Agoric is a smart contract DeFi platform designed to bring millions of developers to the DeFi frontier. On March 11th, Dean Tribble (CEO), Michael Fig (Software Engineer), and Rowland Graus (Product Manager) of Agoric joined us in Staking Hub to answer all of our questions.
- Agoric separates the asset transfer layer and the smart contract layer allowing for a safer and more secure experience for DeFi participants.
- Composable “DeFi Legos” aim to power rapid ecosystem development at launch.
- Validators and stakers will earn more as the economy grows through fees generated by the expansion of Agoric’s local currency and fees on native AMMs.
- Inflationary rewards, unbonding times, and slashing penalties will be unique though informed from Cosmos Hub learnings.
The Agoric blockchain is designed to make deploying DeFi applications more accessible, safer, and faster for developers while creating a more secure experience for DeFi participants.
Agoric separates the asset transfer layer from the smart contract layer. This allows a user to interact with a smart contract without sending funds directly to a smart contract.
This is not the case when interacting with smart contracts on Ethereum. For example, when interacting with a smart contract on Uniswap, you are actually sending your funds to that smart contract and entrusting that it will execute correctly.
“I characterize that as sending money to a random number and hope something good happens.”Dean Tribble, Agoric CEO
Agoric on the other hand allows users to interact with smart contracts, but transfer funds via the infrastructure/asset transfer layer.
“The payments are escrowed by the infrastructure layer. The contract knows the funds are available, but ONLY if the contract provides what the client wants. If it can’t, the infrastructure layer returns the provided funds. So the offer safety is that you get what you want or your money back, independent of incorrect or malicious behavior of the contract.”Dean Tribble, Agoric CEO
The Agoric platform is designed to be highly composable. This object-based approach enables, what the Agoric team calls, DeFi legos that are directly reusable and verifiable.
“Remember old-style HTML applications where each lick took you to a new page? That’s current DeFi. Now think whizzy modern Web apps? That’s built with components.
More seriously, building with reusable components allows safer, more rapid innovation in applications. That improves the functionality that gets offered over time, the usability and refinement, and the safety of the customer’s funds.”Dean Tribble, Agoric CEO
Agoric plans to launch these DeFi legos conservatively, but over time, they will gradually enable permissionless building, which the team expects will rapidly power development in DeFi.
The Agoric Stack
Agoric is built on top of Tendermint and the Cosmos SDK. As such, validators and stakers can expect similar staking and slashing parameters as the Cosmos Hub, but there will be differences, and have yet to be announced.
A key differentiator between Agoric and most other Proof of Stake protocols is that Agoric stakers will earn a share of fees generated by the expansion of the local currency and fees on native AMMs which will likely be the deepest for certain asset pairs. This is similar to staking a governance token on a DeFi application.
This was designed for good reason. In Proof of Stake networks, it is important for the underlying staking token to capture value because that increases security of the overall network.
“I think other projects are kicking the can down the road, but staking token value = protocol security. If the protocol has $10B in assets, but the staking tokens are worth $100M, then there’s a strong incentive to break the protocol guarantees to steal the assets it secures.”Gavin Birch, Figment Protocol Expert
Governance of the Agoric chain will be done at the smart contract level, which means it will feature the same composable elements as the DeFi legos allowing it to easily evolve over time. At launch, we can expect a similar governance experience and structure as most Cosmos SDK chains.
Agoric recently launched its incentivized testnet that is scheduled to last until June with mainnet to follow. The testnet will consist of 5 phases, Onboarding, Infrastructure, Economy Security, Stress Test, and Adversarial. 1,000,000 tokens have been allocated to reward participants during the testnet stages.
There is still plenty to hash out and be discussed and we are looking forward to participating in the incentivized testnet. We ended our chat with Agoric with a few thoughts on staking derivatives and what would be needed to properly implement them on Agoric.
“Security has to be the priority, but capital efficiency is hugely important too. Security is driven by asset value and value is driven by desirability of owning it – which speaks directly to capital efficiency, so managing the tension there with staking derivatives is critical.”Rowland Graus, Agoric Product Manager
“If you can sell staked tokens, then you can trade a staking position with liquidity. If you can buy slashing insurance, then you can make staked tokens + insurance fungible across validators. Does that break impact staking security?
In order for staking derivatives to actually accomplish what they intend, they must be in the context of an extended market and economy so that people can do things with them.”Dean Tribble, Agoric CEO
Special thanks to Dean, Michael, and Rowland for spending an hour with Staking Hub to answer all of our questions! We hit a few things that were not mentioned in this recap, so if you want the whole conversation head here.
Thank you Gavin for co-hosting and thanks to our Staking Hub community for all of your wonderful questions.
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