Founder Spotlight - Sunny Aggarwal @ Osmosis

Building the Future of DeFi with Sunny Aggarwal, Co-Founder of Osmosis Labs

I had the distinct pleasure of interviewing Sunny Aggarwal, Co-Founder of Osmosis Labs a while ago. Sunny and the team are focused on building, you guessed it, Osmosis.  Osmosis was and still is an app chain that serves as the DeFi hub of the Cosmos ecosystem. Today, the same team is about to launch Polaris. I wanted to share with the world this founder spotlight from over a year ago, because it is indicative of the Osmosis team’s dedication to setting out a vision, and building user-centric products that Web3 needs.

So, lets start at the beginning..

Sunny’s Origin Story

”DogeCoin just sponsored the Jamaican Bobsled Team”. This bizarre headline was the first spark that ignited Sunny's curiosity in the world of Bitcoin and other digital assets during his final year of high school.    

Upon arriving at Berkeley, Sunny and a few friends signed up to teach a class on Bitcoin, the community that eventually became the Blockchain at Berkeley Club. Later that summer, Sunny interned at ConsenSys, where he developed an interest in proof-of-stake for its ability to address certain incentive systems and mechanism design challenges that proof-of-work couldn’t solve. Preferring Tendermint, he explored further and came across the Cosmos SDK, realizing it could more effectively address many of his existing issues with Ethereum. Excited by the idea of bridging multiple app chains around Bitcoin to build even more applications, he quit his internship with ConsenSys to join Cosmos full-time, ultimately dropping out of Berkeley before starting his second year in 2017. Here, he met another intern, Dev, who would later become one of his co-founders for Osmosis. 

Founding Osmosis

“We really wanted to do something with privacy”. 

At the time, front running was a growing problem, which occurred due to privacy breaches in the mempool. Letting the whole world know Alice is about to buy and Bob is about to sell something meant that others could beat Alice or Bob and take their place. To build privacy in the mempool, he settled on building a threshold encryption scheme using a Tendermint chain but realized this was a feature but not a product.   

On the other side of the world, Josh and Tony, the creators of the Keplr Wallet, were unsure how to monetize a wallet. They had just started at a Hackathon—building a DEX (Decentralized Exchange) on the Cosmos SDK—where they were introduced to Dev and Sunny, who initially thought they’d be their first customers for their shared sequencer. However, after a joint project, all four of them realized they were better off merging and focusing solely on Osmosis as the DEX.

The Untapped Market

“Being as close to the user [as possible] is very important”

The initial aim within Osmosis was to develop a privacy-focused DEX, but the announcement of Cosmos IBC presented a new opportunity.  The Cosmos ecosystem assets, with its high-value and numerous assets—second only to Ethereum by market cap at the time—faced difficulties getting listed on centralized exchanges.  The Osmosis team saw an opportunity to address this issue. Launching the dex, as soon as Cosmos IBC went live, they got product-market fit almost immediately. Even after the collapse of Terra in 2022, Osmosis remained resilient, retaining many developers and continuing to build within the Cosmos ecosystem. 

Innovation and Prioritization in Blockchain Development

“Many projects you see are forks of the same three codebases. We really wanted to set ourselves apart." 

Osmosis’ commitment to originality required knowing what to prioritize in the complex landscape of innovation, particularly in deciding between the “intellectually cool and innovative” ideas versus features that actually cater to the “direct demands” of the market. For example, Sunny noted that while superfluid staking was extremely exciting, they pondered whether it was the “most important” product-facing concept, and felt it didn’t significantly improve the trader experience at the end of the day.

Another major issue that the Osmosis team addressed was that existing blockchains need to pay gas fees with a specific token, which negatively impacts user experience. Why should you have the token of the chain you are trying to get an asset in for the first time? Osmosis addresses this by modifying their chain to allow transaction fees to be paid in any token.

Today Osmosis is able to provide its users, cross chain, fast, gas-efficient settlement. The developments shipped as features today are the result of the constant balancing act between the intellectually stimulating features and pressing market-needed features. 

Osmosis Labs remains dedicated to enhancing user experience by enabling transaction fees to be paid in any token, addressing privacy concerns, and taking users for chain A to chain be as fast as possible. 

Before I dive into the latest and greatest with what the Osmosis team has been upto..

Take aways from Sunny for other founders from our spotlight:

• Launch when you said you would - but with caveats

  • Launching as scheduled demonstrates responsibility and legitimacy to your followers, but it's important to communicate that timelines may need to adapt in response to changing market conditions. 

• Build the culture  

  • Being a fully-remote company, it’s even more important to host regular team meetups, supporting repertoire between co-workers and mentorship

• Know when to drop or pause a project. 

  • Intellectual curiosity can distract from building features with more direct user-facing value. 

• Hire the best people

  • A blend of senior and junior talent combines the certainty and expertise of experienced professionals with the fresh perspectives and bold bets of the younger generation, fostering a supportive and dynamic environment.

The “since”

What can I say? The Osmosis team has been shipping faster than my editor that went MIA for a couple of months so there has been so much happening that I need to close with a segment on the latest and greatest.

What else happened at Osmosis:

Its hard to give a snippet on what this productive team has shipped but I’ll highlight two major things. Osmosis has spearheaded the development of a novel cross-chain security model termed “mesh security” since 2023. This model aims to combine staked assets from two or more blockchains, thereby bolstering the security of the Cosmos ecosystem against potential security breaches or validator staking takeovers. According to Sunny, “With the introduction of mesh security, we can approach security bidirectionally, meaning that two chains, like Osmosis and Juno for example, can provide security to each other.” Mesh security allows Cosmos chains to consolidate their token security. This leads to significantly higher economic security than what a single chain can offer. Also recently, Osmosis has announced their intent to be a Bitcoin Layer 2 app. By allowing users to stake “alloyed Bitcoin,” a derivative of the Bitcoin liquidity pool, Osmosis will simultaneously strengthen the appchain’s robust security and emerge as a frontrunner in the race to become the premier Bitcoin layer 2.

The hot stuff:

Oh gosh, where to begin.. Polaris is going to be awesome, but let me try to explain in two paragraphs what deserves a post all onto its own.

As a user, Polaris will enable you to actually go from any chain asset to any chain asset. Actually. Period. Ok, that deserves a wow. Beyond that, it will enable you to pay for the transactions with the token you already have and take the most effective route along the way. And get this! Even if the path involves making pit stops on chains for which you don’t even have a wallet, Polaris will enable users to execute the trades on the best paths (identified through multiple APIs like that of LiFi) and create ephemeral wallets for the users. It will ask for your signature on all transactions involved along the way. It will spin up the necessary wallets for you, and get you to the asset you wanted. 

Example for illustration purposes: Imagine you are trying to buy a memecoin on Solana and you have ETH on base. And don’t tell me you will never do that, you just might sound like you will never use a website in 1995. You will, it just has not been easy enough for you. 

Ok so today, your transaction would require you to take your ETH on base to Polygon, swap it for USDC, bridge your USDC to Solana and then buy the memecoin. Now, that would mean you would need to deal with 4 transactions each requiring a separate signature, 15 mins, and a lot of patience unlocking your ledger. If you remember what you were trying to do, that is. With Polaris, you will start with the asset you have, select what assets you want on which chain, sign once and get your tokens. Just make sure you don't close your browser as your signatures get broadcast and bingo, you got what you wanted. For the record, I understand that This is mostly for MVP scope reasons, in a few months you'll be able to shut off everything and it'll still run on autopilot!

Closing Thoughts:

Sunny's early career experiences, sharp market insights, technological expertise, and intuitive leadership with a magnetizing effect on talented builders tell me there is so much more to come from this team.

I am excited about the Polaris launch as it is poised to deliver a decentralized exchange portal with 1-click trading, safe session keys, gas fee abstraction and privacy innovations. The multi-chain nature of Polaris will deliver on all the needs of asset holders that have made centralized exchanges popular. Oh please get me safe unstoppable execution, without the annoying KYCs, logins, and fund deposit flows (!) 

Ultimately, unlike VCs, users are not necessarily loyal to a chain. They want to be able to make their trades easily. Polaris is poised to deliver that. Finally, I should mention it will be a net gain for the ecosystem. The cross chain functionality will allow for the very pockets of liquidity whose fragmentation we have been complaining about, will be building blocks of a now antifragile infrastructure.

As proud partners of Osmosis Labs, we look forward to supporting Sunny and the team in the journey ahead.