DiscoverOpen Source UnderdogsEpisode 56 – Connecting Web3 Blockchains, Federico Kunze Küllmer, Co-Founder of EVMOS
Episode 56 – Connecting Web3 Blockchains, Federico Kunze Küllmer, Co-Founder of EVMOS

Episode 56 – Connecting Web3 Blockchains, Federico Kunze Küllmer, Co-Founder of EVMOS

Update: 2022-06-06
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Intro





Mike Schwartz: Federico, welcome to the podcast!





Federico Kunze Küllmer: Hey, Mike, thanks for having me today!





Background





Mike Schwartz: Before we dive into Evmos, tell us a little bit about your journey how’d you get here?





Federico Kunze Küllmer: So, I started in Computer Science and Industrial Engineering in Chile. I did a semester abroad at UC Berkeley where I joined this student organization called Blockchain on Berkeley, and that’s where my journey on the blockchain ecosystem but also in the open-source ecosystem started.





After I graduated, I started working on numerous open-source projects like Tendermint, Cosmos SDK, which powers many of the projects that you can see out there, like Binance, Terra, and the entire Cosmos ecosystem. And now, Evmos, which is a project I’m building.





Mike Schwartz: Awesome. So, the topic of today’s podcast is how we can use DAOs to perhaps provide an alternate funding mechanism, an organizational mechanism for open-source projects.





But before we get into that topic, some of our listeners might not know what a DAO is. Can you help give a baseline sort of definition?





Federico Kunze Küllmer: For sure. DAO stands for Decentralized Autonomous Organization. It’s basically – think of it as a corporative or any association of different accounts that live on the blockchain or through different governance mechanisms are able to decide on certain like outcomes or voting certain proposals at the DAOhaus.





They also have like a common shared address where they can, for example, pull their accounts and their tokens, so they can spend on different initiatives. That’s how you can, more or less, create these sorts of autonomous organizations to eventually fund the different public goods and base-layer infrastructure that you’re providing through open source.





Is DAO Discord Group With A Crypto Wallet





Mike Schwartz: One of the founders of a DAO called “Friends-With-Benefits” has described the DAO as a Discord group with a crypto wallet. Is that inaccurate?

Federico Kunze Küllmer: In some way, that’s accurate. In a way that the crypto wallet is here, was that the important component, where every member of this organization has some shares, so to say, so that they can be long in this organization. So, I would say that’s pretty accurate, where every member of the Discord has some share in the organization.





Tokens V. Options





Mike Schwartz: In a traditional company, let’s say, that most of our listeners are familiar with, you issue stock to team members. That stock is normally issued in the form of options. And those options, even when exercised, are subject normally to a fairly restrictive stockholder agreement. So, in this case, it sounds like you’re saying that the sort of members of the team, instead of being issued stock, are going to be issued a token specific to this project. What are the ways that such a token would differ from the traditional options or a corporate equity grant?

Federico Kunze Küllmer: The main difference here between a token and a share in a company is the immediate access to the liquidity, when you have options for a company that is not publicly listed or is not currently raising a fund, like a funding round. It’s really hard to get liquidity for those options once they’re exercised. So, with tokens, you actually have the opposite. When your tokens are vested, you can start selling them in the open market. I would say that’s a main difference.





On top of that, tokens can also have certain behavior, like, for example, you can create tokens that are vested over certain period of time, or like some tokens that are locked for like one year. Like, trying to simulate a one-year cliff they usually have with options, and so on and so forth. So, it’s actually trying to replicate the same behavior that you have right now with options, but on a decentralized way, and actually having those tokens be liquid.





Token Liquidity





Mike Schwartz: If you get tokens in a DAO, these tokens aren’t necessarily going to be listed on a public exchange, so how exactly would owners of the project tokens get liquidity?





Federico Kunze Küllmer: For example, either you issue these tokens individually to each of the members of the team, so that they can like have different vesting schemes or vesting schedules. So, if you have like an individual joins a company or organization at a given time, you can issue these vesting schedules over time that is publicly available on the blockchain. And you can see the account that says the tokens are being vested over like four years or one year. And then, you can also create these flobots for each of the tokens.





That’s when you issue them individually to each member, and you can also create as you mentioned, like a DAO, that is covering certain rules, where all the shareholders vote to distribute the proceeds or these tokens that the DAO account controls to the different members, according to the different shares they have.





So, that’s like the two ways that you can fund this, as either issue a vesting schedule individually or the tokens individually, or the other option is like have these common wallets, where you create different wallets or proposals, which are voted by each of the members.






Mike Schwartz: Maybe I’m not understanding: if I go to pay rent or buy milk, you know, how do I sell my project token into something that’s liquid like Ethereum or Bitcoin?





Federico Kunze Küllmer: You can do that by issuing the tokens that are native, from the certain project, and usually they were publicly traded on decentralized exchangers or centralized exchangers, like Coinbase or Binance, etc., so you can like actually swap the token if they’re listed. And then, like, thus, bring in some liquidity so that you can trade the token against like another known crypto currency like Bitcoin or Ethereum.

Mike Schwartz: So, what you’re saying is that you could sort of build into these project tokens an automatic conversion feature into something that’s liquid?






Federico Kunze Küllmer: Yeah. Usually, the project doesn’t need to be necessarily the one that is providing this exchange on a decentralized way, but usually rely on other projects that are fully interoperable. If you’re building a specific application, your application can connect to another smart contract that provides this functionality for another digital assets, like Bitcoin and Ethereum, and then you can use that and trade them to fiat, for example.





Mike Schwartz: I see. So, you’re saying that there’s already a generalized token. So, you don’t issue a specific token for your project, but maybe you use a platform that gives you a token that already has the properties. What are some of the platforms that are out there that could do this? Just maybe a couple of examples?

Federico Kunze Küllmer: On Ethereum, the most notable ones are probably Uniswap. You also can find some of the others that are targeting other types. But, yeah, like the main one is definitely Uniswap, I would say on Ethereum. On Cosmos you can find for example Osmosis, which is another platform that supports this.





How To Define The Governance?






Mike Schwartz: You mentioned that in a DAO, you can implement different rules, depending upon the specific goals of your project. I think of that as the governance of the project. It seems to me like it’s somewhat challenging to set up the governance of the project. Where do you start that process? And, you know, while there’s governance frameworks that exist for Discord group participation, are there templates out there or playbooks for open-source projects? And it seems like sort of a difficult problem. And where do you start and how do you define these rules?





Federico Kunze Küllmer: This is a great question. In general, where you can find different governance protocols that are used in these different DAOs, so you can have different types of votes, you can have different type of proposals that you can submit. One is, for example, you can signal certain changes to your community. Like signal certain changes, when I introduce it to your community, how strongly do your community feels about certain topic. And those are, like, just for example, “Do you support us doing this?”





That is actually not caring weight on blockchain itself, but, for example, you can also build some type of proposals that are voted on by every member. You can distribute the tokens from these DAO, or from other community allocated tokens, in order to fund public goods, like open source or other contributions from other external contributors, which has already, for example, like my company was funded through these sorts of like community-allocated grants, through these governance mechanisms.





So, they’re like multiple types of proposals that the community can vote already, and you can find them on Cosmos, which is a Block

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Episode 56 – Connecting Web3 Blockchains, Federico Kunze Küllmer, Co-Founder of EVMOS

Episode 56 – Connecting Web3 Blockchains, Federico Kunze Küllmer, Co-Founder of EVMOS

Michael Schwartz