on? Why are we so stuck in the past? Why is that there? I can totally see what you're saying about moving medical records. Definitely.

Valerie Tetu
But I think even beyond that, like you're talking about lawyers and everything, and I think especially like right now we zero knowledge proofs are are, you know, nascent. But there is the disintermediation that is that I mentioned, but also verifiability, which in regards to medicine or law or notary or anything like that, verifiability is important. And also disintermediation in human to reduce error is very important.

Valerie Tetu
So when you think about that, when you see the advances in AI, then you pair all of those together. I think like this ledger, whether that is, you know, like even beyond Defi is very powerful in many ways.

Citizen Cosmos
Val you mentioned the abbreviation go to market GTM Can you L5 that for me and for everybody out there like let's imagine we are not from the marketing world which I'm sure not everybody is What is go to market? What does it mean? Like go and buy vegetables, go and buy fruit. Let's get deeper in it. Let's like, what is it?

Valerie Tetu
Yeah. So I kind of mentioned it briefly, but basically best way to think about it, it's literally how do you bring something to market Now, your market is different depending on what you're building. And in Web3 we have different market segment. So you can think about for example, like in Web3, there is like often a big part of that is your community.

Valerie Tetu
Another part of that, if you're in defi, it might be funds, institutions or like investor fees that make want to build that you may want to use your protocols, then you might have just, you know, the unbanked, you might have different types of personas with different degrees of financial literacy and all of that. You need to think about the different personas that you're going to market with.

Valerie Tetu
And then essentially it's to think about the strategy for onboarding for kind of like distribution, for promotion and for for positioning is actually. So it's all about how do you get the right product, the right frameworks to think about it and the right kind of marketing strategy around it. So I would say like if you want concrete examples, for example, it's like you can choose one specific segment, so what would you do, for example, to onboard institutions to a defi protocol?

Citizen Cosmos
It's a rhetorical question or a question. I try. And so it's very transparent. I'm going to let you answer that.

Valerie Tetu
I was going to answer.

Citizen Cosmos
Yeah, please do. Please do. Please don't put me on this spot Please.

Valerie Tetu
I was going to say so if, for example, you're thinking about that, you want to think, okay, so what do they care about? That's kind of like the first question that you want to ask is you always like when you're building a product. And I think this is really important because in Web three, sorry, I need to make that intervention because I think it's it's important interjection sorry is to say a lot of there's so many features on your being built, so many like new functionality, everything like that rarely do we see solutions instead of just building kind of like, you know, features.

Valerie Tetu
So rarely do we see solutions to problems. Well, I mean, that's obviously debatable because there are solutions, but having like a very targeted kind of like need and being problem first versus just like building something out like another. Oh yeah, like I'm doing this other thing that like introduces more leverage with like another pools of like you can do this other strategy and whatever.

Valerie Tetu
Like it's super fun, but what are you trying to serve and what are you trying to do? Kind of and like what kind of like user need or desire are. So you need to think about that first. So like, first of all is like, okay, for an institution, for example. So they may want to put their capital to work.

Valerie Tetu
So you think about ways to do that. So okay, different. Defi That's kind of like checkmark. They could put their capital to work is certain what different like criteria. Some of them will want more volatility, some of them will want more long term investments and more passive, more active. It depends on like your user base. Depending on your protocol, you're going to cater to one profile more than another.

Valerie Tetu
You might cater more to like a hedge fund and like for a derivatives exchange, for example, or but Lido my, for example, a staking protocol might cater or more to a fund or a Dao Treasury, something like that where it's more passive. So you have to think about, okay, so what what do they want? What they didn't looking for, and then what do they care about?

Valerie Tetu
So, for example, if you're depositing money, you would want it to be secure. So you wanted to be secure. You would want it to be trustworthy. So what do you need in order to do that, to demonstrate that, for example, like audits or like having transparent code, everything like that. And those are all like important checkmarks to do.

Valerie Tetu
And then in terms of infrastructure, so what are they going to use to how are they going to access your protocol? So they don't need to like specific custody solutions, They need a specific UI, probably because like they might not understand everything you might find and find that intimidating in the more friction that you cause the more the less appealing it is.

Valerie Tetu
And then what else do they need? Like we need liquidity. So how are you going to enable that? Well, you need to integrate across tons of different markets. You need to find partners, you need to be integrated within other protocols and everything like that. So then it's like, okay, now that you know, all of these things that you've gathered, all of that data, it's like, how do you execute on?

Valerie Tetu
So there are different ways to do it. So the first piece is to say, okay, what do they need to know? How do we communicated? How do we express all of those things where those like to educate about the buying proposition that meets those needs? So that goes to marketing. So for example, like you'll do campaigns of education, you might do webinars for them, like because there is a way to like nurture, you make specific relationships and all of that.

Valerie Tetu
Now for infrastructure, you might say, okay, what are the right partners that I need to integrate into my protocol? What kind of wallet providers do I need to like onboard them in terms of liquidity? If you want to optimize for liquidity, well, you want to say, I want to integrate everywhere. I want to integrate into all the defi protocols.

Valerie Tetu
So you're going to talk to all of them. Try to get that started and they get that right infrastructure in place so that when you can basically onboard them, you have the right kind of like structure ready and you meet their needs, you meet their wants. And you've also communicated to them and the last piece that I would say in terms of go to market, which actually precedes all of this is you need to know what is your unique value proposition, for example, in terms of a liquid staking protocol.

Valerie Tetu
And I'm seeking because it's from Lido perspective, but is to say, what does liquid staking do differently and unique? That is not necessarily the same with traditional staking and Why is it relevant? Why does it matter in so liquid staking, for example, you can see it makes staking more simple because abstracts all of the complexity. You don't need to run a node.

Valerie Tetu
It makes it more accessible. You don't need a minimum investment. For example, in the case of Ethereum, where you need 32 Ethereum you can stake any amount. Also it is liquid, so it eliminates the opportunity cost of locking up assets and not be able to participate in Defi, which makes it more capital efficient, which is another kind of pillar where capital efficiency is super important because you want to put your assets to work, you want to optimize for returns.

Valerie Tetu
And so to be able to say, hey, you can earn passive staking rewards while using your liquid, staking assets in Defi is also a huge benefit. And then knowing all of these pillars like what pillars you stand are unique value proposition will inform all of your strategy. This is kind of like what needs to permeate throughout everything that you say, everything that you do, the people that you talk to, who you want to target, everything like that.

Valerie Tetu
Because those unique things that you're going to bring to your users, you're going to want to find even the users that find that the most valuable, because not everything is as great for everyone. So all of that is to say go to market is at a high level thinking about all of these things and then putting an execution plan together.

Valerie Tetu
And obviously you work with a team, you have big, you have marketing, you have all of that. That kind of comes together to go to market, to go to market properly essentially

Citizen Cosmos
Can we hire you? No, I'm joking, I have not. But a serious question that comes up from all of this, the first thing that springs to mind is the first thing this brings to mind, I guess to everybody. But it's something that resonates within the experience that I have personally with doing what I do now. And it's interesting that as I was making my notes to ask questions, you were actually answering those notes as I was to go.

Citizen Cosmos
But one thing that you didn't mention that I would love to ask you, and I know you like the topic because you mentioned it on your biography a lot as well. How do you align everything that you said with the philosophy and the values, like the philosophical values that you have? Because a lot of the time, what I see and this is mistakes.

Citizen Cosmos
Of course, I think it's mistakes, at least personal mistakes. And I'm sure every founder, every project out there does that. It's like a lot of the times where we believe in something and our personal beliefs or our philosophical beliefs to say, okay, I have to follow this path. But then when you line your problems, your strategy, your desires, your needs, everything like your yours, and you're like, Yeah, but I cannot do it because it just doesn't align with my philosophy.

Citizen Cosmos
So how do you find that yin and yang balance between doing what needs to be done in order to achieve everything you just said and between internally feeling satisfied and feeling that Zen of saying, okay, I didn't harm anyone, I didn't, you know, kill a fly, I didn't do anything bad or whatever, whatever.

Valerie Tetu
I think that's a super relevant question, especially in the context of everything that's happened with FTX and with all of these things, like you realize that a lot of these things might not be like, you know what I mean? Depending on your values, to want to judge everyone, but depending on your values, it might not be the best alignment.

Valerie Tetu
So first of all, I think the best way to reconcile this is work or contribute to a protocol that aligns with your values. I think that that's the first step. If the protocol aligns with your values, there shouldn't be any issue because it's very intuitive. You're working for something that makes sense to you that you want to contribute to, and eventually that goes into that direction.

Valerie Tetu
I think that values in any kind of organization is people can say whatever they want. We saw it in the case of the recent failures that happen. People can say whatever they want, but you can only demonstrated in actions really. And I think it's a really important thing to talk about. Actually, I'm happy that you bring it up because in crypto there's a lot of like narrative culture in hype culture where people actually put a lot of weight on narrative versus like actual even the actual products and actual like use cases in actual applications.

Valerie Tetu
And a part of their strategy is actually just building narrative and building and sharing words and or hype or anything like that, which is very vulnerable on the long term actually, because like narratives change. Like we know this from history and like human history and all of that. And like humans, we are attention moves to one place to another and all of that and like, but value stays, stay grounded.

Valerie Tetu
But if you just act like in alignment with it, then I guess like you don't even need to say anything. People will just it's like funny because I was reflecting on this the other day and I was like, you know, like it's good products. They stand for themselves. You don't need to explain why your iPhone looks great. Like it's like the interface is so well designed that it abstracts the design because it's so well done.

Valerie Tetu
You know exactly what you need to do. And I was so and obviously not to be too controversial, but I ask myself a lot that question. Even in the case of, for example, Bitcoin, which relies a lot on a narrative, it's like, I don't know, sometimes like, okay, well, if it can't stand alone like a wall, I mean, it can

Valerie Tetu
It's a great technology, but it tech there's involved a lot there is a lot of like alternatives now and now there's like kind of narrative around it which is a pillar. But is, is that fundamentally super strong? I don't know. So anyway, but does it really answer your question? I kind of went on a tangent there, but I think I think going back to what you were saying is in terms of executing all of it, you know what you're contributing to.

Valerie Tetu
You know what the protocol, what the vision is of the mission is. You deduct values from that if it aligns with you, you like. It's fairly intuitive in the sense that like how you're going to execute on it because the mission just aligns with it naturally.

Citizen Cosmos
I know what you mean. I am a decentralization maximalist, but I am definitely not the biggest Bitcoin fan, so feel free to say anything you feel. In fact, my personal opinion about Bitcoin, I've mentioned it on a podcast several times is a lot worse than the most people. So yeah, but it's just a natural topic, you know, those values thing.

Citizen Cosmos
I've noticed that a lot of like lately, the further I that, the longer I work with what aligns with my values, the more that question keeps on coming up. Am I really doing the right thing? Am I like really going the right way? But I totally hear what you're saying. I totally agree with 99.99%, definitely of what you say Val

Citizen Cosmos
One question I had from everything that you said, or rather one thing that I highlighted about unique value propositions. And of course, you've explained the one of the unique value propositions of liquid staking is being simple, what it's offering and giving you the opportunity to do other things to move your capital more efficiently. What about the dangers of liquid staking?

Citizen Cosmos
I mean, I must ask that, and I think hearing it from you, from the person who works with liquid staking will be the most like fair and it will align with the values we just spoke about because you work with it. In your opinion, what are the dangers of liquid staking, if there are any? Of course.

Valerie Tetu
Yeah. I mean, there's always a risk somewhere, you know, like someone that will say there's there's never any risk or anything like that. So definitely that is the case. I think liquid staking provides a net benefit to the ecosystem. I think I mentioned it a little bit about why it's important, but I think I reiterate just before kind of like seeing the risks of like at least why I think it matters, maybe just personally, but why I think it matters so currently

Valerie Tetu
And maybe we can talk about Cosmos, actually, because I think it's a really relevant example. For example, in the Cosmos ecosystem, if you're an atom holder, the current staking yields to stake Atom in your Kepler wallet, for example, is from like 18 to 20%. So of course, as an atom holder, that is an amazing yield. So I definitely get a lot of stake in my Kepler wallet.

Valerie Tetu
Now, that's great because it incentivizes a lot of people to stake and participate in, like the chain security. And for those who kind of like are unfamiliar with how that works is just that, you know, when people stake it increases the pool of capital non that that is at stake. An incentive is is it actually like Validators to remain honest because like if they're not honest that the capital goes away so prof of stake systems so essentially I'm super incentivized to stake now all great but in the case of Cosmos now I'm securing the chain but defi protocols that are building on cosmos need in liquidity.

Valerie Tetu
They need people to use their defi protocols and like interact with them and deposit their atom to earn yield to basically so that there's enough liquidity to lend so that people can borrow and also in liquidity pools so that, you know, people can swap and actually perform defi activities and all that because that's the purpose of it, right?

Valerie Tetu
Like if you want to build apps on it, then like you need that. But the problem is like these defi protocols are like, well I can't compete with the 20%, it's so costly. I'm going to have to like basically either create a new token and inflate the supply just to basically be able to compete against the staking rate.

Valerie Tetu
So a rational investor would always like stake out the base layer. So apps, if I'm an app builder I'm going to say, well, I don't really want to build on Cosmos because it's going to be so costly. It's going to cost me way too much. So a the current defi app suffer from adoption because people are not like providing liquidity the for the users it's not as good either because you don't you don't have the liquidity, you don't have same offering.

Valerie Tetu
And then also the development is also a lot slower because for new developers they're not going to be incentivized to come in if it's super costly for them to maintain it. So the current apps suffer. The the new ones don't come in and then the user also only stake so becomes this passive environment. And that's not a healthy economy.

Valerie Tetu
So it's kind of like say, okay, well how do you resolve that problem? So liquid staking kind of came in as a solution and said, Hey, you know what we want the priority is to decentralize, is to get the chain secure. We can't compromise that like, of course. So because that's a purpose of like the public blockchains, right?

Valerie Tetu
Like we want to create decentralized systems that have honest validators that are decentralized enough so that, you know, no one can censor our full control over it and all that. So we want people to stake so liquid staking says Hey, you stake on chain, but as a result, I'll give you a token that represents a receipt of like your stake on.

Valerie Tetu
Atom that you can then use in defi. So you have like this kind of representation that you can use in Defi and then afterwards you can earn additional yield on it. Participate, provide liquidity, use as collateral, borrow, lend all of these things So you fuel that economy in the cosmos ecosystem while the chain is secure. And then when you want to redeem your Stake well, then you use that liquid staking asset to redeem your state.

Valerie Tetu
That's how liquid staking works. So it enables these like economies to kind of flourish, and it incentivizes users to stake, developers to build and basically apps to thrive. So it's a fundamental piece of infrastructure, in my opinion, of like why it's really important. Now, there are risks, as you said, kind of like, okay, what could go wrong? What could go wrong?

Valerie Tetu
Well, it depends on the we the liquid protocol. The liquid staking protocol is designed because different liquid staking protocols have different risks. If you're saying if I'm me, I'm Val, I'm by myself, and I'm like, I'm providing a liquid staking protocol, everyone's stake with me, and I'll give you liquid staking assets. Well, I'll be staking all of the assets and I'll have control over the whole chain which is actually really, really bad.

Valerie Tetu
Right? So you wouldn't want that. So a better way to do it would be to say, okay, the liquid staking protocol, for example, in the case of Lido, Lido, we don't operate nodes. Lido is a set of smart contracts that basically you stake in this Lido smart contract in the liquidity pools. And the smart contract distributes your stake across Lido node operators.

Valerie Tetu
So not only is it like the state kind of a distributed, but also, for example, you're reducing your central point of failure risk by not staking with one provider that may go down and then you get Slashed and you're like, No, I trusted this person. So that's also for the user. And the other question is, okay, well, sure, for example, if I do that with Lido that's better than staking with Val

Valerie Tetu
But who are these node operators like behind the light of protocol and can I trust them? Are they decentralized too? So that also depends on like how what's the node operator, kind of like management and selection kind of like process different liquid staking protocols have different views on this. Some of them say we want permissioned sets so that to make sure that they know how to operate a node and so that user funds don't get slashed and that we can trust them.

Valerie Tetu
And that may be a bit slower of a process to like on board and completely decentralized and node operators set But that's why we do it. The other way to do it is completely permissionless where anyone can become a node operator and in a validator and then you can stake with them, can choose your pool or you can distribute the assets across them, or you can have like a mix of both.

Valerie Tetu
You can have permissioned or not permissioned. You can have different degrees of permissions and different ways like that. So those are different kind of like tradeoffs that you want to think about. And then the other piece is like in terms of, okay, well, if you have that, how is the protocol governed? So obviously, if, for example, the team that is building the protocol makes all of the decisions on the protocol and they can shut it down tomorrow or change the smart contract code or anything like that.

Valerie Tetu
Well, you don't really want that because if it scales and it holds a lot of the Stake like you have to think about the stake as like the security of these Layer one networks, which is really important. So you can't compromise that. So that's one of those use cases that actually, like decentralized governance is probably better. I think Dao’s in general, it's a very like broad concept and it's been adopted in many different ways.

Valerie Tetu
But if you think about having a specific set of decisions that are validated and executed by code with like a vote and it doesn't need to be every decision, like kind of like, oh, what color do we choose for the background of our landing page, but like, do we upgrade this smart contract, Do we onboard this node operator and things like that that are more important is to say, can we make sure that all of the stakeholders of the network and of the protocol are involved Now?

Valerie Tetu
Obviously it's not perfect yet, like governance structures and models are still being experimented with. And one thing that I'm super excited about though is in for Lido on Ethereum, we discussing this on the forum actually. So I would invite anyone to take a look but at the duo governance proposal and it's essentially enabling stEth holders which are the liquid asset holders to have a veto over the vote of just like for example, the node operators.

Valerie Tetu
So basically the power is distributed across also liquid stakers which is great because it's more representative of like who's actually staking the capital versus just the node operators. So going back to that, I think there like the centralization risk can be real because these do have economies of scale, liquid staking. It does have an economy of scale advantage because when you think about it as a user, you want to be able to use the protocol that is the most liquid, the most integrated in the safest and what that means is that if it's the most liquid you want to be able to trade it anywhere, you want to be able to access the capital and the

Valerie Tetu
most markets possible to be able to exit your positions when you want and on as many Dex’s as possible and you want it to be the most composable as well. So you want it to be have like the most defi strategies to be able to use because that's like the whole utility of it. Like that's, you know, that's a whole buying proposition.

Valerie Tetu
Different staking protocols are not as well integrated as others. So if you have a liquid staking asset, you're like, Well, I have a liquid staking asset now, but this one is not integrated anywhere, so I can't even use it in Defi. Well, that kind of defeats the purpose a little bit. Well, not totally, but partially. You don't get the full benefit and then you want it to be super secure.

Valerie Tetu
So like, you know, you want it to be audited and all of these things. So it tend to gravitate like towards a provider where the liquidity is concentrated similar to Dexs, for example, like why do people go on Uniswap? It's because your order is like there's so much liquidity there that your orders can get executed and you'll get you'll be able to trade your positions fairly easily, fairly efficiently as well.

Valerie Tetu
It's much more efficient. So yeah, that's what I would say. I don't know if you have any other questions like to go deeper into that.

Citizen Cosmos
I have a lot I have a lot believe me, I have I have them all lined up. No, no. But we you spoke about several types of centralization risk and you mentioned security risks as well. What about de-pegging risks you didn't mention if I'm sorry if I missed it, but I don't think I heard like, what if the that the asset de-pegs the liquid staking assets?

Citizen Cosmos
Can that happen?

Valerie Tetu
Actually, I didn't mention it because I don't consider that a risk. And the reason for that is actually so liquid staking assets. Peg is the wrong word. It's actually backed. So the way to think about it is your liquid staking asset is always going to be redeemable, the 1 to 1 with the stake. So as long as you have that staking asset, you can always redeem it for your stake 1 to 1.

Valerie Tetu
So from the protocol is the protocol issues, it issues the asset, it's mints. The asset once you deposit, so say you deposit one token of atom and return you receive the liquid staking atom, you receive one. So the protocol mints it when you redeem it in the protocol, when you want to like get your state back, put it back in the protocol, the liquid staking asset, and then you get your out and you return in the protocol.

Valerie Tetu
It burns that liquid state asset that you were using. So essentially it's redeemable, it's backed by your Stake The peg is interesting because it's true that the market price might be different. It tends to not be the case for protocols that you can have liquidity both ways. So, for example, if I can like unstake and stake and like all of that, I'm withdrawing all of that.

Valerie Tetu
There will be if markets are efficient, then their arbitragors that quickly make sure that it's always kind of on a 1 to 1 ratio. Now in case of Etherium, that is not the case. And we've seen there is a gap between essentially the value of stEth which is specifically like Lido Liquid Staking Asset and Ethereum. And it's also the case for like CB ether, other liquid seeking assets.

Valerie Tetu
The reason for that is actually you can only do arbitrage on one side because withdrawals are not enabled on Ethereum. So for people right now, for example, like especially in this market, there are some people that has staked Ethereum that they need liquidity now because maybe a part of their portfolio is down, maybe they're a big fund. And for example, what happened with Celsius is like they were going under and then all of a sudden like they needed to access liquidity.

Valerie Tetu
So in a way thank God that liquid staking was there because they could exit their ETH position, which they could have not done otherwise, like their capital would have just been locked on the beacon chain. So until withdrawals are possible, that's still something that we're going to see on the market. But the way that we have to think about it is like these liquid seeking assets are a market of their own, so the market is going to price them accordingly.

Citizen Cosmos
One more question to dig into that I think would be fair enough to mention before we we were talking about the dangers. You were explaining the use cases for liquid staking and you mentioned capital efficiency and you mentioned, you know, all this Defi protocol that made liquidity better than it does. So let's now imagine a system. And the reason I say de-peg, and I totally agree with you, de-peg might not be the right word, but there is a reason I do use that word.

Citizen Cosmos
Imagine if we had a system and let's think of a domino effect here and imagine my assets that I'm using the initial asset. Yeah, backed 1 to 1. But I know nobody's saying is the fault of this or this protocol. I'm talking in general about the dangers So imagine this asset is backed 1 to 1, but then this asset is used here that is used there, that is used there.

Citizen Cosmos
And essentially somewhere along the chain, one of these guys that didn't align with the values that we were talking about before, because he could care less about the values because he's just all about the narrative. They don't do that. You know, they offer, I don't know, some kind of premium or some kind of, I don't know, X5 or whatever, some bank multiplier on one of those assets that is in the chain where initially the liquid staking asset is backed by original asset.

Citizen Cosmos
So as soon as something here in the middle of the chain falls, of course this is a hypothetical situation, but wouldn't that cause the whole chain I mean, the market will go panicking. Of course. Essentially our last stop is still backed, like you said, 1 to 1. And those guys are all fine, but the market doesn't really care about that.

Citizen Cosmos
The market goes into panic and into a domino effect and everybody shouting, starting to sell. End of the day, these guys that have, you know, had their liquid asset, that kind of, oh, we are okay because we are we still backed one by one and we can redeem it. We don't care that the market fell. But the thing is, if we were talking to talk about their capital in USD, for example, own euros, which again I don't think should be discussed here, but I do want to have the hypothetical question and I do want to understand it.

Citizen Cosmos
Wouldn't that in your opinion, can cause like I mean, we've seen that with Luna, we've seen it with FTX within it many, many times, not just in crypto. People panic, people start to rip their hair and sell their shirts and their wife shirts and whatnot. So that's what I mean by de-peg here.

Valerie Tetu
I guess if there is like kind of like a degen Defi pool or whatever that they provide yield, then I don't know what I said they would provide yield in but something like that, it's not an algorithmic stablecoin We're not minting burning anything like that at all. Like the stake is staked, the asset represents the asset and it's actually floating in a market.

Valerie Tetu
So there are traders, there are two sides to the trade. It will just flow in and out of the protocol or be sold now if that everybody starts to sell Ethereum and the value goes down, then people might sell just too because they need liquidity and sell. But that would affect the value of ETH and stEth for example. But there's no like mechanism or nothing.

Valerie Tetu
Like even if people sell it's just it's the same as like the token itself. I don't know if that answers your question. Another question that could be asked, though, is like, what if, for example, which was the case for Celsius, they use the stAsset as collateral and for example, the value of the collateral goes down because the discount starts to widen, for example, which was the case in Celsius, and that they can get liquidated faster, for example.

Valerie Tetu
So that could be a risk. That is a risk, for example, because if you're saying, okay, well, I assume that my collateral is always going to be 1 to 1 with ETH, but actually the value of the collateral goes down because there is a discount and then you get liquidated in a protocol that could be a risk. And I think that the best answer to that is really like and I think we're all learning from this terms of like the right collateral ratios, the right way is to evaluate risk and to mitigate against that in defi protocols essentially like how, you know, with credit, I don't know if the answer will be credit score blockchain.

Valerie Tetu
I don't know if it will be like other higher even collateral ratios or what it would be like, but that's something that is valid to think about is to say, okay, maybe collateral ratios need to be adjusted for liquid staking assets, but it depends on how efficient the markets are. And as you said, if there's a greater demand for liquidity and for anything else, people might exit more of their liquid staking asset positions, which does create more of a discount.

Citizen Cosmos
I think where we like with any and you are emergent technology, right? I think we are all here to learn to experiment and for sure we will see something that will close collapses we definitely never are going to be able to see. Hence that's why it will cause those problems. Right. But and I guess we are all here to create something and to build.

Citizen Cosmos
And this is the main thing at Valve before we move on, like the Blitz, quick question and this is something more commercial, not commercial. I don't know what would be the right word about Lido and the structure of Lido and neutron and cosmos and P2P, like just a quick 101 I mean, I'm personally more or less familiar, but just again, for myself and for the listeners, whatever you can share.

Citizen Cosmos
Of course, just in like a couple of words, how does the structure look and who's who, where is what?

Valerie Tetu
Okay. No, that's a good question. So for those who are not familiar, so Lido was intubated by an entity called P2P, which they do, they run validators on different chains, but Lido itself is actually a DAO. So Lido is not a company, it's a DAO and there are different kind of. For example, like the Lido protocol is kind of like the smart contract that we're referring to that provide liquid staking.

Valerie Tetu
And so there are different teams that build on Lido like that contribute to the DAO to build on different chains and all of that. Lido is actually not a part of P2P, and so it's actually its own kind of entity and it's governed by LDO holders and obviously it's operated by the core DAO like it's operated and maintained and all that by the core

Valerie Tetu
DAO that's like how it works. And Neutron is a part of P2P, so they're building kind of like a chain which is separate to Lido But Lido is going to build a liquid staking protocol on Neutron. So it's kind of like separate in terms of like the entities.

Citizen Cosmos
That makes sense, makes perfect sense, the way you explain that. Thank you. Val Blitz. I can't say it's really a blitz because a lot of the guests choose not to answer the questions Quickly And I love it. So feel free to choose to answer either really quickly or depending on the amount of time you have. You can go into details, but there's going to be three questions.

Citizen Cosmos
So the first one, three projects, protocols, applications, doesn't matter what outside the top 20. Please don't say Ethereum bitcoin cosmos that you are curious. And in terms of what they do, you think it's interesting? Emergent or not, emergent technology in any case is something that you think it's really cool technologically that you follow. Doesn't have to be three, but let's try.

Valerie Tetu
Yeah, that's super interesting. Oh, I actually really like this question and yeah, so I think one that I find really interesting is and Axelar and I think that the problem that they're working on is really interesting. I like the fact that they're tackling it with a proof of stake system. And I find it really interesting that they maintain the state like different chains.

Valerie Tetu
I think it I don't know in my mind like the my mental model for it is kind of like this like yes it's like, you know, the routing like interoperability protocol. But it also kind of acts like an oracle when you think about it, which I think is really fascinating about having that extra layer of like validation on top of it, which I find really interesting.

Valerie Tetu
So that's one. The other project that I think is will be really interesting is I'm actually really interested in learning more about Mina. So I wouldn't say that I'm the expert on Mina, but I think that what they're working towards is really interesting and I think that they're they've been working on, on their project for a while, like Raging kind of like seeking proof that the very, very late blockchain, like I wonder where that's going to go.

Valerie Tetu
And then the other piece I would say is also I really admire what the guys are doing at Polygon ID and in terms of providing that piece of infrastructure to the ecosystem, I think is very, very needed and valuable. I find that their approach with ZK proofs is great and I really wonder how they're going to integrate it in scale.

Valerie Tetu
From a go to market perspective, I really hope that they can turn up their bid team to really make it kind of like an sso versed in Defi and across all of Web3 because I mean my personal opinion is that wallets are not an authenticating device and they probably should not be. So I think that's something that I really support and want to move forward.

Valerie Tetu
Okay. And actually I would add one to that is reserve I think reserve protocol, what they're doing is really interesting. So they're enabling anyone to create like Stablecoins based on a basket of assets and to have a marketplace for that essentially. And I find that super interesting, even as like a thought experiment to think like, what do you consider kind of what like a good denominator?

Valerie Tetu
And to have that as a can. A general Yeah, I guess collective experiment, I find that really interesting in the way that they did it with kind of like a marketplace where people can adopt different standards. I think it will be interesting to watch the.

Citizen Cosmos
Second one do daily activities that motivate you to keep on doing what you do in your life.

Valerie Tetu
I could just say, okay, if it goes into like what energizes me, I would say like for sure, huge breakfast and morning yoga or Pilates for sure.

Citizen Cosmos
I love the breakfast. You want me over it at.

Valerie Tetu
That event in your day and your winner?

Citizen Cosmos
That's it. I agree. I'm a huge breakfast person. I'm one of these weird people who can just eat like this breakfast, and I don't have to eat for the rest of the day. I'm with you. I just want one person Doesn't have to be from the crypto space. It could be a writer and painter, an artist, a developer, a content creator, a co-founder that you would recommend people to follow or to read.

Citizen Cosmos
If it's a writer that could help their to succeed in their lives and to do whatever they do again.

Valerie Tetu
So I think the obvious answer for me would be Marcus Aurelius in terms of like reading about philosophy, I think it's really important understand like how to focus on what you can control and focus on your agency in your ownership and like your how to basically modulate and like take ownership. I guess if your perception of your experience, I think it's really empowering is really important.

Valerie Tetu
But I would say another one that might be, I guess more under the radar is Allen de Bottom. So for those who haven't heard of him, I would recommend following on YouTube this School of Life. So essentially it also goes into kind of like philosophy and self-development in history a little bit. But he provides these like short clips on YouTube, like from the School of Life that are literally like, why you're not, you're good, you're going to marry the wrong person or like things like that.

Valerie Tetu
And it's like very short clips that really, like elucidate the truths of like human nature and. I find them like really, really useful to think about. If I can add one more, it would also Robert Greens book Laws of Human Nature, which basically he every chapter is like a different law of human nature and also like exemplifying that law as human nature with a historical figure and why it matters.

Valerie Tetu
And you start to recognize these patterns across humans. And I think like whatever you're doing in your life, whether that is building relationships, even building a product, understanding the fundamentals of human nature is like a constant that you'll always be able to kind of like anchor in and rely on. Yeah, And it will help you be more like self aware of yourself about those of your environment and to build from there.

Valerie Tetu
So those are the three that I would say.

Citizen Cosmos
On the second one you were like, Oh, that's unexpected. I was like, All three of them were unexpected, so that's good. I like it. I really like Marcus Aurelius. Definitely going to be hard to follow, but for sure it's possible to read that I was. I'm kid and I'm kid and I'm just kidding. Well, wow, this has been really great.

Citizen Cosmos
A really, really huge thank you for finding the time and going to be watching what a Lido is going to build on Neutron with excitement and not just a neutron. I mean, I'm saying neutron because like a lot of people do listen to us from Cosmos, but it's not just Cosmos community. There is a broader community as well.

Citizen Cosmos
So everything of course, you mentioned there is in the show notes. So guys, please do go check all this things that Val is suggesting out and thank you very much for joining us.

Valerie Tetu
Thanks so much for having me.

Citizen Cosmos
Thank you. Bye, everybody.

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