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Ungovernable Podcast Ep. 16 – Guillaume Lambert
Recorded: May 1, 2025 Duration: 1:03:49Space Recording
Full Transcription
Thank you. Music Thank you. Thank you. Thank you. Thank you. Join the ungovernables.
No filters, no apologies.
This season we're cracking open Uniswap governance.
Welcome to a new episode of the Ungovernable Podcast.
Hey, everybody. Welcome to a new episode of the Ungovernable Podcast.
Today, we are joined by Guillaume Lambert, who traded lab coats for liquidity pools
from quantum biology to DeFi. We are going to explore a little bit about how deep science
meets deep finance. We are Joe and Austin of Alpha Growth, your premier DeFi operations
and growth firm. Guillaume, thanks for being here. Hey, thanks. What else did everybody know about
you? No, exactly. Great intro. I was going to say that I love the puns and the background so succinctly said about my previous life, for sure.
But yeah, I used to be in academia.
I used to be a biophysicist.
So quite different than finance and governance and blockchain.
But yeah, here I am.
What was your main focus? Did you have an against the grain thesis back in the biophysical world?
Always. So I was a physicist by training. So I did my undergrad PhD in physics.
And physics is very broad. And we're a bit arrogant in this way where we think,
all right, we know all the problems. We can figure that all of them let's try to solve biology these guys don't know so a lot of folks have this uh constant battle with
what we physicists think is important and what biologists think is important it's it both of
them are important but we again i admit we are a bit arrogant and approach things in a slightly
different way i was was studying antibiotic resistance.
I was using microscope to look at cells.
I was looking at single cells as opposed to like trillions of cells in the test tube
to try to extract differences, for instance.
So it was definitely fun, definitely something that was technologically advanced.
And that's why, I guess, again, I was able to use my physics training to do that.
But in a weird way, and then we can touch upon that later.
But the research I was doing, which
was in biophysics, statistical mechanics, some math involved.
But the math that you use to describe a molecule moving
in a cell or how populations can have
interact with one another can be applied to finance
in a weird way.
So diffusion, all of these, the math is the same.
It's just different topics.
So whether it's a electron moving around
or a molecule in a cell
or price getting pushed around by traders,
it's all the same math in a weird way.
So maybe also with some arrogance and say,
all right, I'm going to fix finance.
But it is the same tool.
So it's a bit more natural for me to apply the math that I've used in my past life to
finance, in that case, Uniswap options, all of that.
So tell us a little bit more of that pivotal moment.
When was the time that you left the physical world and went into the digital?
I mean, I was always at the forefront of technology and research.
So at the, I started in 2017, I think CryptoKitties was when it went on my radar.
And I said, this looks cool.
And then again, I think I sired and bred a few CryptoKitties and then I stayed on for
the fun and maybe the idealistic view of changing finance and from 2017 through the
bear market of course but i was kind of dabbling i was starting even assistant professor i wasn't even
out of academia yet but just somewhere would keep up with science advances technology then
blockchain seemed like a cool thing to look at i knew about bitcoin but it wasn't as exciting as
hey let's create some critical kitties and And I was a user of MakerDAO of
Uniswap v1 when it launched. I
deployed a few pools myself type of thing.
So it was a transition.
And with COVID, with
2020 being, I was at home, I was
remote, I was teaching
remotely, so I could not do research
as a summer project almost. But
through 2020, 2021, I was
delving a bit deeper.
I was able to be a better LP in Uniswap V2.
And then when V3 emerged in 2021,
and the white paper first, but also the real protocol,
I kind of sat down and studied it from almost like a summer project,
like a bit more math perspective.
And that developed.
But yeah, it wasn't a clear moment.
I was just a lot more excited with the advances of DeFi and finance
than it was with the pace of science,
which is extremely slow when you compare to it.
So at some point I said, okay, two curves.
One is going slowly, but had years of head time.
The other one is going much faster.
There is some level of transition, but yeah,
I would say that actually I was out of academia in 2023.
So between 2021 and 2023 is when I kind of made a jump, I guess.
So I'm kind of curious, which one do you feel is a little bit more chaotic,
the molecular world or DeFi?
This is also something that even DeFi or core development or protocols,
I come from the world of science where you say,
all right, I'm going to do an experiment that's going to validate in my thesis.
And then you have a hypothesis, you do the experiment.
This is a scientific method, but it's not like that at all.
99% of the time you're wrong, stuff breaks, you have no idea what's going on.
breaks you have no idea what's going on when i see some of the um fights or arguments we see
in defy or in even ethereum or blockchain development it's human push so you can change
it you can actually have a say to it you cannot say no i want the mass of the electron to be
different no one's going to listen to you you just have to play with it you can live with it similarly
with uh my view is that i use uniiswap v3, v4 now.
I go with the flow a little bit more,
trying to not reinvent or change what exists,
but rather take it to the next level, which I'm sure
is coming from that previous experience of science.
I would say, back to your question,
a lot more chaos, lots more uncertainty and doubt in science for sure.
Tokens, coins, it's actually very easy to understand in my opinion compared to
everything else that you can do in science.
Oh yeah, and I feel like you can jump in the deep end with DeFi, right?
Instead of going through that meticulous process that you could take months or years,
you're like, all right, I'm going to get into the nitty gritty
and just launch a protocol over a weekend and see what happens.
Yeah, the feedback loop is much more quicker.
And when you're doing science, again, that was at Cornell University,
the level of science that you do is charting new territories.
So it is, there's no textbook, there's no reference you're making,
There's no textbook.
There's no reference.
You're making, you're writing a textbook as you go along more or less.
you're writing a textbook as you go along more or less.
So it is definitely much more difficult to kind of exceed the speed at which you can innovate.
Whereas, as you say, writing code, even LNMs can help you write code through it.
But you can actually create something that is a little bit more quick and rapid turnover than what you see in science.
Yeah, it all moves quickly.
I'm kind of curious, Guillaume, what do you tell your kids that you do?
I feel like talking about options in finance can be pretty difficult.
Yeah, he said tokens are really easy to understand.
So how do you explain it to your kiddos?
I have a two-year-old and a five-year-old.
So now for them, it's can we play outside
and can I try to climb as high as I can on the table
and launch myself forward?
So that's, I don't even tell them about tokens.
I will evangelize them later when they're a bit older.
I mean, when I tell my wife, my wife is a cardiologist.
She's also quite, again, grounded.
She doesn't show up one day people could die type
of thing so that's kind of a different the stakes are different but she gets it again she she uh
she sees i am enthusiastic about it but then when when she meets her colleague she's like yeah
i'm when i meet someone to know me i'm like'm like, you know, blockchain is so great.
And then she's like, he's building a platform to trade options on cryptocurrencies.
And people say, okay.
Takes five seconds to explain it while when I try to do it, I have some trouble misjudging.
Like what level to take there.
So on that note, let's double click into what exactly that is. So cryptocurrency options on the blockchain.
What is Panoptic?
Yeah.
So this is the fruits of many years of efforts.
But at the end of the day, it's taking over the LP side of Uniswap v3 and v4.
So LPing, most of you may have been an LP or you see like people do it. On Crypto Twitter, the main narrative that it's impossible, people lose money.
But if you look at it long enough and hard enough, you realize there's a lot of analogies between LP positions and options.
So we can dig deeper, but the key point is that we're taking over the LP side of Uniswap,
trade LP tokens as opposed to trade the underlying tokens themselves.
But if we trade these LP tokens, you can create options payoffs.
So it's a happy accident, almost like a cheat code that we unlocked.
I'm sure Hayden and even those that do research on AMMs had no idea
they were creating something like that.
But at least our thesis is that LP tokens have this weird
non-linear property. You can lose a lot, you can earn a little bit. It's so weird, but if you look
at it carefully, it's like selling options and selling options is difficult, but at least we know
the tools and the playbook for selling options. And with Panoptic, you can sell options. You can
do it on leverage. You can do it with more returns, but also you can buy options which is shorting someone
else's LP token you can open the two-sidedness of the market not just sell something but also buy
people may be used to buying options with GameStop or options or calls on on your uh stocks of choice
it's kind of making the whole options uh landscape complete buying selling options the beauty is that
it's integrated into Uniswap in a
way that is almost too easy in some some in some ways i go with the flow i didn't want to change
uniswap v3 artwork let's say all right this is what we have the hand will death with what can
we do with and yes options lp positions equals options okay look i do want to understand a little
bit more about that because i think fundamentally i I understand what you mean by they're similar in risk profile,
right?
But explain a little bit more about how an LP position and an options
contract can be looked at in the same,
like you said,
nonlinear return and risk.
Yeah.
And if you go on our website,
app.penoptic.xyz, we try to show it
very visually. So I personally think in terms of payoff curves, linear, it's like your perp,
and then you have the curviness of a covered call, an option, and we show this. It is simplest,
As we can say that you have a LP position that has a range.
as we can say, that you have a LP position that has a range. Above the range, you're 100% USDC.
Above the range, you're 100% USDC.
So there's no payoff.
Your cash or payoff is flat.
Below the range, you're 100% ETH.
So you have a one-to-one payoff with ETH exposure.
You started maybe 50-50, but now below you're 100% ETH, 100% USDC on top.
You have some curviness in between, but that's kind of the main feature of, again, a covered call. You have upside
capped profit potential, downside risks, which is you holding the asset or the stocks. And just
that simple observation that below UTC, above UTC, somewhere in the middle is continuous,
so we don't have to worry even too much about it, means that the payoff is like an option.
we don't have to worry even too much about it,
means that the payoff is like an option.
The premium you get, the fees you get is another story,
but just the fact that you have a complex instrument
that has a covered call-like payoff,
you might as well say, all right,
let's treat it like a covered call.
Okay, now do derivatives such as these,
is it fair to call these derivatives?
Right.
It's a, it's, it's, it's a more physical derivative.
Okay.
A more physical derivative because it's, it's more correlated because it's
actually representative of liquidity instead of a synthetic.
If you do features contracts or even options, you can print a long and a short.
And CME, all of these trading, like the brokerage firms allow you to do it.
If you're a market maker, you can print.
You don't need to have the assets.
You don't need to have barrels of oil sitting in a warehouse.
You actually can print these contracts because you close them.
You make sure that you get rid of them to some extent.
Which is kind of how the short squeeze happened with GameStop,
right? It's because they didn't actually, those shares did not exist that were being shorted.
Okay. So how does this contribute? How does panoptic activity contribute to price discovery
of the underlying assets? Yes. A lot of what we see, so DEX space has its own rules and centralized
exchanges have a different one. so if you focus only on decentralized
exchanges like amm's uniswap the more trading there is the more fees are generated for the lps
and if you have a lot of liquidity in a uniswap pool where everybody puts the liquidity in the
same range it can act as a buy or sell wall but you there's more there's's more dampening. One ETH purchase will move the price less if there's a lot of liquidity.
And if there's almost no liquidity, a one ETH purchase can move the price at 50%.
So when you sell an option, you move liquidity in Uniswap.
So selling an option requires you to have the tokens, moves liquidity in because you have the tokens moves liquidity
in the Uniswap pool
dampens the price action
decreases volatility
and if someone were to put
a billion dollars worth of liquidity
in Uniswap v3 or v4
then that would be the driver
where all the liquidity
would be traded there
whether the centralized exchange or not
the bulk of liquidity will be where the profit is
because there's the most liquidity.
And if you don't do that liquidity provisioning,
selling options is in thin air.
It's not affecting the price at all.
It's secondary.
Again, options are traded in Chicago,
stocks are in New York.
It's two different markets, two different locales.
Here, selling an option or GameStop style, people bought call options, someone had to sell them.
But in that case, selling those options would impact the price and the volatility directly.
And that's kind of the physical nature of it. Lots of selling means the price moves less, volatility decreases.
And if you want to buy an option, this is where the unlock that Panoptic allows is that you can short an LP token. This is weird, but you remove liquidity from Uniswap. And then you had something
that was 50-50, ETH, USEC, you remove it, you unwrap its content, you say, I'm going to sell
the ETH, get that everything, USEC. You remove liquidity, it'srap its content, you say, I'm going to sell the ETH, get back everything to USEC. You remove liquidity.
It's not there anymore.
So buying activity now reduces liquidity, makes the price more volatile.
There's less liquidity to be kind of backstopping the trading activity.
So buying options now also impacts the volatility quite clearly because you can decrease the volatility that's available.
The seller that sold the option still gets paid. The buyer pays them the fees that would have been
corrected because now there's more liquidity. They pay them more than if no buying or selling
were to happen. So that is kind of the clear missing piece if you want. If Unisob LPs feel like they don't earn enough fees, a buyer will be buying
cheap options. And from the math and the probabilities, if you buy options cheaply,
you'll make money in the long run. The more buying there is now, it can get more expensive,
but that's kind of the missing piece. You need the other side of the balance to,
yes, fees are low, now buyers make money. If fees fees are too high sellers make money and and you need
these two actors to kind of stabilize the market gotcha so it's almost like a it balances it in
itself while using more of the range of liquidity in a traditional like v3 v4 contract yeah and and
the liquidity that sits in v3 contracts it can be misdeployed you have some
pools i won't shame any protocols or teams but you have liquidity out of range it was it's likely
the tokens or like the stuff that they didn't want to keep but price went down liquidity is out of
range your start you don't want even want to touch it whereas if uh you think about this in terms of
options you could move that liquidity you can buy that liquidity that is out of range.
You can relocate it near the range.
You can actually now be a bit more efficient
in how liquidity is distributed.
And also, if your option is out of range,
maybe if your liquidity is out of range,
there is a trade that exists that can make it close to the range
without burning it.
So the liquidity distribution as well is guided from LPs trying
to optimize time in range maybe from their choice of range like upper price and lower price.
That's one way but if you deal with in terms of options now we have the volatility, the buying
activity, you have more parameters to kind of that can enter into the formula for the entry point.
In that case you are being more efficient into where the liquidity is deployed.
And so how are you seeing traders use Panoptic today?
Like what's the primary use case?
Yeah.
So we've launched in December.
We're on Mainnet.
Quick announcement.
We're launching on base later this week.
Mainnet is cheap for fees which was fine who
knows sometimes go out goes up but then fees on base and layer twos are definitely uh more retail
friendly so we'll launch there a lot of what we see on mainnet is selling activity lps that were
lp-ing already in uniswap or new option sellers that have a good understanding of setting options
that are now doing this on panoptic there's a little bit of buying activity mostly on the call side meaning people are
bullish it went down so much people that there should be a turnaround so a lot of calls queue
this is what one thing that you can see in the options world but a lot more buying of calls
whereas what buyers would have made bank over the past three months, you know?
But that's fine. It's hard
to predict, but lots of call buying,
lots of selling
options. I'm personally
not an LP, but one
thing as an LP can do is you can buy options
as well to cap your risk. It could be a
risk management tool as well.
Not buying for speculative
purposes and going like 100x on a meme coin,
but buying one or a few options on E2SEC
can help you offset risks for kind of the whole market tanking.
In a way, you have E token A, E token B, E token C liquidity positions.
One single E2SEC target can offset some of your losses
if the price of all tokens were to go down, especially to USDC.
Gotcha. So like essentially for LPs, it's like a way to manage risk. And then for traders,
it's a way to possibly leverage and make more money on those opportunities, whether it's through
are the traders mostly doing the put options or the-
No, call options, which is, do you make money the higher the price goes.
And a call option is the right to buy ETH at, say, $1,500
when the price is $2,000, $3,000, $5,000.
So you buy it cheap.
You can either keep that cheap ETH or sell it in the open market
and make your money.
But yes, a lot of folks that are speculating
are mostly buying EAT token on the way out.
Oh, that's interesting.
So why do you think they're not buying like puts?
The bulk of activity you see in most like ETFs
and kind of large underlying,
there's puts queue, which is the other side.
And this is for hedging purposes.
You have a fund that contains like millions of dollars worth of assets,
some Tesla, some Amazon, some Treasuries, a bunch of different stocks.
And you can buy one or two puts on the S&P 500 to hedge your risks in a way.
That's how options are used in trade fights to some extent.
Hedging, managing risk, buying insurance,
and you trade the most liquid one, which is S&P 500.
But if your Amazon and Apple stocks go down,
S&P is probably going to go down all the same time,
so you make money on that kind of hedge.
This is different than what we see in Ethereum land,
but that's fine.
I would say that the people that are owning meme coins maybe
don't care about uh risk yeah true and and well i feel like the market kind of moves together as
well uh or at least traditionally has been for the crypto market so it's hard to you know cover your
your risk because you're still going to be in a bad position either way.
And that's the thing.
I personally am exposed to ETH mostly in my LPEing, in my trading,
but then I still think in cash at the end of the day.
So you can have, yes, one or two trades that offset that overall exposure.
So even though if the whole market of altcoins, Ethereum goes down,
you can make money hedging correctly on ETH or SEC.
Or if it goes up, we're finding new use cases.
Another one that we're thinking about a bit more is that
if you're lending your stable coins, you go on, it could be Morpho, Aave, Orler,
all of these lending protocols, you land your stable coins.
Maybe ETH goes back to 5,000.
You lose out on that upside in a way.
You had stables.
Yes, you made 10%, but you lose out on the 2, 3x
that could happen in these tokens.
So one strategy is you can hedge the other side,
which is, yes, you have all of your kind of net worth in stables, but you buy a few call options to kind of see the upside of having no exposure directly on the downside.
But yes, if the price were to moon, you do have an extra yield.
It could be like 10% of your net worth is on these call options that would now pay off and if price
keeps going down you lose the premium you pay which is kind of the minimus compared to the
the price there Guillaume is it fair to say that Panoptic allows traders to have safer and
safer leverage is that is that a fair way to put it? Yeah. Again, the crypto ecosystem,
when you tell them, yeah, leverage or risk,
they don't bat an eye and that's fine.
But yes, the primary use cases for options,
whether it's a bank or a fund
or anyone that holds a sizable amount of stocks
is for, yes, controlling risk,
managing volatility. The funniest thing I see is that, oh, look, all of these hedge funds underperformed
the S&P 500. So we hear this all the time. If they put all of their money in the S&P
500, yes, they would never, they would outperform 99% of the hedge funds. That's not the goal
of a hedge fund. It's for folks that have a lot of money.
They don't want to see it go down.
So on the downside, hedge funds, I would imagine,
would overperform if, especially this year,
even if the S&P 500 were to go down,
it's dampening the risks.
And you want to be going up to the right,
maybe less than the S&P,
but the pullbacks aren't affecting you as much.
And that's kind of the story of options that were used for, it started in Chicago because
a lot of agriculture, lots of unknowns where whether the weather's going to be nice,
the harvest will be larger, plentiful, you secure a price, you limit the risks, and then you have
some certainty that you pay okay i'm gonna pay a
little bit to ensure i can sell my corn at this price type of thing and if it's true of course i
can or if it's not i can sell at the market price and let that option expire so controlling risks
is i'm a bit older maybe uh that's why i focus more than going 100x on the perfect exchange
focus more than going 100x on the perp exchange.
That's what suits me as well.
And is Panoptic offering more accessible and actually cheaper exposure
versus just a conventional buying an options contract on ETH
versus can I have that same...
If you want to buy options on ETH now,
I'm sure maybe if you're US-based, you cannot do it anywhere.
Deribit is the most liquid one venue that allows options to block US users.
It's through the ETF.
So Bitcoin ETF can buy options on Bitcoin on the ETF.
I traded as well on my TradFi account, I guess.
But ETH, unless there's an ETF with liquid markets, you cannot do it. So that's... we also block US users, I guess. But the key point is that we can
offer options without... by tapping into the existing liquidity in Uniswap. But we can also
do it for medium to long tail assets. The UniToken, it has a Uniswap pool, it has healthy volumes.
The options market falls off kind of as a bonus almost all the defi
tokens stable coins to go point pools this is our these are kind of a bit more boring less more
range around but it's a market that win options meme points pepe uh we we traded some uh the the
milady cult token so we traded some of those uh some options on those and and extremely volatile
as a seller you make the most money and that's kind of one way to also get exposure on on on
the sell side but yeah the the beauty of uniswap was to democratize the uh listing of tokens or
stocks we can do the exact same thing with options so i'm not sure people will buy uh
puts i mean maybe they will puts on all the defy tokens but now we can do it exact same thing with options. So I'm not sure people will buy puts, maybe they
will put on all the DeFi tokens, but now we can do it in a way that is permissionless.
That is awesome. Okay, now how is Panoptic adapting to v4? How is Uniswap v4 changing
the way that you guys are thinking about it in the way that the protocol operates?
Yeah, so we were building for two years before we launched, working on v3 because it was
the only one live. We launched in December and then v4 came in earlier this year. We were able
to convert our existing code base, which was kind of audited, vetted, lots of work, blood,
sweat and tears, to work on top of v4 in addition to v3. And we don't do any hooks. We don't do anything that is specific to v4,
but we can work on top of any hook pools.
We can work on top of any pairs.
It could be vanilla as well.
That was the first step.
Even the hook wars, I don't know if this is,
but it's still unknown what hooks will gain the most traction,
what's the best and worst ones,
and it's going to be iterative.
And then we don't compete at this level yet.
We just allow any hooks to be served by Panoptic.
So any hook builder here, you can get an options protocol
on top of your hook pool for free with Panoptic.
Is there any use cases for those hooked pools
that you have in mind or maybe thinking about and playing
around with?
Yeah, so the existing ones,
a lot of what I see is branching to solve LPs problems
and kind of trying to make it more,
yeah, more profitable for the LPs.
One thing that happens is that
this means that options will be a bit more expensive
if LPs in general earn more fees.
Buyers will be paying a bit more, but it
still works. There's got to be a different market equilibrium. So I wouldn't say that I want a bet
on a specific market or a specific hook, I mean, but rather we can serve all of it. And what seems
like, oh no, they're redirecting some fees away. That's fine. That means that the buyers can now
buy so cheap
that eventually they will buy enough that is on par
what you get with the other pool.
So I'm actually happy with this decision
because maybe our V2, maybe our next iteration
will tap and lean into the hooks infrastructure a bit more.
But now we can let it play out with the V3 pools
and the V4 support as well.
So base now that we're launching has the main flagship one
is going to be the E2 ec uh v4 pool uh for instance so you've you've hinted in the past that leaving
leaving money on the table or the lps are leaving money on the table right and this market equilibrium
that you just alluded to the the yield has to come from somewhere this additional revenue has to come
from somewhere and so who in your mind is going to be
taken on that burden yeah as though again we can touch a couple of directions but with fanartic
if you want to say I want to increase the returns for LPs you don't need to change the fees the
trading fees so traders can pay the exact same fees and a simple solution. Oh, you have a dynamic fee that reacts to trading and that flows value to the LPs,
but more trading fees may mean less trading volume.
It's rich and rich.
So yes, one thing that we are able to see is that traders pay the exact same fees.
Value is brought in by speculators and risk managers that buy options.
is brought in by speculators and risk managers that buy options.
They have a totally different pool of funds.
They buy insurance in a way that inject money into the panoptic ecosystem
so that it doesn't interfere with the swappers
because they see the exact same trades.
And the LPs also get a large fraction of their fees from these swappers,
but they have a supplement that's coming in from that buyer.
And buyers may have a totally different outlook than a speculator.
Options buyer that will hedge will have a totally different outlook than a speculator.
So they may even be happy to pay a bit more for protection so that they can sleep at night.
And now that flow of funds can flow to the LPs directly
from that hedging use case that the buyers can get.
Would you say that it also protects against impermanent loss
or is that like an unfair statement to make?
No, exactly.
The impermanent loss,
it's a very well-known concept in the world of options.
It's something that any beginning trader has to deal with,
any even funds they have to deal with,
what we call impermanent loss, they call that gamma risk.
You set an option, the covered card example,
you're still exposed 100% to your underlying
if you're kind of directionally wrong,
and you have to deal with it.
And the gamma risk that you face as an options trader,
you have tools at your disposal to do this, to solve this.
When you do it only in a swap,
if you look and some solutions to now buy options,
at least use options to hedge,
but yeah, now with Panoptic, it's all in the same place.
But the problem, quote unquote, of unparalleled loss
is at its root only because you can only sell options, but also only sell covered calls.
So covered calls have this payoff and it's limited.
You always have exposure to the downside.
Your meme coin, your DeFi token, it going down means that you are always exposed on the way down.
Unless you short the underlying or you do something else. But as
a option traders, yes, you can set an option, buy another one to cap your losses. Instead of having
100% max loss, you have maybe 10% because your option protects you. So buying options,
buying options that are maybe wider than your initial position or slightly offset allows you to
get control gamma.
It's not getting rid of infinite loss because it always exists,
but then it controls it.
And that's kind of the... We pushed an update to the UI where we showed a gamma risk
to some extent.
And it's a concept that's very well known in options trading
in TradFi.
I'm going to try to push this for LPs,
but the gamma exposure of your option is what you want to etch.
And whether it's something else is kind of a transformation of that principle of risk.
Gotcha.
And I love your site too, because it's so easy to see where you are exposed.
I feel like a lot of other options platforms, you're just kind of shooting in the dark.
And unless you're really a pro at how to how to navigate it you just kind of seem lost
from the the get-go yeah i mean i would i can claim that even our ux is better than the tradfi
experience you go on robin hood it's for the buy side it's actually okay you see the the pnl but
even the greeks that's data there's a bunch of stuff that you have to know that it's not clear
so we feel like we put a lot of efforts in to make it so that you see with your eyes
what your exposure to, and you have maybe one, two, three, 10 positions.
We show you the combined payoff of all of those as well, that you don't have to worry
about 10 little different kind of underlines.
But now you have one global position.
You hedge the impairment loss of that global one
instead of buying 10 options you buy just one so it makes this is again what hedge funds and quants
do but this is how we make this accessible to unisop lb's wealth of traders here in d5
so how do you guys i mean these are very complex and you've you've kind of touched on some of these
the greeks and we don't really use these terms a lot in d5 unless you come from a I mean, these are very complex and you've kind of touched on some of these, the Greeks.
And we don't really use these terms a lot in DeFi unless you come from a TradFi background.
It sounds like you guys have done a tremendous job on the user experience, user interface.
But how do you guys go about educating users?
What do you think has worked well?
What has not worked well?
And how can we learn from that?
Yeah.
So even internally, I'm used to treating options.
We have a research team that does research full-time,
two people doing research.
We used to publish this on Twitter only.
Now we do a live show where we discuss kind of that week's research bite
that we call.
And this is a good way to discuss these research topics.
The last one we did was a backtest.
Would you be aware of buying puts or selling calls?
And these two are making you money if the price goes down,
but it turns out that buying puts on Uniswap was cheaper
and made you more kind of return in a way.
So research, hard data, I don't even know half the time
what the answer is going to be when you do these back tests. So we just have to look at the data on the chain, which is easy to access. So
that's a good thing. And as I said, internally, I was talking about this with the research team,
but a lot of folks had even no idea how to trade. So what we've done over the past two months
is that I'm doing three live shows per week with Rosalie, who's on the marketing team. And she used
to be a meme coin trader and said, I'm tired of losing.
So I'm teaching her our trade options.
And we've done those ticker Bitcoin trades or ETH and BTC.
And she's actually trusts her guts.
And she's actually right quite frequently.
So again, she's not obfuscated by the math and the data
and the technical analysis.
It's just how do you feel Bitcoin's going to do?
And then we frame it so that it's high likelihood of profit.
You make less money, but you're right more often.
But it is a skill that can be taught to anyone.
You don't need a PhD in math to some extent to understand this.
And that's the research show that we do.
It's modeled a little bit on the Tasty Trade show, which is a TradFi platform that teaches people
how to trade options. We do a similar thing. Rosalie is on vacation. So starting this week,
we teach someone else on the team that used to be a new swap LP and teaching her how to now hedge
her LP positions on Panoptic, how to transition from being an LP only to LP in Panoptic as a way
to hedge her position. So to some extent, showing by example, and people send me Twitter DMs and I answer,
and I'm actually very active, but yeah, running the reach, class 101 type of thing is also
another way that we make sure we educate. And yeah, some people have questions and you can
answer them live as well. So it's just a good for them and of course your your background in academia i think probably doesn't hurt your your case with your ability to
make the level of preparation that you put in a class compared it's like each hour of class you
have four hours almost of research sometimes and and i was teaching like grad level class as well
so you have to kind of put in the work so now now without saying it's easy, but it's easier. I just have to ask, what's your assumption on Bitcoin? Bullish, bearish, neutral.
All right. Okay. So we can actually create a trade that matches her assumption. So yes,
it's fun. I like it a lot. That is a lot of fun. Not only do I want to participate personally in
some of these classes, because I think there's a lot that I could personally learn. But I also think this would be a very, very powerful thing that we can share and co-market
from the Uniswap side, because I think a lot of Uniswap users would probably
say that they're not more than 50% comfortable with being able to trade options and understanding
the purpose and the reason why these instruments exist and how they can help
you become a more prudent and smart risk averse trader by also being a DJ at
the same time.
Exactly.
And if you're an LP, some people say, all right, new meme coin drop.
Let me be an LP.
You get a lot of fees.
This feels good, but you have to have some management as well.
And you're also selling options, but then naked options in a way. And that means that you can be quite exposed. So even the
LPs, they are kind of missing the toolkit. It's like a Swiss Army knife with like one or two tools
missing. You don't have the full gamut of what you need to be successful. And yeah, I think the
DGENs, whoever is trading perps and trading coins and looping with Pendle
and forming points, they're kind of primed for understanding options.
The option is going to be easy for them if they have the know-how to loop through all of these
kind of hoops to- And you used some funny vernacular there,
naked options. Now, is that just if I am to sell an options contract and i don't
have a hundred shares in my own name basically yes uh yeah the the naked call naked put so yeah the
winning trade options whether your hedge fund as you can print money out of thin air almost
but you still have to have some requirement the bank to some extent
doesn't allow you to same thing with GameStop they probably had a few billion dollars worth
dollars worth of dollars here that was enough to back some GameStop calls they lost all their
money but at least they had the money same thing with options even if you don't have the shares
we allow you to borrow maybe tap onto leverage and sell a call option, even though you
don't have the online. And we have a buying power requirement that matches that risk. And if you
were to trade in your IRA account in TradFi, it would be all secure. You won't even have access
to leverage. You have to have the cash or the assets to back 100% of the losses. In Panoptic, we made a decision to allow this
leverage to take place. We allow people to borrow funds. We allow them to get 5x leverage in a way.
So we do give them a... You have one ETH, you can borrow four more ETH to form the protocol to trade
options with. Of course, the liquidation is risk, but that's how you can be a bit more capital efficient.
Again, leverage is not always inherently
bad. It means that you
can be more efficient with your capital
and the way I trade is that even though
I have 5x leverage, I use
2 maybe, 2, 2.5
and don't max
it out. And that's how you can
now I effectively trade with
again, 100%, 150% more capital.
That is in Uniswap using other people's capital that I borrow to act with it. And if I do get a
loss, then it's my funds that are getting seized. But at the end of the day, I can be more capital
efficient with other people's capital that they don't have the ability to do it.
So traditional options markets have been generally gate kept. And first of all,
do you agree with this? Do you think that this is directionally correct? Or do you think that
this is just a tactic to give institutions more control of the markets? Or is it genuinely designed
to keep the retail investors safe? I think it's not designed to keep the investors safe.
You can buy IPO stocks.
You can buy a bunch of stuff.
And they even make it like...
Anyways, long story short, I won't go in a tirade again,
but I do think options allow you more financial control,
but they allow you more financial control but they allow allow you to
control risks and of course if you don't uh educate and it was from like 60s and 70s no one knew how
to educate the retail user base which was kind of mom and pop like doing some investments they
blocked them just because all right you're gonna lose going to lose money. You're going to sue the SEC.
It's going to be bad news for everyone. Now it's accessible. We have people spend more time learning more generally, but learning about anything that you want. It's easy. And what
is the current barrier of entry is how much money do you have? And any Fidelity or Schwab or E-Trade
account is if you have more than $250,000, oh yeah, of course,
go lose your money with options. That's fine. But if you have 25K, no way. You have to almost
lie and say, yes, as a trader, I have 25 years of experience trading options. Let me have this
25K account be enabled, I guess, level three or whatnot. But yes, I would say that it's a bit
archaic. It's a bit something that we see in
DeFi, opening the doors, allowing people the control of their finances. But as you hinted at,
institutions use options. They have access to this hedging risk management. It is a useful
instrument. And if you don't give it to people that want to control their finances then they
kind of have it like a much much higher uphill battle than then if you allow them to do so
i'm on the sell side which is doubly uh more risky but it's it's not out of reach for anyone for sure
but same thing with buying average so when i say you can hedge your losses by buying long dated
options you don't even have to day trade.
You do this and then every month, maybe over a few months, you can roll or adjust.
It's easy.
It's much easier than these swing trading that you see with stocks or SPAR.
So pivoting slightly over to Uniswap specific around governance, especially, you had an idea for an alternative use case for the fee switch.
You remember this?
Yes.
Tell us about this and whether or not you still stand by this idea.
Yeah, so this was V3 and V2 as well had the fee switch code.
So this was a signal thing.
It's there.
And I'm also of the opinion and back to my science uh uh background
and even murphy's law if something can happen it will happen so if it can happen it can happen
something with the fee switch i feel like it is there the best way we can find a use case for it
is okay let's look at it and and not necessarily to see future token flows for token holders,
something that's very, very complex.
But rather, the fee switch will be on a per-token basis,
which is what it is.
It's going to be the protocols or the teams launching that token
that will turn on the fee switch.
And the rationale is that now you
can have a fee switch that allows revenues to go for that trading to the protocol itself.
Maybe a little bit goes to Uniswap, but the key point is that you don't have to print as much tokens as you had during DeFi summer that we saw where we had 400% dilution per year.
You have the more the trading tickets there.
You can guide users.
You have some ETHs, some tokens.
You can actually have some revenue source as a protocol that launches and that could guide more traction
guides the incentives and you can say okay whoever goes through our process gets their share of the
fees but if you have just-in-time liquidity mercenary lps that don't don't go through that
entry point of being with the protocol and with the incentives,
then they don't get their share. So I don't know. I'm glad you read it. At the end of the day,
it's just one of those things where even me as a protocol founder, maybe I'll do this. Actually,
it would be a great idea to have, if we have a Panoptic token, I want to get control of the
incentives. I want to make sure that the LPs are rewarded properly.
And I don't have to wait for Uniti token rewards, but I can say this is the Panoptic and ETH that is skimmed off of the LPs.
But if you're LPing in protocol, maybe on Panoptic, but you'll get back that amount type of thing.
And I feel like it makes sense too, right?
Like you're kind of bribing protocols to bring their liquidity
and keep their liquidity over.
And use them.
With Uniswap, yeah.
Rather than going to another DEX, like let's say Aerodrome,
where they have their like flight school
and they're able to bribe LPs to essentially reward them.
So, I mean, it does make sense in theory.
I mean, if I'm a, I mean, Oler Finance to some extent.
I was a token holder.
I'm glad it went back up
and then they are crushing it for sure.
But yes, maybe they want to incentivize
their token holders
though they weren't there for the long run.
And yeah, I could be an LP with these tokens
as opposed to doing nothing.
And if I do it on LP,
I feel like I'm kind of without any protection.
So yeah, I mean, that was what I thought
was the best, most straightforward use case for maybe not benefiting
Uniswap directly, but benefiting protocols.
But as I said, it could be a part of your ETH that you collect
and that piece goes to Uniswap DAO or some way to grow the market share.
As you say, Airdrome is unfortunately
like getting a lot of traction with these extremely liberal
monetary practices with their tokens, but that's fine.
LPs are moving for that direction.
But yeah, we don't have a fee switch in Panoptic.
But then, yeah, maybe it brought back something.
Maybe the next iteration will have something.
It could make it even more straightforward
to activate these.
It still has to be governance.
You don't want to have any random
imposter pretending to be the founder
of XYZ.
But if it's voted on and there's a use case to be made
and yeah, maybe the DAO
gets a share of their revenues,
then yeah, that seems sensible to me.
Sure. Yeah, and I feel like with V4
hooks now too, that kind of to me. Sure. Yeah, and I feel like with V4 hooks now, too,
that kind of opens up those possibilities at the protocol level
if they want to implement those types of hooks
for their particular OPP pool.
Is there a V-switch conduit in V4?
I'm not super familiar.
Or can you do it all in hooks without asking for a commission?
So I think there's some no-op hooks, essentially.
So you can essentially charge fees without, you know, without the fee switch, essentially.
That would go back to your protocol.
So I think there's a few different protocols out there that are implementing those.
And that's how they're getting their revenue streams essentially for their activity and LPs.
See, if you're listening to this, I think if you want to increase revenues and it has to make sense,
like if you're a tokenized, I mean, even if you have a tokenized item,
you may use this revenue to incentivize some extent, but the source of revenue,
the more trading there is, the more you get,
the more activity, the more demand helps you.
So yeah, I don't know.
Seems like tokens are a product unto themselves sometimes with some teams.
So I'm sure getting some of it back maybe.
They are their own product on themselves and they can be a beast to maintain and work with.
And especially like the protocol on liquidity too. That's an asset that you want to leverage and work with. And especially like the protocol on liquidity too.
That's an asset that you want to leverage and use.
So yeah.
All right.
Let me drop a bomb on you.
So the protocols, they should not be, I think,
be actively managing their liquidity.
Like you create a lending protocol, like LPEing options.
It's actually pretty like outside of your area of
expertise and and if you have a different type of protocol could be nft any tokenized asset
it's hard to market make and to be an lp it should not be like a team so yeah protocol only
could hire someone to do this one thing that panoptic does is that we have a we've constructed
a lending protocol inside of Panoptic.
So when people come in, they deposit some funds
and these funds can now be borrowed by LPs.
And this is how we allow people to access leverage.
So if I deposit a bunch of ETH
and not even do any options trading in Panoptic,
I can get a yield because this is like any lending protocol.
You don't go out
and buy a mansion in the real world. You just LP with it, but you pay an interest rate that goes to the depositors. But if your team, a protocol, you can print 5% of your token supply
and park it in Panoptic. And now it's liquidity available for traders. You can now move that
liquidity in Uniswap. You can borrow for a fee. The team will
earn some revenue, but you can now move that liquidity in Uniswap. You can be a market maker
and access 2x leverage and be maybe coming with your own ETH. You borrow the token side. You don't
have as much exposure maybe as a real LP. And that's another way to... Folks in the Univ2 era
would burn the LP token and have perpetual liquidity
you can do a similar thing where you deposit
into Panoptic but you burn the
deposit tokens so you can never
redraw this or maybe you can collect but at the end of the day
you can now have liquidity that's
perpetually available not locked
in a range or not locked for a range but
available to be moved and be traded with
in a way. Have you seen
more and more protocols start to do this?
I mean, no one is maybe brave enough.
I don't know.
Some meme coins, I think there should be a meme coin launcher that deploys that liquidity
into a Panoptic so that you have options as opposed, options and meme coin trading when
when you graduate, whatever, pump.fun, instead of just .
you graduate, whatever, pump.fun instead of just start.
We wouldn't talk about the Clanker team, but yeah, I don't think the, again,
maybe the Panoptic token will be a pioneer in that front, but it makes a lot of sense, if you ask me,
for the use case of the token itself.
Yeah, I feel like there could be a good collab with Launch or some of those different V4 hook uh launch pads i spoke with them at edinver they had a uh a slight uh
hiccup where the fees was like not explicitly reported in the union swap pool and then that
meant that our job was going to be a bit harder to fetch those fees out uh it could still be
doable but yeah no definitely the um meme coins, telebrity coins, everything is tired.
Maybe options on meme coins is the next wave.
Who knows?
What do you believe is the core purpose of the fee switch in Uniswap governance as a whole?
Yeah, I think the Uniswap Labs and Foundation are two entities.
Labs is creating the front end of contracts.
They turn on a interface fee and that's fine.
It's in the meat space world.
People log into their computer, they access this website, another website, they have a choice.
But that is how revenues from the interface goes to the Labs team.
And a lot of revenue for them.
And I'm glad for them.
So that's one aspect.
But yes, everything is on chain.
Everything that is related to trading activity has to flow to maybe the foundation of token holders.
And the fee switch hasn't been turned on, so we don't know the impact.
But that is one source of revenue that, again, labs should not touch the same way that foundation doesn't touch the interface fee if they don't want to.
not touch the same way that foundation doesn't touch the interface fee if they don't want to.
And my view is that even the fee switch, you go to clearing, Uniswap is like a clearing house.
You go to the DTCC or these clearing houses, which clear like trillions of dollars worth of
stocks every day. They have a membership model, market makers, large banks can get discounted
fees, pay almost nothing per trade because they
trade so often whereas retail pays a lot more so there's a tiered approach the clearing house has
membered it has revenues they have fee share this is how robin hood retail users to make sense again
forget about peridot or for but they subsidize that dtCC clearinghouse operations that the power users can now trade
at a fraction of a penny each. And that could be how we also target more fee-insensitive retail
to help the active and sophisticated participant to be more efficient in their trading.
Do you see a future where a team like Uniswap Labs would ever offer a subscription
model for a monthly fee where a certain wallet can trade without paying any fees?
This is how, again, DTCC and OCC Options Screening Corporation, they have this similar thing. You pay
a yearly fee to be able to trade with this enlarged fee tier and you get some of it back.
to be able to trade with this enlarged fee tier and you get some of it back.
It's a weird system, but one thing that I haven't seen a lot discussed, but if you go to REI or some
co-ops, it's a similar thing. You pay a membership, you get some returns. It's like a DAO to make sense.
Very, very socialist for sure. But DDCC works the same way. You pay a fee. This allows
you, like Costco as well, you pay a fee, you access a higher level of product efficiency,
better access through the collective bargaining, and you get what you came in for for free or
cheaply, and you get maybe some returns in terms of yearly dividends. I don't know.
You get unlimited access to $1.50 hot dogs, most importantly.
This is worth...
This would increase it.
But yeah, is it $160?
Me and my wife go to Costco way too often.
But yes, it is a steal.
But yes, the hot dog for sure.
It really is.
If you had one wish for Uniswap protocol, Uniswap DAO over the next 12 months, what would that wish be?
And this is a bit subsurbing.
On the Uniswap interface, have a options tab.
And the options tab brings you to Panoptic.
But this is what I want to see. But yeah, I think the one thing that I don't know if it is still on people's radar, but
Coinbase launched this verified pool hook.
You can have the big bars play at the table. If you frame your hook, if people want to have KYC, yes,
of course, give them KYC. Retail will complain, but otherwise, they won't trade there.
What I want to see for Uniswap and Uniswap DAO and Uniswap more generally is to compete head-to-head
with a lot of those extremely liquid, extremely traded venues. Could be Nasdaq, could be
extremely liquid, extremely traded venues, could be Nasdaq, could be New York Stock Exchange,
but for DeFi native or on-chain native assets. I don't think we'll have Tesla stocks tokenized,
but we'll have the next 25 companies that IPO will do it on Uniswap, maybe on-chain,
but all your C20s type of thing. And I want to have the Uniswap verified pool hook is one step toward that,
but have this be kind of the next iteration. Again, retail, even though you speak with your
friends that might have bought some cryptocurrencies over the next few years, they're burnt. They won't
come back. At least if they do, it has to go up 10x more. It's the institutions, the big players
that will validate maybe the value prop
of decentralization in a way that you have a chain
with a single sequencer or like a extremely centralized
approach, then you won't be able to compete
with Uniswap and Ethereum in any way.
And definitely I'm supportive of that vision.
Absolutely.
And you can do options on it too.
So lending options on it too.
So lending options, it's like prime brokerage.
Maybe that's the same thing.
Maybe Uniswap is to morph into something like a prime broker,
which is not just swapping, but swapping, margining, options trading,
all of that in one place. And your capital is extremely efficiently deployed
as opposed to being kind of scattered around 25 different protocols.
Where is the best place for people to follow your work and all the cool things you guys are doing?
Yeah, sure. So I'm on Twitter. This is mostly where I post. So yes, at Gwil underscore Lambert.
On Twitter, there's also, or X, there's also Panoptic underscore XYZ. App.panoptic.xyz is our
app. Even if we block US users, unfortunately,
but we allow you to see and kind of interact
and even create mock positions.
You can see how it feels.
And again, hopefully that's going to be
something we can offer as well.
Again, we're going to be compliant,
but the experience, again, you can get a feel.
Yes.
That should be a call to action for every DeFi protocol
should at least let you see what's going on.
You don't need to be able to connect a wallet or anything, but if you're in a sanctioned nation,
then you should be able to see what this all is and the promise of it and how it works.
I think that's very fair.
Thanks for doing that.
That's cool.
Yeah.
Again, DeRibit, they block US users, but they open up their interface.
I can see the pricing. I can actually see same option on panoplic versus their a bit whether it actually
is yes definitely um i mean more openness you cannot hide it to some extent someone some
someone could write a clone or allow you allow them to access the same information as us and
we have no control so might as well make it available. Well, Guillaume, this has been a pleasure. Really, really appreciate you.
For sure. That's a wrap of another episode of the Ingovernable Podcast. Thanks again, Guillaume.
That was quite a journey and I definitely learned a lot myself. For our listeners,
please do not forget to follow us on Twitter at Grow Uniswap and on Spotify and YouTube as well,
dropping new episodes every single week. This was the Ungovernable Podcast. Thank you again,
everybody for joining. We'll see you next week. This was the Ungovernable Podcast by Alpha Grow.
Watch all our episodes on YouTube or Spotify or weekly live on X.
