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June 7, 2022

Axelar AMA: Georgios Vlachos & 0xEsper from Kinesis Labs

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Axelar Team

In order to achieve the reality of an interconnected blockchain, Axelar works closely with various Cosmos chains to provide Cosmos-EVM cross-chain capabilities and link other non-IBC ecosystems to Cosmos-interconnected chains.

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In order to achieve the reality of an interconnected blockchain, Axelar works closely with various Cosmos chains to provide Cosmos-EVM cross-chain capabilities and link other non-IBC ecosystems to Cosmos-interconnected chains.

 OxEsper is the pseudonym for the research lead at Kinesis Labs, a stablecoin swap being developed on Evmos, a Cosmos-connected SDK that is set to be released in the coming weeks.

Georgios Vlachos, co-founder of Axelar, sat down with OxEsper for the very first time to discuss bringing a wider array of stablecoins to the Cosmos ecosystem, methods of securing the integrity of stablecoins on a network, and what the future of interchain development may have in store for users.

You can listen to the full recording of the Kinesis Labs AMA on Axelar’s YouTube channel. Subscribe there for more like this in the future as we sit down with key Axelar partners and leaders in blockchain infrastructure, applications and interoperability.

Moderator:

Welcome everybody. Axelar is glad to share the space with Kinesis Labs today. Let’s introduce ourselves and get started.

Georgios:

Thank you everyone for being here. I'm Georgios, one of the founders of Axelar Network, a universal interoperability solution connecting all major blockchain ecosystems: Bitcoin, Ethereum, Avalanche, all major EVMs and of course Axelar is being built on the Cosmos SDK, is compatible with IBC, and it can connect all Cosmos-compatible chains. I'm sure a lot of you have been following the Osmosis vote over the past few days; through which the community selected Axelar to be the primary bridging solution for Osmosis. We're very excited to take on this responsibility and bring new assets and new users over to the Cosmos ecosystem. On this topic of discussion, we want to support the wider Cosmos ecosystem, not just Osmosis, so here with us today is Kinesis Labs, which launched just yesterday. One thing worth noting is we've never talked before, they're a completely anonymous team, but they've been a pleasure to work with, very easy to communicate with over Telegram. We'll have some cool programs that will be launching next week, so we’re very excited to have them on our AMA.

OxEsper:

Thanks for the introduction, my name's Esper, I'm the research lead at Kinesis and we've been working with Axelar discussing what the partnership will look like. They've been a great team, we love Axelar. As a brief explanation on Kinesis: Kinesis is the premier stablecoin exchange on Evmos. We are natively-deployed on Evmos so we can focus all our undivided attention and also our token’s mission to the Evmos ecosystem. A brief explanation on Evmos for anyone who might not know: Evmos is the EVM-compatible chain built on the Cosmos SDK. This means that it can connect with the various EVM chains, and also the Cosmos ecosystem. You can use MetaMask, you can use Keplr, there's so many different applications you can use and things that can be built on top of Evmos. At Kinesis, our goal is to connect Evmos via EVM chains and also Cosmos chains via our unique multi-basepool system. This means we'll be partnering with bridges and networks such as Axelar to focus on bringing a lot of liquidity over and mitigating a bit of the risk for liquidity providers using this multi-basepool system. If you’re bridging assets over via Axelar or Satellite, then you know you can trust whichever bridge you use and can make sure that if you're providing liquidity on Kinesis, you won't really be affected by the security from other bridges. We wanna maximize the liquidity flow into the Evmos ecosystem, so we're working with various partners to deliver high-yield for anybody who's willing to deposit their stables in Kinesis. To explain more about that: we've been partnering with a lot of different various CEXs on Evmos, we've also been partnering with lending platforms, we've been partnering with yield aggregators. There's gonna be a lot of different things built on top of Kinesis that I'd love to get into.

Georgios:

Excellent, I believe with Kinesis your team just launched yesterday with the Evmos launch, is this something people can actually go and try out right now?

OxEsper:

Yeah, we currently have our testnet up, but have not launched at the moment. We're gonna launch very soon, we just want to wait until people can actually claim the Evmos airdrop. Currently, you're not able to claim the Evmos airdrop right now, because this is their second time launching. They wanna make sure everything is running smoothly, and so currently what they've been doing is rolling out in different phases. We're gonna be launching around phase two when people can claim their airdrop and actually start providing liquidity which can start flowing into the Evmos ecosystem.

Georgios:

Awesome, that's a sensible approach. Absolutely no need to rush it. What's interesting to me about Kinesis is that you're working with many different “bridge players.” I'll let you mention some of the names yourself. You've always been open to working with multiple teams, sometimes this may lead to fragmentation, but there's also a lot of positives, right? In that you can include many different ecosystems, users of the different solutions and–for a stablecoin DEX especially–you can let users go from the stablecoins of one interoperability provider to another one. We'd love to hear a bit more about what the thought process you followed to make that decision to work with multiple providers versus just one, as we've been seeing with some other solutions lately.

OxEsper:

Yeah. Just to name off the bridge solutions that we're working with, we've announced our partnership with Nomad, Celer and Axelar. In the future, we hope to see more bridges partner with us. I know Gravity bridge recently made a proposal on their governance to integrate with Kinesis as well. I think the reason why we went for this approach is because yes, as you highlighted, it allows us to connect with various different ecosystems and various different chains. People also have different bridges that they're more comfortable with using, bridge security is something that is not taken lightly these days, there was like the Wormhole hack and there's also the Ronin hack, both multi-million dollar hacks in the past year.

We just wanna make sure people are happy and comfortable with the bridge that they use.

So a liquidity provider can choose whichever bridge that they use, whichever solution that they wanna go with. They'll be bridging over assets, or sending over assets to Kinesis and you can deposit stables there. Liquidity fragmentation is definitely an issue, but the way we see it is, since we’re a stableswap, liquidity fragmentation isn’t as much of an issue as it might be for DEXs. Because we're using a stableswap invariant, which uses a mixture between constant-product and constant-sum market-making formulas. What this highlights is that we have a little bit more freedom and flexibility when it comes to the amount of liquidity that is needed to transfer large sums of stablecoins.

Georgios:

Cool. I think another great point to make here is that Kinesis is not just a DEX of Evmos. It's part of the wider Cosmos ecosystem, and soon it's gonna be part of the wider blockchain ecosystem. The way I think about it is that we are moving towards a state in the growth of the blockchain ecosystem where we'll start thinking more about applications, rather than blockchain ecosystems. So with the rise of the interchain and all the interoperability solutions that will make it very easy to access users from different chains, Kinesis will be able to tap into the users of Osmosis, Secret Network, Avalanche, Terra and many more blockchains. Having all those different assets will enable users to move easily across those different blockchains and Kinesis can let users swap between the different versions of the stable coins on the backend. There's actually some bigger applications besides the Evmos ecosystem itself, because it's so easy right now, especially within the Cosmos ecosystem to become a user of an app on Evmos. Something very fascinating to me is that we're transitioning to a state where applications won't necessarily be siloed to a certain ecosystem, but will be able to service the wider Web3, and every user that's in the space.

OxEsper:

Yeah, that's exactly what we envision as well. One of the futures that we think about is, for a lot of these different DEXs that are gonna be built on top, they are also trying to bridge the gap between different chains and build into the multichain future. But one thing that we can see is that various protocols can be built on top of Kinesis. For instance, if in the future there can be swap aggregators that swap between, for instance, Nomad ETH and Axelar ETH, there won't really be a pool that is Nomad ETH and Axelar ETH on one of these DEXs, right? There probably won't be enough liquidity, there also might not just be the pair. So what we kind-of envision is that, in the future, with all these protocols being built on top of Kinesis, someone can swap Nomad ETH for Nomad USDC, then Nomad USDC for Axelar USDC, and then, in a swap, Axelar USDC for Axelar ETH in the background. So you can do all these different things, and we definitely see a future in that as well.

Georgios:

Then it would probably be fair to say that Kinesis will become a utility hub for Evmos, right? Users of one application may adopt Nomad assets, another adopts Axelar assets, and other Celer assets, and you'll be able to move in and out of different applications without actually having to think about it. What would be really cool is if we can abstract away this layer completely from the user, so that, in Kinesis, you can allow users to move from the assets of one application to the assets of the other application with one click. We haven't discussed this before, but I’m very happy that we’re aligned in this vision, that sounds like the correct direction. Great that you’re forward-thinking also, I think you covered most of the bases here for Kinesis. We’d be happy to take some questions from you, as well. If we have some people from your community, we can tell them a bit more about how we think about the interoperability landscape.

OxEsper:

Yeah, I would love to ask some questions. I think one thing that some of the people in our community might not know is, I guess, how do all these different bridges, or bridging solutions, differ? For instance, Axelar is like the “cross-chain interoperability network,” you know? If you can touch more on that and how you guys are different, what kind of security do you guys use?

Georgios:

Great, let me take a step back to the origins of the interoperability narrative. So, I'd say four or five years ago, the first projects that thought about interoperability were Cosmos and Polkadot, right? And what's great about Cosmos and Polkadot, maybe I’ll focus on Cosmos since it's a more familiar example for a lot of people here is that you can connect chains directly. It's saying that launching using the Cosmos SDK is compatible right out of the box with IBC, and it can interoperate directly with any other chain that is part of the Cosmos ecosystem and is built on the Cosmos SDK. Now with IBC, there have been some initiatives to also build it outside of the Cosmos ecosystem. There have been some discussions to have it integrated into Ethereum and some other EVMs, but this is very, very hard to do, and it would take a long time. It's probably the end state of everything, but it will take a very long time. So in the meantime, we saw some other interoperability solutions popping up that were way more centralized. The first successful one was WBTC on Ethereum, where you effectively hand your Bitcoin over to a custodian, and they make the wrapped representation of that BTC over on the Ethereum side. More recently, we started seeing some revolutions of this design in some federated multisigs, these are centralized solutions with some higher redundancy, but effectively what happens in all those solutions is they handpick a big set of validators and this set of validators is responsible for passing messages, so it's still a custodian solution. Axelar is really the only solution that can connect all EVM chains together, including Bitcoin, including Cosmos, and is actually decentralized in the sense that instead of having a custodian securing the cross-chain communication, you have a decentralized network of validators that is based on the Cosmos SDK. The only way we know to decentralize any set of validators is through proof-of-stake. That's the only model that has worked in practice, and that's why we picked the Cosmos SDK to create the blocks in. So every time you go from Avalanche over to Ethereum through Axelar, two-thirds of the Axelar validators have to approve this transaction. What's also very cool about this is that we get a bonus, in that because we have the Cosmos SDK, we can connect to every Cosmos blockchain through IBC. So as new blockchains are getting launched that are IBC-compatible, Axelar can be there from day one to bring cross-chain compatibility to all the users of that blockchain. Another unique feature of Axelar is that it is an end-to-end solution, it's not pairwise, like basically everything else. Once a new chain is connected to Axelar, it plugs into the whole ecosystem of the chain, so there's some cool networking effects. When Evmos is added through IBC in the coming days, it will get access to assets from Avalanche, from Osmosis, from Ethereum and so on. This has some very cool advantages in that Axelar Network can act as a routing layer so that you don't have to do these pairwise connections. It can act as a translation layer, if different blockchains speak different VMs and so on.

OxEsper:

Honestly, it was just so great to hear more about Axelar and what you guys do. I know a lot of our community members haven't really had a lot of experience using different bridges and using different ways to interact with different chains.It's definitely a concern for a lot of people to use different solutions, so I love hearing about what Axelar is doing. I guess another question is, I know that Axelar mentions that there's a lot of different ideas that can be built on top of Axelar and I know you guys have the developer grant program–allowing people to utilize the Axelar SDK–can you touch on more about that and what you envision in the future?

Georgios:

This is a great extension of the previous question; so, for the past year, when people have been talking about interoperability, they think of bridges. People effectively talk about bridging assets from one chain to the other. Either wrapping them or swapping assets, but Axelar itself is not a bridge, it’s an interoperability platform, meaning that applications can leverage the stack, its SDK, to build cross-chain applications. With Kinesis, by launching on a single chain–Evmos–and having the logic of your application over there, you will be able to tap into cross-chain functionality with other chains. That's not just about asset transfers. You will be able to compose this liquidity layer with other applications. I'll pick a particular example: let's say your user wants to buy an NFT over on Avalanche, and the NFT market on Avalanche is denominated in UST, but the user holds USDC on Ethereum. Through Axelar, you could basically route the USDC over to Kinesis swap it on behalf of the user for UST route the UST over to Avalanche, and then buy the NFT.

So you can do much more interesting composability that goes beyond just swapping assets. This really enables users to have very similar user experiences to what we have on Web2 today, right? In Web2, when I go on a webpage, I don't have to think about the back-end and all the infrastructure layers, these are completely abstracted away from me. We can actually do something very similar, where in Web3, for example, you can buy an NFT on one chain with an asset on a different chain. The user can do this with one click, without actually having to go through all the intermediate hoops of transferring over, swapping, transferring over, buying, etc. So I think we'll start seeing a lot more of that over the coming year as interoperability solutions mature, and developers understand all those possibilities in the ecosystem.

OxEsper:

I think the NFT explanation was a very good explanation. To explain further: does this mean that, in the future, if I'm on the Avalanche ecosystem and a new ecosystem like Evmos launches– would I be able to swap my AVAX for Evmos without having to do anything in the background here? Is Axelar the one who handles everything in the background?

Georgios:

This we’ll actually be able to do. If you’d like to do that, we could do that in a week. It's gonna be very easy. You need to set up liquidity somewhere, but that's actually extremely simple. We have a team from our community that builds that for some ecosystems. Maybe we should actually integrate it into the Kinesis front end, but yeah, that's one feature that we’d definitely like to build out.

OxEsper:

I think one of the hardships for people entering new ecosystems is, I guess “how do I have access to Evmos, if I wasn't able to qualify for the airdrop,” right? This is something that, for new people, could be a way to enter the Evmos ecosystem before you can buy Evmos on a centralized exchange, or Osmosis, before that's available. If this is the way, then anyone can join the Evmos ecosystem without even qualifying for the Evmos airdrop. This is definitely something that's very interesting.

Georgios:

Exactly, I think that's gonna be the first use-case: one-click onramps. So that any user that goes to an Evmos application can enter the ecosystem seamlessly in one transaction. They don't have to go to a different front-end to figure it out. I honestly think this would be integrated on the front-end of every application just because it's so confusing right now, right? When you look at the new ecosystem, it's very, very hard as a user to onramp to that ecosystem. We need simple front-end: buy the gas token of that application, of that chain, and yeah, I think we should discuss and figure out a way to integrate this, because this is really going to be useful, especially in the early days when there's no Evmos liquidity for people on exchanges, people will have a hard time, so we wanna make the experience as good as possible for them.

Moderator:

Well, we wanna thank both of you guys for the great conversation that we've been having. We have time for one more question. I would just like to ask what both of you see as the future of stablecoin interoperability? It seems we've been talking so much about it and the roles that both Kinesis and Axelar will play in it.

OxEsper:

I could start off. I guess why we think this huge migration of stablecoins, specifically ERC-20 stablecoins, will enter the Evmos ecosystem is because, since Evmos is EVM-compatible, this means that a lot of different projects and a lot of different existing projects can come onto the Evmos ecosystem, and you'll see a birth of DeFi expansion in the Kinesis ecosystem. What this means is that, for DeFi to be built, there needs to be a base layer. Usually those are DEXs–specifically stablecoin DEXs–and a lot of different yield strategies are built on top of stablecoin borrowing/lending, and those are built on top of stablecoins as well. A lot of people do yield farming or leveraged stablecoin yield farming. On AAVE and Compound, one of the most popular borrowed assets and supplied assets are stables. This is a future we see, as Evmos allows DeFi to thrive. A lot of it will be built on top of Kinesis, and one of the main ideas is, since Evmos is EVM-compatible and also interoperable with the Cosmos ecosystem, there's gonna be a lot of different liquidity coming from a lot of different chains.

Georgios:

That's an excellent take, I could not have put it better myself. Personally, it's clear for many reasons that there's going to be a multitude of stablecoins. I think Kinesis is gonna be a huge part of this evolution and ecosystem, just because people will need a very simple way to move in and out of different stablecoins, even without actually having to know that they're moving in and out. It should happen completely abstracted away on the back-end. That's one of the reasons why I'm very excited to be working with your team and expect a lot of amazing things to come. Thank you so much for taking the time to explain your vision for our community, and everyone stayed tuned. I think we already mentioned some of the features that are coming, but I'm sure we'll do a lot of great work over the coming year with the Kinesis system.

Moderator:

Great, thank you; Esper, Georgios, thank you so much for today. Great talk everyone.

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