Strangelove is a software company with an investment arm called Strangelove Ventures. Their USP is building solutions on the Cosmos chain while sharing their expertise in different areas to support their investments and new projects launching on Cosmos. Among the services they offer are: an IBC relay which makes the transfer of data between IBC-compatible blockchains possible and Lens, a command line tool to interact with any Cosmos chain.
Tyler Schmidt, Co-founder of Strangelove Labs, joined us for an AMA on April 10th.
vVv: Can you briefly introduce yourself and your journey into the Web 3.0 space?
Tyler: Of course, I’d be delighted to. Hello, everyone. I’m Tyler Schmidt, Co-founder of Strangelove Labs. For over a decade, my professional journey has been in user experience design, where I’ve had the opportunity to create interactive experiences across numerous platforms refining my skills and understanding of this space.
Early on I found myself drawn towards cryptocurrency. As an early Bitcoin investor – purchasing my first Bitcoin in 2013 – I had the privilege of engaging with this revolutionary currency. It was during this time that I introduced Bitcoin to my now Co-founder, Jack. We would often brainstorm tech ideas together and this paved the way for our mutual interest in cryptocurrency.
My interest in cryptocurrency evolved into an exploration of mining. I embarked on a hands-on journey, purchasing several ASIC miners, and experimenting with a proof-of-concept setup for Bitcoin, Ethereum, and Zcash miners. The energy cost competition, particularly from China, challenged our attempts to scale a Bitcoin mining operation based in the United States, yet this experience was invaluable.
As Jack transitioned into project management and evangelism for crypto protocols he introduced me to Tendermint, sparking my interest in proof-of-stake solutions as an answer to the Byzantine general’s problem. This led me to Cosmos and ultimately to our decision to run a validator. We started small, running validator nodes in Google Compute Cloud.
By around 2017-2018 we had built our business originally called Pylon Validation Services, focusing on operating validator nodes and tracking returns. We saw opportunities for growth and decided to reinvest our earnings into token investments. Our initial venture was an investment into the Akash network in 2019, which proved to be a profitable turning point for us.
Given our expanded scope beyond validation, we decided to reincorporate and that’s when Strangelove was born.
vVv: How did you arrive at the name Strangelove?
Tyler: The name struck me during a shower epiphany. Jack, being the unique and somewhat eccentric character that he is, reminded me of Peter Sellers from the film Dr. Strangelove. Moreover, both Jack and I share a fascination with Cold War history, from signal intelligence to nuclear missile defense. This shared interest, coupled with our role as outside experts similar to the film’s Dr. Strangelove who was consulted for his expertise on mutually assured destruction, resulted in the naming of our company. Analogously, we see ourselves as the go-to experts on IBC and asynchronous composability, striving to be the authoritative voice in the Cosmos space.
vVv: Your portfolio of services at Strangelove is impressive. Can you share the experience of bootstrapping the company, especially considering you didn’t raise initial funds?
Tyler: We were fortunate enough to have a substantial initial fund to draw upon. My partner Jack and I utilized our personal crypto holdings to bootstrap the business, further buoyed by the profits from our validator operations. Leveraging these assets, particularly during the last bull cycle, we managed to accumulate the necessary operational funds. The investment in Akash, for instance, proved to be significantly fruitful along with several others. Using this capital we bootstrapped but we also made sure to tread carefully. Unlike venture-backed companies, we were compelled to find product-market fit and found profitability almost instantly.
Our validator operations began generating revenue immediately and our investments promised future financial returns. We maintained this approach until our encounter with Galileo. Our first significant endeavor post-Akash investment was to build a full-fledged company with strong engineering competency. We aimed to secure contracts within the Cosmos ecosystem, striving to become the acknowledged experts in IBC, and master IBC integrations for other chains.
Projects such as the composable IBC integration which is nearing completion and our IBC work with Penumbra are a testament to this goal. Realizing we could afford to bolster our technical team we hired our first engineer, Justin, around 2020. His addition was instrumental in bolstering our infrastructure work and contributing to core open-source projects.
We began core development as soon as we could, driven by our passion for contributing to Cosmos beyond just investment or validation. Our aspiration is to be recognized as experts in IBC.
vVv: This journey has led to a diverse range of services offered by Strangelove. Can you give us an overview of these services?
Tyler: Absolutely. Strangelove has expanded to offer a variety of services. Our primary service is core development where we collaborate with several foundations and organizations needing open-source work. This includes significant partnerships with the Interchain Foundation and the Juno Foundation, among others. We map out the roadmap for these projects and contribute to building core software components. We aim to transform this core development work into products that generate recurring revenue. Currently, we offer infrastructure products like relaying-as-a-service, RPC nodes-as-a-service, and white-label validators-as-a-service. The latest product in our lineup is an Interchain API, a low-latency data availability API catering to anyone requiring interchain data. This service will prove valuable to wallet projects, exchanges, and more. Furthermore, we also provide spinouts, and whole product offerings that could potentially operate as separate entities from Strangelove. A prime example of our spinout initiative is Noble Chain, an asset issuance chain primarily for stablecoins in the Cosmos ecosystem which brings USDC natively to Cosmos and facilitates greater liquidity.
vVv: Was Noble Chain set up in direct collaboration with Circle?
Tyler: Yes, the Noble Chain project was indeed established in collaboration with Circle. The initial contact was made by Circle with Zacky Mannion, who gathered a team of interested parties to bring USDC over to Cosmos. Zacky reached out to us given our proficiency in IBC. We also onboarded Jelena Djuric from Informal Systems, who has been contributing significantly as the CEO of Noble. We also involved a few others from Zacky’s network to aid in the project. The whole process was executed seamlessly and the team’s collective contributions have made this project a success.
vVv: Critics of Cosmos suggest that it lacks a central organizational entity that is the face of the ecosystem. They argue this could be similar to the disadvantages associated with Layer-2s with regard to regulations and centralization. What’s your take on this? Should the Cosmos ecosystem have better marketing organization and a clear entry point for new projects?
Tyler: This is indeed an ongoing discussion among Cosmos insiders. While we do have the Interchain Foundation leading the developer work, there isn’t a central body for marketing or messaging. I’m part of a small council, the Interchain Communications Council, which is tasked with promoting the benefits of interchain without bias towards any specific project. This council could use more support to increase its contributions. However, I believe a central point of entry for enterprise-level entities could be beneficial. At Strangelove, we’d be keen to serve as that point of entry. We have the skills and experience to help enterprise-level entities build sovereign chains, advise on custom tooling, and conduct necessary developer relations work. We liken ourselves to Red Hat, the Linux open-source software firm which became known for its expert-level Linux developers and contributions. They helped enterprise-level customers transition their infrastructure to Linux and we see ourselves doing something similar for those wanting to integrate with IBC or the Cosmos ecosystem.
”We liken ourselves to Red Hat, the Linux open-source software firm which became known for its expert-level Linux developers and contributions. They helped enterprise-level customers transition their infrastructure to Linux and we see ourselves doing something similar for those wanting to integrate with IBC or the Cosmos ecosystem.
vVv: The Cosmos ecosystem can be overwhelming for newcomers with its app chains and participants performing different things. It requires a substantial investigation to gain an overview of all the available options and toolkits. However, this complexity also has the potential to accelerate the adoption of the entire Cosmos ecosystem.
Tyler: Absolutely, and I see a significant part of that adoption coming from Cosmos’s integration with projects like dYdX, which I believe will triple the amount of total value locked in the Cosmos overnight. Cosmos also boasts a high number of active developers, second only to Ethereum in terms of developer activity for crypto projects. There’s still a lot of work to be done on features and user experience for these Cosmos chains and with many opportunities to improve tooling and introduce new features. For example, at Strangelove, we aim to build a simple multi-signature UI and facilitate the addition and removal of accounts from a multi-sig. We’re passionate about improving the Cosmos ecosystem and are continuously striving to expand our capabilities.
vVv: Given the recent news that dYdX will exclude Canadian users from their network, and considering that you’re also a validator running nodes and infrastructure, what is your perspective on such censorship and government regulations?
Tyler: It’s definitely a significant challenge. A natural wave of regulatory scrutiny is coming in, especially with things like Operation Choke Point in the United States. At Strangelove, our strategy has always been to engage with regulators. We aim to educate them as much as we can. If we decide to operate in a pure Cypherpunk space using zk proofs for all transactions and going private, that could be one way to go. But it’s not necessarily a way to run a successful business, particularly in places like the United States with high regulatory scrutiny. The situation with dYdX in Canada is concerning but my advice remains to engage wherever possible. We need more crypto lobbyists in places like the United States and Canada as the crypto lobby is currently much smaller than many other interest groups.
vVv: I’ve noticed that many blocks are being censored due to OFAC regulatory rules on Ethereum. Is this happening in the Cosmos ecosystem already, or is it just an Ethereum phenomenon?
Tyler: As of now, I’m not well-equipped to comment on the current regulatory climate in the Cosmos ecosystem. To my understanding, we haven’t seen any similar regulations in Cosmos as of yet. It might be that regulators haven’t taken notice of it due to its smaller size. I must say I’m still astounded by the success of projects like Osmosis in that it’s still up and running. I had anticipated stricter regulatory actions by now and figured Osmosis would have been hit with the regulatory hammer.
vVv: Indeed, turbulent times might be ahead, especially in terms of DeFi applications. Still, the Cosmos ecosystem seems to have an advantage in that there is no central foundation coordinating everything, despite it making the developer experience more demanding. This could potentially be a game-changer. How do you compare other ecosystems like Polkadot? Why do you think Cosmos is currently so popular among developers?
Tyler: While I’m not an engineer and won’t draw a direct technical comparison between Polkadot and Cosmos, I can say that Polkadot has shown positive growth recently. However, from a user perspective having two different currencies within Polkadot can be confusing and might lead to a more complex developer experience. On the other hand, the developer experience in Cosmos is exceptional. Developers have the freedom to pick and choose which parts of the Cosmos SDK they wish to use, allowing a high degree of customization. This coupled with low transaction fees and a good user experience is one of Cosmos’s main attractions. We should also acknowledge the Relayers like Strangelove for their contribution to the ecosystem. Overall the modularity of Cosmos seems to be one of its biggest draws.
vVv: In the Cosmos world the narrative is often about appchains where each application runs its own chain. However modular blockchains like Celestia and Fuel offer a slightly different approach. What are your thoughts on this?
Tyler: I’m particularly drawn to projects that don’t require an entire blockchain but only a segment of it. Celestia certainly piqued my interest; I am eager to see what will be built on its platform. To me Celestia embodies the future, acting as the Cosmos version of roll-ups. It offers a promise of enhanced speed and easier data access. Thus, I’m incredibly bullish on the direction Celestia is taking. I’m also a strong believer in the modular blockchain thesis. Before Celestia’s advent, I assumed that we were moving towards a world of appchains and multi-chains, where every project would possess its own blockchain. However, Celestia’s arrival has made it clear that not every project will require such a heavyweight solution. The platform offers improved flexibility in production which I believe will lead to a surge in innovative projects.
vVv: I think this approach makes it easier for many developers to build on top of existing layers, without needing to bootstrap the whole thing from scratch. That could be quite an interesting approach. Do you see that both ideas will live in parallel in the future, or will there be a dominant one?
Tyler: Oh, yes, I believe that these ideas will live in parallel. I think that people are still going to want sovereign app chains for various purposes. For example, they might have a real-world commodity for which they want a digital representation. But if you’re just trying to create a data availability layer, or if you just have a cryptographic proof you want to execute in your application, those kinds of things are going to make more sense for Celestia. So I think we’re going to see both types of applications emerge in the future. We want to build for both of those types of applications.
vVv: I just realized that we missed the validator aspect in the overview of your services. Could we go back to that? Because I think that’s also a very important thing, especially for new applications that want to launch their own chain.
Tyler: Validation is a crucial piece of our business. We find that the validator business isn’t about volume but about being selective and investing in projects that align with our interests and show potential. We operate on over 10 blockchains at this point and are constantly improving our internal validator infrastructure. We have a library called Horcrux, a private key sharding technology that shards your validator’s key onto a number of different sentry nodes, further enhancing security. So we’re always looking to improve validators’ experiences and continue to stay in this space.
vVv: I love this innovative approach where you look for improvements in every different aspect of a project’s life cycle. So, let’s say I want to build a new application and launch my own appchain. What would be the first step when I approach Strangelove?
Tyler: The first step would be to have a conversation with us to discuss your project and requirements. Generally, that involves providing a specifications document that discusses the scope to determine whether we’re building a full sovereign appchain or something more modular and lightweight. We then assign a product manager to your project, who helps with planning and requirement gathering. From there, we use classic Web 2-style project management tactics to organize and complete your project in bi-weekly sprints. Our process includes creating a project plan, turning your specifications into user epics and user stories, and then tackling these tasks systematically.
vVv: How does the process continue after the initial development tasks? If I want to run my own appchain with your validators, how is this managed?
Tyler: Absolutely. The process typically begins with a conversation where we discuss your requirements. For instance, if you don’t want to run your own validators we can manage that for you. We can also assist in creating a network of validators and even recruit additional validators to provide robust support for your app chain. My partner Kevin often discusses the infrastructure-as-a-service products that we provide. Once your project reaches the stage where it’s live and ready to go we carry out a thorough audit of our technology. This technical audit is crucial to verify the code we’ve written. Around this time we usually negotiate the scope of our collaboration, outlining what Strangelove’s product offering to your project would entail.
vVv: Could you explain the role of venture activities in your operations? You mentioned that you began with your own venture endeavors and later outsourced it to Galileo?
Tyler: Jack and I have always taken a multi-armed bandit approach to Strangelove, being open and opportunistic to any venture that presents itself. Jack’s position in the Cosmos ecosystem and his role as the product lead on IBC provided us with an influx of promising projects. We realized we could provide technical advisory services to projects in which we invest at the seed stage given our deep understanding of IBC. This strategy evolved over time as we identified the need to focus more on building and creating products and less on the time-consuming venture side. It was then we encountered David Feuer who brought a wealth of fund management experience. With David we established Galileo and outsourced our venture activities, enabling Strangelove to concentrate on becoming the product company we envisioned.
vVv: So Strangelove appears more like an incubator supporting early-stage projects and then spinning them out to different applications. Is that correct?
Tyler: Yes, indeed. We’re keen on continuing this incubation strategy where we can bring whole products to market internally at Strangelove and then send them off into the wild.
vVv: What exciting milestones are up next for Strangelove? Can you share some insight into your future developments?
Tyler: We’re starting the IBC apps repo, which will house many IBC apps and middleware. In the coming months, we’ll continue IBC integrations including one with Avalanche. One of the biggest projects we’re excited about is the development of our interchain wallet, Abacus. We’re using human-centered design practices to create a user-friendly wallet that supports thousands of different cryptocurrencies starting with IBC currencies in Cosmos. The next goal would be to extend to Ethereum and Bitcoin. We’re hoping this will give us a competitive advantage as we strive to master multi-chain UX.
vVv: It’s wonderful to hear your focus on the wallet aspect, as it currently seems to be a significant hurdle for people transitioning from Web 2.0 to the crypto space. It’s often too complex for newcomers. A well-designed wallet could create a seamless user experience, which is currently lacking in the industry.
Tyler: Absolutely, the general feedback I receive, whether it’s on Twitter or in direct conversations points towards the need for better UX in the crypto industry. As a user experience designer, I’m eager to apply my expertise to make improvements in this area. For instance, my lead developer, Grieco, has been instrumental in a project we call Composer. It’s built on Cosmos’ auth z module which lacked a user interface. Composer provides a UI that allows users to grant permissions for token transactions like allocating a specific number of tokens that another user can spend over a set period. This will be useful for institutions that need others to manage token allocations and it’s a prime example of how UX can be improved in the crypto industry. We also want to develop a user-friendly multi-sig tool which I believe will be another significant step towards improving Cosmos’ UX. Ultimately my goal is to facilitate greater user adoption. I want to create a system that even my grandmother could use. If we can achieve that, we can make crypto accessible to anyone.
vVv: That’s a commendable goal. For mass adoption, the crypto space definitely needs to be more accessible to everyone. Currently, explaining the various steps needed to set up a wallet, manage seed phrases, and execute initial transactions can be daunting. Are there plans to incorporate fiat on- and off-ramps in your wallet solution?
Tyler: Yes, absolutely. We are partnering with Kado for our fiat on-off ramp, which will take care of a lot of the KYC and other hurdles we’d rather not manage ourselves. This partnership will be crucial for the space. Our wallet will be one of the first interchain wallets to have a fiat on-off ramp. It’s exciting to see other wallets like Keplr also partnering with Kado. Although it means we’ll have some competition it’s ultimately good for the ecosystem.
vVv: That’s promising. It’s refreshing to see your focus on user experience as a UX design expert. Many project founders often get caught up in technicalities and overlook the difficulties regular users might face. Keeping user experience at the center of product development is a smart approach.
Tyler: That’s true. It’s a shift from the old mindset where designers believed they knew the best solution and would implement it accordingly. What we aim to do now is acknowledge that we might not necessarily know the best answer. We build hypotheses and design documentation and we present these to potential users as soon as possible to gather their feedback. This approach of prioritizing the users’ perspective over our own assumptions significantly impacts the product’s success.
”What we aim to do now is acknowledge that we might not necessarily know the best answer. We build hypotheses and design documentation and we present these to potential users as soon as possible to gather their feedback.
vVv: If you could change one thing about the way Cosmos currently works, what would it be?
Tyler: That’s a thought-provoking question. If I could influence Cosmos’ operation, I would advocate for providing more power to the technical advisory board, enabling it to have more control over the technical roadmap. An intriguing idea I had a while back was to integrate Cosmwasm into the Cosmos hub enabling smart contract capabilities at that level. However, the community voted against it. But still, I believe it would open up interesting possibilities. Furthermore, I’d like to see a broader range of authors for governance proposals. Currently, it seems like they are coming from the same group of individuals. More diversity would mean greater decentralization and a wider range of ideas, which is always beneficial. Lastly, some aspects of the Tendermint codebase could use modifications and updates. But that’s something my engineer, Justin, could better speak to given his technical expertise and strong opinions on the subject.
vVv: As a closing question, what are some appchains you’d personally like to see developed on Cosmos? Are there specific features you feel that are currently lacking?
Tyler: I’d love to see an appchain that facilitates token issuance as a representation of company equity. Essentially a way for companies to launch a token that is a direct representation of their equity. Despite views from the SEC and individuals like Gary Gensler who believe all tokens are equities, I don’t entirely agree. However, for circumstances where it does make sense, it would be intriguing to see a token representing equity and it would be legally backed within a nation-state. This would particularly benefit DAOs, potentially allowing DAO tokens to represent equity in both public and private organizations. Additionally, it would be interesting to see commodities represented by Cosmos chains, and tokens representing AI-run instances. Although Akash is nearly there with their token representing computing power, something more custom-configured to AI could be compelling. So those are some of my immediate ideas, but the possibilities with Cosmos are abundant.