Delphi Co-founder & Head of Research, Kevin Kelly & Head of Delphi Labs, Jose Maria Macedo, join Founder & CEO of Real Vision, Raoul Pal, for another edition of Crypto Insiders where they dig into the most pressing questions at the nexus of crypto and macro. Moderated by Ash Bennington.

Transcript:

00:08 • Ash
Welcome to Crypto Insider Talks. I’m Ash Bennington, joined by our guests today, Raoul Pal, CEO and co-founder of Real Vision, Kevin Kelly, co-founder of Delphi Digital. And our special guest, José Maria Macedo, partner at Delphi Ventures and head of Delphi Lab. Welcome, gentlemen.

00:28 • Ash
I should say the guests on this show received a list of potential questions prior to filming today so they could have time to prepare thoughtful responses. And, of course, as always, we’re tailoring ProCrypto to meet your needs. So make sure to let us know what you think about this new format in the comments below. And, of course, in Discord, let’s get right to it. All right, José, we’re going to start by throwing it over to you for a couple of questions on Cosmos. Here’s the first one. What are the current Cosmos ATOM network developments? How do you assess its growth and potential? Any insights on its performance and future prospects? That comes to us from Sri.

01:02 • José
Yeah, absolutely. Cosmos is an interesting one because unlike other Layer 1 ecosystems, it’s not like a generalized smart contract platform with a token that represents it that makes it easy for people to understand. Like, if you want to launch on Solana or on Ethereum, you deploy smart contracts on there. You use ETH your sold to pay fees. There’s a very clear relationship there. Cosmos is sort of different in that it’s a toolkit to actually launch your own blockchain. And so one metaphor I sometimes use to tell people understand this is, if you’re launching on an existing smart contract chain, it’s like building a company and setting it up in some jurisdiction, whether it’s the US. Or Europe or Cayman or whatever it might be. When you’re launching a blockchain on Cosmos, it’s actually more like building your own country. You don’t inherit any of the existing regulations, any of the existing network effects of that country. And so you’re able to kind of customize everything from scratch. And so this, as you can imagine, similar to starting a country versus starting a company, there’s some trade offs there. You can customize everything to your complete sort of desire, whether it’s how you deal with MEV, what currency you pay fees in, how fast your chain is, how decentralized it is, all this kind of stuff.

02:16 • José
But it also just takes longer because you have to bootstrap a validator set. You have to mess with Cosmos SDK type stuff. And so what we’re seeing recently is a lot of advancements that make it easier for anyone to launch a Cosmos chain, such as the launch of interchange security, which means that you no longer have to bootstrap a validator set. You can leverage ATOM security from the beginning. And we’re also seeing a lot of app chains launch that are kind of showing people the power of what you can do with this by starting your own country, basically, and not being dependent on the existing trade offs that you inherit from ethereum and other networks.

02:53 • Ash
Let me ask you a quick follow up. One of the things that Cosmos ATOM is sometimes compared to is Polkadot. What are your thoughts on the similarities and the differences?

03:03 • José
Yeah, Polkadot has sort of a more complex system where you sort of are forced in a way to use dot security through this power chain auction system. With Cosmos, it’s actually much more like opt in. So you can just use the and that’s also what makes it less of, like, a united ecosystem with this shell and point token. Right?

03:25 • José
Because you can launch a Cosmos SDK chain without interacting with ATOM at all. And in fact, so far, every single Cosmos SDK chain other than Neutron, which launched recently, has no interaction with ATOM at all. So you can use the Cosmos SDK stack without accruing any value to ATOM whatsoever. So it’s much more of like a set up for creating independent chains and like, developer tooling almost. And so what we’re seeing now is – and it’s built around, obviously, the Cosmos SDK and also IBC, which is basically like a standard for Cosmos chains to talk to and send messages between each other.

04:04 • Ash
One more question here about Cosmos. This one comes to us from our old friend Major Duffles, who wants to know what DeFi projects in the Cosmos ecosystem are you most excited about and why?

04:15 • José
Yeah, absolutely. Very excited about dYdX. They’re launching their app chain soon. That’s a product that it’s arguably the most successful DeFi project of all time, maybe other than Uniswap. Right. It was built on Starkware, which is an Ethereum Layer 2. And last year they made the decision to kind of abandon this – or NFT abandon, but like, take 180 degree shift in terms of they have this very successful project on a Layer 2, and actually build out their own app chain to relaunch dYdX. And so I think that’s a big statement. Right? You have one of the most successful projects in crypto, and you decide to start from scratch using this app chain architecture in order to really maximize the benefits. And I think they’re obviously very good at product. They’ve done a lot of innovations with Cosmos SDK. And so that launch is super exciting to see what they can do there. It should be very fast. They should have some innovative things in terms of internalizing MEV or maximum extractable value. Yes, I’m very excited about that one. Also, there’s a couple of privacy projects launching that I think are really exciting for us.

05:25 • José
Privacy is one of the kind of most important sectors in crypto that hasn’t developed yet. I think once DeFi is fully developed, and we have kind of on chain decentralized exchanges that rival centralized exchanges. Privacy is kind of the next big area. And Cosmos has secret network, which is live already. But then there’s Penumbra, that’s launching soon, and Anoma, which is also launching soon, both of which have used Cosmos SDK to do privacy preserving decentralized exchange of assets, one with an order book, one with like a concentrated liquidity type system. So those are really exciting. SAY – that launching soon is very exciting. It’ll be likely the fastest chain in production. So Cosmos chains generally have block times in the five second range. So not particularly fast given that Tendermint is about five years old, whereas a lot of these newer L1s are much more modern. But SAY has actually made some customizations to Tendermint and some trade offs, which mean it has like 0.5 2nd block times, which is pretty insane and will allow them to do a lot of stuff that you can’t do elsewhere. So that’s an exciting one. Obviously, like projects we’re involved in MARS, which is live on Osmosis and we’re very excited about Osmosis, think it’s one of the smartest teams in the space.

06:39 • José
They’re going to be launching concentrated liquidity and order blocks soon. And then MARS is launching credit account functionality which will allow for cross margin bridging of a bunch of assets. And the cool thing about Cosmos is whereas on Ethereum you have to build these generalized solutions. I don’t know, do you think your viewers are – how familiar are viewers with MEV? Is it worth getting into that or?

06:58 • Ash
Well, we’ve talked about MEV here and on other shows. But José, I know that you have prior commitments, so I want to open this conversation up to Raoul and Kevin to let them jump in and ask a couple of questions before..

07:09 • Raoul
Where does value accrue? Because this is way above my pay grade in complexity. Where does value accrue? How do I understand it at a basic level?

07:18 • José
Yeah, that’s a really good question. That’s a really good question. So I think there’s two ways to think about value accrual. The first one is at the app chain level themselves. And so for me personally, I don’t think ATOM is the way that value accrues. I don’t hold any ATOM. I don’t think that’s the way to capitalize on this because what you’re seeing is any sufficiently ambitious chain that wants to be a DeFi hub, they want their own security, right? They want to use their own token for staking. And so everyone is in a sense competing to be the hub, right? Because any chain which is sufficiently successful will end up having a high market cap. And if it has a high market cap, it can be used leveraged by other chains for security, right? And it becomes kind of a political alliance rather than anything else. And so I don’t think ATOM has too much of a competitive advanta