#citizencosmos

  • Episode link: https://www.citizencosmos.space/evmos

  • Episode name: Federico Kunze Küllmer, bridges, tokenomics & Berkley

Transcript of the Episode:

[00:00:00] Anna: Hey, it's Citizen Cosmos, we are Serge and Anna, and we discover Cosmos by chatting with awesome people from various teams within the Cosmos ecosystem and the community. Join us if you are curious about how dreams and ambitions become code!

[00:01:03] Citizen Cosmos: Welcome to the new episode of Citizen Cosmos, everybody! Today we have Federico Kunze Kullmer with us, the co-founder of Evmos. We’re excited to have you!

[00:01:15] Federico: Hi, everyone! Thanks for having me today. I’m excited to talk with you about Evmos and the rest of the Cosmos ecosystem.

[00:01:30] Citizen Cosmos: There recently was a Cosmoverse in Lisbon. How was it? Did you guys get the attention at those conferences and hackathons? I mean development and user attention.

[00:01:52] Federico: Yeah. Many people were excited about the project, especially with the recent announcement of the recent partnership we've been publishing weekly with different infrastructure providers. So people realize the potential of the project. During the hackathon and the Cosmoverse conference, we got a lot of interest from developers. We got a few outstanding projects, the two winners. First was a wallet that directly integrates AVM smart contract and metamask so you can see your erc20s and also Cosmos on IBC tokens. In the second place was a balancer fork, it's going to be one of the first natively built AMM directly built up on Evmos. So we’re excited about all the support from the entire community and developers.

[00:02:42] Anna: Let's start with the very basics. Could you explain a bit from scratch what Evmos is because it’s not super easy to understand? What’s it all about?

[00:03:08] Federico: Evmos is an application-specific blockchain that allows you to run smart contracts the same way as Ethereum. It supports AVM. You can use your erc20s directly on Evmos. Still, on top of that, it runs on Cosmos, which allows you to have interoperability functionalities, especially in building interoperability between the more minor contracts on other blockchains. The main goal is to make intelligent contracts scalable and scale the entire ecosystem by connecting chains that might not run innovative contract platforms directly interrupted with smart contracts. This brings a lot of different use cases and the whole ecosystem. For example, Somalia or another region could interact directly with the smart contracts deployed on top of Evmos through the composability functionalities we’re enabling. It’s all about smart contract interoperability, our main selling point. We will be working with developers, infrastructure providers, and the entire community to make the economics of Evmos appealing for developers to start migrating and deploying their projects into Evmos.

[00:04:25] Citizen Cosmos: What would you classify Evmos - as a smart contract interoperability platform? Layer 1 is Cosmos and Ethereum. Is it infrastructure or a bridge?

[00:04:42] Federico: I'll consider Evmos as layer 1. It has its own validator security set. It doesn’t depend on Ethereum, so we don’t need to roll up to Ethereum or any other EVM-based chain like Cosmos Hub. It’s a fully sovereign chain and a platform because it allows you to support and deploy the smart contract and interact with contracts directly deployed to the Evmos AVM. We also build the bridge on top of Evmos. For example, all the AVM bridges connecting Ethereum with EVM chains like Mpolygon, Moon Beam, Moon River, etc., and the other l2s can also be deployed using our EVM. That also comes with the IBC components that allow developers to interact with all these different other blockchains and thus get more access to liquidity from various sources like Osmosis or the Cosmos Hub. It's genuinely like a fully interoperable sovereign smart contract platform with its own validator set, and the stakeholder of the platform entirely governs it.

[00:06:00] Citizen Cosmos: At the time, it was like a protocol for other bridges, which makes it a bit different. It’s interesting to see how it's going to develop. I would love to hear how many layers we can handle inside of the blockchain. For example, let’s say Evmos is AVM on top of Cosmos but you can build something on Evmos, which will be another layer. Can you make another layer? Or is there a limit?

[00:06:45] Federico: Well, that's not the project's scope. It's more like enabling full smart contract functionality with fast finality as well, so all the smart contacts for all the transactions that are involved in smart contacts are executed after the block is committed so it's faster than Etherium in terms of finality because it's running BFD also the securities guarantees are different from Etherium - one third versus 51% to perform an attack so that's more like the trade-off between BFD and consensus. The topic of building on top of different layers is something that we are going to work with Celestia to support an optimized EVM for roll-ups as well. That's something that will be working closely with the Celestia team next year and we recently announced something on our blog post. It's going to end up being the most team-working project where we’re going to do what we’re best at which is EVM and smart contract interoperability components and the Celestia team is working on the data availability solution which is what they were building before - an optimistic tendermint fro consensus.

[00:08:07] Citizen Cosmos: It's good that you mentioned it because I had a question about it, and it sounds like what you guys are basically doing - a collaboration with them, it sounds like the Web3 OSI model and equivalent to that where you have a data availability layer, smart contract layer, and communication layer. So is it an OSI kind of thing?

[00:08:32] Federico: I think in the future, once Celestia is out, we won't see many other l1s. Celestia will effectively be the last layer one solution, providing data availability for all these blockchains and the data availability layers. So instead of the blockchains checking if the blocks are valid, it will result in the bltheming if the blocks are available or not on the Celestia data availability. The chains themselves, instead of being l1, will be the settlement layer. So that's how I see the ecosystem evolving. What needs to be figured out as well is a migration path for the existing blockchains.

[00:09:35] Citizen Cosmos: Do you think this will cause problems? We see now some Web3 projects that are trying to move data from Web2 to Web3 and a lot of ipfs or crawlers, and you know there are many different ways to take data from web2 and upload it to web3, but we're seeing that people are not incentivized to do that. Is it still a problem to transfer all the data from the existing blockchains and get developers to share existing blockchains to Celestia?

[00:10:15] Federico: That's a great question. I think, in general, the migration path is still not clear. I’m not an expert in terms of data availability, so this is a topic the Celestia team is working on the migration pass for existing blockchains but what we're building with them is sort of like this collaboration for optimized EVM that access layer in terms of cost this new chain that will act as a settlement layer and will be connected directly connected with Evmos and use Evmos for security as well. I think that’s the first step in terms of using the same token for a potential migration but we’ll have to see how the technology evolves. Celestia just announced their initial developer net which is earlier than just a public net, so once we see that technology publicly available will be able to see how other projects are reacting or how the challenges of migrating the existing solutions to Celestia would be.

[00:11:15] Citizen Cosmos: Obviously the goal of l1 is to get developers to build projects and users to use those projects but do you have any specific targets at Evmos in terms of numbers? If you want ten developers and $100 market projects in 1 month, who are you going to attract?

[00:11:50] Federico: We’re trying to track projects and we want to leverage the interoperability functionality from Evmos and also the token economics and get a new user base. The Cosmos ecosystem, even though it has IVC interoperability between different blockchains in the ecosystem, has generally been very isolated from the rest of the Ethereum in general EVM ecosystem. So we wanted different projects trying to get a new user base from the Cosmos community. Terra has a few bridges: third chain and a few others, and now with the gravity bridge as well, but we want to be the point of entry for all these different projects that want to expand and have a different cover and access to the entire ecosystem. So our token economy is being built with the thought of how can we create the right incentives for developers to migrate on to the smart contracts on Evmos and thus expand their user base onto the entire ecosystem.

[00:12:58] Citizen Cosmos: Talking about tokenomics, do you want to share about direct airdrops?

[00:13:15] Federico: When trying to design the urge the first thing that we were discussing was how do we get up a broad token distribution and how we incentivize Ethereum users to start working on deploying their contracts to Evmos and for retail users in the Evmos ecosystem to interact with contracts directly? We decided to have different categories. The first is the Cosmos ecosystem which involves Cosmos Hub and Osmosis. We're going to reward and stake a few different pools on Osmosis. We want to bring and incentivize all these different uses to start migrating but we didn't want to take the token holders and have a not fair distribution, but we want to make sure that users that we care about from Ethereum are the ones that are actually using Ethereum and that's why we roll up with the concept of the gas drop. The gas drop is when you filter some of the most used applications. We created a list of the applications with high TDL or a high volume. Then, we’re rewarding users based on the amount of gas they spent. The whole narrative behind the direct drop is that all these users are getting wrecked in terms of like how much fees are they expending. So, the more gas you spend based on the number of tokens, the more gas you spend because the gas price for Ethereum is really high right now if you're getting some tokens back because of all the gas you spent on Ethereum. That's kind of like the concept of the drag-drop for the users and also because we wanted to follow this narrative and create a lot of discussion in the ecosystem we wanted to reward victims for different projects that have been hacked in the ecosystem, so we collected the addresses from several hacks on vulnerabilities in the Ethereum ecosystem. We were rewarding the victims of those projects. If you’ve been a victim of an attack of the product that we mentioned in the direct drop announcement, you will be eligible for tokens as well. So that's kind of the whole concept of the narrative behind the direct drop. The token price has decreased significantly over there past few months as well.

[00:16:17] Citizen Cosmos: Could you share any more details about the economics apart from the drop?

[00:16:28] Federico: We thought about Evmos being a two-way marketplace where users and developers meet together. For example, developers deploy their decentralized applications and users interact with these apps. For token economics in general we're discussing different ways of incentivizing both sides of the marketplace so that users and developers are incentivized to use the applications. The other thing that I could mention is we’re another column of the token economics. We’re adding fee rebates for IBC relayers and transferring all these packets between two connecting chains, in this case, Evmos and Cosmos Hub. Once a new fee model for IBC transfers will be out, they’ll also be gaining fees and rebates for the transactions.

[00:18:07] Citizen Cosmos: That’s really great that you guys are thinking about relayers because there’s been a lot of problems and people who started to talk about it, say it costs a lot of money. It’s not incentivized at all, and it’s strange how people expect it to hold on to that infrastructure. As an infrastructure provider, we’re not a relayer but we’d like to be. Is there any project out there in the blockchain space where the tokenomics design is something you think is a good example?

[00:19:02] Federico: I think one of those tokenomics designs is definitely Osmosis. We took this a basis for our airdrop but we wanted to expand it. We didn't really like the quadratic boating mechanism that they had because it wasn’t fairly distributed. We went instead for a pro-rata approach in which you have different things that you need to comply with. Some of them give you points that have different weights. For example, if you stake versus if you lp one pool, they might have different weights and those points assigned to each of these tasks will be pro-rata to the number of tokens that each category will have. For example, the more points you gain, the pro-rata to the total number of points of all the users. In that way, you're basically incentivizing for usage and not for large token holders or large aflp providers and that's the main difference, it's fairer for users that may be not have a large number of shares or tokens, so we’re distributing everything pro-rata based on these options.

[00:20:25] Citizen Cosmos: I have another strange tokenomics question. I don't know if you've followed the bribery war with Terra and Etherium and bridges giving incentivized and stablecoins. Is Evmos going to be a place where DeFi is going to enter Cosmos?

[00:21:20] Federico: I have two thoughts about this. One is that these different bridges have different layers of various degrees of security. Hence, it's not the same as talking about a single multi-secured bridge, and another bridge also has an optimistic mechanism that you can like clean back in case things happen. The user can choose the different bridges based on their security and risk profile. Incentivizing other users will come out come down to the end-user to preferences that they have. The bridges need some liquidity to be operational. I don't think that's necessarily bad because otherwise, if you don't have the liquidity, there’s not enough bridging mechanism. If on one side of the bridge there is not enough liquidity, then you want to be able to transfer. In terms of the incentives, I would say it's not necessarily bad for the ecosystem, and in the end, it will be resolved. There are a lot of attack scenarios that also can happen through incentives. If you’re incentivizing enough one bridge with a security vulnerability, you can get a lot of tokens through bridge farming. All the exchanges should be aware before incentivizing the different bridges, so that's my thought in terms of user security and risk profiles on incentive being another attack surface for the smart contract platforms and, in general, for the bridges.

[00:23:42] Anna: I’m excited about how Evmos was born as a project. How did you get to the idea of creating it?

[00:24:02] Federico: Evmos was born from the concept of this old project called Ethermint. The RnD project started in late 2016, even before Cosmos SDK was built. The whole concept was proving that you can build the EVM on top of tendermint you can run smart contracts using fast finality and then this project was migrated to Cosmos and there were a few teams working on it but no one even gave it new resources or support from a community point. Once these multiple parties have decided to de-prioritize the project, we saw the opportunity of not only having just an EVM on Cosmos but also expanding the scope of the project to be a fully interoperable smart contract platform in which you can build all these interesting economic models for smart contracts to be deployed. The initial scope of Ethermint was expanded in a way that wasn't there before, and that's ultimately what we want to do - to create a platform in which we support interoperability and interchange composability so that other smart contract platforms can also interact with smart contract deployed on Evmos. It doesn't have a smart contract environment. You can still interact with the smart concept that is deployed on Evmos. It’s all about interchange composability and scalability for smart contracts. The product initially started when I stopped my consulting for Chainsafe after they decided not to continue with a project. I reached out to my two co-founders Akash and Nick with whom I was friends since Blockchain Berkley. It was a blockchain community student organization from Berkley where a lot of projects in the Cosmos ecosystem were founded. Sunny was also part of Blockchain Berkley as well as co-founders of Osmosis and the whole IBC team. My co-founders were active in the Cosmos ecosystem and in the blockchain system. They were really excited to start this journey together.

[00:26:40] Citizen Cosmos: We had an episode with Chainsafe in 2020. Is it involved in Evmos?

[00:27:15] [federico_kunze_k_llmer]: No they're not involved they have other priorities with different ecosystems. They started working on other projects so they haven't supported the project since they left in early 2021. After Aragon chain pulled the plug on the project and they decided to rely on other solutions like xDai. They didn’t have enough resources to continue with Aragon chain.

[00:27:52] Citizen Cosmos: Now it’s Osmosis chain, right? They just rebranded.

[00:27:56] Federico: Yeah.

[00:28:00] Anna: I'm really interested in the Berkeley alumni group. Could you tell us a little bit about it? I guess it wasn’t that mainstream back then, why did you decide to join the group?

[00:28:24] Federico: I was in Berkeley for only use a semester, I was an exchange student. I studied computer science and industrial engineering in Chile. So when I went to Berkley, I was working on different machine learning projects and I realized like everyone was working on machine learning and AI. There was a lot of demand and a lot of general offers from computer scientists and engineers. I wanted to join and learn a new technology that wasn’t so mainstream. I chose blockchain Berkeley because they had a consulting arm. You could work with real companies that were interested in doing projects with blockchain, so I was involved early on with Qualcom that they wanted to build a network of a private blocking solution with different providers and suppliers. The other thing I found really interesting about Blockchain Berkeley is they also have RnD research and also an education arm which is really useful to get started with all blockchain lingo and everything technical about blockchain, so I started my career by learning everything about blockchain with Blockchain Berkeley. My co-founder Akash was actually the one who taught me to write smart contracts early on. It was nice to reunite and create this project. I think Blockchain Berkeley has been foundational for Cosmos ecosystem. Essential projects like Tendermint had offices in Berkeley, and Berkeley alumni created a lot more.

[00:30:44] Citizen Cosmos: I have a slightly controversial question. Do you think it's an issue for decentralization when a large group of people near the foundation of the projects know each other and could potentially communicate with each other or found the vector of attack?

[00:31:40] Federico: When we were just students, I think none of us participated in the ICO that was involved in the ecosystem. I joined as an intern so I didn't have access to any of the token sales or any of the projects. I remember while still with Blockchain Berkeley, I used to read the IBC on Cosmos as well. On the whole governance procedures, we used to have different white paper sessions and really what motivated us was building these technologies in terms of decentralization. I guess not many developers were available for other projects so I think for Cosmos and tendermint having this pool of young motivated students that we're able to also contribute a lot back to the project was really beneficial for the early stage of the project because literally, all us knew what blockchain meant on both at a high level and also from a technical perspective. We were doing all these white paper circles every week where we would read a new paper that came and also analyze it from a technical perspective. Back in 2017, there were a lot of white papers coming out and most of them were not really relevant but I guess it was very beneficial in terms of having this pool of two engineers early on for the ecosystem.

[00:33:05] Citizen Cosmos: I guess it is a great thing. I think it was AZ16 who was the first to talk publicly about the specter of centralization/decentralization and that it's a really good thing where the project evolves and decentralizes. It is a perfect example of how this is evolved.

[00:33:35] Anna: I want to ask, do you still spend some time on RnD? Or you’re so involved in the project building and development that you don't have time for that?

[00:33:45] Federico: I would definitely need more time to do more RnD. I’m usually up to date with everything that's going on in the Cosmos ecosystem, but it's tough to catch up with all these different blockchains that are being developed right now. I don't have much context about what's going on. I try to focus my attention mainly on the Ethereum/EVM ecosystem. It is where we can provide value. My co-founders have been involved in different blockchains and different communities so they know a lot about all these other blockchains as long each can provide value from different perspectives. I think that's relevant for the project in terms of RnD.

[00:34:33] Citizen Cosmos: Do you think you guys will connect to other l1s to build the connection between the two most significant ecosystems in blockchain?

[00:34:45] Federico: In the future, we'll see the two leading smart contract platforms - EVM and WASM. I would expect every primary l1 to have a blockchain or a run time that supports Most l1s widely support EVM and WASM. We'll be indirectly connecting to these ecosystems through the EVM bridges. Evmos will be the point of entry to the different EVM bridges. Next year we’ll focus on shared security and make Evmos on the EVM chain.

[00:36:05] Citizen Cosmos: Nice description! The last question. What motivates you in your daily life? Books, activities, music, whatever.

[00:36:42] Federico: What motivates me is building the base infrastructure layer for all these different products to be built. Right now, blockchain is mainly focusing on finance, and we're seeing a recent NFT ecosystem. In the future, NFT will be huge in adopting and connecting the real world with the blockchain. My motivation, in general, is to build this infrastructure layer. No one has yet built any fully interoperable smart contract, so that was my central core when I decided to make Evmos. Use cases that we don't even know that will exist right now will be possible through this infrastructure that will be set in place through Evmos and the entire blockchain ecosystem.

[00:37:48]Citizen Cosmos: But what helps you in your daily life not to set off your goal?

[00:38:14] Federico: I try to set some time for myself in the morning. I try to meditate or do sports. I like balancing my life especially when I’m in a high-stress job. If you're not taking care of yourself, then you're not taking care of your company, employees, and the entire community. So it's essential to be humble, aware, and mindful of the things you're doing. at times like being present.

[00:39:05] Citizen Cosmos: Nice. Isn't that the essence of blockchain?

[00:39:09] Federico: Blockchain is a perfect technology for making money in the ecosystem because it’s technology + finance. At the same time, we're building foundational infrastructure. The base layer infrastructure is usually what I care the most about and what it would enable to create all these exciting applications for users that need it the most.

[00:39:48] Citizen Cosmos: You're right. I was invited to a round table to speak about some things, and there were people there: a couple of guys from YouTube, Holochain, etc. Unfortunately, after forty-five minutes, I had to log off because the conversation was about price and NFTs. It was kind of boring. People only talk about money rather than data availability layers, IBC, and the future foundation for infrastructure. So I agree with you.

[00:40:40] Federico: A lot of investors in general, when they join your community channels, are usually asking when the token is going to be available or how they can buy the token instead of learning more about the project or asking the right questions, but I think it's okay. We will be slowly transitioning and it's our job to both educate and give more resources to people. There are different products and all these other exciting applications being built and they are not money-making applications, they are benefiting and serving coordination problems or giving access to finance to people they didn’t have before.

[00:41:25] Citizen Cosmos: I think this is a great note to finish up! Thank you very much! Bye!

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