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Talking DeFi with @HoudiniSwap
Recorded: May 29, 2024 Duration: 1:01:00Space Recording
Short Summary
In a recent discussion, Aaron from Houdini Swap shared insights on the project's growth, upcoming product launch, and the increasing demand for privacy in the crypto space. The conversation highlighted strategic partnerships, innovative solutions, and the potential for higher yields, positioning Houdini Swap as a key player in the evolving DeFi landscape.
Full Transcription
Thank you. Thank you. Okay.
Hi, guys.
Just a quick test.
Can you hear me well?
GM, GM.
All good on my side, Nikki.
Awesome.
Perfect.
So just let's give a couple of minutes more let the people join
and we can start so i'll give it just two three more minutes sounds good . Thank you. all right let's just like kick it off while people are still joining so thank you so much
guys for coming here awesome having you around um really super excited and pumped and today you'll see we have a special guest and if
you haven't tested the solution yet please go ahead and do it it's very seamless very nice
and very simple so it's just you just go to houdini swap.com and then the rest is just like
pretty simple so but nevertheless um yeah i would would like to maybe introduce you to Aaron from Houdini
Swap, but I'll let him to do that himself because he can do it much better.
So yeah, like, thank you so much for joining Aaron.
Maybe you could intro yourself and Houdini Swap Finance briefly.
Yeah, absolutely.
Thanks.
Thanks to everyone.
And thanks so much, Nikki and the Telos Foundation for having me on this space. GM, GM, hope everyone's doing well. chains, 100 plus tokens in and out of Telos natively in a private, compliant, non-custodial fashion.
So pretty sick tech and honestly, a really elite team to work with.
Like it couldn't have been a better experience working with their team and just the support that we received, you know, along the way, just, you know, testing and really just collaborating on making this a big push.
So, yeah, it's been great.
I mean, just a bit about me.
You know, I'm a class of 2017 crypto guy.
You know, just started off with early investments in ETH and Bitcoin.
You know, TradFi background. I started my career on Bay Street, which is kind of like the Canadian Wall Street with jobs at McKenzie and Fidelity Investments.
You know, tried FI background.
And then, you know, sooner or later, got pretty bored of that.
I started trading NFTs around 2020, 2021. You know, I'm a Noji Doodles, Goonies Gang and Hype Bears and, you know, you name it.
So that kind of really piqued my trading interest.
And then I went on to join a few buddies at a startup called SX bet,
which quickly scaled to be one of the largest blockchain peer to peer
betting exchanges in the world.
And then later joined the core team at Houdini swap.
And it's been crazy, you know, this past year,
what we've been able to achieve.
And it's all kudos to communities like this
that have helped support us along the way.
So yeah, no, I really appreciate that.
I'm looking forward to chatting today.
No, thank you so much, Aaron.
Kudos to you, actually.
I mean, I think we've all made our paths
from the traditional world to, yes, Swap3.
And I think we couldn't be much more happier at least that's
what i can say about myself but uh without further ado right right like it's for me like what you
guys have built is super interesting and it stands out right from all the solutions that are out there
so my question would be like why did you guys decide to start a solution like this? And what is so different about it?
And how is it different from other actually privacy-focused solutions in the market?
And is there like a risk?
Like what I mean is a regulatory risk, right?
Like when we're talking about privacy solutions, you know, some people might freak out and feel like you're acting like a criminal.
You know what they can,
you know what I mean, right? So, and essentially, like, would love to, if you could unpack on that
topic as well. Yeah, no, it's a phenomenal question. And it's definitely our most, you know,
highly received common questions. So I'll just start with, you know, what our kind of ethos is
as a, as a, as a team here. And it's really just...
Hello, is that me or we lost Aaron?
I think you're breaking aaron
uh maybe aaron you could just like try to join again because i think we lost you
yeah this stuff happens sometimes on X.
Just give us a second, guys.
Yeah, Aaron, like, we just messaged Aaron as well.
So, yeah.
Probably some technical issues or some connection issues and by the way if you guys haven't tried the houdini swap it's not like i'm trying to show
here but please go to houdini swap.com and you can actually do following um operations you can do
private swaps and semi-private swaps.
Generally speaking, the semi-private swaps
are faster than the private swaps.
And yeah, but private swaps will ensure
that there is no trace between sending and receiving wallets.
And it's very safe, compliant, and the costs are pretty low.
And essentially you can bridge pretty much like, for example, from Ethereum or
from any chain, like they support a bunch of chains.
So mostly EVM chains.
So feel free to try it out.
It's a pretty seamless, actually application.
And I think if you're interested in privacy solutions
or in using such solutions feel free yeah to check it out
all right someone has requested let's see let's try again
I don't know what happened to Aaron.
We're sorry, guys.
We're trying to figure it out. Thank you. Yeah, it's until somebody rugs.
I think Aaron is going to be reentering as a speaker.
But yeah, in the meantime, definitely check the pin posts on top.
There are two tutorial videos, one by TellsKiwi and then one of a thread that we recently posted.
So in this brief intermission, definitely check out the site.
It's really user friendly.
Have you checked it out yet, Nikki?
Have you made any swaps yet?
Yes, yes, yes, of course. I mean, I tried it also, like, before. Actually, like,
the reason why I really liked it, I tried it with the other chain. So I was like, wow,
this is really cool. We have to have something like this on Telos. So, and that's how, basically,
I just, like, met Aaron and, like, spoke to him. And essentially, it was a pretty cool team to
work with, super fast and efficient.
And yeah, we got the solution on Tolstoy.
I mean, I think it's pretty cool, right?
If you're like into privacy solutions
and if you want to like basically use a solution
that will like have no trace between sending,
like let's say like when you want to send or receive funds,
I think it's a pretty cool solution at least like
i'm not a big user of such tools but i thought this was really cool okay we have aaron here so
hey yeah yes we had a technical glitch we're really sorry and we're really happy to hear you
so like i think when after i asked questions like you started to talk about it and you said like, it's a great question,
but after that was in sheer use.
Oh my goodness.
I can't believe I was just speaking into the void for,
for about five minutes there. That's a, that's classic. What else is new?
Guys? I'm so sorry. I apologize. Yeah. So you can hear me okay now.
Yeah. I'm getting a lot of heart emojis. Perfect. Perfect.
So yes, back to what you were saying.
Great question.
I'll take it from the top.
And really, for HoudiniSwap, the reason why we started this project is because we had
KOLs and influencers in this space coming to us saying that they needed some sort of
compliant privacy tooling. They were having a lot of copycat trading, a lot of MEV trading, a lot of prying and snooping
eyes on their wallet addresses when they were getting in projects and then on the other side
when they were getting out of projects. And so we basically created this solution out of demand from
KOLs in the space. And if you look at kind of like the existing options that are currently out
there to achieve privacy, it's really at three levels. The first is, you know, CoinJoin and
Mixers. And, you know, we've seen what's happened with Tornado Cash. I'm not, you know, I'm not
here to give my opinion on that. But, you know, that has opened the door to elicit and nefarious
activity and say what you want about that. But that's one option, right?
And you can make your own judgment or decisions on that.
The second is achieving some sort of privacy
at a centralized exchange level.
You know, there's fundamental privacy
that exists with that solution.
But again, you kind of sacrifice counterparty risk,
not your keys, not your wallet.
We've seen the result of that story,
you know, a few, like too many times now.
And then the final
option is going directly into a privacy token. So like an XMR, but that obviously has limited
smart contract capabilities. It's very much just like holding Bitcoin. It's a commoditized asset,
doesn't really give you access to any DeFi. So that's the reason where HoudiniSwap came in
and really has a monopoly on the privacy market, but it's privacy done well and it's
practical privacy. So as this kind of emerged from this KOL demand, we started seeing growth
and we started seeing volume come into the swap and things were great. And over time,
it really like use cases unfolded. So our largest corporate partnership to date is Maestro,
the OG sniping bot in crypto.
And our API is directly in there for users to on-ramp into their wallet and then to off-ramp out of their wallet.
And other businesses like, you know, HR payroll for Bitcoin mining companies were coming to us saying, hey, we want to pay our employees in crypto.
But we don't, you know, we don't want that to be public and open source and have everyone seeing what each other is making.
And fundamentally, and just to hammer this point home,
like Nikki, say you and I go out for dinner at ConsenSys
and we split the bill and you send me your MetaMask address.
I literally have unfiltered, unpermissioned access
into every token you've ever held,
every transaction you've ever placed on chain.
And so while privacy gets this really bad rep,
like our ethos is that if
crypto is to achieve widespread adoption, then privacy needs to exist bank account level privacy.
We're not trying to be, you know, an off ramp, you know, a money laundering site, we're not
trying to be a terrorist financing site, like there's a lot of controls and practices in place
that we have to, to, you know, restrict that kind of activity.
It's very much just like practical privacy. And I can't like hammer that point home enough.
And we've seen it, you know, we've seen a lot of, you know, support from Vitalik, you know,
I think his last like five tweets have included some sort of, you know, aspect of privacy and
it's really your fundamental right. So that's just what we're trying to achieve here is is compliant um you know compliant transactional privacy
totally agree with you privacy is a right not a privilege uh that's uh like i'm totally
agreeing in agreement with that and yes you're right like if for example i share my wallet
address you can actually go and just just try to investigate what's going on in my wallet,
what kind of transactions I've done.
And you can actually utilize the other tools that are available there, right?
To check basically, yeah, like the transaction history and so on and so forth.
I mean, even if you use Explorer, it's not that hard to figure it out, right?
So that's why we have like a lot lots of us we have tons of
wallets and it also becomes a bit cumbersome to keep up with the numbers of wallets the seed
phrases to save the seed phrases and so on and so forth it's not the best ux ui i would say
definitely but um generally speaking right like because I have met a couple of people, like, during the last week at DAPCOM.
Like, I have met these guys, like, FluidKey.
I don't know if you've heard about them.
They say, basically, like, they protect the privacy.
Like, you can basically receive and manage funds on-chain without publicly linking them to, like, the user.
them to like the user and essentially like um uh what they have is that they claim that they have
this one identity and new address for every transaction so uh and uh essentially like i
don't know if you've heard about them or no but like general speaking right the one we're in this
space also have like lots of competitors and like who would you consider your biggest competitor
and like general speaking what actions do you take to address your competitors and like who would you consider your biggest competitor and like general speaking
what actions do you take to address your competitors and do you believe that it's
possible to collaborate with your competitors for example if in the let's say in this um
in the scenario where fluid key would approach you guys for collaboration yeah no no it's it's i i
really appreciate that and i actually no i I haven't heard of that project,
but like, you know, we're very much like rising tide,
lift all boats, you know, kind of guys here at the team.
It's, you know, we're looking to push
the privacy narrative forward
and kind of like reverse engineer all the bad rap
that it's gotten over the past few years.
So anybody that's, you know, developing or innovating in the privacy space,
we're more than happy to chat and connect with and collaborate with.
But really, honestly, like one thing that's been so like, you know,
the clear go-to-market fit for us and, you know,
the testament to that is over a billion dollars in transactional volume
that we've done over the past year.
But there's just not that many competitors that exist.
Like, you know, like Railgun, for example, is a very familiar, you know, on-chain privacy protocol.
But it's basically just like having a savings account that's privacy protected, right?
And there's not much portability and fluidity.
And like there's just not much like transactional privacy that you can that you can receive and so i'd say like our competitors are more broad in terms of like the
liquidity aggregation space because that that's that's what we do really well too right is is
we're a curator of of non-custodial centralized exchanges and so you can think of houdini swap
as like a one inch or like a zero X with, with privacy
tooling.
So like privacy is what we do really, really well, but what we also do really well is aggregate
liquidity from a bunch of different sources and give it to users in one seamless UI UX.
And all those things that you were talking about, about, you know, like, like wallets
and C phrases and like all the headache and frustration that comes with onboarding you know into crypto we've kind of abstracted that down
to a really really clean uh user experience and you know just even little things like 24 7 real
human telegram support you wouldn't imagine how many users send you know wrong tokens on wrong
chains and so just offering you, offering support for users in that
capacity is like, like an insane competitive advantage. Whereas, you know, a MetaMask swap,
you input it correctly, and it's, it's off into the void, right? So, you know, we, we do. So I
will say, like, just back to your original question, yes, we do currently have a bit of
monopoly in this space. I would say if you're looking 30,000 feet out, the larger total addressable market,
like the privacy market is probably maybe a billion dollar market,
but like the bridging and the liquidity aggregation and the DEX aggregation,
those markets are hundreds of billions of dollars.
And so that's also where we're a player in the space.
We offer private transactions, but we also offer semi-private transactions.
And about 30% of our volume is done basically just in a traditional one-inch style routing
with obviously some nuances there around Wallet Connect and, you know, some core fundamental
differences.
But it does just play into that cross-chain, you know, like swaps market.
And so obviously there's a number of competitors on that side, but, you know,
aggregating the best liquidity sources, offering it to the user in the lowest cost,
fastest routing with this privacy optionality is a really competitive offering.
Makes sense. Like, I mean, you have guys already built a very simple and elegant solution.
And I think simplicity actually is what would attract people to Houdini swap, generally
speaking, because it's really simple.
Once you go to the interface, you know pretty much how to utilize it.
But like, my question would be like, or I would be keen to know, right, what's the,
what's next in the development roadmap for you guys?
And when do you plan to release those novelties or features?
And how could the community take advantage of them?
Yeah, yeah, no, great, great question.
And like this kind of ties in nicely to what I just mentioned. And so if you like, so right now a new user coming into crypto, like, yeah. Okay.
So let's even just use myself personally.
You know, I'm trying to go from our native token dollar lock, Houdini swaps token dollar
lock on Ethereum to whiff on Solana, or I'm trying to go from BTC to Telos, or I'm trying
to go from, you know, Solana, like, you know, whatever bonk on Solana to roost on base, the amount of like gas considerations, bridging and like latency times.
It's just it's really, really fragmented.
And like solving this interoperability piece is is is what we're doing like full head down.
It's the reason we're not at consensus.
Like we're literally just gearing up for this insane product launch
that's happening on July 7th, 07, 07, 24.
Mark your calendars.
But basically what we're doing is privacy will always be our baby.
That's always going to be our UVP.
That'll always be there for users.
But what we're
expanding to is just aggregating all sources of liquidity that are in Web3 and basically calling
it like the Google search for Web3 liquidity. So you'll never have to. It's the one stop shop for
all transactions, all swaps. You'll never have to go to Uniswap for Ethereum know ethereum swaps and then you'll have to go to a centralized exchange for
bitcoin or you'll have to go like you know like you have to go to socket and li-fi and bungee and
and across and chain link ccip like it just doesn't make sense um and even the words send
swap bridge receive like we really just want to just like take away all the complexity out of transactions and just feed it to the users in one simplified, you know, user interface.
And it's very similar to how, you know, Spotify gave you all your favorite songs under one, you know, one clear cut, you know, easy to use as their interface.
It's how YouTube did that with content creation.
It's how Amazon did that with consumer goods
and distribution channels.
And so we're hoping that Houdini can emerge
into this brand of just like, Houdini me this,
yo, Houdini me money for dinner.
It's like Venmo me this, interact me that.
And so it almost becomes a verb as we scale. But for now,
what we're focused on is offering the most seamless lock on ETH to bonk on Salana transaction,
all tokens listed, all liquidity sources, non-EVM, alt-L1s. And it's even getting worse.
I just spoke to Alifium. I just spoke to Supra.
There's all these L1s that are coming out and they're going to have their own bridging challenges.
And typically what they do at the project level is they'll just have some wormhole forked bridge
back to Ethereum and have some liquidity on that. But it just, it doesn't, again, it almost worsens
the problem. And we're trying to alleviate all the anxiety that people have around bridging
and swapping and sending and receiving and just make me like you're either transacting
or you're not.
And that's it.
And that's what we're, you know, about six weeks away from.
This is super exciting.
Really thankful actually for you, for your explanations, like going into the details and just like, you know, unpacking the stuff because it really
helps us with the community and also people who join to understand like more about privacy
focused solutions, because like, as you may know, right, we live in the world or we live in the
basically in the time when people think that privacy, if you're doing like, if you want to
use a privacy solution, like focused solution, you're doing something criminal for sure but it's also
like not just related to privacy but also generally speaking a lot of people still have a very bad
assumption of cryptocurrencies right like some people will think like okay if you like bitcoin
is for criminals only because they they link like bitcoin like for example if
you remember to silk road right uh even though now there's a discussion of like basically um
pardoning gross albrecht which i'm completely against because i do believe he's a criminal
but that's my stance but uh generally speaking right yes, there is like a lot of this discussion.
And what I would like to understand from you, because you are involved in this industry and you see it day to day and you get this feedback more, maybe more often than we do.
So what do you see like as a future of privacy in the industry?
Like what's your biggest challenge that you're currently facing as well
when trying to explain your solution, right?
So how do you guys promote this awareness?
How do you address that concern
that privacy technologies might be used
for illicit activities?
Yeah, no, it's a really great point.
And like even my prior tenure at a blockchain betting exchange, you know, as soon as VCs or, you know, imagine trying to raise capital and your first thing is like, hey, we're GambleFi, right? And they go, oh my goodness, you know, like, let's not touch that with a 10 foot pole. And there's no way that we could ever get capital behind that.
get capital behind that. And so, you know, but we proved them wrong. And, you know, while explaining
it to them and actually showing them that, hey, we are a peer to peer, you know, betting exchange
and all the traditional sports books that are out there, the FanDuel's, the DraftKings,
the stake.coms, they're actually the ones that are, you know, like exploiting their users. And
so it's really just an educational piece. But with privacy specifically, we just try to bring it into into like web two
terms that everybody can understand right if i have your name if i have your phone number if i
have your address if i have your your your kids names your wife's name your spouse's name like i
still can't get access to your bank account and so like why should it be any different in crypto
and we're not we're not privacy maxis like we're not trying to um like like the core
team here we're not we're not all a bunch of people that are like trying to drive privacy down
everybody we speak to it's it's basically just giving you that that optionality and that
fundamental right back um and like you'll see like i like i just i you know there have been a lot of really, really difficult anecdotes and testimonials from our users in our community about how privacy has affected them.
Or they bought some coin, now they're a millionaire, and now it's just like all this backlash.
And we've had institutions come to us with a $200 million digital asset portfolio saying, Hey, you know, we want to get into these projects, but we don't
want everybody knowing that we're doing that.
Like privacy, like that, that never happens in traditional finance, you know, like you
don't, it's, it's all done on a privatized basis.
So it, like just giving people this optionality is, is really what we're trying to do. And then, you know, at our, like at the project level,
like we offer compliant privacy.
So like that's really important.
And I'm sure we'll probably get into that.
So I don't know if you want to touch on that now,
but that's like where we create the money as well.
Yeah, I think that's a good point.
Like let's just touch on that
like what is the compliant policy uh privacy right like if you could unpack that like what does it
mean to be compliant yeah yeah so one thing that's really important for us and one thing that
separates us is um on the privacy aggregation uh side so on the private transaction routing
we we call ourselves curators. And so what
that means is that, you know, there are hundreds and probably thousands of non-custodial centralized
exchanges that we could work with to source liquidity for, you know, for Telos, for example,
and offer that to the end user. But really, we only work with, you know, 15 to 20 of these exchanges.
And the reason we do that is because we put them through like the absolute ringer in terms of due diligence, making sure that they have compliance procedures in place that are in line with what we're about as a team.
And so that's things like, you know, working with chain analysis for having, you know, on like on chain screening for illicit wallet addresses.
It's working with like elliptic bot and, you know, things that we do just at the project level, we cap transactions at $50,000.
So, you know, if you're trying to off ramp 5 million from a bridge hack, it would just be a terrible, terrible choice to use Houdini swap.
terrible choice to use houdini swap um so we're basically like at a at the project level we are
a front end for for these exchanges so we're basically just like their glorified uh affiliate
you can think of us as like a as a booking.com and we just work with the best in class airlines
we don't work with shit airlines that are going to have some sort of liability that are treating their customers, you know, incorrectly that have
sketchy compliance, you know, sketchy parts. Um, you know, like we want to, we work with the best
in class airlines and then just give you this booking.com experience of giving you the best
ticketing, the best pricing, you know, the best user experience.
So you don't have to go airline to airline and, you know,
cross-reference pricing and we do all that for you and just give it to you in the best, the best route. And then obviously, you know,
the privacy tooling comes into play after that. So we,
we kind of have this, you know, red light, yellow light,
green light process in terms of transactions. And you know,
we've stopped,
we've stopped we've stopped
transactions in real time that were even linked to to betting protocols so it we're definitely
more on the conservative side when it comes to compliance and and you know like on-chain
monitoring and screening for for nefarious activity but those red like uh yellow lights
like they come from the providers such as chain
analysis and elliptic, right, I would assume? Correct, correct. And it's done at the exchange
level. And like, the point that I was trying to make earlier is like, that's the only like,
that's the reason why we only have, you know, 12 to 15 in our network, whereas there's hundreds,
I bet, I bet 1000, you know, out there that are just like white labeled non-custodial binances non-custodial okx's hobies um you know ku coins like all that
stuff they exist but these ones we feel are best in breed and and the best airlines out there to
deliver the most optimal experience for the for the end user that's that's pretty cool no thanks for unpacking that and i
think that's actually like a point where you can stand out from the other providers as well because
like as you said it's a compliant privacy which is great right which gives confidence to the users
and which gives confidence uh actual to the exchanges as well yeah absolutely and we and
we don't operate under the same you
know like like regime as an exchange right like we don't we don't need a broker dealer license
we're not you know we're not holding assets um like so there's none of those pieces come into
play just as like a final point there yeah yeah you're just an interface after all yeah exactly
uh so yeah like then like let's move maybe let's take a
industry specific view right like because uh still like you have it in the name houdini swap right
it's a swap uh what is your view actually on the future of privacy in d5 right and what type of
solutions do you think will see emerging and what yeah actually how will Houdini swap impact the future of privacy in defense would it
this way as well yeah I know it's funny the name kind of you know like the for
all the listeners out there who don't really understand the the the connection
there like who do you need Harry Houdini was a famous magician for he was famous
for making things disappear.
And so for us, we, you know, we, we make the sending and receiving transaction hash disappear. So there's no linkage between the sender and receiver.
So that's kind of how it started.
And, you know, it did kind of start off as like this meme, funny thing.
And, you know, fast forward to $20 million in volume a week.
And, you know, we think that Houdini swap has grown up a bit and is a bit of a more professional brand at this point, but it is still,
it is still just a, you know, more of like on the meme style of namings and brandings. But
anyways, so one thing that's really cool for us is that we have what we're calling like our PASS, which is like P-A-S, so privacy as a
service. You can think of it as, you know, just like a similar SaaS, you know, business that
we're running now. And a few examples of that have been, you know, these partnerships with Maestro
and Pal. And, you know, we have about 20 of them to date. But really, what we want to see is like breaking down the metamasks of the world, you know, breaking down the phantom wallets, like getting into the largest, you know, like basically where the largest user activity is and where all the assets are flowing.
And just have this, you know, check out, you know, this functionality of, you know, swap with, or private, private swap with Houdini and just have it be like a toggle. And so just give users like empower users to,
to have, you know, privacy embedded into their, their everyday transactions. And then like,
not only that, but then also in, in, in the trading tools that they use. So like having it,
you know, like privacy, you know, on games
or GMX or DYDX, like in the projects that people are actually using. So that's what we're kind of
titling this privacy as a service vertical. And it's very, very scalable. And not only that, but
like at our core, you know, we all we are still offering just cross chain technology, cross chain
liquidity aggregation.
So that's been a really, really exciting vertical for us.
But yeah, it's still, it's still like a really, really nascent space.
I mean, I can't, I can't really tell you how things are going to unfold,
but for us, like getting privacy into as many like,
like real protocols, real projects that people are using.
Like that's, that's a really, any like real protocols, real projects that people are using.
Like that's a really, really exciting vertical that we're exploring and
offering to users in an API offering to, you know, B2B to C really in an API solution.
Yeah.
That's pretty cool.
Just a question, right?
You actually mentioned privacy as a service.
Maybe you could unpack on that, like how would that work from a technical
standpoint or from a partner yeah yeah yeah so so we have a so we have an api that's fully
composable and so basically like you know you can run a front end using our back so say you're like
running gonna run a telegram um you know sniping bot or whatever you're gonna you're gonna go
against the banana guns the uni bots the maestros of the world. You can actually take our API and plug that into
a telegram sniping bot. And so then your users will be able to, you know, transact. So basically
go from, you know, ton to BTC or, you know, like not coin on time to, uh, to Telos privately, um, with all within like,
like your dApp. So it can be like the, you know, the Telos sniping bot, right. But it can be powered
by the Houdini swap API on the backend. And so that's exactly what Maestro has done. That's
what's pal. That's what pal has done. Um, there's numerous examples of them out there right now so basically just like white
labeling um the houdini swap uh back-end technology the privacy routing the liquidity aggregation
all all under like your branded front end
sorry i was i just realized i was on news no. No, that's pretty cool and pretty exciting. I think this kind of solution just can then further push the adoption of privacy
and especially of the combined privacy.
But there is one question that I've noticed that someone from our audience asked,
and I would like to actually bring it up before I move to another question.
So this is from Minor, and he's asking a question,
is Houdini more similar to Mixer or cheaper under the hood?
Yeah, so we're not a Mixer.
First and foremost, we don't operate under the same way as a Tornado Cash
where you're basically connecting your Ethereum wallet address.
It got full-fledged support from Vitalik.
And basically, they were just mixing.
So you'd have five Ethereum coming out. It would go through a bunch of different chains. Like there would be obfuscation
there and then it would, you know, have some sort of output for you on the other side. And
so like it really opened the doors for like, I mean, there was no controls in place. There was
nothing, you know, there was nothing that they could do. I mean, the argument to be made here,
somebody brought this up to me the other day and it was a really interesting, like, kind of just like example, they're like, hey, you know,
if a Colombian drug lord uses Microsoft Excel to, you know, to track their, you know, their drug
sales, does that, you know, does that put Microsoft Excel under the gun? And like, obviously, that's a
pretty crazy, ridiculous example. But like, the same thing could essentially be said for Tornado Couch, right?
They just provide open source technology in the form of a mixer to users.
And then bad actors caught wind of this and used it for nefarious activity.
But from their eyes, it's just like they just shipped code, right?
They were just the devs shipping code and just like bringing you AI and
then relying on good actors to use AI in the most, you know, like, you know, like the most
transparent and positive way possible. So anyways, long story short, we are not a mixer. We are just
a liquidity aggregator that is, so basically, maybe it'll help for me to like kind of walk through a transaction and how it works so say you're going from um you know usdc on eth to uh to telos evm
so how it currently works is uh an api gets called on a non-custodial exchange number one
uh where it will perform a swap of usd so ethon so usdc on eth to Monero or a alt L1 equivalent. So like a Litecoin or a Polkadot or
a TRX, something like that. That's kind of the intermediary token. For the longest time we've
used XMR, but we've actually just recently innovated and been able to use other alt L ones as kind of this
like privacy conduit token. So they'll go USDC on ETH to XMR, and then it'll get XMR will get sent
to a non-custodial exchange number two, and API gets called to number two. These two exchanges
have no linkage to each other, they have no connection to each other. And then it'll go
XMR to destination token, which is in this case, Telos and then Telos to the receiving wallet address. And so throughout
the entire process, you don't have to connect your wallet if you don't want to. The exchange
number two sends out a unique deposit wallet address on every transaction. So at least from
Houdini Swap's perspective, or from a user's perspective, you're never sending assets to a Houdini Swap account or broker account or anything like that.
It's fully non-custodial from A to Z.
So, yeah, that's how we operate.
So we're not on chain similar to like how Ethereum is, you know, like there's no smart contract integration we're basically just routing the
the lowest cost and the fastest uh the fastest transaction times um through through our front end
yeah thank you for actually doing this walk through this and like providing this detailed
explanation because this really explains like tell us also about how you guys operate and
function in the background because in the end of the day, a lot of people think, like, of privacy, like, and I don't
blame them, right?
Like, we always associate privacy solutions, like, with mixers or chippers or whatever.
And that's normal.
And essentially, like, you know, that's also basically, like, from what we hear and what
we've been exposed to in the past.
But now, like, we have we have like novel solutions coming up,
which are more compliant and which do take into the considerations,
the frameworks,
the regulatory frameworks that are out there and regarding Colombian drug
wars,
I think they mostly transact in us dollars.
At least that's what I've seen.
I'm carrying a bag of ledgers or treasures, mostly like bricks of cash.
So let's move to the next question, though.
And I would really love your expert opinion on that.
Basically, why do you think we're in 2024, right?
So DeFi protocols, if we have heard like the ones
the one that came out first was bank or for example protocol and then like that
it's land like since 2016 2017 we have heard a lot like i've seen like certain d5 protocols
emerging and then like 2020 like where we had a bunch of them coming up like i remember in august
of 2020 like um uh the overall tvl was around 8 billion that was how
low it was like and now we have seen also like things have changed and of course the tvl increased
in summer of 2021 which was d5 summer but still right like uh the number of users using d5 protocols
as well as limited i would say like we we tend to think that it's a huge market,
but actually it's not.
So, and why do you think that DeFi
is not adopted by the masses?
Like what are the challenges, generally speaking,
do you think that the industry is facing?
And is there something we could all do to improve?
Yeah, it's a great question.
And like, I think maybe like I can just walk through kind of like my personal entrance
into this space and then maybe that can be used as kind of like a test case for onboarding,
you know, and for kind of mass adoption of crypto users.
But I remember in 2020 during COVID, you know, I was trading NFTs around this time.
I was a little bit bored of my, you know, my corporate life.
So I needed some sort of stimulus to get me going outside of work.
And so I was trading NFTs and, you know, gambling on roll bit.
But anyways, that's for another that's for another day.
But I remember a buddy of mine, we took out some some pretty serious, some pretty serious
option contracts on the S& 500 that year so we shorted
the market and i don't know if anybody can recall the the year of 2020 but we had you know coronavirus
global pandemic that was you know foreclosure in businesses and there was no supply chains and
there was no economy there was yeah but we also had gamestop no yeah yeah so that so anyway so
that so that's like that comes later in the year.
But so also, you know, there was a president, like one of the most highly contested, you know, presidential elections in recent history with Trump and Biden.
And we also have, you know, civil and social unrest with Black Lives Matter campaign.
And so each of these three, you know, theses, like each of these three items in isolation, we felt would be enough to crater the market, right? I can't even go to a restaurant, I can't go to, you know, a sports game, how is there an economy? And the S&P 500, you know, printed 12 and a lost a lot of money. And not only that, but we just we felt as though we were playing a game that we couldn't really win.
And that, you know, and this was right around the time where Janet Yellen was, you know, the money printer go go burr and everyone was getting stimulus checks.
They were putting the thousand dollar stimulus checks in the United States into Robinhood accounts.
United States into Robinhood accounts. And then they were getting into AMC and GameStop, as Nikki
And then they were getting into AMC and GameStop, as Nikki mentioned.
mentioned. So not only were we losing money on what we felt was a really sound investment thesis,
but everyone else was making a ton of money. And so it just, we felt, we felt we, we, we lost
confidence in the traditional financial system. And I just, I think that that is what's turning
people away from traditional finance in general.
And I think it's getting all the nightmares of wallets and the poor user experience versus a 4% savings rate in a high interest savings account when inflation is at 6%.
So you're really losing money. I think that gap has really, really narrowed. And so like,
we're seeing more and more adoption just out of necessity and out of like, truly just
a loss of faith in the traditional banking system. And this is here in North America,
where it's supposed to be the gold standard. That's why you see in other countries that are a bit less developed,
they've already accepted this as legal tender.
And so this momentous wave is coming.
And I think it percolates from people really just taking a step back
and just being like the Fed really just puppet masters around our currency. And so
you just, you feel like you're playing, like, you know, like you have 21 at the table at Blackjack,
but it just, so does the dealer every single time. And you just keep pushing and pushing and pushing.
And so that's kind of what led me to go full-fledged into crypto and into Bitcoin and
into Ethereum. And we all know that, you know, the recent emergence of, you know, they said Bitcoin would never hit, you know, would never
hit 7K. It's now 70K, right? They said that an ETF would never be approved. And so look what
happened now. And so it's really just, we're seeing crypto and you even saw this as it's now
a bipartisan issue where single, you know,
single vote families are going to be, you know, weighing in on these issues. And so it's just,
I think like these things are just, these things take time and it takes, you know, it takes all of
us to really do quote unquote, like God's work and making sure that the UX is, is, is perfect.
So that when they do get here, they don't have a terrible experience.
But it really takes these situations or these bad experiences in traditional finance to have people search for an ultimate route.
And that's kind of how I landed here.
So I don't know if that's helpful or I don't know if that resonates with anyone.
But that's kind of my journey here.
And it's solidified my my place here for sure i mean totally i agree with you right like uh essentially
what we just need to improve i totally believe that as well is that like uh we need to improve
that the ux ui is there like right to ensure that it's there like the users can use it much easier
they don't have to jump through the hoops. Maybe we should kind of try to,
in the industry, like remove this idea of the bridges because it's really hard to explain to
normally what a bridge is, you know, because you know, they're not used to it in the traditional
world as well. So, and essentially I do believe that DeFi has actually more potential to be
adopted than Tratfly just for different reasons.
Like as you mentioned, if you go to your bank or whatever, like they can offer you certain
investments and you can like make maybe 4% or something like that.
And it's still not risk free, right?
There's certain risk.
Like, of course, when you, let's say, decide to, let's say um invest uh like uh put your money in the pool or with funds in the
pool or something like that you also accept the smart contract risk but it's also much more easier
because you just go to the website like for example waltz.fyi you check which returns are there
and you know like you can decide where how you want to let's say utilize your stables for example
and essentially like in certain cases
it can be an infinite money glitch
where you can easily actually deposit
your funds and
essentially like pay also your rent
or whatever right like
that can cover your rent and stuff like
this and actually like make
much more out of the funds
that you have than if you use the traditional financial services
that are available currently.
By no means I'm saying that to people,
okay, you should stop utilizing traditional financial services.
It's up to the people to decide.
But generally, for me, I prefer to put my funds in use in this manner, right?
So just to see where like uh higher apys or
returns uh and essentially like uh supply stables and uh most of the time and actually get a certain
amount on monthly basis so this is how i see it but, like I would like to move to one last, I would say the
bingo question, because I really like to ask bingo questions. You know, in that, like one of my
favorite mathematicians, John von Neumann, he said in 1955 that he asked the question, can we survive
technology? Given how much stupidity is going on around us, right? Like given that, for example,
the regulators are freaking out, you know,
there are governments that are going fully anti crypto and stuff like this.
Like I would like to reverse that question and ask like,
and essentially like given like what the situation that happened, for example,
was tornado cash, right? The developer being arrested and so on and so forth,
or like people being afraid to actually build further solutions
in the in the space similar like privacy solutions in the space my question would be like can privacy
actually survive us what do you think aaron
yeah i mean it's a it's a it's a difficult it's a really difficult question i like i i the fact
that we're even like asking this question just it it makes me feel like privacy and like
transactional privacy is like it is something that's you know like in its own area of being
like sketchy or something like that when really really in traditional payment systems in Web2,
if we didn't have transactional privacy,
everything would break.
And so why would Web3 be any different?
I think a lot of what we're seeing now
with Tornado Cash and Mixers
is it's really just growing pains of the space.
But like, I just feel at the business level, at the company level, like we are really like
we're really just like trying to give users the best, like the best possible experience
when they when they get into crypto.
And privacy is truly just like a fundamental piece of that journey.
And there's just I don't know what else to say on
that like it's really just like it's just how like it's our fundamental ethos as a as the team here
and and there's like as these use cases develop and develop like we just again we started this
with just like a few kols saying that we needed something like this. And so we built it for them in mind.
And then, you know, next thing you know, like months later, we have JP Morgan coming to us being like, hey, we want to put 200 million in assets on chain privately.
And so it's just you act in the best interest as you can.
And you put all these guardrails in in terms of compliance and, you know, and like, you know, and procedures and, you know, like processes
in place at the exchange level. But really, it just comes down to, like, I just feel like the
vibe as a team and what you're trying to achieve and the goals that you're trying to achieve. And
we're just trying to bring compliant transactional privacy to the masses. And, you know, that's what
we've been doing so far so i apologize if that
doesn't answer the question directly but man that's a tough one nikki i got to uh i gotta spend more
time on that yeah it's not just about your project the reason why i'm asking i totally get what you
guys are doing at the project level and i think that's awesome and uh after this like i hope like
all of the people that joined this uh conversation this AMA session, they go ahead and check it out.
I really think it's an awesome solution what you've built, guys.
Kudos to that.
I'm just asking it because I'm asking more on the societal level because as you may see, right, we do see, for example, I personally see privacy as a right, not a privilege.
But certain regulatory bodies or official bodies or governments,
they might see it differently.
They might see it as being a privilege rather than a right.
So essentially, like they take every step might potentially to kill it as well.
So as a matter of fact, like as a society, like for me, it's a question, can like a privacy
survive what we're currently doing?
And it's not just privacy privacy but also like it's
related also to defy or whatever right like they try to put a restriction on so can can it survive
like all those stuff all that pressure i mean i'm i'm betting not only with with you know with my
mouth but i'm betting with my you know my my assets and my assets and, you know, like I'm, I'm betting full fledged that, that this,
that this grows and this scales and not just, you know, Houdini swap,
but, but crypto as a whole. And, you know, obviously like, you know,
with fit 21 and some of the bills that were, you know,
that were reversed and we're getting, you know,
support from the Democrats and it's now, you know,
crypto is becoming a bipartisan thing.
I think they thought that this was just going to go away and it's, it's really not gone away at all. And, you know, just just touching on like, you know,
like you think of why crypto was kind of like, why, like, like how it received this, this,
you know, this, this minimum stability at the start was really because it was it was to bank
the unbanked, right. And so, like, that's why you see it being so widely used
in places like Turkey and El Salvador
and places that don't have access
to like traditional banking systems.
You know, if you're in Turkey and you own the lira,
you know, hyperinflation has plagued that economy
for years and years.
So it's, they had to pivot to a different currency
out of necessity, not out of
choice. And so, you know, speaking here in North America, yes, I have access to bank account level
privacy, but like, that is not a wide, like, we can't all say the same about that. Right. And so
like, just like, you know, I, like, I can feel comfortable going to my bank and knowing that
I have privacy in place and that I know that I can get, I can feel comfortable going to my bank and knowing that I have privacy
in place and that I know that I can get my deposit, like I can withdraw my deposits,
you know, basically whenever I need. And, and that's like, that's a very like Western and very
like localized ideology. It's not across the board. And so when you, when you broaden the
scope a bit, I think that it, it becomes a lot more of like an absolute necessity for privacy versus just a good to have, right?
A good to, like a nice to have or an option.
It becomes almost like just entrenched in what you believe and how you want to operate.
And we've seen, like we've seen in Web 2 what happens when you kind of just turn a blind eye to it right it's
we all know that our phones are listening to us our data is used uh and monetized basically against
us and so it's just uh you know like we've seen what happens when we give control to to five
enterprises that can leverage this data and and use it to to kind of like you know manipulate us sell to us monetize off us and
and so um you know that's that's that's privacy at the data level but like that's that's where
we're going to like that's where we're going to like it'll start with transactional privacy and
it will evolve over time but um yeah that that's that's kind of like it's we're here to stay we're
here to stay for sure totally agree so before we finish
it off and i ask questions from the audience i just would like to know aaron is there something
that i forgot to ask you is there something that initially would love to share with the audience
like yeah please feel free yeah no i i like you know i i never want to like kind of like shill a
token on here but i i the only thing that i will say is like, I do think that we have really,
really cool tokenomics and that's like, will be like my one bit about it.
Um, our token is dollar lock and basically like how the mechanism works.
It's very similar to DYDX, um, with their model. And basically it's,
it's very, very easy to understand the utility for the token is,
is as follows swap Swap volume on our
platform. We take a percentage of all that. That translates into revenue for the business. Revenue
for the business translates into buyback and burn into dollar lock. That gets emitted into our
staking yield sitting at around 35% right now. And that hopefully leads to more demand for lock
token. And then it's back to the swap and then then back to so it's this whole feedback loop and so um you know deflationary real yield on the token
we feel that that's pretty exciting and pretty competitive in the space and um just you know we
we do have a yeah we do have a token dollar lock absolutely fantastic uh anyone has a question to aaron from the audience
if so please request to speak
but i also hope like but aaron you did an awesome job today explaining houdini swap and i i hope
like i'm looking forward for our community to go and try it out i think it's a great tool and i do
believe that whoever uses it will enjoy it. It's
really simple and really straightforward. Yeah. Thank you guys so much for having me on,
Nikki. And like, honestly, I can't thank you guys enough for the support and
working with the Telos team has truly been like, just a, yeah, like a breathtaking,
a momentous experience for us and just a pleasure and a joy to work with.
And so I wish you guys the utmost success.
And I'll be back.
I'll be back to chat whenever you guys want.
Absolutely, yes.
We have to do one more specifically focused on the privacy,
maybe invite some other actually attendees as well
so they can have a discussion.
I really found this discussion very interesting
and maybe we can have more of a deeper discussion
around this topic
because this topic is to a certain extent controversial
and people in this space are interested in it
and the solutions that are getting built around it.
So I think it's a cool topic to discuss, generally speaking.
And really, I would love to thank you, Aaron.
Thank you so much.
It has been an absolute pleasure to work with you,
to work with the Houdini SWOC team.
Like, I really love it, guys.
And I really enjoy working with you guys.
And I really, really hope that we can take this partnership
to the next level and collaborate even further.
Like, really, thank you.
And it's an honor to have you in our ecosystem.
Awesome. Thank you in our ecosystem.
Awesome. Thank you guys so much. Have a great rest of your day.
And if you guys are at ConsenSys, enjoy,
and we'll chat with you soon.
Thank you guys.
Thank you very much.
Oh, thank you for joining.
Bye guys.
