Revelo Roundtable #1 - Perps Landscape

Recorded: Feb. 9, 2024 Duration: 1:05:10

Player

Snippets

How are you?
I just opened my first beer of the weekend. So it's all good
Let's hey, do you want to do you want to like teleport one of those over to me?
Uh, you can if you'd like sounds like it's too early for you wherever you are
It's noon it's noon I'm irish it's noon
I mean, that's that's the time of the day better than no one for an Irishman
You're the host and I'm a sloppy guest. So keep your shit together. I will have the beer you keep your shit together
Keep this train on the road
I'm gonna do my best. I'm gonna do my best. Welcome. Welcome. Thank you guys. Can you hear me?
We can we can welcome sir
Good afternoon. Good evening. Good morning. Whatever it is in your part of the world. Thanks for joining
Yeah happy to be here and I am currently in Europe so
You think
It's the beauty of this space
That's that's good dedication good dedication out of you if you're if you're joining in the evening
9 p.m on a Friday night, but there's nowhere else I'd rather be
There you go. So I'm assuming that you're also cracking open a beverage like Darius done. I would imagine
Perhaps after
Dude, i'm not gonna lie. You rugged me. I thought this space was gonna be yesterday
And now i'm here on a Friday night. So
You got me you got me
I think we think we're waiting on one more panelist and then we can get started
I think we've got uh, we've got uh, kamel over at contango
Yeah, hello guys. Hey, how you doing?
Doing good doing good. Thanks for joining. Thanks for joining. We're gonna get started here in just a minute
I'm gonna give everybody a couple of minutes if you guys wouldn't mind, you know retweeting the space
You know passing along the social goodwill to your to your followers. Uh, we'll get started here in just a minute
All right, I think we're ready to start so
Um, thanks everybody for joining. Um, this is the first episode of of the revelo round table
Um, i'm kirk i'm the head of business development with revelo intel and i'm going to be the the moderator today
And i'm going to let these guys uh
Who actually have the giga brain?
In their in their body i'm going to let them take over but uh for those that are unfamiliar with with revelo intel
We're an institutional grade research firm that focuses on providing investors with the tools
They need to perform due diligence, um in the most time effective way on defy projects
And for protocols, we provide a gateway to connect with the uh, the ideal user for for your project
today i'm joined by
four extremely innovative, uh DEX projects in the the perpetual space
And we're going to explore some key topics surrounding the perps market
Uh some of the design choices that you guys have made on your uh on your DEXs, uh to try to perfect the trading experience
And yeah, it should make for a lively discussion. Um
And and we'll get started with some introductions here
So, um, you know darius, would you like to go first give us a few seconds about about you and uh about vertex?
Yeah, uh, i'm darius. I'm
One of the co-founders from vertex. So my background is in trading
traded fx commodities markets ran businesses and then moved into crypto so did that for 18 years
before moving full-time to be a builder
and vertex
Is a spot and perp stacks, uh order book based on arbitrum, but basically the exchange
Of which I had on the trading side. So self custody super fast on chain capital efficient
Um, and yeah, so met up with my co-founder. We built it
Awesome awesome. Thanks for joining. Thanks for joining. Um matthew over at infinity pools. Do you want to go next there?
Hey everyone, uh, i'm met you. Uh, i'm a co-founder, uh at infinity pools
Uh infinity pools is a dex that allows for theoretically unlimited leverage on any assets with
No liquidations. No kind of party risk. No oracles
Uh and a bunch of other cool stuff, but uh, those those are really kind of my favorites. So, um
Awesome we're lucky to have you sir. Um kamel from contango. Do you want to go next sir? Hello?
Jeff my name is kamel. I'm one of the co-founder at contango
Uh, we also build our own flavor of perps
Uh, we do it with money markets and spot markets
Happy to get into more details better
Awesome awesome. And then last but not least we've got uh, we've got levi over at intent x. Yeah. Go ahead, sir
Yeah, hey everybody. This is uh levy with uh intent x
Yeah, as the name suggests we're an intent-based, uh perpetual dex and we're utilizing
semio's infrastructure to kind of facilitate these otc trades between, uh solver and trader
And we've been live in open beta since november 15th
with some really really good, um traction and use and feedback and uh, yeah, we're looking forward to establishing ourselves as a
Bigger player this year and happy to share more about our model and you know why we chose it
Yeah, no, no, it's and that's really the the perfect segue into it's really the first topic
I think that that I want to get into with you guys
You know each of you have kind of a different unique approach to
Tapping into uh liquidity depth right for for your exchanges
And obviously, you know like most things, you know when you're when you're designing
The mechanisms that are going to going to drive your protocol in this space. There's certain trade-offs that that you have to make
I'm just curious if you can get into
What were some of those trade-offs that you considered when you pursue when you pursued your uh, your liquidity model or your uh your trading model?
And can you kind of get into the the mechanism itself itself a little bit?
Um, so we'll go ahead and start with uh with darius over the vertex and then we'll go down the line
Yeah, so we went with the order book model. Um
In many ways, it's probably the most difficult one to start off
because you need
professional market makers to
Give you uptime give you depth of liquidity be refreshing the prices very quickly, you know, the alternative was running a
pool-based decks maybe
You know something like gmx or synthetics where
You take an oracle and take a pool of capital and you can start spinning up markets far quicker
I think with us the reason we went in the order book route is
Even though the lift in the beginning was much more difficult and we did that, you know, that was one way we used that token
Build partnership and alignment with the market makers
Such that they kind of own a big chunk of the exchange effectively
That means they're invested in its success. They're kind of long-term partners for us
But it means that now we're very very scalable and capital efficient
You know one of the problems you run into with pool-based decks is you have to keep growing the pool of capital you've got to
More positions more open interest was kind of one of the things we saw the gmx guys they ran into
Being victims of their own success really where they couldn't take on positions over a certain size. So
That order book model is challenging
But um, if you can hit it, right it can be big
And what it means is long term
You're not just a derivative of other people's liquidity, right?
We have a shot of being a place where
Market prices actually get formed
Where the problem is if you drive always off someone else's liquidity, you know, and everyone in this space really drives off finance currently
But you can find niches with order books where you can
Be a dominant liquidity venue where?
Um with pools that becomes very difficult. So that was one of those choices we made
Yeah, no, it is interesting the
You know the uh, the order book, right?
I mean, I think that's a big debate, you know
In a lot of spaces in defy is the uh, the order book model versus the you know, the pooled model
You know i'm curious to hear from infinity pools on like what your take on that is and uh
Kind of what you considered when you were building out your uh your infrastructure
Yeah for sure. So I I think that you know in this case
We're we're kind of comparing apples to oranges just because we're uh, we're not really a perps protocol, right?
We're a new financial instruments that is
You know actually more similar to options than perps
So the ux looks like perps, right? It it looks and feels like perps
But you know if perpetual futures are one day futures that get rolled over and get you know
Continuously cash settled via the funding rate
Uh, infinity pools is more like options that got rolled over. Um, um continuously and instead of the funny rate, you know, we have uh premiums
Um, so I I guess i'll start there and saying that like, you know, everything i'll say is specifically
Foreign committee pools and you know may not apply to perps
But um for us, we actually needed an amm essentially this this model simply was not possible
uh with a
Order book the reason being that um, essentially what what happens with us, right and the reason that we can offer
unlimited leverage
Uh or theoretically unlimited leverage is because um users can essentially
borrow liquidity
Um that is very very close to the market price. Um, and what that means is essentially they're buying a call
That's very very very close to the market price. Um
Market makers are simply not willing to provide
liquidity
0.0001 percent away from market price. Um, that's just like
And so that's actually where market makers
shine right because what they do is that they allow you to
Not only you know provide liquidity across many many more strikes in a completely automated fashion
but they also
Allow you to do that across many different like assets. So, um in our case it it was not only
a gas decision, right so
You know like uh, like amms are cheaper like from a gas perspective. So like resource constraint decision
It was actually very much part of the mechanism design decision, too
Uh, we simply couldn't have done it any other way
No, no that makes sense that makes sense and and really
you know, I think you hit the nail in the head there, you know, it's it's almost like a
You know the the market makers themselves, you know, and how do you appeal to to that?
uh, that stakeholder group versus you know, the alternative is really one of the
One of the things that comes into play when you're when you're building these things
You know camel over contango. Um, I know you guys are attacking this from a little bit of a different
Uh a little bit of a different perspective. Um, what's your take on all that sir? Yeah, sure
Yeah, basically we're a bit back to the og way to to do leverage trading in in d5, right?
Like back in the days when you had maker dao
The easy way to open the leverage position on east die was to do recursive looping
If I take a very simple example, like I don't know
Bring one east borrow
400 usd. Uh, sorry die in this case
Cell does die for more east
Put more east as collateral borrow more die sell
And repeat again and again and you could like open
Positions maybe with 4x 5x leverage
And basically that that's what we're doing
But we are
Having a twist we're using like flash loans
To automate this process so we don't have to do those loops
recursively and automatically
But the result is exactly the same and um, we do that across different money markets
Obviously avy is the biggest one. I think right now on contango they have like between 60 and 70 percent
of the volume and open interest
Um, then you have uh compound morpho spark, which is kind of the money market from
from maker
Uh, the very interesting thing in the design is that we're using the liquidity directly from the money markets and from the spot markets
This is the biggest liquidity in d5
So there's like maybe around like 20 billion of liquidity on
on this kind of markets
Meaning that right now we do not have any lps
Uh, we do not require anyone to bring money to facilitate trading on contango
and by design also we have the the cheapest and
least volatile funding fee in the industry meaning like we compare ourselves to dy dx and
Binance, for example
I'm saying a lot of good things, but there is also some drawback
And certainly the biggest drawback you can have here from a pure speculative point of view
Is that we do not allow this very big leverage?
Uh of like 20x and above basically were limited by the collateralization ratio from the
money market
so for example on ecu sdc on on avy you have something like between six and seven x
Um, that also means that on the maintenance margin, you need to be more careful. That's maintenance margin around like 15
obviously as an industry we're thriving to
have less risk and
tighter risk parameter and I think we're going in the right direction with all the l2s
Coming into the play and also money market with much higher collateralization ratio
Yeah, yeah that that scalability piece is
is key and that's one that i've really got my eye on as the the perp space kind of well
really the derivative space in general and defy kind of progresses is
You know, how far can we scale? What do we have to give away to scale to where we want to?
Um, you know, I know with the the intent model the intense kind of be been a buzzword, right?
The last few months, uh, you know, so so levy
Um, you know with intent x, you know, how are you guys approaching this and uh, give us some of your thoughts
Intense, I think you know, they can mean many things and be applied in many different ways
so in some ways it's a it's a bit of a you know umbrella term
And specifically in our system we're referring to us leveraging solvers, which is like a middleman later
to execute trade intent for a perpetual
And intent x itself is actually an entirely new style of exchange to facilitate this
Which we call an automatic market for quotations and amfq exchange
And this is kind of derived off a traditional rfq style exchange, but because we've automated quotations to kind of
increase execution speeds
Um, the the trade flow is a little bit different. So market makers stream quotes continuously
It's not that a trader comes and requests the quote the quote is already there for them
The trader based on that quote can send their intent to trade
With their trade details. So their collateral leverage position size
And then the solver can pick up that trade and fill it
Kind of settled and directly peer to peer with the counterparty on chain in a bilateral trade agreement
Um, or if you're familiar with cfd's kind of from a tribe my perspective that's actually the instrument that facilitates the trade
and what we're solving for primarily is the chicken and egg problem with
liquidity and traders
Traders go to the most liquid markets and liquidity goes to the market with the most traders and right now that's off-chain venues
It's centralized exchanges. It's finance, right?
You know kind of the game being played right now is like incentives to convince market makers to take their liquidity from binand
Um and come you know market based on chain
And it's a very inefficient process and it kind of fragments liquidity
So instead using this otc process
We actually tap into those off-chain markets and then facilitate the trade on chain and the entire exchange is kind of set up to
orchestrate the activity
This achieves like really good outcomes in a lot of ways. So one is
Um, you know actually unlocking this liquidity on chain. So we have
Probably the most liquid markets or long-tail assets
Um anywhere today we have the most pairs available because potentially anything
Um any any pair available at binance or another centralized exchange we can offer very seamlessly
We have like day one listings for pairs
Barely high leverage so up to 60 x
Now the the trade-offs are of course, this is an entirely new style of exchange. It's entirely new infrastructure. We're working on
Um, and we're kind of going through kind of like the learning improving refining process
So it's a much harder ux to to perfect like trades aren't
Instant or guaranteed like like they would be on an order book or amm
That that's kind of like the main point that we have to work around is try to you know
coordinate the trade so good before it happens that
um, it's for sure executed when the intent is pushed
and then secondly, it's harder to build the centralized and robust systems on top of it like stop-loss force closes because
Um, it is a fairly complex system with multiple moving parts
On top of that we need to kind of grow and bring the spreads and funding rates down
Um, although they're they're quite competitive especially for long-tail assets
So that's kind of a quick rundown
Um where we're at today
Um, but we have kind of with where we've come and what I know is coming in the future
I'm I'm very excited to kind of see this model play out and offer something different
Yeah, no no appreciate the perspective and I guess just a follow-up question, you know for for you at no bird intent is just uh,
You know you mentioned um
You know, obviously you're you're highly dependent on on the market makers that are coming in and feeding those uh, the price feeds
You know through the the price quotes right through the rfq system
Um, how difficult has that been? I mean is it is it hard and and I guess this this is for darius too, you know
Any model that's got market makers like have you guys seen that it's it's been attractive for market makers to come over and
Uh in play on chain versus, um, you know doing this, uh through, you know, finance, right or some of these centralized exchanges
Yeah for for us. I could definitely say that
Um, it's it's not easy, especially, you know big market makers
They are not exactly first movers, but they're often the ones that have the best pricing, right?
Do you kind of have to convince them to come integrate?
Which which is quite difficult and especially for us
We have an entirely new text back so it requires a lot of development effort from them
So I would say pre-launch
The discussions are pretty hard, but at least where we're at today, we've seen product market fit. We've seen the volumes, you know
Market makers can extrapolate some expected revenues from that
Now we have a little bit more interest on that side and we're kind of working with a few to integrate now
Gotcha Darius, do you have any follow-up or uh, any thoughts on on that the whole market maker piece?
Yeah, I think the
I mean look I came from the trading side. So my take is that
These guys are like in an amazing
Attention deficit sure for right so they
Just have loads of people come into them asking them to integrate and provide liquidity
And so it tends to be even if the opportunity is big
They'll wait it according to effort
So what we did with the technology for vertex wealth, we made it as easy as possible
For the market makers to integrate so, you know, we built
Simple apis. We did good documentation
We have an engineer on our team that basically all he does is on board
market makers and automated traders
this all seems like simple shit, but
They're so busy that they'll generally
The outcome you'll get on your end is they'll feel lazy
so I think like when I listen to like the challenges for intent that
That makes a lot of sense to me because
At the point where you're asking them to do a whole different business model and different thing
Very challenging for those big market makers. I know that they just you know, they have a million exchanges
They just want the things that are easy for them to integrate
that just
Get the money going as soon as possible
So it's yeah, it's a big challenge of things to do truly innovative
Of that make sure with market makers
Gotcha and I guess just just posing I guess the the next topic to the group and just following up on that a little bit
You know, we're talking about
You know, obviously trying to take market share away from centralized exchanges
Just curious, you know, and I guess I'll start with with infinity pools, you know
In the sense of derivatives, right and not necessarily just perps
But like what do you think are some of the the key I guess milestones we've got to achieve or what do we need to focus?
As an industry if we want to take market share away from these centralized exchanges and and drive a lot of that
Volume coming through the the blockchain
Sure. Yeah, so
I guess i'll like maybe like also started off by like giving my take on the last question
but uh, you know, if any post doesn't really have any market makers, so
I actually I actually can't relate that much. Uh, and in fact, like we're like in our nrv one like
We're we're not expecting for there to be like any market makers. It's definitely going to be
retail focused
In terms of you know, like who's providing liquidity?
so I can't really speak to that piece but
Yeah, uh, definitely definitely agree. That's uh, yeah, there's a bit of a chicken and egg problem
So but to specifically answer your your like the question that you asked
uh me now, um
What we need to do to and this is my opinion. Um, i'm a big fan of uh, peter teal
And specifically his book zero to one, right?
And one of the things that he talks about a lot is well, okay when when you're trying to
Deet or you know
Like disrupt, uh an incumbent what do you need to do? Well, you need to come up with like a 10x innovation, right?
um, and I think that like people really like to like throw that word around a lot and like
Oh, yeah, we're like 10x like in this like specific metric, but then you actually look at it and it's not not quite true
Um, I I I do think that like having like a very objectively
10x improvement over or several 10x improvements over a centralized, um
Exchange is the only path board
And so the way that I look at it, right is uh the uniswap example, right? How did uniswap?
Start like making as much volume if not more volume than coinbase
Well, it was not by being better than them on, you know, liquidity, etc, etc
It was simply by offering 10x more assets and being 10x faster at listing those assets, right?
So like the permissionless market listing of assets
Um and in that way what they did is that they offered something that simply wasn't possible on centralized exchanges before
So I think that competing head-on
right with a centralized exchange on like a lot of this stuff is is is honestly going to be quite hard because it's
I want to say almost impossible if not impossible for you know a blockchain to ever be faster than a centralized exchange
yeah, basically, um
I truly do believe that the best way to beat centralized exchanges is to yeah, just come up with
new innovations that
You know, uh, are 10x innovations in in our case, right? Like, uh, it's it's
And the way that I think about it for infinity pools and like how we expect to beat
Centralized exchanges is that well number one we're going to be running the same, uh, playbook as soon as swap
Right. So we're going to be able to like
Have leverage on the long tail of assets
And be the first ones to list those assets
Number two we have you know, um, we're going to have like 1000x leverage. I believe on the high market cap assets
Um 10 000x leverage on like um, uh pegged assets, etc, etc
So 10x improvement on the amount of leverage
And then there there's a couple other like 10x improvements that that I won't get into
But for example, no liquidations actually, uh improves your expected returns very significantly too
Um as as a trader, but um, yeah, those are like less less
They're more
They're more arguable whereas like these two are extremely set in stone
If that makes sense, they're more debatable whereas like these two like you you simply cannot refute it
If that makes sense
No, no, no. Yeah. No, it makes perfect sense. You know, I think and I think there is something to be said
You know in general, right? I I don't think you necessarily want to attack your opponent where they're where they're strong
Right. Do you want to you want to find weaknesses or maybe things they haven't even thought of?
And start to out compete on those levels to to attract users and attract liquidity
Camille from entango. Do you have any uh any counter points or any agreeing points or any thoughts?
Yeah, so on our side, like it's very interesting because we are using existing pieces and existing infra in in defi, right?
If we talk a bit about centralized exchanges like such as abidance, the thing is like the core
Um metric certainly for for the fees on the perp is the the funding fee
Uh, what happens for example on a very bullish market?
Is that a lot of people go long?
You have this imbalance
Because of that the the funding fee spikes a lot
And the only mechanism that you really have to
to fight against that
is the arbitrage
Opportunity for people to try to go short the perp and certainly go hedge on the other leg
and it's really not a common for the the funding fee to to go spike at
Those high values of 35 and 50 percent, right?
Um, especially on on the this ball market caps
But this is not necessarily the same thing
On in defi and especially when you use
money markets
Why because you have much more usage of the money markets for other use cases
And I love to take one example
For example, if we're a very bullish market on east usd
a lot of people
basically
are trying to to borrow usd
and the the borrowing rate on usd
come higher and higher
And on the construction on the money market, basically you borrow more and more usd
But you're lending more and more ease
And because you are more
Landing more and more ease
It also means that the borrowing rate on the east is much lower
and once this happens
Having new opportunities in the market. So for example on the famous
st-east-east loop
So this one you need to borrow east and basically you're buying st-east
So for example, if the landing rate on st-east is 3.5 percent
As soon as the borrowing rate is under that it means that you can borrow more and more ease
to make this
Arbitrage and you can put a lot of leverage of like up to 14x on avia at the moment
So you can see that there is a mechanism to cool down this funding rate with money markets
So that's one thing and this is one thing
DeFi is really good at is to offer more use cases with the same liquidity
then you have obviously the strong liquidity of the money markets plus
the spot markets
Really like that's a big difference and we cannot stress enough that in DeFi you still have custody of your funds
Which is a big change from the centralized exchange
And there is certainly
An angle there for DeFi to thrive
Yes, certainly certainly and self-custody
Is a huge thing obviously, um, you know, at least for for most, uh, you know DeFi natives at least
Um, but i'm curious to to to know well, I mean, I think it's been proven, right?
I mean, do you guys think that the the majority of of normies care, you know about about self custody?
You know, I guess that would just be like my follow-on question to to that
Well, I don't jump in like in my perspective, I think
You know a lot of normies
Actually prefer someone to custody their funds
Which is not necessarily great, but you know, I kind of accept that as a need in the market
But I don't think those normies are necessarily like the part of your base that maybe you know
Our projects are trying to hit
Um, and the way I see it is is more like in a broader sense that you know on-chain markets have security
But they don't have liquidity and then these off-chain markets these centralized exchanges. They have liquidity, but but no security, right?
I don't necessarily see us like competing with centralized exchanges on that liquidity, but
You know intent x
Actually brings that liquidity on-chain to serve the decentralized economy that's developing
And so we're not you know, necessarily trying to disrupt what what the centralized exchanges are doing. I think they're they're facing enough
You know pressures from from regulators and and locking users at regions and all this stuff already
um, so I think there's going to be a natural development in this kind of on-chain decentralized economy and
You know derivatives
They're mostly used as speculation vehicles right now
Actually what they do is allow advanced economies to develop and my thesis is that as the on-chain kind of economy matures
There's going to be greater demand for this liquidity for derivatives products
You know one example is
You know amm providers hedging their impermanent loss risk, right?
That's something that derivatives can effectively do to create greater efficiency in the markets and allow users
Um, and maybe more like power users to actually control their risk appropriately
Another another interesting thing is, you know interest rate swaps
Um, which are going to be a huge market
Now that we have all these yield bearing instruments coming through real world assets
So whether that's like liquid stake derivatives or that's some type of yield bearing stable coins backed by treasuries
Um, you know, that's like an entirely new use case that's coming on chain
That's going to need and it's going to see huge derivative markets develop for
So that's kind of what what I look forward to and then that's kind of what I consider d phi 2.0 is just
More sophistication in the market more efficiencies new use cases
Sam, maybe that's a different way of looking at it too. Is you know, I think the on-chain economy is kind of inevitable
And we're here to serve the new economy
I don't think true rewards have ever been said
Darius I wanted to wanted to kick this over to you. Um, you know one thing that levi just mentioned about uh,
about security on chain, right
Um, take us through some of the security mechanisms
That you guys have built into your design
And and how do you guys think about about that as pertains to like protecting?
You know any lps or any traders on the platform take us through that a little bit
Yeah, I mean
It's kind of a difficult one to talk about like what other security measures you use
you got security from a
Just general blockchain security standpoint where I like making sure your code's audited
You don't have any bugs
You're not going to get
that kind of thing so obviously we do the kind of
All of this stuff that everyone else does
you know we have
People that check our security we have a um bounty program we work closely with auditors, you know, we have a
Smart contract auditing firm on a retainer that they check any
Changes we make to any part of our info at the time
So that's part of it and then the other part of it's really economic, right?
So like I think perp taxes are particularly vulnerable to various forms of manipulation and attack
It's currently
We currently use a very high speed oracle for this. So we use stalk
We're integrating chain link as well. I think oracle stability is key
I think one of the things that becomes interesting is that like
Our liquidity in various markets is actually deeper than say
And when you get to that on some of these halts what can happen is
If people are pricing using okx or finance as a reference price
Those markets can get manipulated and then traders on your platform can get hit
So that provides challenges for market makers. Um, I think you see this in anywhere where people are taking a fee from anywhere else
And honestly, we just do a lot of work making sure that risk parameters are strong
The exchange has everything built in a way that
We don't run catastrophic risk, you know, we don't run
Bitcoin to 100 to 1 leverage because that's how you go business quick. We don't use our own
The leveraged play on our platform because again you run it to a risk so it's just stuff like that
But you have to manage
And we just try and be thoughtful basically
That makes sense infinity pools, do you have any thoughts on that?
Sorry, my mic was off. Um, yeah, uh, no problem
Yeah. Yeah. Yeah. I mean I I actually completely agree, uh with with dairies. Um, you know, I I think that
markets that tend to offer any amount of like
even like remotely high leverage on shake coins tend to
You know bad liquidations, right?
Um, which eventually ever leads to uh depletion of the insurance fund and for some month of markets
Uh or straight up just the derivatives could change going out of business or socializing the losses to all the traders and like
Wrecking everyone in your markets either either way like it's it's going to be a bad time. Um
It's uh, yeah, it's just kind of like one of those like properties that you know
Mixing oracles and then like having to liquidate stuff like efficiently enough. It's just not never going to work. Um
We did it very very differently once again, we're a very different instrument
You know from perps, um, so that because we don't have liquidations and we don't have oracles actually that doesn't really apply to us
Uh, we actually have zero counterparty risk. So you can offer
um high leverage on
On shake coins, obviously, you know, this is this is dependent on
how much liquidity there is like in the pool for that specific shake and shake coin and um
You know like the the volatility of that shake coin rate because the volatility then has a direct impact on
on like the the maximum leverage that can be taken out but
Uh, yeah, so
TLDR I agree with Darius. We're different. Uh, we
Are the perp once again?
Uh, we're a different mechanism and uh, yeah, that's that's kind of like the entire
And the entirety of our value proposition, right? Um, so
Perfect, you know kamala. Do you do you guys have any any thoughts on that? Are you guys inheriting any more risks from?
From the money markets that you're you're built on and and you guys have to think think about that in particular ways
yeah, so so maybe one of the key differences with um
like per taxes such as gem x and
usually like
They use oracle
Base feeds for for the price this can be used when you open close the position but also for liquidation
In our case, we do not rely in any oracle. So there is no oracle manipulation
um, and the only thing we do at the moment really is to
do and to go and open those position on the underlying money markets and to do the
The flash loan and spot mechanism for for the trader in one click, right?
so at the end the liquidation also is
Done by the money markets and we recontillate those events inside the
the ui in our smart contract, so
From contango point of view you don't really have any additional risk than the one you have on the money markets
You have specific risks like for example
when ave froze some assets
you could also have
some risk on
The liquidations
Like for example indeed due to the oracle of the money markets when they liquidate
So this this happens but on specific money markets due to the design of the money markets so on on leaders such
As ave it doesn't happen
so the trader
Uh is aware
Usually of the risk of the underlying money market. We're we're not doing
this choice
for them at the moment, right so
Usually like the the risk of contango is exactly the same risk as the money markets
We're not custodial. We do not need
The opening of an account where you deposit money before
trading on the money markets meaning that at no point there is any money staying
on our smart contract
There is the access
From our smart contract to the money markets
But really the risk the vast majority is on the money market itself
Let me uh, how does intend x think about these things
Yeah, that's a good question, um, I would say that I guess from
A ground up perspective. There's a lot of things that
We do to kind of mitigate a lot of these risks
So one is you know reduced reliance on oracles?
Kind of as a few others mentioned oracle manipulation is actually the number one exploit vector in defi
And so eliminating that alone is is huge for the kind of protection of your platform
Um, so we don't use oracles to price assets
Um, so that's kind of a big thing second one is we have no liquidity pool
honeypot, I suppose
Um, you know, we don't have like a big sum of money waiting there to get exploited kind of like these amm, you know
like a gmx
style protocol would
And and that also pushes risk off to the market maker
Um, which is is actually the appropriate way to do things because they're the ones earning profits at the end of the day
And they can price that risk in
Um, the users aren't in
The right position to price the kind of risk of their deposits
Um, so we have to protect them at all costs and and that's why I think
You know kind of like the community lp, you know
Amm style decks is a little bit, you know opening up
Um, there are users and depositors to these manipulations
Another thing is we have
No counterparty risk. So when you're entered into a bilateral trade agreement with your counterparty
Um, you kind of have guaranteed solvency at a contract level
Um, you know, there can never be
An ftx type game where like the market maker is in bad debt or anything
And then these positions are entirely isolated
So no bad debt can ever accumulate in the system
So there's no insurance fund
like an incident
Like what happened on dydx? Let's say with with um, you're in finance last month is just not possible in intent x
Because there's no like insurance fund to kind of like manipulate and exploit for payout
Um, so these are all the good things we have going for us, which kind of comes back to like really good system design
Um, obviously that introduces a lot of smart contract risk
Which uh is always a bit of a landmine in the space, you know, even the biggest of the big protocols
Have faced troubles with that
So that's kind of coming down to extensive audits peer reviews
We also have a 12-hour kind of fraud proof window on withdraws as a risk monitor
Which hopefully will reduce over time as kind of like the protocols de-risked on a smart contract level and you know develops lindy
But that's also important right now
Well, I appreciate your guys's responses, um
We're coming up to the end of the ama here and i've got you have two final questions. Um
These are more more general. Um
But if you if you guys were sitting up here
You know and marketing to your ideal user like what would you point to is the the key differentiating factor of your project?
On on why someone should should use your project over another
Um darius, we'll go ahead and start with you
I think we're probably wondering if not the fastest
Experience you could have on chain for training
Close to if not the cheapest
And almost definitely the most capital efficiency you've done
Whatever into our contracts and it just does the right thing
Yeah, super slim kind of
World cap, you know
Capital efficient experience. Yeah
Can't argue with that
Infinity pools. What would you say yours is wait, I might already know the answer to this
It's definitely the four million x leverage, but but let me hear it
Uh, yeah, you cut you cut us there
Yeah, I mean definitely like the leverage part is is is definitely like a very appealing aspect
I also think that it's it's it's just great marketing material. Honestly, just because
Yeah, most people are like unlimited leverage. That's not possible and then yeah
Uh, but yeah, so that's that's definitely like one of them
I I will say that like I also really really like the other features that we also um operate on our system
right like that
permissionless market like listing of assets the
The no liquidations which increases
uh, you know trader to traders expected returns and then
Actually one that we don't really talk about is is also the fact that you know when traders enter
Or exit their their positions on infinity pools. They're actually or in our v1
We're actually just going to be plugging into one inch
Which means from day one?
Um, they'll just actually have access to the
Uh best price in the spot markets, um for whatever trade day they initiate
So yeah, also just composability slash like, you know, uh, reducing liquidity fragmentation
Um is is pretty cool. Um, but yeah, that's yeah, definitely the unlimited leverage is the uh
Is the big one?
Gotta love that gotta love that and I guess I guess uh, you know kamel you'd be perfect to go next, you know
So obviously you mentioned earlier, you know leverage could be somewhat limited on on contango
So like what do you think the the differentiator is for for contango?
something that we have different from the other per protocols is that
We are a perp exchange, but you can come and open a trade from example on wst ece
Up to yeah 14x leverage. So on this one like the
The api is is is really juicy
So that's one of the trade
Uh, then on something like east usdc even if the leverage is lower
Right now on the market, which is
Let's say a bit bullish
you usually
have your position
Open if you come on contango and compare the prices
And the different options you have
You would find some venue where you get bait
To go long you get bait through the difference of uh, borrowing and lending rate
But you also get paid because you can collect
The rewards from the underlying money markets
So this is definitely an advantage and the third one
Usually whales really like to go through contango because they have the peace of mind
That their position is staying on the underlying money market
not this risk of uh
the insolvency of the underlying per protocol
Uh, the position is literally fully hedged because it's synthesized on the underlying protocols
Um, so yeah, this is how we differentiate there
Awesome, uh matt matthew. I saw you turn your mic on. Did you have a
A point about that? No, no, sorry. That was my bad. Just uh, excellent
No, that's that sounds good. You're good. You're good
You're good. Um, let levy over to you. Then what do you think that differentiates uh, intent x from the the market?
Yeah, just
Two simple points one. We have pairs that you could trade at intent x that you can't trade anywhere else. So we have 250
plus pairs
Uh, which is quite unique in and of itself, but we also have some of the deepest liquidity anywhere for these pairs
So it's not like we're just listing pairs, you know that that are super liquid. Um, you can actually trade these with with size
So those are the two things um that that we kind of bring to the market
at least today
So so dog with hat you have that
No, not yet
Yeah, actually we do we do. Sorry. We do have it. I want to keep my eye on this. I don't know what we have
in this book
So last question for you guys just just uh
You know, tell us what's coming up next for for your protocol if there if there's any alpha or if there's any
Any milestones that you guys are excited about here in the the first quarter of 2024?
Um or beyond uh, there yes, we'll go ahead and start with you, sir
All right, that beer's gone to my head and I drifted man
Friday night bitcoin pumping beers are flowing
All right, good like refresh on my portfolio every minute you've got to keep
There you go
Fall honestly refreshing your portfolio. You can't beat it
No, but uh, just tell us something uh something coming up for vertex or you know, touch on the roadmap a bit
What are you most excited about for vertex in the in 2024? Yeah, I can't say a whole lot about it. But um
We just announced a connection with um a new exchange we're launching on blast
It's called blitz
Basically our cross chain
But this year I think it's going to be really really exciting. We've got like
What we think is a very fresh approach a new way of partnering with
L1s and l2s
Yeah, we think it's going to be really really exciting for people. So super pumped to get that kicked off and get people
Understanding exactly how we're going to make this shit better for everyone
Beautiful beautiful, uh infinity pools. What do you got going on?
Yeah, I mean we have a lot going on especially from the next couple months so
Uh, we actually have our audit. Uh, I mean it's already kind of started or like it's starting technically next week
But we have our official audit starting on march 1st
we're hoping to have mainnet ready by
april mid april
So yeah, that's that's kind of like the the most immediate thing that we have on our minds. Um,
And yeah, so, you know, we'll we'll see uh, definitely launching on an l2
And uh, yeah, we'll uh, we'll kind of like reveal later, uh, which which one it is. So
Oh music to my ears music to my ears
Um, come over kentango. What's what's on the roadmap for you guys?
So the first thing is to keep growing like real life for uh around three months and
We have an open interest almost at 15 million. So
The the goal here is to keep growing
Obviously in the first half of
2024 we are preparing our token launch. There is a point system for the past two weeks
It's very exciting. This is generating a lot of interest
uh being on
Discord or on our socials. So we we want to keep this momentum and then obviously there is some iteration on the product side
Uh, we want to bring new interfaces make some flow
easier and more accessible, uh with like one click trading especially on
does let's say correlated asset such as
STEs is and um
Yeah, we also want to
better ways to compare rates between different values and to all some like
delta neutral strategies
And this is something we're really excited about
Awesome i'm so i'm so happy you just mentioned points. Thank you
Serious you you you got you got my brain thinking about this when you mentioned blast as well
Give me give me some thoughts on points guys, like I mean i'm a points maxi
I think everybody is at this point, but but it's just been fascinating to see the uh,
Uh, the point systems roll out and and kind of the uh, the psyops behind all of it
Anybody can take this but but give me some thoughts on on point systems
And would you use it for your protocol my guess not if you're going to but would you consider using it for your protocol?
If you don't already have it
I guess I oh, yeah, you can go first areas
Okay, i'll go because like I actually have I have experience on this in a couple of ways
when we launched vertex, um
We kind of did a points program we didn't do a point program we actually were very explicit we said
How many tokens you could earn for doing what activities?
And we laid it out for people
And whilst vertex has broadly been a success. I don't think that program
Was as successful if I would have just spun up a random number generator
And told people to do a whole bunch of bullshit
And they would have just come and traded right
I like I honestly I was I was very dismissive about it
And that was you know, i'm being flippant. That was kind of how I view points programs
I think actually as it's evolved and i've looked at it. I think it's actually
good because
The type of program we did meant that you end up being a bit inflexible, right?
Because you can't change anything halfway through a program
you can't sort of
Do things to optimize you can't
Do the things that are right for you and ultimately as a like founding team
You're giving away, you know
Large parts of your token base, which is kind of your your big asset your big leverage for building
Um, and if you get it wrong and it's a one-shot deal, it can be it can be rough
now I think the way it is with some of these
I'm sure some of these points programs, you know, it can't be this is crypto
You know some of these points programs people are going to get upset
About what they get or feel that they got roped by a team, you know, they weren't dealt with honestly or whatever
But I actually think that if the team is decent and you know
They're like relatively dots and you check them out and they seem good and they want to do the right thing
It gives teams flexibility and as long as they don't abuse it I think it can be good for users and teams
So i've still gone full circle on it is what i'm saying
Um, but yeah, I do think there are some problems in terms of
It's very interesting
As like we were running a points program now and I think there's definitely a saturation in the market now with points
Um, but use the right way
It definitely has a lot of value add to like the protocol and we see it as kind of a mutual return in value to
The people who are accruing these points, you know, that'll translate into a token
airdrop in the future because
Like one you have to design your points program carefully to incentivize the right behavior
But we've had a lot of really good feedback from early adopters and early users
Um who may be here for points, right?
cryptos in a game of incentives, um, but nonetheless we've taken that feedback and actually iterated on the project and improved it
Greatly, so now that we do come to kind of like launch on a bigger stage and a bigger level
We'll have a better product. So that's kind of the trade-off that I see it's it's not
I think some protocols use it to like pump their metrics that just kind of like launch into a huge fdb or something
Um, we're really using it to improve product and I think used in that way
Just makes a lot of sense like to both parties, right the farmers and the protocol
That's how I see it
Well, I guess i'll also do did you I I agree with like
Yeah, I agree with like a lot of the points. Um
That that were made I I will add one more point. Uh
Pun intended or non-intended. Um, it was intended afterwards
That um, it is actually like a very low operational cost way to essentially
Launch a token without really launching it right like everyone knows that like points like usually convert to tokens
In some, you know fashion
You know, you can essentially launch points, uh without having to like set up like foundations, etc, etc
Because it's like much more like a rewards program and it's not transferable, etc, etc. But
Um, so yeah, I think if anything it also allows
Smaller teams that may not have the funds to you know
pay lawyers hundreds of thousands of dollars
um to you know set up their dirt or like it at least gives them like a little more time to
consider, um
You know how they should launch their tokens. Um, so I I do think that there are like some other perks
Yeah, besides just flexibility, which already on its own is is fantastic. But yeah
Yeah, yeah, I think for me like I mean
Deejens loved dopamine at the end of the day, you know at Darius you you mentioned it, right?
It's it's almost like the the moment that you you defined exactly what you could get
It wasn't you you know, it wasn't as successful as you thought it could be and it's it's like everyone loves the unknown
You know and and that's really the the psychological part of the the point systems that that I love
And then the composability of it too, you know, you've got these you've got some of these markets popping up where you can
You know, you can buy points right for for certain for certain programs you can
You know go to pendle and do you know a swap right to speculate on on more and more points
Uh for some of these assets and it's just obviously d5 makes everything multiples more interesting
and it's just it's awesome to see the the points programs kind of
Bootstrap bootstrap attention, right? Um
You know as part of the I guess the the changing market, you know
I feel like we're we're starting to change, you know turn into a more of a bold market
And and it's good to see kind of uh point systems popping up to to keep mind share
in in the space
So with that, um coming up here to the end of the space, um, really really appreciate you guys jumping on with me. Um
Fantastic discussion. I learned a lot about your protocols
I'm sure sure everybody else did too and and really just your your thoughts on the overall space
Um, so thank you for coming out. Um, we'd love to have you again sometime
Thanks for hosting man
Yeah, thanks for hosting
Thanks. Appreciate it. Cheers guys. Absolutely. Yep. All right. Take care. Good night. Great weekend