GMGM. Hello, how are you going? Yeah, I'm doing well. Thank you. How are you? I'm good. Can you hear me properly, by the way? I'm experimenting with the new set of headphones. It's it sounds like this is a wonderful
What do you buy? I bought the new Bose ones, they're not that new but I don't know they are like the 3000 something like that. The Bose 3000.
Cool. It sounds great. Change your life. Yeah. The, um, I'll wait. No, no, no. It's using my VPN. Wait. No, let me find the real prices.
They are pricey good good buy this is This is a proper gadget. Oh, anyway, look you you you so wonderful. Thank you very much for for being here It's 11 in the morning here in an atlant what what's the time for you?
Hey, that's not too bad. It's 7pm over here. I'm based out of Australia, so it's a little out of us. But I'm very grateful to be on this call. Hey likewise, likewise. So thank you very much for being here. As you know, this is being recorded. So, you know, just so you're aware
where and the people in your audience are aware as well. Would you sort of kick things off by educating me any others on what you guys are doing? And then we can talk a little bit about what marinade and prefer doing it together. And yeah, if you take it from there.
Yeah, of course that sounds great. Thank you for putting all of this together by the way. I know we've had this partnership and it works for a little bit so we're very excited to be able to officially launch it. Drift. So Drift is the leading decentralized perpetual exchange on Solano and what that really
means is we offer the same sort of services that users can perhaps expect from a centralized exchange, like a Binats or a previously functioning FTX. They can expect that on decentralized rails. We completely open sourced. We're completely on chain. You can see proof of reserves.
trades happened live in real time. Everything, or I guess the entire experience that users would typically want, except with the transparency that central exchanges don't typically have, is I guess what we're trying to offer. We recently launched SpotMarkets, so we've taken a step first
We've also launched borough land markets and recently launched our vaults as well, so insurance fund-staking vaults. So really just trying to take a few more steps towards the full-service exchange idea that we're pursuing.
Yeah, in general, that's us. That's wonderful. And, you know, sorry for this somewhat lousy question, but I just have to ask your name says V2. So what happened? Yeah, so when we relaunch the drift to be V2,
A lot of our team members decided to add V2 to the end of our name to be a little cheeky to get some free promotion. I've just been quite lazy and left it there. It's not as contentious now given V2 has been often running since November. But yeah, in general,
like drift first launched in October of 2021 I believe and then it was up and running for about six months all the way through to like all the May Tara Luna FTX crash and all the fire burning started happening we ended up sunsitting our V1
protocol in the same period and then we re-launched in November. So we talked about like a six month break to really redesign the protocol from the ground up a lot of our thesis around having the best on-chain training experience with Perps. We still stuck to but then we also developed
new thesis is like wanting to be a full-service exchange, wanting to upgrade from our pure AMM model. So now we're at AMM and Autobook, and then a bunch of security upgrades and all the fun stuff. I'm not a developer, so I know very little about the, you know,
of the fun stuff. But I did take a look at the protocol today. I don't do leverage trading or really trading, but it seems it has all the stuff you'd expect to be there. What was the most complicated thing for you to build
Well, my background is very similar to yours. I'm also not technical, so don't know the needy gritty of all the fun stuff. But yeah, I think if you're asking what the most difficult thing to build is, I think like, and once again, I'm speaking from what I've learned from Interflex
facing with our developers, but it's the on-chain environment is very different to what the off-chain environment can offer to protocols building. So where you might see a buy-and-answer and the other centralized exchange, to just port that over directly onto the blockchain is an impossible task.
transactions speeds are obviously much slower on chain. You have limited block space, you have transaction fees that have to pay to verify every transaction. And it, like prior to Salana, it wasn't possible at all. And it's sort of why you see the innovation of AMMs, right? Like why UniSwaps design is the way
it is when Ethereum DeFi launched isn't because they were like, "Oh, look at this much better design than the traditional audiobook we have." It was because they couldn't put an audiobook on chain, they couldn't match the buy and sell orders on Ethereum without it being extremely and prohibitively expensive. So they came up with this new method of liquidity.
exchange. So I think grappling with that on-chain architecture is like a constant, it's actually a constant like I would say like it almost like an intellectual battle because you're creating a new way of conceptualizing how to exchange liquidity. And so I'd be shout out to our core guys Chris and Z. They're
I think self-hygienicists, but also want to say, I've identified like, search movies. They pioneered the dynamic AMM, which is what our V1 was built on, which is just virtual liquidity only. And then they pioneered now this dynamic
AMM and audible hybrid, which is something that doesn't really exist in centralized finance or wasn't didn't exist on decentralized finance either, when we had conceptualized the idea. And then they've then gone ahead and done like an RFQ system, which is our Justin Timer, liquidity, which I want to go to into, but it's similar to what
Robin Hood has for their payment for order flow. They're just giga chats and they're just mixing all the stuff in and I'm like the little document Mikey, he's just typing into normal words if he would understand it. That's great.
work not in a technical sense, but just, you know, let's say high level. You can trade on leverage, right? Yes. Do you
And there's an insurance fund. So how does this all sort of tied together? Yes, exactly. Exactly. So whenever you're trading on leverage, what you're doing is you're borrowing from the exchange, right? You're borrowing at an interest free rate or not really interest free rate because you're paying funding rates, I guess, but
You're boring at a very low interest rate and you're boring without a predictable credit rating either. There's always the underlying risk of defaults, which is why a traditional bank you go and borrow a million dollars to buy a house, they're going to be crossing their teeth and dot in their eyes.
on decentralized exchange without those mechanisms at place and without, like, yeah, what you're essentially offering is a lot of credit for people to trade with leverage. So it's very important for you to one have an effective liquidation engine so that when the
price of the asset goes below us and threshold. The collateral that uses health, that margins their positions, can be quickly sold. So one, pay off the debt and two, be able to still pay out whatever P&L the counterparty has. And so when that doesn't happen,
and when liquidations aren't processed fast enough, someone has to pay for that bad debt. And that's what the insurance fund does. And the insurance fund is there to make sure that if someone does have a liver loss, like you and I aren't the ones eating it just because we're participating in the exchange.
Obviously insurance fund has their limits right like insurance fund increases as the exchange takes on trading fees and as people put more money into the insurance fund. But it's the reality of any exchange that insurance funds have their limit and
if like an event where the Leopardlossic sees the insurance fund happens, then those losses get socialized amongst participants in the market or depending on how the insurance fund mechanism works across different exchanges like they may have different other settlement mechanisms. But yeah, like
That's like, I guess. I'm not sure if I explained leverage in a nutshell. You did, you did. And so if I go to the Earn you'll put it on the website, right? There is sort of three vaults that I can throw stuff into. Yes.
So this is great. This is like a product demonstration. Yeah, we're doing it. We're doing it as we go. So imagine someone like there's something silly and you know goes mega long. Well, everything nukes and then at some point you just start selling the underlying
This automatically is there someone on your side smashing cell buttons or what happens? Yeah, so part of the infrastructure of the exchange is that we have like a network of bots that do the functions that need to happen for the exchange to stay healthy.
We have like our keeper bots which match orders between buys and sells and we also have our liquidation bots which take over the user's position when it dips below the maintenance ratio and then sells that position off like either through the exchange or
or through wherever else and then recoups the capital for that and then distributes it wherever it's meant to be entitled. And then for that liquid out-of-bots have a financial incentive to do that as well. So if you imagine an ecosystem of financially incentivized
machines doing what's needed to to keep the exchange healthy. Alright got it. So right now I'm I'm I'm staking some M-soul in the... Hey congrats! Yeah let's go. So there's no tensile
in the vault. Yeah, vault balance just went from two-soul to 12-emsel. So that's great. I see that, yes. Here we go. And now other people can sort of borrow this emsel to play around with essentially right
Not technically. So the vault you've just deposited into is the insurance fund staking vault. So that vault operates a little differently to the standard boroughs and lends that we have on that exchange. The insurance fund staking vault means that you're putting your money into
the insurance fund of the exchange and you're saying if anything happens where the insurance fund is needed to be used then you'll be able to use insurance fund and the money I've deposited. And so you might be like well why the fuck will I do that? Like that's just opening myself up to risk right? And the reason you do that is because at the end of each trade
the user that makes a trade pace of fee. And this fee is divided into like a few portions, but one of the largest portions goes to the insurance fund. And so as an insurance fund staker, you get your proportion of that fee paid to the insurance fund, depending on how much you've staked into the IF.
So it's like a, it's like a, like we don't have a token yet, but if you imagine like, like, like, insert xd for a protocol with a token where the token holders get a share of the profits generated from the exchange, this is sort of what the insurance fund staking does. It lets you have exposure to how profitable the exchanges and how much trading
it out, purely just by sticking into it. I'm going to be rich. This is cool. You should have seen before we launched this publicly, we had a back end where people could still stick into the insurance fund with a Python script. I didn't know how to write that script. I just borrowed
one of the scripts used from the devs, but because the insurance fund balance was quite low and because there weren't any external stake is sticking into it, the APY was something crazy, it was like a thousand percent. And I know that's not commonly heard of anymore, but I had like maybe like $800 or $1000 stake in, like maybe a month or
two and I was like, I was just watching another guy, I was like, whoa, is this real? I'm overthrown now. So it is real. I can confirm it's real yields. I love it. I love it. And I just created a referral link. And then if people click on it, I make all the money. Yes.
You make a portion of their money. You make 15% of all the money they pay. Forever. I am going to tweet about this 24/7. So how do you make money?
imagine when there's fees pay, there's some sort of fees split between insurance fund drift and your mom. Yes. I don't know about your mom. Don't mind mom's hands. I was sure of probably someone else's. Great. So what's the what's the model essentially?
Yeah, so we charge a flat 10 bips. Oh, actually it's not flat anymore. Depending on how much you have staked in the insurance fund, we charge a variable take a fee.
So if you don't have any state, it's 10 bips, but if you have, I believe, more than 10,000 state, then it's three bips. So it's like 70% discount on your fees. But regardless,
I believe 15% of the fee paid regardless what it is will go towards your referral. The maker themselves, so the person's providing liquidity on the other side, they take two bips and then the remainder of that is then pro-riders split between the insurance
insurance fund, insurance fund stake is and the AMM itself. Got it. Okay, and so it's the perpetuals that solve leverage trading. Can you also just do boring stuff or is it only the agent stuff that we can do here?
Well, no, we have spot now. So now, instead of just perpetual trading, you can buy and sell M-SOL, right? That was listed today. Yeah. Appreciate it. You guys, you can also buy and sell SOL. There is a bit more degenerate unfortunately. So if you
you want to like margin trade on spot, so leverage on spot, you can also do that like that access boroughs against your account. Right. Because I was wondering what's the difference between spot trading on leverage and perpetuals, but one is essentially future and the other one is just a borrow against my own assets or
Yes, exactly. So it's a borrow against your collateral to buy more than you actually have money for. Nothing. And then obviously for that, you have to pay, you have to pay like a borrow APR. So it's like, I think like maybe three percent or seven percent of the money. Okay. But on the other side of that,
If you want to enable DJing you can deposit money in and let other people borrow against it Also borrow let other people borrow it against their own assets So then you earn like a little you know little deposit APR like a little yield. All right, and then I guess you you take
a spread between those two right.
Yes, so we charge we primarily charge like the biggest fees by far we charge our ticket fees. Right, that's our bread and butter. We do charge like a small bar of fee But then yeah, we also charge liquidation fees that for the exchange for the
under water positions that we're good at. But yeah, those are the three primary sources of revenue. And so this all looks like something that shall set me token drop soon.
I don't want to get you fired, but I just, you know, from a theoretical perspective, do you understand why I think such a thing? Yeah, dude, that's crazy talk. I mean, a product with, like, I mean, I would say product market is so far.
With like really healthy uses right we have like 700 uses on weekly basis We have like 550 in and volume traded like 150 million of volume traded. No, I'm not sure why you think that right right? Yeah, yeah. Okay silly me. I'll just I'll just quietly move on here and so so Emsel is now part of let's say you
your ecosystem so people can borrow soil, they can do all the, like I'm so they can trade against, they can leverage trade it. How does the process work when you want to add an underlying, what sort of metrics do you use to qualify before you say yes or no to a
Yeah, so the underlying asset that the like users use to margin their positions is probably one of like
Even the USDC DPEG, right, like how all of our contracts are margining in USDC and how that would have affected positions during that period. It's a very sensitive decision, so we don't take that lead.
Yeah, so like USDC obviously and then the other one we had was Salano. I guess primarily because we built on Salano and then
now today we've integrated M-SOL as well. We probably will try to integrate another stable coin relatively, it's on the roadmap, I'm not sure when that would be, but for now like those are probably the primary assets we're considering.
Got it and I see that the especially the the USDC Insurance Fund quite sizable. There's a million there I think
Yes, that's right. How on earth would everything that happened were you able to get a million in that fault? I'm gonna quickly pull the stats out so I can speak to some more clear numbers.
is. It's just running at the moment. Oh, here we go. So the assurance fund vault is at 1.18 million. Yep. How much of it is protocol owned? Let me check. Oh, there's protocol on liquidity.
Yeah, so the insurance fund itself earns money as trading fees are paid, right? Yeah. But now that we have the staking available, like that revenue gets split to stakers. And so the insurance fund grows at a more steady but like at a slower rate because they're actually stakers are getting a portion.
But that incentivizes the stakeors to come in. So I think, and I don't know if I'm wichring this, but I think the insurance fund, Trifts Insurance Fund is at 100,000. So about 1.08 million of that is from external stakers staking their collateral into the insurance fund vault.
Yes, I mean, it's not a small amount.
I think it's the real yield narrative, I think, because people can clearly see where the APR comes from, right? It's not just Pixies and Fairy Dust, like, what a lot of defy. Unfortunately, it's... No!
Yeah, this is this is genuine yield. I promise Yeah, it's great. I'm very excited by this and the the So what's what's next for you for let's say the coming I don't know three or six months. What what do you aim towards?
Right, so probably the biggest plan for our next three to six months is going to be taking step towards solid decentralising the protocol. So becoming a Dow, having governance mechanisms in place,
And then like just taking that next step in terms of like defy maturity and decentralized maturity It tells like a product and marketing perspective We just launched referral links. So we're going to be looking to do a few large referral links
I don't know how to do that.
under your your takeoff look I I just tweeted let me let me quickly tag you on my tweet here you go I got you dude don't worry about it take some take some last long yield there we go there we go
good stuff. All right, but okay, so that's exciting. Maybe another hint towards the token error drop conversation we didn't complete, but good stuff. And, no, no, this is good. And any other new products that you want to add
Because the reason I'm asking is, mango, of course, is working towards some kind of comeback. So this will be an interesting sort of competition here. So I'm just sort of trying to tease out, like, what's the unofficial plan to kind of win there?
Yeah. I think on the competition aspect, it's really great that they're coming back. I think a lot of people view competition as a sort of like a 1v1 sort of thing, but to have a very flourishing trading community, you need like a different viable avenue.
used to be able to trade. It actually is mutually beneficial if we have a sort of traders come in that actually then are betraying the prices between ourselves and Mango. So I actually quite pleasantly look forward to that. On the product side, our main priority is just listing. Does
desired and hypermarkets in a safe and scalable way. So we were one of the first Dex's across any chain to let list Pepe. And that was huge for the platform. We had a bunch of new users come in just for the sake of trading Pepe. I think staying on top of those
and moving fast and iterating fast is definitely a priority. Yeah, that makes sense. And I agree, by the way, the more players in the market, the more healthy the market becomes and having a single point of failure just sucks. Exactly.
Before I swap this onto you, the way we view DeFi and Dex's is very much so that like the DeFi Dex's scene is so small at the moment that there's really no need to be competitive. Centralized exchanges have so much of a
large a pie right like one exchange cumul cumatively does more volume than all Dex's combined yeah regardless of if we're part of spot or peps so a lot more yeah a lot more room to grow so that's what it's all looking for too. Got it. On your guys then like I know you guys have
a lot of really cool products coming up. But we discuss more generally about what liquid staking is and what the value of liquid staking in the ecosystem is. Sure, sure. Well, so let's sort of zoom out a little bit. What people should know is with staking,
right? You are essentially allowing a validator to vote on your behalf to basically approve the next blocks in the chain. That's what's taking it. We need more people's taking and people should also be taking because that's how they capture yield. If you're not staking, you're kind of missing out because
So there's inflation every epoch. If you don't have any soul-staked, you won't get any of that new soul created. So you're missing out. Problem is, of course, if you stake your soul, you can't do anything with it because it's locked, right? Do note that never really leaves your account.
pick a delegate to vote on your behalf. Anyway, when you stake, you can't do anything with it, which sucks. So liquid staking essentially solves both problems. So when you convert your soul to M soul, what you're doing is you're adding soul to the pool that marinate management.
images, and then what we essentially do is we stake it across a bunch of validators. So that's great. But you get an M-Soul token, and this M-Soul token essentially is a receipt of the soul that you, you know, you left with us, and with this M-Soul you can do cool stuff in DeFi. So what I just did is I
put 10 emceal in your vault and then I'll make all the fees that you generate there. But still I have soul-staked with all of those ventilators managed by Marinade. So it's kind of a best of both worlds situation which why everyone should be doing it.
not financial advice. Yeah. It's compounded yield two times a year, baby. Yeah, exactly. Exactly. So, you know, the the the the the sole that Marinate now has on my behalf gets staked and then the yield
get staked as well. So that's great. And then in addition, with my MSL token, I get a little bit of yield from Drift Protocol. So I'm winning along a bunch of different dimensions and help securing the network. So
There's all that bit. Now technically speaking, there is a downside of course, which is smart contract risk.
Although it marinates defense, MSO has been one of the largest protocols in defense for quite a while. So it's relatively juicy target, which is why we get audits, obviously. And if it was easy to
sort of break our system, it would have been done by now. Yes, yes. The other point I want to raise and maybe you're actually more familiar with this is also kind of like a breakdown of, um, yeast state and liquid yeast in the Ethereum ecosystem.
versus like salt steak and liquid salt in the solicure system. Do you want to perhaps talk a little bit more on our side? Yeah, on our side, right? Only 2% of all steak salt is in liquid-staking tokens. So it's a very low number. And then ETH is way larger, but I'm an active one, ETH.
As far as I know, staking Eath on Ethereum is super hard, but you can also just buy the Eath token by Lido, which is super easy. But Eath is a bit behind us there as far as I know.
Yes, yes. So it's actually like a huge public good because the more staked, I guess like the more staked L1 token you have like the better you secure and decentralized the underlying blockchain. But also if that's just locked there and it's not liquid, it's
like it impacts DeFi to a degree because DeFi has limited capital and that's limited capital that people can be deploying elsewhere as well. So the more that we can increase liquid-staking adoption, the more that DeFi in general just grows. It's also just better for users if you can get
boring since Saber Mango FDX implosion. So I really want you guys to succeed, right? Is there anything I, we the audience, Solana can do to help
either defying general or drifting particular.
Ah yes, the big questions, okay. Well with the recent partnership that we just entered due today, I would suggest people to start depositing M-Soul into the platform. If your M-Soul is already earning the yield from it being state, but now you actually have tangible
it for it to be borrowed against by other users on the platform. So you earn the lending yield there. And you can also put it into the insurance fund because now that it's a type of collateral that you can use, we now have an M cell insurance fund as well, which is what you just did. But yeah, I would just like
More generally, I would just like really recommend people to just give things like new things a try and defy such like an evolving frontier that all these new products get really overwhelming and very Technically difficult to understand but they become much technically easier when you just have a go and how to play around with it and realize that
that a lot of the functionality that you're used to on a centralized rail is actually here on decentralized rails and you really just have upside because you get the transparency, you get the immutability, you get the decentralization and it's a safer way for people to trade in general so that would be the take-home message. What's your
what you take on M.Sold. >> Just do it. I think I've heard that one. >> Yeah, no, no, no, but we'll be launching a ton of new things going forward. So, you know, if you don't want to jump in right now, that's fine.
definitely feel that Solana needs more soul being staked and you want your staked soul to still be useful to you. So this is why you need a liquid staked and token. And you know Marinate is a great one. Again, financial advice, do as you like all that sort of stuff.
But one question that I had though is the APR right now for MSOL in the vault is still rather low and that's likely because people still need to start trading. MSOL, right? I will only get fees on MSOL trading. I assume.
Yes, that's correct. So as people use M-SOL more to margin their positions, then fees will be collected in M-SOL, and then those will be distributed to M-SOL Stakers. So it's like a slow process, right? Like our Solano Vault is obviously a little bit behind, or quite a bit behind our UFTC Vault as well.
but to put it in context like our Salana side has probably only been live like maybe like Salani insurance fund-staking, probably live only about a month or so maybe two months whereas USDC has been live since like November. M-Soul was only live today so those numbers were
continue to grow and ideally as actually it doesn't matter if you're an early adult or not, just give it a crack. It's a different way to trade. Yeah, I also threw a little bit of soul, like a real little bit in the soul vault, but I'll be throwing more.
interesting. By the way I did send you a small text by a telegram just take a look at it and pretend that I didn't. Oh wait yes yes no no no let's let's ignore what you said but yes we have we haven't you we haven't you
you like a launch campaign in partnership with Marinade. So sort of to announce this launch, where we're doing a deposit prize for five random depositors of M-Soul directly into the drift platform.
We'll be picking this probably at the end of I believe a week or two weeks But we're picking yeah, so if you deposit some empsol not only now to get to Compound your yield, but you'll be in the running for for a prize That's great, and I think I think it's a thousand dollars or something in Marinade token
Yes, that's correct. $1,000 worth of marinate tickets. Well, that's generous. Obviously, the guys really believe in what you guys are building because that's a, hey, slow.
not small, so happy to see we're supporting here and I hope Drift really makes it because we need more success stories in Solana DeFi, so this is great.
Likewise, that's really sweet. We really appreciate that. I've also just got a second message now from someone else in our team who says that the prize is actually a thousand USDC and a thousand in Marinate. Oh, shit! So 2000 in total, right? The prize is doubled just for you guys.
So we're picking four winners and it's 500 to four winners each. This is great. All right, so we'll tweet about that later today. Is there anything you'd like to share before we, you know, you must have dinner or something or just start your evening? I want to punch in a bit. Any final words?
No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no,#
Like, guys. Thank you all.