Key Takeaways

• Osmosis's DeFi ecosystem has 21 teams building core Dapps on top of the DEX, with some of them deploying on mainnet at the end of Q4 2022. The panel covers 3 of those projects and interviews the founders of Margined, Phase and Membrane Finance.
• The most highly anticipated features on Osmosis from the interviewed teams include the hybrid model of concentrated liquidity and orderbooks, in addition to the UX Osmosis will provide with tightly integrated products.
• Outside of the projects they are working on, the teams are all excited about layer-1 orderbooks within the Cosmos ecosystem. Additionally, capital efficiency for liquidity and DEXs is an interesting topic, with teams such as White Whale who are trying to aggregate liquidity across mulitple Cosmos chains. Another design for this unified liquidity is Delphi's SLAMM model which rotates the liquidity between each layer-1.

What is Osmosis?

Osmosis is a DeFi-focused app-chain that is built out on the Cosmos stack. It aims to be the on-chain equivalent of Binance but is permissionless, more decentralized and interoperable with the cross-chain ecosystem by default. To execute on this vision, they are building out a core AMM that is a hybrid model of concentrated liquidity (Uniswap v3) and orderbooks with many complimentary apps composed together to be the one-stop shop for users’ DeFi needs. Check out Nansen's deep dive into Osmosis to get the full breakdown.

Below are the show notes from some of the teams building on top of Osmosis. In this first panel, teams from Phase Finance, Membrane Finance and Margined provide some key insights into what they are building and key things to look out for in a multichain world. The notes are broken down by each team and displayed in the following order:

1. Phase Finance (Twitter)
2. Margined (Twitter)
3. Membrane Finance (Twitter)

Margined

Introduction and an ELI5 of each protocol

• Margined Protocol builds generalized margin engines for Cosmos zones. They have a margin engine that you can use with a number of different applications and arguably most importantly - perpetual swaps.
• The first application will be perpetual swaps. They will deploy their perpetual swaps onto Osmosis shortly.
• Their goal is to deploy multiple perpetual contracts onto various Cosmos zones for the native tokens and try and be the perpetual swaps contract on each Zone for the native token and eventually explore contracts for other ‘blue-chip’ tokens within these ecosystems.
• Just finalized an audit and running through testnet on Osmosis in the next week.

Why did you decide to build on Osmosis over other chains?

• Osmosis has the most liquidity and given Margined is focusing on perpetual swaps, it is complimentary to spot trading for traders who may want to use leverage.
• The vertical integration of Osmosis does make a much nicer UX. The cons of many app-chains is fragmentation but it is very nice to see a cohesive DeFi experience.

What is the current roadmap and when can we expect mainnet?

• Finalized an audit and launching a testnet soon (Q4 2022).
• Looking to go live on mainnet soon after the testnet.
• Product Roadmap:
  • First, they use a dynamic vAMM architecture. Good but less capital efficent
  • Will build around concentrated liquidity and orderbook design for price discovery.

  • Orderbooks are good, so helping build perps on top of that infrastructure is something Margined is looking to build

    What feature are you most excited about shipping?

• Features tied to the base layer DEX
  • Orderbooks and concentrated liquidity AMMs is something they are looking forward to the most, can leverage the layer 1 to have a more efficient protocol
  • Have Margined engine handling the positions to piggyback off of the orderbooks

• Integrations with other apps

  • Can see a world where users get credit from Mars to use on Margined.

    Outside of the projects you all are working on, what are you most excited about in the Cosmos ecosystem?

    • Layer-1 orderbooks
    • Is something that is really good for the space for price discovery
    • Allows other apps to build many other products on top of them
    • Drift is doing it via smart contracts on Solana
    • Having the orderbook in the layer-1 makes more sense for Cosmos chains

    What is the ‘end game’ for you all - is it your own app-chain or something else?

• App-chains make sense for specific applications such as with Membrane
• However, over time, it is his view that there will be a few app-chains (4-5) with very specific use cases that users gravitate towards. This seems more likely than everyone having their own chain

  • Having your own chain introduces key considerations/tradeoffs:

    • Centralization
    • Fragmentation of UX, IBC solves some of this but it is still just a bridge at the of the day

    What does the IBC ecosystem look like in 1 year and how do power laws take effect - is it more of a ‘hub and spoke’ system or a ‘mesh’ of hundreds of chains like Sunny refers to?

• The ‘Mesh Security’ stuff is interesting but he thinks ‘bigger islands of liquidity’ for various use cases is more likely.
• IBC is a bridge of sorts, a standard across ecosystems (NEAR, Polkadot, etc.) but dont see it being thousands of blockchains.
• What are the use cases that people need? It seems quite small to a certain degree, whereas you can create really good products with security guarantee and UX for users.

  • IBC and mesh will definitely be apart of it, but it is hard for individual investors to understand.

    How can people get involved - all there any test nets, tokens, or any alpha to share with everyone?

• Will be back on the Osmosis testnet soon, can find all of the updates on Twitter.
  ## Phase
  ### Introduction and an ELI5 of each protocol
• An automated investment strategy platform at its core. Combining different investment strategies with different yield options to make the best use of users’ tokens.
• First product: A dollar-cost-averaging (DCA) feature, that will allow users to deposit tokens with predefined parameters and DCA into whatever asset they’d like.
  • Can integrate the DCA with other products such as lending which will be using Mars.
    • Increases capital efficiency as users can get some extra yield while also getting a better cost basis via their DCA.
• Other products they are looking to launch after DCA:

  • Investment strategies such as:

    • Value averaging
    • Grid trading
    • Using LP tokens and other staking features

    Why did you decide to build on Osmosis over other chains?

• Fan of the multi-chain vision of Cosmos, the chain itself can be optimized to support a certain app or feature. Building on Osmosis gives Phase the best AMM which is the core feature they need for making swaps. Additionally, the vision of a good UX through Osmosis’s vertical control of the stack (protocol layer → wallet) and integrations with other apps can give Phase and other apps the UX.
  ### What is the current roadmap and when can we expect mainnet?
• Contracts are being finalized and looking for an audit for end of Q4 2022 into Q1 2023.
• Will also be waiting for the Apollo router and Cron Cat who they will be using for their scheduling of transactions. ### What feature are you most excited about shipping?
• First integration will be with Mars - deposit idle tokens in users accounts to generate yield while DCAing.
• Osmosis and Cosmos wide features they are looking to utilize.
  • First, using Osmosis superfluid staking to generate more yield from staking and create a looping effect.
  • Cross-chain DCAing utilizing interchain standards.
    • Can be Phase being deployed on other chains (further down the road).
• Osmosis will be releasing concentrated liquidity pools similar to Uni v3, one cool thing to look at is using Uni v3 positions to simulate different options. Similar to what Panoptic is doing on Uni v3.
• Lots of room to experiment with getting yield with Phase.
  ### Outside of the projects you all are working on, what are you most excited about in the Cosmos ecosystem?
• Orderbooks are very interesting place for Phase to land as well, given how efficient orderbooks can be and what kind of products they can create.
• Jet Protocol on Solana is creating a bond ticket system that uses an orderbook - allows for fixed term/fixed interest debt which you can’t get with a lending pool model.
• For Phase, can leverage these financial primitives to bring about new yield strategies.
  ### What is the ‘end game’ for you all - is it your own app-chain or something else?
• Want to become a horizontally structured protocol where they leverage as many products and apps within the broader Cosmos ecosystem.
• If there is interoperability between other chains outside of Cosmos, they would like to leverage that as well with Phase.
  • Benefit is that it doesn’t matter where the user is, they can just use the product such as the DCA
• Will consider their own app-chain later in their roadmap
  ### What does the IBC ecosystem look like in 1 year and how do power laws take effect - is it more of a ‘hub and spoke’ system or a ‘mesh’ of hundreds of chains like Sunny refers to?
• Depends on how well the interchain stuff is functioning, IBC makes stuff easier but it is still a bridge. Chains are connected but they are very sovereign still.
• A large piece of this can be interchain security, which can provide an argument for a millions of chains ecosystem (help smaller chains bootstrap security).

  • However, it can be argument for the other side where all of the volume sticks on the bigger chains and a lot of this will take time to be adopted as well.

    How can people get involved - all there any test nets, tokens, or any alpha to share with everyone?

• No testnet yet, but looking to have one soon. Finishing their contracts soo but can visit their Twitter or Discord for updates and docs will be up very soon.
  ## Membrane Finance
  ### Introduction and an ELI5 of each protocol
• Membrane mints stablecoins. Similar to MakerDAO who uses a CDP model, users post collateral and Membrane mints stables based on the value of the collateral.
  • They are aiming to allow more sustainable leverage.
• They differentiate from traditional CDP models by allowing users to deposit ‘asset bundles’ to mint.
  • Not a single collateral type. Can use ATOM, OSMO and USDC in one bundle to mint CDT (the stablecoin)
    • Allows users to customize risk a lot more and bundle USDC to get lower interest rates for other more volatile collateral types such as OSMO or ATOM.
  • Price and liquidity-aware interest rates. Focused on the stability of CDT. If liquidity or price goes down, rates will increase to ensure volatility of CDT is within a range.

  • Open liquidity pools - a stability pool and liquidations queues. (Kujira uses liquidation queues).

    • Liquidators’ job is a bit easier and increases the efficiency of liquidations to be safer and more solvent.

    Why did you decide to build on Osmosis over other chains?

• Given Osmosis is an app-chain strictly on being the best DEX, it allows teams to confidently build on them knowing there won’t be too much competition from the base chain itself.
• Each app can focus on what they are doing and give users the best experience.
• Osmosis has the most liquidity, which is important for a stablecoin and Membrane’s supply cap is based on their liquidity. Hence, their growth is determined directly by liquidity
  ### What is the current roadmap and when can we expect mainnet?
• Waiting for their audit, so there is no clear timeline as of yet.
• Wait for grants program to get renewed but this gives them time to ship a final product. When mainnet, can focus on helping the community learn the product and contribute.
• Focusing on different proxy contracts to make the system easier for end user.

  • Ex: A loop leveraged proxy, similar to MIM, where you take collateral and loop it. The contract can automate this.

    What feature are you most excited about shipping?

• The Mars Rover credit framework custodies the collateral for users and uses it in whitelisted yield vaults to make UX easier (1 click and take leverage for varying utilities/use cases).
• Connecting to the stability pool that can be used for liquidations instead of locking up collateral elsewhere.
• Anything that increases the velocity of CDT and reduces the friction for the end user is stuff they are excited to ship.
  ### Outside of the projects you all are working on, what are you most excited about in the Cosmos ecosystem?
• Capital efficiency for liquidity and DEXs, White Whale is very interesting
  • They launched on Terra as an arbitrage protocol but it was not too successful.
  • Now, they are building a bot first LPs that they put on each L1.
  • Expect arbs to keep prices closer to aggregate liquidity, rather than Astroport’s SLAMM which actually rotates liquidity between L1s.

  • A distributed network of actors can potentially work better than a single chain moving liquidity around.

    What is the ‘end game’ for you all - is it your own app-chain or something else?

• As of now, Membrane benefits the most by having its own app-chain. Allows it to take control of its system efficiencies liquidations and UX.
• No design in production but lots of ideas on how the chain itself can liquidate the positions.
  • Liquidation fee is a user expense to pay liquidators. However, if the chain can do that itself, then users can stay solvent for longer and liquidations would require less collateral from them.
  • In a traditional CDP model, this is not possible given efficient liquidations need to be near liquidity.
  • With the queues and stability pool, it can be hosted on a Membrane chain. If the majority of liquidations go through those pools, they wont need any external liquidity for them to perform liquidations.
  • Puts less of the collateral on the market
• UX
  • Ex: A vault that did interest rate arbitrage to keep the system more stable and direct funds to certain protocols.

  • Users reacting to interest rates is important for the stability of CDT

    What does the IBC ecosystem look like in 1 year and how do power laws take effect - is it more of a ‘hub and spoke’ system or a ‘mesh’ of hundreds of chains like Sunny refers to?

• The UX of Cosmos right now is not the best because the end user has to do so much stuff themselves
  • Developments coming out that make this UX easier across chains
• IBC is spreading to many different ecosystems which is great
  • Each subset of Hubs will have a large group of competitors
  • Main question: how useful is it to be to come out with a new competitor?
  • Other apps can connect different chains and connect IBC in general such as White Whale who is aiming to connect liquidity across many DEXs. This is better than forcing users to use a DEX that puts liquidity on a bunch of L1s. Lets each protocol focus on what they are good at and find teams to work on this abstraction layer, the ecosystem will get stronger.
• Don't think there will be a million chains that do stuff that is useful. However, sovereignty is interesting PoV as it gives compute power for communities to do what they want.
  • Likely see larger nets of integrated protocols that work together to be a better XYZ Hub such as DeFi or NFTs

  • Will be many DeFi app-chains for instance, but it is unlikely that every protocol on top of these chains will also become an app-chain. Some protocols just don’t need it.

    How can people get involved - all there any test nets, tokens, or any alpha to share with everyone?

• Twitter is useful, a landing page should be coming out soon along with different forums for communication prior to launch.
• Has a small team so less involved with public facing stuff at the moment.