SIP-X: Deploy Saddle to Evmos

Summary

Deploy Saddle to the Cosmos-based Evmos blockchain launching initially with a Stablecoin Pool V2.

Abstract

Governance will decide whether to deploy Saddle to new Cosmos-based Evmos blockchain. If ratified, Saddle will deploy the necessary protocol contracts to Evmos to allow users to LP for and swap with a Stablecoin Pool V2 to start.

Motivation

The Saddle core team believes the future will be decentralized across blockchains. Whether that takes the shape of a multi-chain or a cross-chain world is still to be determined. The Cosmos ecosystem is strongly positioned to capture the cross-chain market. As it currently stands, there are no major EVM-compatible chains plugged into the Cosmos ecosystem. In other words, there are no major EVM-compatible, IBC-enabled block chains. Evmos will mark the first major foray into this space and as such serves as the intersection between the burgeoning Cosmos DeFi ecosystem and the already strong and still growing Ethereum-based DeFi ecosystem.

More importantly, Evmos will usher in an era in Cosmos DeFi where multi-billion dollar stablecoin assets such as USDC, USDT, and DAI will be able to trade cross-chain assets on DEXs like Osmosis or the Gravity DEX. This presents a unique opportunity for Saddle to capture the StableSwap market, the backbone of DeFi, in this growing interoperable DeFi market.

Specification

We plan to launch initially with a Stable V2 pool composed of the three major Ethereum based ERC-20 stablecoins USDT, USDC, and DAI all bridged using the Nomad bridge.

For: Deploy Saddle protocol smart contracts onto Evmos with a Stablecoin Pool V2.

Against: No change.

Poll:

  • For
  • Against

0 voters

1 Like

Think it would be best to wait to make any decision until we wait a few months and see how Evmos launch goes…their recently launch failures are very concerning

Why does the Saddle core team think Evmos is part of the future of the multi-chain/cross-chain world? Evmos is a bad chain, here’s a list of everything that has gone wrong with it since its launch on 2/28:

  1. Team announces the official mainnet launch will be delayed to 3/3, the community gets mad, so the team increases the community airdrop share by 10% to appease them.
  2. Chain launches on 3/2 without EVM capabilities, ledger users cannot claim airdrop, metamask and keplr both have bugs when interacting with Evmos.
  3. Some users manage to stake their airdropped evmos during this time, leading to outsized APRs as many other users can’t even claim their airdrop.
  4. A critical security bug is found in Evmos by Interchain GmbH, which allows users to claim the airdrops of other users.
  5. Evmos pushes up a fix for this and creates a manual upgrade, the fix fails because the code was not tested.
  6. The chain stops working because of the consensus issue created in the fix in step 5, validators also stop cooperating with the Evmos team due to double signing fears. The Evmos team reassures them that if they follow their lead, it will be impossible to double sign.
  7. The chain restarts, 5 validators immediately double sign.
  8. Evmos and the validators agree to halt the chain.
  9. Evmos announces the chain will go down for 24-48 hours for maintenance, this occurred March 7th, 2022.

It is currently March 11th, I think it would be a massive waste of Saddle’s engineering resources to deploy to Evmos. Not only is the chain down for an indefinite amount of time(I’ve been hearing up to 1 month), Evmos didn’t even work with metamask when the chain went down.

TLDR: No, let’s wait until Evmos fixes itself before devoting resources to this

2 Likes

Pranay from Nomad here. We are in favor of Saddle deploying on Evmos as soon as it launches, in order to establish itself as one of the premier stableswaps on Evmos. As @CXGonzalez mentioned, we’re already in the multi-chain world and the Cosmoverse is one of the most promising and successful ecosystems currently.

Evmos is poised to become the first EVM chain to launch in the Cosmos ecosystem and enable many DeFi apps to leverage IBC to tap into a large market. It would be foolish to wait and dither while other projects seize this opportunity to expand, and risk losing mindshare. It is in Saddle and SDL holders’ best interests to move quickly and deploy.

The Nomad team has been working closely with the Evmos core team, and wanted to chime in and address the concerns from posters above.

Most of the concerns are in some shape of the following:

  1. Let’s wait and see how the Evmos launch goes
  2. It would be an opportunity cost for Saddle

The risk is as stated above, Saddle moves too slowly and by the time we feel comfortable, the market is already captured. The Evmos team is really strong, and while their initial launch was rocky, they are taking methodical steps to remedy most of the issues that arose. From their community call this week, it is clear that most of the issues were due to non-core aspects of the chain such as the claims process, and several of them are already resolved. Eg. The Metamask issue was fixed with one small change, as it was an unanticipated upgrade from the Metamask side. Additionally, the challenge of building in public is that while other projects can hide their issues, the Evmos team has been transparent the entire time and has had to bear extra scrutiny, and the accompanying judgement.

Re: opportunity cost, I’d love to hear the Saddle team weigh in, but it seems like deploying Saddle contracts on another EVM chain with high EVM equivalence should not represent much engineering cost. So, I don’t really see what the downside of doing this is, other than a one time minor engineering effort and a few bucks in gas fees on Evmos. Can someone provide meaningful pushback on why the resourcing issue should be cost-prohibitive here?

The Nomad team is ready and excited to provide the rails for cross-chain liquidity to flow into Saddle on Evmos, and feels it is the right move to deploy early and expand Saddle’s reach into the Cosmos!

7 Likes

Very valid concern!

We’re estimating ~2 days of deployment work which can be done in tandem while tokenomics is being built out. So this wouldn’t be an either or, but a both.

Don’t think the main risk would be opportunity cost, but more so the SDL emissions that would have to be given out to incentivize these pools on Evmos. If Evmos doesn’t do well, Saddle will have emitted a lot of Saddle tokens which will dilute Liquidity Providers on Ethereum and make the token price drop a lot.

2 Likes

Deploying Saddle to Evmos won’t cost any SDL as those emissions will come from the LPs hosted on the Dapp.

For example, we’re currently discussing deploying an LP to Saddle on Evmos (if this passes) for gUSDC, gDAI, gUSDT with SDL and GRAV incentives (from Cosmos’ Gravity bridge). The current estimate is .15% of SDL’s supply which is definitely not nothing, but given the potential upside of being the primary stable coin AMM on the Cosmos ecosystem of over 20+ blockchains, it seems well worth the risk accounting for this shaky launch.

Isn’t Nomad the smallest bridge out of all the bridges deploying on Evmos? No disrespect but I don’t see how Nomad and Saddle working together will pan out at all. aren’t there already 2 stableswaps building natively on Evmos? How does Nomad plan on bootstrapping liquidity on all 3 pools with no token incentives? Saddle definitely does not have a lot of token incentives to go around either, so not sure how this is a “win-win” situation for either party. This seems like Nomad is spreading themselves thinner and Saddle is doing the same by distributing their already low liquidity mining incentives to other pools.

Sorry, maybe I misunderstood but can you explain this? How are emissions coming from LPs? Who are the LPs? Also stableswap fees aren’t enough to support emissions, we know this from all the stableswaps out there. Emissions is what keeps the APR high, and not sure how you can incentivize liquidity in these pools without emissions from Nomad or Saddle/

Smallest in what way? Afaict nothing has liquidity on Evmos right now? If you’re making TVL comparisons to other chains, that seems somewhat irrelevant here.

In general, you want to use the bridge that has the best security model, not the one that has the most TVL. Systemic risk is real, and while liquidity plays a big role in bootstrapping pools, long-term success comes from designing robust systems.

If you are concerned about initial liquidity, we are working with our partners and the Evmos team to drive initial liquidity to app partners including the various AMMs, stableswaps and lending protocols.

No disrespect taken, but would love to discuss more in good faith, rather than get sniped about liquidity with zero context :slight_smile:

Sorry for sniping, but please try to understand my frustration as I’ve been a long time liquidity provider for Saddle, and have now just heard they plan on expanding to Evmos, possibly diluting my rewards even further. I’m not sure why overall TVL comparisons are irrelevant here. Overall TVL is a decent metric on understanding the power and liquidity that a bridge can have in my opinion, and if Nomad spreads their liquidity among multiple DEXs, wouldn’t other bridges have an easier time becoming the canonical bridge? Does Nomad also have plans on releasing a token to incentivize liquidity? Saddle also doesn’t have a lot of tokens left to distribute too, so I’m just not sure how this partnership is great for both parties.

1 Like

Totally understand. And these are good questions!

The reason TVL is not a great metric here is because it ignores several things:

  1. It doesn’t measure how much organic liquidity is in a system vs. mercenary liquidity. If a bridge provider moves over $50M but there is no activity, then while the bridge appears successful, it is often just cooking its own books to look bigger. And if it throws tokens at people without ensuring their liquidity is sticky, then it’s just incentivizing mercenaries rather than driving real organic growth.
  2. It doesn’t measure capital efficiency. While we do want enough liquidity to bootstrap the stableswap and offer sufficient depth for traders, we also need organic demand to ensure a higher utilization of the capital in the pools. We don’t want to just observe TVL in isolation, as there is marginal benefit (and in fact a disservice) to having $100M TVL if your demand can be satisfied by $10M.
  3. While TVL allows for certain representations to serve as a schelling point for the chain, what matters is how many other apps / teams are using those bridge representations. We have been working closely with the Evmos team, and alongside Connext, will be the primary bridge provider for Evmos. This means that Nomad assets will be used more widely across Evmos and in the long run become the more utilized and liquid representations.

In the long run, we believe the bridges that partner closely with the core team and grow organic liquidity via measured incentives + programs to drive demand will win out.

This is in alignment with SDL holders who are trying to do the right thing by avoiding wasteful incentives. I totally agree that we need to be surgical with incentives, and only incentivize growth that we know will benefit the Saddle community in the long run. I think the initial step here is just to deploy contracts on Evmos, which has zero cost. The reason to move forward here is:

  • Evmos is really promising, not only as an EVM on Cosmos, but as a strong L1 team in general.
  • The risk of stasis is greater for Saddle than the risk of deploying contracts on a promising chain.
  • The upside of this bet is uncapped.
1 Like

Thank you so much for the clarification. Look forward to see more.

1 Like

Oof, what incredibly short-term thinking.

Expanding to new chains early can mean capturing an untapped part of the market. Capturing a new market means more fee revenue for LPs and token holders. Partnering with a bridge means an additional moat for other projects, and makes the revenue more defensible.

Not sure if it’s moderation or something else that’s needed, but we need to raise the level of Discourse on this forum. This is pure FUD — no SDL has been publicly bought or sold, and AFAIK you have no special knowledge about any private sale buyers’ thoughts or feelings. Instead, you’re pretending like you’ve somehow been hurt while the dev team keeps shipping.

Spend half your energy trying to help the project and we’ll all be in a better place.

3 Likes

Hey everyone, Liam here from the Evmos team.

Thank you to CXGonzalez for making the proposal, and thank you all for kicking off some strong points both for and against.

First off I think it’s important to address the concerns of @manuelreydias given that CXGonzalez already spoke to the resourcing concerns. @manuelreydias , the concerns you point out are all very valid and important for the Evmos team and community to understand and correct. While all the flaws you pointed out are mostly accurate, a few additional pieces of context I’d like to provide:

  1. All of the bugs as @pranay mentioned are on auxiliary services and none of them are directly related to the functionality of the EVM module that makes Evmos so special. The EVM module has been audited by multiple firms to ensure contracts and all users’ funds are safe. As for the auxiliary functions:

  2. The Metamask issues were caused by Metamask V10.10 upgrade two weeks before mainnet and we unfortunately did not diagnose (or even realize) the full extent of the issues caused by this bug until the day before launch. We built a workaround within ~48 hours which was available the day after launch as shown by these two PRs (PR1, PR2). We are working to provide a full post-mortem within the next couple days.

  3. The Ledger issues were tied to the Keplr wallet which was caused by an oversight of how many people would be affected by this. we’re working closely to support the Keplr team however we can as they implement the fix for this as described in this Twitter thread (twitter, /EvmosOrg/status/1499941460250091522) due to using Ethereum keys for Evmos instead of Cosmos keys as Keplr is accustomed to. In the meantime, when Evmos is back up we will have alternatives for ledger users to make their claims without the need for Keplr’s UI. Ultimately, the responsibility to get these integration lies with us and we take responsibility for these issues - as well as solving them.

  4. While we do not have a firm timeline for resuming Evmos, the reason for this is because we want to make sure we don’t make any more mistakes. Evmos will resume in the coming weeks and as soon as we have all the problems solved and have tested everything rigorously we will continue to keep the community informed.

The above is not meant to be an excuse but to hopefully provide some reassurance that we are doing everything in our power to resolve concerns and make sure that when Evmos resumes in the coming weeks that there is a smooth user/dev/validator experience that doesn’t leave anyone out. Again, the Evmos team owns the responsibility for getting this right, and we are well on our way to delivering the experience that this community deserves.

Throughout this process we have continually informed the community through our social channels of the problems we have experienced as well as documented our faults to hold us accountable. We have several more post-mortems coming out in the next week as well to further explain all the issues that went wrong, why they went wrong, why they weren’t caught previously, and what we are doing to fix all the issues.

As for why we think the Saddle Community should support the Evmos deployment, one key reason is to become the dominant stableswap in the Cosmos ecosystem which accounts for over $144B in value (cosmos.network/ecosystem/tokens/). Evmos allows Saddle to not only capture value from many EVM chains through Nomad, but more importantly it allows Saddle to capture value from all Cosmos chains connected to IBC including Terra’s UST.

Please keep the questions and concerns coming as I will continue to monitor this thread and answer any questions I can.

2 Likes

We seem to be miscommunicating. Emissions aren’t coming from LPs. What I’m trying to say is that deploying to a new chain alone doesn’t cause any new emissions. It’s only once a new LP is set up that SDL begins to emit. So concerns about SDL dilution would be better addressed on proposals that seek to set up a new LP (be it on Evmos or any other chain/L2).

Concerns about dilution are valid! As such we wouldn’t want to set up low TVL LPs and have SDL be emitted in exchange for little to no transaction fees. But in this case, being early to capture marketshare on the first IBC-enabled, EVM-compatible blockchain, starting most likely with the big 3 Ethereum stables, is too good an opportunity to pass up. Also note, all SDL tokens will be emitted anyways, be it on one LP or the next. So it’s just a matter of, “is some proposed LP worth the dilution?” taken on a case by case basis. Taking all that into consideration, we think Evmos is worth deploying to.

What do you think?