This is episode episode. 479 with guest Anthony.
Giuliano Welcome to episode of
Revolution. I'm Brian Crane and I'm here
with Felix lunch. Today, we're going to speak with
Antonio Giuliano. He's the founder of dyd X dydx
is the largest crypto. Derivatives exchange or
decentralized. Derivatives exchange have about
1.2 Two billion trading volume per day.
It's also the largest layer to application on a theorem right
now running on Stark where. And I'm sure a lot of people
have seen some months ago. They've also announced that
they're going to build their own Cosmos chain, so that also got a
lot of attention. And so the lots of interesting
things to touch on. Thanks so much for joining us.
Yeah. Excited for the conversation.
Cool. Well, I mean, they started
beginning like how did you get into crypto and what's the story
of He started to idx. Yeah, absolutely.
So I got into crypto in 2015, when I interviewed for a job at
coinbase, which was my first job right out of college, I kind of
got to coinbase differently than most people in that I didn't
really know anything about Bitcoin or cryptocurrency at the
time, it was just one of the like 20 or so companies, I
applied to senior year of school and I was kind of just more
interested in finding a really high-quality startup but whence
I interviewed and all these people.
All seemed really smart, really awesome, and really excited
about this random thing that I didn't understand in Bitcoin.
So, I was like, okay, what the hell?
Like, I really want to work with these people seems like an
awesome opportunity and a great company at least, and they all
seem excited about this thing. I really get it.
But, you know, I'll take a leap of faith and kind of at least
spend a year or two working there.
So, went out to San Francisco work there for a year.
I was like the hundredth employee or so at coinbase and
it was a really awesome opportunity.
Unity just to get a chance to have a great front row, seat to
kind of see what was happening in crypto at the time.
So there are a lot of really great people who since then have
gone to do really awesome things at coinbase.
We are fortunate to be, you know, by far, one of the the
biggest and kind of only one of the legit companies building in
crypto at the time. So bunch of other really great
people. In crypto would come and talk to
us. Like we had vitalik come and
talk really early, Joey Krug, the founder of auger come and
teach us how to build smart contracts and it was a really
kind of pivotal time in crypto in terms of that was right
around the time. Back in 2015, early 2016, when
aetherium was launched. And I think it took all of us a
while to wrap our heads around, what's possible with aetherium.
And I remember kind of learning from Olaf and Fred about, hey,
what is gasps, what are smart contracts?
What is solidity? Things like that?
And again I didn't really get it but I kind of Took a little bit
of a mental leap of faith because there are clearly, all
these really smart people that were excited about it.
And I kept looking into it and then I think at one moment, it
just kind of clicked for me. Oh, like this is just Bitcoin
but you can build programs on top of it.
And it sounds kind of simple now.
And I think once people have understood it more en masse,
they can explain it more simply but it really wasn't obvious to
people at the time. But once I kind of clicked for
me, I realized this was just a totally new paradigm of
computing. Where for the first time you can
write these programs that execute totally autonomously
totally deterministically and without being controlled by
anybody and I was like, ah, aha. This is something that's
fundamentally new. Like there must be something
someday that this can be useful for and I've always been really
entrepreneurial. I really wanted to start my
company, even before my own company, even before going into
coinbase, and I was pretty transparent with Brian and
everybody else on the team about that and they were super
supportive and then After coinbase, I agree, fully worked
at Uber, but then started dydx, and mid-2017, and actually, the
first thing I started, when I try to start my own crypto
company was not dydx, it was a search engine for decentralized
apps and not a lot of people know this, but I built this out
and early 2017 and I tell the story because I feel like I
learned something important in it.
So I try to build a search engine for decentralized apps,
using kind of the data that I was on the blockchain to inform
kind of the ranking of decentralized apps but the
problem was there. We're only like 10 decentralized
apps in the world and early 2017.
So what's the point of a search engine?
If there's nothing to search for?
And the point of the story is I really learned the importance of
timing and building products and building companies like maybe
someday, it'll make sense to build a search engine on
decentralized apps, but certainly not in early 2017.
So I kind of took a pause on that and I thought about Okay,
what could I build? That would actually be useful in
crypto right now back in 2017 and back then.
And still to this day, the main thing crypto is used for is
trading and speculation, and that was right around the time.
When the very first decentralized, exchanges were
just starting to come out things like 0x things like Khyber.
So I took a look at that and I was like, wow, this actually
kind of makes sense like you can build an exchange that is just
code and people can use that rather than centralized
intermediaries and that has a ton of If it's, in terms of
censorship resistance, in terms of transparency, in terms of
security of funds what's coming next after that.
And if you think about finances, kind of a stack where you have
to build the things lower in the stack, so things like money,
which in a decentralized sense could be things like etherium
and Bitcoin and stable coins and then you build exchanges after
that. So things like zero X and now
unit flop, kind of the last step in the stack.
There is more Advanced Financial products and those are things
like Mitchell derivatives margin trading and that's what we set
out to build in dydx. So that's kind of the journey
and we've been at it since 2017. Yeah.
Also the that's super cool that you found that Niche there and I
guess obviously became one of the big players.
We also wanted to just generally for the listeners to get an
overview of what are actually the dydx products right now.
Maybe you can like kind of elaborate a little bit on that.
Yeah, so we have one main product.
And it is a financial derivative and it's the most popular type
of financial derivative that's traded in cryptocurrency and
specifically, that's called a Perpetual contract.
A Perpetual contract is a type of derivative contract that as
per the name, never expires, it's perpetual kind of goes on
forever and the reason these are so popular in turn in trading
cryptocurrency is because they're really accessible to
kind of the audience that trades cryptocurrency in this kind of
prosumer retail Trading. And that's Global.
And we have built these into decentralized finance and kind
of the way that they work is. You can point a Perpetual at
whatever you know price you might want to point it at and
specifically you can make a Perpetual for Bitcoin.
You could make a Perpetual for aetherium.
You could theoretically make Perpetual is that are pointed at
pretty much any type of asset that you might want to trade
right now on dydx only Perpetual is are available for a
cryptocurrencies kind of just like the top.
Markets on coin market cap and these Perpetual contracts
though, they sound Advanced. There are actually really
critical and integral to the crypto markets and they're by
far the most traded product in crypto.
So about two-thirds of crypto volume is traded through
Perpetual contracts and only one-third is traded through
spot. Just kind of like a fancy word
for just regular old, buying and selling.
So these things are really popular in centralized
exchanges. They or popularized by B, Max
and now are available on by Ants.
They had been available on ft x but our IP for that.
And now they are available in defy as well through dydx and a
couple other decentralized exchanges.
Do you rely on? Like, I guess some sort of price
feed oracle's for that and like, how this dydx solve that using
chain link or some other kind of?
Yeah. So Perpetual do rely on price
oracle's even centralized Perpetual for lie, on price
oracle's more or less or index prices.
And the way that that works on dydx and pretty much every other
legitimate Perpetual is trading venue is you take the prices of
a given asset on a bunch of different exchanges?
Has and then you kind of take the median of them which kind of
removes outliers. So you might look at the price
of Bitcoin on like coinbase and finance and whatever other
exchanges are the most liquid and have the most trading
volume. So, right now we do use
chain-link price oracle's, and then as you alluded to before
the big thing that we're building right now is the next
version of dydx called dyd X V4. And in that version, the price
oracle's will kind of be built directly into the validators
themselves on our cause Chan and there won't be any external
price Oracle. So chain link now and then
eventually our own later also be able to go to definitely get
back to you before. I think you kind of alluded to
it a little bit already and and obviously yeah how how like the
product is very accessible the Perpetual.
But you can you like expand a little bit?
Who are the users of dydx? Yeah, absolutely.
So there is two main classes of users that we have the First
class of users is crypto institutions, and these are
hedge funds that are trading crypto.
There's a lot of different types of them at it.
Kind of the two main types of crypto institutions that are
most actively trading right now are going to Native crypto
trading firms. So like crypto hedge funds, like
wintermute or something similar to that.
And then there are kind of more traditional call it Wall Street
trading firms. That have really gotten into
crypto trading in a big way, so like a Trading or Tower research
or others. So that's kind of one big class
of users and most of the actual volume does come from these
institutional users, but that doesn't actually necessarily
mean that they're more important than the other class of users,
other class of users, that's big In Perpetual and therefore also
on dydx is kind of prosumer crypto Traders and specifically
International crypto traders who make up the bulk of the
derivatives trading Market especially in crypto.
And these users are just regular old individuals, but they are
kind of more sophisticated and demand kind of more advanced
trading products than most crypto Traders.
It's not your friend that bought their first Bitcoin yesterday.
It's kind of somebody that's either for a full-time gig or
kind of on the side likes to basically day trade or trade
with more Advanced Financial products, like perpetual 's and
these users are actually the most important users not to say
that. Art's importance, but most
exchanges build, first, and foremost for kind of these
prosumer users because they're the source of most of the quote
organic taker volume on the platform.
And that's kind of the most valuable volume.
So you want to make sure the product is really excellent for
those users. And they have all the tools that
they need to kind of maximize their returns maximize their
risk management and all of that. And then crypto is actually
really different in terms of its Market structure than
traditional. Ants In traditional Finance,
really almost all of the volume comes from institutions.
Sure. There are some prosumer like
retail traders that trade in the traditional markets, through
things like Robin Hood, but they make up a very small portion of
the overall trading volume in crypto.
It's completely opposite where a lot of the trading volume does
come from retail basically and then the institutions will
follow over rounds wherever most of the retail volume is so if
you're an exchange or an exchange, All kind of the name
of the game is attracting more of that volume, but we've also
really intentionally set dydx top to be a platform that is
really accessible to institutional Traders as well.
And that's something that I think is pretty novel for D5
platform, because we've really intentionally tried to make the
technical trading experience on dydx, similar to a centralized
exchange actually because that's what the users are used to
trading on. So like their API endpoints that
feel really similar to a centralized exchange API
endpoints and that makes it much easier for a lot of these
institutions to come and trade on dydx as their first foray
into defy in fast forward to now, we've actually been really
successful with that and pretty much all the top crypto trading
firms are trading on dydx now, as for a lot of them as their
first thing and defy, and I think that was a really
intentional thing. We tried to set out to do.
Yeah. I mean I'm somebody who's, you
know, I guess had long-term crypto investors but not not a
traitor, right? So I've mostly been this sort
of, you know, spot volume type user but I was You know, did
some like put on some trace on vix before because I want to
tell, you know, try out before a podcast as to say, it's like so
smooth and intuitive and like a super straightforward.
So I think that was really, really nice user experience,
really nice flow. Yeah, I'm glad to hear it, and
that's been something that's been an intentional Choice as
well. Like, I was mentioning before is
trying to make the experience, again, feel like just a regular
old trading venue and that's actually pretty Hard to do from
a technical perspective in defy. But doing things like being a
really early, adopter of a lot of these new technologies.
Like you mentioned it before. But currently we're by far the
largest app on layer 2 and then fast forward to the next thing
that we're building. We're going to be building a
sovereign, our own basically blockchain for dydx and all of
that is kind of centered around the the user experience.
That I think you kind of alluded to like a bunch of stuff that I
may be. So kind of a larger question
here, what do you think? Are the main things that you did
right and that allowed you IDs to get so successful.
So I think one of the first things is that we were early
actually and that gave us kind of a lot of time to learn and
build and iterate kind of gave us more shots on goal to build
the right thing and build in a really iterative approach.
But if you are really early and certainly we Or when we were
founded in 2017, and I think, even now Defy is in the really
early stages. You have to combine that with a
really long-term approach towards what you're building and
kind of just the internalization that what you're building really
is not going to take off, probably for like five to ten
years plus and I still think that's the case and do you fight
today and I think a lot of people don't build with kind of
that long-term focus. And that's probably the reason
like 75 percent plus of kind of call it new Ventures and new
markets. Well so I think that was
probably one of the first and biggest things, I think this
Focus that we have on building a great product experience was
really useful as well. And then just building a really
strong core team and especially really strong technical core
team. Like we again have been building
smart contracts for over 5 years at this point.
Like I don't code so much personally these days, but I
coded a lot of our early smart contracts along with some of our
early engineers We set a lot of the paradigms for how smart
contracts are built. And I think it's also this
mentality that we have of risk-taking from a product
perspective. And I think what I mean by that
is, like, we've made a lot of bold choices from a product
perspective and I think we've executed on them pretty quickly
as well, especially in crypto terms.
So, like we've been talking about dydx is currently on layer
2 and I think it's been basically two years now that
we've been on layer 2. I know it's gotten a lot more
popular recently, but like we are on L2 before people were
really even talking about it and that was a really intentional
choice and we did that and the previous L1 contracts or kind of
sunsetted and that was kind of risky, right?
Because we had something that was working on layer 1.
But we went out and we felt strongly that this new
technology could give a better product experience because it
can process way more transactions and you know, in a
previous version or you just focus getting absolutely
hammered. I gasps fee is the latency is
way lower. So Brian, like you mentions now,
our product can feel just really Snappy kind of again more like a
centralized product but kind of being that Trailblazer and when
there hasn't been a really great example of a previous project
building on some of these new technologies.
That's gotten a ton with ton of adoption.
I think can be scary because a lot of times just in life and
and Company building especially you feel like you have something
to lose. It's like okay, we've this like
thing. That's Working and we could
build on it more iteratively or like.
Okay, let's like wait and see what happens with layer, 2 for
example. But instead we've just really
put our foot forward and be like, no, like we believe this
is the best technology and the best product that we can build
and I know we're going to talk about it later.
So I don't get too into it too much, but I think this is a
similar mentality. That's caused us.
Make a relatively controversial, technology, choice, and our next
version. It is too kind of abandon l2s
almost at the time when everybody is like finally hyped
on Em and move to our own blockchain but we can talk more
about that. So I think it's that mentality.
And then also just the experience and capability of our
team to go out and execute on. A lot of these things that
really have never been done before in crypto.
Well, thanks so much. So I have kind of like to get
the sort of the corollary question on this one, what are
the biggest mistakes you made? And especially a mistakes where
you feel like, okay, here's like deep lesson that you've learned
and something that you're approaching in a different way.
Way now. Yeah, I think one of the biggest
mistakes that we made was earlier on in the company and
again we were able to recover from it just because we were so
early in the space but back in 2017.
Kind of the space just felt different like ico's were
rampant and basically what everybody was doing at the time
was publishing white papers, not really building products, but
more publishing papers. And maybe I don't know if people
like in crypto these days. Remember what IP papers.
Then our because, luckily, they fallen out of fashion.
But basically what white papers were, we're kind of long like
research based documents like an academic paper, basically saying
what you're going to go out and build these things would be like
ridiculously complicated and the way papers would basically be
like, okay, here's our like, 50-page white paper and we're
going to build this whole thing. It's going to be perfect and
then we're going to ride off into the sunset with this
perfect product. But that is not how product
development works. And I think we weren't as guilty
of this this as some other people were, but we were guilty
of it to an extent to like there was a dydx white paper early on
and kind of worse than that. I think we spent basically too
long building the first version or two of the dydx protocol.
I think the the first one took us about a year a little over to
build which again is fast but we have good developers and like
the problem with the first version was we just trying to
consider like every case we were trying to build a really General
protocol, General, meaning, Like, you could do a ton of
different types of things with it, rather than having a really
specific use case, for the product, and that caused us to
build a ton more features. And this is a really common
story, not just in crypto, but in product development in
general, often times you go out and you really excited about
something you build out the early version of the product
that you had way too many features to it and then it ends
up like, 90% of this features, you don't even need.
So you're like, why the heck, did I spend so much time
building this first version of the product?
But the story here is it's really important not to build
something kind of for the future.
But for right now and again, I think that kind of resonates
with the story. Even the founding story of dydx
that I told earlier, I think too many people in crypto can a
build for too far into the future and that's not to say
that the future is not important so that we shouldn't pay
attention to it. Because we are super early and
we need to know or at least have some like guests about what the
future could hold it really impacts the decisions we make
right now. Now, but like that being said,
like the only thing that matters when you're Building Products,
is building the best possible product for right now, or maybe
like for the lifecycle the next year or two of the product.
So I think fast forward to now, we have hopefully taken that
more to heart and are really trying to build again the best
possible product for right now. And I think we've learned our
lesson. Yeah.
I think what I wanted to talk about a little bit is kind of
the Competitor, almost 22. This order book design that that
you kind of pursued a more traditional look that definitely
also had like a big success moment with unity swap.
So basically automated market makers or AMS at probably at
that time where I'd when you were building the first or
second version of dydx, they really took off because that was
kind of something that seems like needed at that time for in
crypto now, I guess. Yeah, it seems though that A lot
of things like M&M's came about because of the limitations I
guess of the of the blockchains to scale for order book.
I guess what I wanted to ask is like what's your general
thoughts or kind of a MMS? How do you see them?
Is it like kind of something that's just there in passing
until everything is like order book base?
Or do you think they have like a space in the in the ecosystem?
I definitely do think they have a space long term in the
ecosystem? I maybe not Be proven is too
strong of a word, but I think that the success of Yuna Swap
and a lot of the other ones at this point has proven that they
are really useful and they are here to say, but I think there
are going to targeted at different use cases than order
books, and I want to take it back to when I my previous
answer is in terms of answering the question.
Why are we building order books rather than a MMS?
And I think it really starts with the users that we're
targeting again, specifically, the crypto institutional Traders
and the crypto prosumer Traders and And these Traders really
demands again, like, I was mentioning before some of the
more advanced trading features things, like, limit orders
things, like stop orders Market, orders, and all of that, and you
can really only get those things on an order book at least as
kind of a First-Class citizen. Also Traders, really demand kind
of really deep liquidity and just like a lot of these trading
firms are not going to be so much out there.
At least like market-making on automated market makers as they
are on order. Looks so it was really again,
kind of deciding what our goal is and our goal at dydx is to
eventually meaning far into the future maybe like five plus
years from now. Become one of the biggest
exchanges or exchange protocols in crypto and really not be
satisfied with just going to being relegated to some Niche,
markets and crypto. And I think that's really
informed what we've done in a big way.
We're quite literally tackling the biggest markets in crypto
like just Bitcoin Perpetual trading and crypto is like
almost 50. Percent of the entire crypto
trading market. So kind of by definition if you
want to be one of the biggest crypto trading firms, you have
to play in the biggest markets and we feel this the product
experience that we need to play in those markets and kind of
Target the users that at least right now are forming the bulk
of the crypto trading volume. I think M&M's can be really
useful specifically, they have been really useful in a lot of
ways on providing liquidity and more long tail markets and I
think that is really important and that's something that was
uniquely enabled by yunus. Whopping Another M&M's.
So it's definitely something we're tracking long-term and I'm
not saying in any way that like order books or M&M's are like
objectively better than the other ones.
Like, I think it's possible it someday like you could even see
in a MM on dydx for not currently building that, but I'm
certainly open to it long term. I think they just kind of serve
different use cases and again the the use case and
specifically, the users that we're targeting right now.
I think in order book is a much better fit for them and also So
like one of the challenges with building order books on a
decentralized exchange is from a technical perspective order
books, require much much higher throughput than automated market
makers. Probably on the order of like
100 to 1000 times more through puts than automated
market-makers do. Because if you think about
what's actually happening on an order book, it's mostly just
market makers which are crypto trading firms, which are placing
automated orders to trade on the order book, but it's not humans
that are doing this. It's Bots.
And these Bots are Saying, multiples of orders per second,
oftentimes up to thousands of orders per second, and this is
just much higher throughput. So then kind of an automated
Market maker needs where with an automated Market maker.
You just like click wants to deposit into your LP position.
That's basically it and that has been one again.
One of the things that's driven a lot of the technical decisions
that we've made with dydx. That's the biggest reason why we
move to a layer 2 and also the biggest reason why on the
current version of dydx X, we operate kind of what's called a
hybrid exchange, where there's some centralized components to
The Exchange, and some decentralised components,
decentralized components, of course, being the smart
contracts, that custody user funds, and operate the protocol,
but the centralized components being the order book.
And the main reason for this is because it requires really high
throughput. This is actually kind of the
main thing that we're solving and dyd X V4, where we're
building kind of the very first decentralized, but off chain
order book that can serve on the order of Thousands order places
and cancellations per second and we're really only able to do
this because of the technical decision that we're making to
build on the cosmos chain. And yeah we can we can
definitely go a lot more into that but I kind of stop there
for now. Let's do.
It's not this is perfect. That's let's go into that
decision. So you mentioned the
decentralisation of this kind of order book and matching where
they are other reasons for this witch or was this the main one?
I'd say that's probably the main one.
I think there are definitely all their positive trade-offs for
building your own chain. Probably the biggest other
Advantage, besides just the order book, which I'll talk more
about, is the sovereignty of the chain, which kind of sounds like
a fancy word. But basically, it means that the
entire chain is yours Fred. So you can do whatever you want
with it. It's like you can have the
validators, do different jobs, you can have their incentives.
Be different. Like their incentives are more
aligned with the All right, because on aetherium, like
there's no notion that etherium validator should care about like
Eunice loppers. You see, slopper, like whatever
else is, like tons of stuff running on the Chain, right?
But on our own chain it's like all the validators are dydx
validators. And just as an example that
actually can help you if you're trying to solve certain things
like dealing with Mev for example, but back to the
connect, critical portion of the decision, it really was what I
was mentioning in terms of the throughput than Needed to serve
this products that we felt like we needed to build and
decentralized order book and kind of the decision as we
thought through it. So we effectively wanted to
replicate what we have right now more or less and improve on it
hopefully but replicate it for the most part.
But in a fully decentralized way that was always really core to
the ethos of what we're building and was always the plan.
So we took we kind of look that we have what we have right now
and we saw okay on dyd X V3. There are currently about About
1000 order places and cancellations per second and
actually if you kind of look into the future with some of our
Ambitions, that's pretty low for an exchange.
Like if you look at something like a by Nance, I'm sure
they're throughput is orders of magnitude higher than that.
But at least for right now, let's like try to be satisfied
with a thousand operations per second and again kind of
replicating the performance that we have and uid xv3 right now.
We took a look around and we really keep an open mind about
what technology we're building on.
Which Some reason is like, kind of controversial and crypto,
which I don't understand, but it's like we really don't care
like what technology we're building on.
We just like, want to build a great product.
So anyways, we took a look around at all the different
chains. We could build on.
We looked at things like Stark, net.
We look at things like, optimism, like Solana obviously
like Cosmos, even other chains. And the core question we were
asking is, can this given chain support the throughput that we
need? And ideally support.
This through puts with really low, we're ideally no gas fees
for placing and canceling orders as well.
So again, if you think about the use case that we're trying to
solve for it, it's really at least on the maker side for
market makers, to be able to cancel and place orders really
quickly and cheaply. So we took a look around and we
were like none of them can even close to support like a thousand
places in canceller like transactions.
Basically for a second with low gas fees, I think L 2.
Right now, have a lot of promise and I do you think they'll
improve a lot long-term but again to pull back from one of
the things I said before, really the thing that we want to do is
not build for like five years from now.
It's the build for now and like the next year or two and
currently l2s aren't really able to support you know that order
of transactions per second. It's more like if you just
literally go and look like this publicly available information
like the transactions per second.
So if like optimism and Stark net is kind of on the double
digits, rather than like the the triple digits, right?
Right now, suffice to say and Solana, like was a contender,
and we did sort of a seriously consider that.
I know. There's a lot of like Solana
Fudd right now, but for what, it's worth my two cents is that
Solana is really novel, an important technology that is
working really well. And it certainly legit and
something that we considered, and they can support a really
high amount of transactions on their layer one right now.
But I think the whole chain is roughly around a thousand
transactions per second, and we don't have all of the chain to
ourselves. That wasn't really a huge option
either. So we kind of looked at building
our own chain and it's not so much that Cosmos in and of
itself is way more scalable. It's actually not it's probably
on the supports on the order of like tens of transactions per
second which is pretty Far Cry from a thousand transactions per
second, but it's this core concept that we gain in
sovereignty that really unlocks building things that are new and
the new thing that we're building is a decentralized but
off chain ordered, Look, it's effectively an order book that
doesn't exist on chain but does exist in the network of the
validators. It's kind of similar to like you
know when you send a transaction and it sits in the men pool for
a while, before being committed to the blockchain, it's
effectively using like a mempool like structure to store the
order book, but it's cool because the mempool is way
higher throughput like orders of magnitude higher throughput than
consensus of the core chain and you don't have to pay gas for
it, which Sweet. Like you only have to pay gas
when things are included on the Chain but that's totally fine.
And things are only included on the chain for dydx fee for when
a match happens. So it's kind of like this unique
product that we had where I like the transactions by far the most
popular ones are just placing and canceling orders but only
about one percent or less of the orders that get placed actually
match. So if you kind of map that to
the throughput that we have with, like the mempool, which is
like thousands of transactions, per second, you know?
Oh, that's totally fine. That satisfies our thousand
transactions per second goal at least start.
And then map the actual matches that happen, which is on the
order of like 10 per second to the throughput constraints of
the on chain protocol, which is like on the orders of 10 per
seconds tens per second that works as well.
So that's effectively what we're building in dyd X V4.
It's something that's pretty novel and I don't think at least
has been built or at least been used at scale and in a
production way. Are so we're pretty excited
about it. We're getting pretty far into
the development process of dydx fee for.
We have an internal test net version, that's up and working,
and for placing orders on it. There's still a good bit more to
build, but we're pretty excited about what exists so far and
what it'll be able to launch with, at some point.
And I'm curious, what are they the other implications of having
validators run this matching engine, you know?
Aside from now it's no longer one company but it's like a
bunch of different entities. But like you know what are the
kind of other may be positive or negative side effects of that?
Yeah, I mean, I guess it depends in terms of what you're
comparing it to. So obviously it's like way more
decentralized than what exists on dyd X V3 right now obviously
way more decentralized than decentralized exchange and I
think there are a lot of different aspects to it and one
aspect is Who are the validators and how many of them are there?
And like how decentralized is that Network that network is
certainly not going to be as decentralized as like the
validator set of etherium itself.
But I think it can be much more decentralized than kind of at
least my censorship resistance perspective.
Then kind of the the sequencer is that exists on like Al to.
So I think we can get to a really good level of
decentralization to start in something that will only improve
and grow over time hopefully as the protocol.
Continues. Increasing in volume.
There's a lot of considerations, right?
So you have to start worrying about Mev in a fairly big way
and that's not unique to dydx. I think that's a big
consideration on any decentralized exchange.
We're still looking a lot more into this from a research
perspective so I won't go too deep into it right now but I
think we do have some pretty interesting novel ideas and kind
of the design space of Mev if you will, is a lot better and a
lot more open when Control the the validators themselves from
from like a network perspective. So I think that gives us more
tools to be able to tackle MEP from like a protocol
perspective. So I think that's a pretty big
consideration. I think it's also probably a may
be obvious but worth stating like when you build so this
matching engine and you build this order book and the entire
exchange. And this decentralized way you
get a lot of the benefits of decentralized exchanges in
general, in terms of things like transparency.
I'll be order book entirely open.
Everybody can see what's on the order book.
It's like provable in terms of security, like the security of
the network is, you know, proportional to the
decentralization of the network. Now, everybody can see the rules
of the chain, everybody can see where the funds are.
So things like what happened on FTX would just literally be
impossible on an open protocol like this.
And then a lot of the really great access that you get with a
decentralized exchange as well in terms of it's much easier to
use. From certain perspectives, it's
much easier to build things on top of it.
And you can kind of build this open network that others can
contribute to and can build on top of.
So, I think it's a really big step forwards.
And I think it's also unique in the sense that we're kind of
really directly trying to take on from a product perspective,
what exists on centralized exchanges, and I think we're
trailblazing like technology that hasn't existed before that
hopefully is making that more possible overtime.
And We're not intending for or even expecting for this to kind
of go out and be one of the biggest exchanges in the world
on day one, but I think it's a really good kind of building
block to move forwards with and we always have try to keep a
really long-term approach towards what we're building and
our goal is to you know from a protocol perspective become one
of the biggest exchanges more on like a five to ten year time
Horizon but this is really the best possible product.
We feel we can build right now. So maybe is there another
question on this? So you said like you see the
causal chain scaling to, you know, like know tens of
transactions in terms of like, you know, unchanged transactions
and then, you know, supporting kind of thousands 2000
transactions. How far do you think this can
scale with this solvent causal chain?
And what do you think are the most important?
I know, changes or directions. That You need to happen for, you
know, to reach like a higher skill of it.
Yeah, so in terms of order of magnitude, I think there is
definitely like a 10x Improvement that we can get
probably both on chain and off chain, at least from just like
tuning things basically. So you have to went in computer
science in general. If you think about scalability,
you think about bottlenecks, okay?
Like what is the bottleneck that's causing, you know, my
maximum off chain? Order sent to the mempool to be
like 1,000 or 2,000 or whatever it is.
And I think one of the biggest things that we found so far
that's been a bottleneck, is the message propagation, which
sounds like a fancy word. But it's basically like, okay
you have like a network of a bunch of validators, right?
And then when you send a transaction to the network, it
first gets sent to one of them but then it has to like
propagate to all the other ones and the network.
So it's like validators, sending messages to each other,
basically, and that right now on Cosmos uses a pretty standard
technology. On this is actually been one of
the big things we've noticed Solana has been focusing on to
achieve improvements and scalability is their message
propagation. So there's some learnings that
we can take from there. And somewhere means we can take
from elsewhere. And again, it's cool because we
can literally build, like, whatever you want, right?
Because we control the like what we're building is like the
software that the validators run.
So we can change things like the message propagation.
And I think that can is just one example of something that can
lead to. I do exactly this.
To be a probably like, potentially a five to ten X
improvements in scalability things, like just improving the
CPU, usage of the validators themselves can improve a lot,
the on chain scalability. So there's a lot of different
levers that we have and a lot of them are pretty technical.
Honestly pretty like, low-level programming but I think it's
cool. And again, similar to my answer
on, Mev, you just control a lot more of the stack so you have a
lot more things to play with in terms of improving.
Who puts over time? Awesome.
Yeah, I think, obviously, like also building this Cosmo
straight means you become kind of part of this Cosmos, IBC
ecosystem. I guess, first of all, maybe one
question also, like, in terms of your building like kind of
modifying the stack they were bit, is there also something
you're like that other Cosmos chains could use like from from
what you're building? Yeah.
So in terms of IBC for those who aren't familiar, it's basically
a bridge more or less. That's kind of built into Cosmos
natively, but it's fully decentralized.
It's much more secure than other types of bridges just because
it's going to again Biltmore into the block chains themselves
than kind of like on top of it. And we are integrating with IBC
in a big way. One of the exciting things that
we help to push for is a launch of native See on Cosmos and the
way that they're doing, this is kind of interesting there.
Basically building it a sovereign, their own Block
Chain, that will run u.s. DC and potentially other things
as well. But we can still on the dydx
Chain used this native USD. See, because you just IBC it
from the Native, What's called the noble chain that they're
building over to the dydx 10? It's also cool because one other
example that we're literally building right now and probably
going to be using is for on board.
So you might ask her try to solve the product question,
like, how do you get USD see from aetherium to the dydx
chain? And we're going to integrate
with things, like Axl are to be able to do this but it's cool
because you can use axle are as a bridge, but at the end of the
whole thing, you can end up with Native us DC, which is much more
secure like you don't have to worry about like Bridge hacks or
anything like that. And the way that we're doing
this is you effectively use like Axl are to bridge it.
Cerium USD see to actually osmosis USD see, osmosis being
just a separate, Cosmos chain that operates the decks.
Then you do a swap on, osmosis has new stable swap feature for
Axl are u.s. d.c. to Native USD see which will also exist on
osmosis now. Like the user has native USBC,
then you use IBC to move that native USD see from osmosis over
to the noble chain over to dydx and all the youth like the
Complicated. But all the user is really going
to have to see or know for this is like you know, click deposit,
like 10 USD, see and then like all this magic happens in the
background, basically, but it's again cool technology and I
think shows the power of composability with things like
Sovereign blockchains and I think this is a really good
early use cases but is there also use case that you would
like token ice some of the positions that people have on
dydx so that they can then maybe use IVC.
Easy to, like, let's say if there's some sort of lending
chain or some other kind of chain and they want to like,
move it over and use as collateral or does that not work
because you have to be able to liquidate on the dydx Chain
itself? It's possible like yeah, we've
considered that before, we probably won't build that
initially into the chain. But I think we've kind of talked
about like dydx using other things that's made possible by
composability, and I think at least so far, we haven't been
quite as focused on like other. Things using dydx as like
building blocks for composability.
But that is something I'm excited about for the longer
term. It just hasn't really been a
major Focus right now and that's still intentional because again
like if you like listen what I'm saying and like the things I
talk about is like mostly like let's just build like great
product experience and like try to make it great for Traders on
dydx. So that's been our main focus.
I think one of the underappreciated parts of
composability with defy though, like people talk about like
Financial building Locks on chain.
And I think that is really cool. Again, that may be a focus
longer term, but one of the things people don't talk about
as much is kind of the composability of just
applications that are built, like, front-ends basically that
are built on top of the apps, the decentralized apps
themselves. So things like the new data
browser inside coinbase. I think is a great example of
this where now you can use, you know, swap.
Hopefully, at some point you could use like you, why do you
ask from directly Side of coinbase.
And this is really something that's uniquely made possible
because the underlying building blocks are open and they're just
technology. And now, coinbase has a unit
flop integration and this is unique, right?
This is like really fundamentally different than
what came before like point-based is not going to have
like FTX or Finance integration, right?
It's like those are all make sense.
They would just build the thing themselves but from like an
access perspective, it's really cool that a lot of these
decentralized apps are just codes.
They can be plugged. Ogden to from like a interface
perspective, into a lot of these different types of products.
And I think that's personally, I think that's going to be like, a
big narrative over the next couple of years as well, and
something I'm excited about. Yeah, that's super interesting,
I guess, because right now, also, the main front end is kind
of dydx trading, I guess. Yeah, people can interact with
this Cosmos chain or like the contracts there and then
integrate that, or how else do you like, do you imagine it
would be like other front-ends built by other parties.
And how do you kind of help people other front ends built by
other parties for sure? And I think that will happen
again, like, with dydx fee, for all of the code that were
writing will be open source and, you know, license to be
available by the effectively, like whoever wants to use it.
So, that means, like, even just for the, the front end that we
are other parties develop that will be open source.
And like, that could easily be plugged into or like white
labeled into some third. T application or like
independent, third party could host version of the front end,
there could be multiple versions running and I think that
improves like access and censorship resistance.
So I think all these things definitely will happen and I
think they're again uniquely enabled by this concept that
it's just technology and it's just like open source code and
anybody can run, it's not like you need permission from us or
anybody else. I wanted to ask like one more
question on this whole like Cosmos chain L2 thing, I mean I
think you were very like clear take to it like sort of
explaining the you know your rationale and round the D 8 D by
DX and how you guys need to have decision from Curie.
And of course, right now this is like big debate and I think I
have a sense at the moment. There's like some narrative
again, gaining momentum that, you know, he's is the settlement
layer and it's the ultimate thing and the l2's.
And everything will be there. And, of course, you do have
also, this more thesis around, Sovereign chains.
So I'm curious, like how do you see this play out, and are there
particular types of applications or use cases?
Where you think they will be more fitting in one world or the
other or do you think that there's more it's more going to
actually go into One Direction? Yeah, so I think maybe just
assuming a little bit like one thing that models a lot of these
discussions. Ian's and I think causes people
to just yell at each other and say different things.
Basically is time Horizons in terms.
And what I mean by that is like, okay, you can ask that question.
But like what time Horizon are you asking that question on?
Are you asking, like, okay, what should we literally use and
literally build if we want to build the best possible product
and a year or two from now, or are you asking what is crypto
going to look like 10 to 20 years from now?
Those are very different questions.
I think again like the thing that we really care about in
terms of what we build right now is the first one.
Terms of what can we literally? Use to build the best possible
product right now. And it just would have been in.
It's like, literally impossible for us to, like, build a product
that we wanted to build on top of like an L2 for some of the
reasons that I talked about before.
And I'm not saying I'm not sitting here saying that like
everybody should build their own Sovereign blockchain.
Like that's not at all the case, like there are two if I were
building like a Yuna swap or like an NF T exchange or
something like that, I would definitely just build on like a
nice paste. L2.
Most definitely, and there's different use cases for
different things. And I think Roll-Ups do show a
lot of Promise. Long-term, I'm really excited
about like, Stark based Roll-Ups long-term like, ZK, proofs,
basically. We're literally like the biggest
user of them right now, in the world, I Corner the biggest use
case of like ZK proofs in the world by like transaction
volume, probably like anywhere. So I'm excited about them long
term and they're literally work but there is a lot of
limitations And I think one of the big narratives of crypto and
I've been in crypto for like over 7 years at this point is
that things take longer than people think they're going to
take. And that causes people to kind
of get into this like hype and bossed mentality where it's
like, okay let's like take L to use as an example.
Yeah, they work right now. Like they're great.
Like we're using them. Are they everything like do they
do everything like no, absolutely not like and are
there. Like answers to how we can make
them better long-term like yes, absolutely.
And great. People are working them like
Stark where and optimism and other teams.
But technology is really hard and it's like, especially
emerging technology is really hard and in those problems are
not going to be solved in the next year or two.
They're probably going to be solved in like five years or 10
years or maybe even 20 years from now for some of them.
So I think if you look at technology on different scales,
you come up with like different answers of like.
What's most likely to be the thing that Dominates long-term,
I think we've kind of seen and it's actually been surprising to
me to this kind of narrative of, okay?
Everybody like started on ethereum basically at least for
smart contracts and now there's been kind of this explosion.
So like a bunch of other chains. Like there's polygon or Solana
Avalanche angle. There's like at least ten of
them that people use these days and I think that will continue
for probably the next year or two, maybe three at least.
And then I think we'll probably see, like, A consolidation more
towards like the ones that are really working long term, one of
those winners going to be like, I don't know, like maybe I have
some opinions. Like I'm more excited about like
ZK based Roll-Ups and potentially some optimistic
Roll-Ups than other things, but there are a lot of open
questions there, right? Let's just take like an obvious
one. Like actually roll ups, don't do
very well on censorship resistance right now because
they use like centralized sequencer the sequencer sort of
being like this service basically.
That Runs the L to roll up and publishes the roll-up chain back
to the base chain, like etherium.
But for all of them, basically, there's only one right now for
like, optimism and Stark that, and that's a problem.
And it's like people are working on solving that like I talked to
Star for about this, talk to optimism about it.
It's hard problems. It's probably going to take like
some amount of years, but if you think about well, okay, from
like you, idx, this perspective, we really care about Open Access
and censorship resistance And so you know we actually think in a
lot of ways like what we're building on dydx V4 is going to
be more decentralized from like an access perspective than if we
were building on like an L2 with the centralized sequencer again.
Is that going to be the case forever?
Like no probably not but like that's functionally the reality
of what we're building on right now.
So I think it's important to just kind of take a step back
and like think about like different time scales when
you're asking these questions as well and I feel like most people
don't do that. Yeah, I think it's super
interesting that you guys have been like remaining so adaptable
and kind of switch through the versions like you can even see
it, right? That's now before and it sounds
like you're not kind of saying that there couldn't be like V5,
obviously, and something else. That obviously, there's always,
like, some sort of migration involved from the previous
product. Can you maybe expand a bit, how
it will be and be three. I guess it will keep running.
And we for will come up and maybe also Like how you plan to
do this migration? But also maybe some sort of tips
of how to like do such a migration.
For other people building may be on the wrong stack right now.
They want to like do a similar thing but you have learned doing
it for so many times already. Yeah, I mean, I think there's
different approaches to it. I'm more a fan of not so much
like forced migrations from one products or protocol to another
protocol but more just kind of like launching the other
protocol and then people can migrate to the new one if they
choose to do. Uso.
And I think this is similar in kind of akin to how like, a
Eunice Lobby 3 verse like, you know, swop, V2 was launched and
that's going to be a similar approach to what we take with
you. I dxv for as well.
So, do ID X V3 will continue to operate for a while, at least
and then dydx before. Well, it's some point be
launched, and then these things will probably run in parallel
for some amount of time. There will be some process by
which you could move your funds from dydx, be 32 dyd x V4.
And it touched on that a little bit with the deposit and like,
the bridging process, I was talking about earlier.
But I think that's kind of been. The best practice is just to
allow users to use. Both, don't so much worry about
like migrating, like, a live system because both number one,
that's actually really, really hard to do from a technical
perspective. Like if we take an example of,
like, the etherium merge, actually, like they didn't run
both in parallel, they just like, literally upgraded all of
aetherium at once to use it. Seeing proofs take over proof of
works as a separate example, but I think a lot of the technical
complexity and the reason it took so long was because they
tried to upgrade an In-Place system, not saying that was
necessarily the wrong choice for them.
Like, you would have been really complicated, right?
If there are two versions of etherium running, but it does
make it harder. So, yeah, it's going to be two
versions running in parallel with hopefully some good product
experience for moving funds over.
Yeah, totally cool and then I guess.
Yeah. What's interesting right there
is the dydx to obviously and that will probably, I mean, it
already has like certain utility and I guess that utility will
extend. When you transition to V4, can
you talk a little bit about? You know, what's the Toten
currently used for? How will it play with?
We for like yeah, I will interact there.
Yeah, so the main thing the token is He is Farah is as a
governance token on the dyd X V3 protocol and similar to a lot of
other D5 protocols, right. Where anybody can put forward a
governance proposal people can vote on it and that's been going
on in a big way. And dyd X V3.
Right now actually is a little bit of an aside, like one of the
cool things that's been happening on on dydx fiii with
the token is pretty active governance actually, and it's
been cool because a lot of these trading firm type users that I
was talking about before. Or have been playing a huge role
in governance as well. And I think that's something
that's been exciting and I think we'll continue to operate
farther into the future. And this is cool concept for a
like, if this exchange of this exchange protocol, can be
controlled by the, the users of the platform rather than like an
independent third party, like some random company.
That's like a fundamentally New Concept and I think we'll just
align incentives. A lot better between the users
and the exchange itself. And I think that's something.
Sorely needed, especially after ft x so aside over.
But kind of talking about like what's going to happen with dyd
X V4. So obviously, it will be an
independent Sovereign blockchain and that requires layer, 1 token
for the chain itself. It's kind of undecided like,
which token is actually going to be used as the layer 1 token for
that chain, presumably. It would be the dydx token, but
that's something that still needs to go through a
governance. It's it's not really up to me.
But yeah that layer one token would be used for things like
staking to validators pretty similar to like an osmosis or
some other chain, that uses proof of stake.
It would have things like voting on the new chain like receiving
staking income potentially from doing staking, things like that.
So it's basically the same thing.
Except with the addition of staking and choosing validators,
which I think is exciting and is really important, too is a core
use case for the utility of the token as well.
We also wanted to talk a little bit like zoom out a little bit
and talk a bit more about sort of defy and see if I heard you
say in another podcast that you think it might take around 5 to
10 years, 55 to be able to like really compete with C Phi what
do you think are the hardest challenges that have to be
solved for that to happen? Yeah, I think the biggest one is
probably product experience, still a lot of people talk about
it, right? It's just hard to build a
product experience, that's on par with centralized products.
Like just by the definition of the technology.
Defy is always going to be higher latency than C Phi.
I think we can get to a point where it's like approaching the
latency you might experience on C Phi and things like Solana and
dydx. I've done a good job with that
but it's challenging, right? It's just harder to build
basically. Anything and defy it is to build
and see if I think the other thing that Five.
Still really needs to solve is great product, use cases, and I
think we've seen some of them and things like M&M's with, you
know, Swap and others like lending markets with compounds.
Things like n ftes, potentially things like, derivatives
decentralized exchanges. But I think it takes time for a
lot of these product narratives to play out as well.
Kind of look at something like nft use, for example, like, and
FTS existed, and like almost exactly the same form for, like,
three or four. For years.
Like, I know the founders of Open Sea and they were Building
open sea for like the longest time and like nobody used it
basically, and they had no volume and then it sort of blew
up all of a sudden like in the past year and with basically the
same product. And why did that happen?
I think it's mostly just like, kind of the maturation of that
product took a little while. And then it also takes time for
users to kind of wrap their heads around, what is this New
Concept? And then these things kind of go
viral. So I think it takes time for
that to happen. Like there's mark Cycles
obviously. And I think we see the biggest
influx of new users in the bull markets all the time and I don't
have a crystal ball. Like, I don't know.
When the next bull market is going to be like if ever, but
it's probably it's going to be at least, like a year or two
from now. So that's going to take some
time. There's been just a lot of pain
in the past year, for all crypto companies and defy included in
that with do the market downturn, right?
And the FTX collapse, and I think we've been fortunate to
have done a good job with like Our balance sheets and just our
long-term focus at dydx but some others haven't been quite so
fortunate. There's - Regulatory headwinds
and there's a ton for us to do on the education, side to
policymakers, and Regulators to get them to understand, at
least, first of all, like, what's going on.
And then for them to realize that there are a lot of
positives, even from their perspective, for what they're
trying to accomplish that defy can offer.
Like, I mean, everybody was like, talking about this on.
The Twitter after FTX, right? It's like this is literally
impossible. It could not have happened on a
decentralized exchange so I think kind of making that story
and getting regular people more or less to understand and
internalize that will take time as well.
I think there is just like one of the other things that I think
is really positive is there's just a continuous influx of
talent in to defy in crypto. And I think that takes a lot of
time as well. And yeah, and I think just all
these things put together, like finding That market fits like
regulatory education, like more talents, the users understand
more, this takes time, and it takes longer than people think.
Like the do you think the like, looking back, in a few years,
the FDX collects will kind of have helped to defy ecosystem or
like how do you, how do you see it right now?
So what I told our team is I think it will certainly help
defy in the long term. Again like the five to 10 year
future that we were talking about.
But I think maybe it helps defy like a little bit like right now
relative to see if I but I think the damage it did to the overall
space is so negative that probably you know plus and minus
45 companies it's negative and the next year or two just with
things like obviously the price is got hammered to the
confidence that Traders and investors have in the space was
super shaken though like - regulatory had ones that I
talked about. So I do think it's going to be
negative for the A year or two and have to like prepare
ourselves for that, but I even felt this personally to and end
of the day, the FTX collapse happened, which, for me at least
was the most surprising day that I've had in crypto so far.
It really gave me a ton of resolve and confidence that what
we're building has to exist at some point.
Like, I don't know, maybe I'm crazy, but like, once you kind
of wrap your heads around, like what a decentralized exchange
is, or even what it is, but like, what it could be, you're
like, this is like better. I like uses just has to exist,
like it's some form in the future.
Long-term it solves a lot of these problems.
It creates this open like equal the accessible Financial system
for the world. And you talked about you like
look at like a lot of the mission statements for some of
these companies. Like, if you look at the mission
statement for like a Robin Hood, for example, it's like they want
to democratize access to like Finance or whatever and coin
basis at least for the longest time was they want to build an
open Financial system. Or the world.
It's like, how are you going to do that?
Like it just look at like the technology that you have
available to you. It's like, yes, that's that's
exactly what we should be doing. But this is the technology that
we should be building on to be able to make that future
possible. And again, I think it'll take
longer than people think and people will be disillusioned,
right? And I think people have been
disillusions especially with defy and the past year or two
because in this happens, with all these technologies always
the same thing. It's always like people are
right, basically, when you start It's like we have the right
idea. We don't know exactly what it's
going to be, but it's like okay, yeah, we kind of get it at least
for the people that understand that we can build these open
Financial platforms and that's fundamentally new thing.
Like this is amazing like everybody should use this but
then it's like wait. Like this sucks at least for the
first couple of years. Like this is like he told me
this is going to be a new Financial system and I can like
barely even connect my metamath qualit to like this website.
Like what the hell is going on here?
But then, you know, after years of building and that causes
disillusionment and Crypto. This is even more negatively
reflexive, right? Because there's prices that are
attached to all of these things and the prices are going down.
And everybody's like oh this is like an even bigger piece of
shit and it's like it just causes these things to get
higher and get lower than they probably.
Otherwise would if everything weren't Christ, but I think it
takes while and there a hype Cycles but at least to me like
the FTX collapse really gave me a lot of confidence that this
has to exist a long term and something.
I'm excited to be at Forefront of helping to build.
Also the other three. Cool.
At we do have a like a question actually in the Stream that is
somewhat related, I guess to this whole discussion.
So I think we kind of mentioned. Yeah, you're building.
Obviously the product on this decentralized platform to enable
this future right that defy tries to promise.
Now is there also like something you're doing.
I think you mentioned it briefly like kind of educating The
Regulators or like interacting with regulations.
Something to you, idx Foundation.
One or someone is doing, or are you like more focused on the
product side and if you're doing, like, what can you expand
a bit on explain, maybe what you're, how you're approaching
that? Yeah.
Absolutely. So just to be clear, like The
Balch like almost entirely the company and the project more
broadly is focused on product. And just building dyd X V4.
It's important not to get too distracted by like any of these
things. And part sack in particular.
I think you kind of saw that happen in a pretty negative way
with FTX like one of the biggest things like SBF was doing for
the year, prior to the collapse is like talking to regulators
and stuff and that wasn't necessarily bad at least from
there. Perspective.
But I think you saw some of the product progress on FTX
stagnates for a while because of that.
So we're really focused on the product itself.
That being said, as I mentioned before, I do think this is a
really important thing that needs to be done going forwards.
It's just critical that developers can build open source
software in a legal way. Going forward, I think there's
sort of this meme at least on crypto Twitter that I see a lot
that's like, oh, just like everybody should be.
Be anonymous and like, well, I'll be fine and like, you know,
who cares about the law. I like, we're all just like move
to someplace. They can never catch us or
whatever and like maybe some people will do that and like
some people have done that empirically.
I think it probably won't work for the bulk of people once like
Regulators actually start caring about this stuff but like, even
if it works for a very few amount of developers, like the
thing I said that we need before is like more talents into
crypto, right? And it's like, how are you going
to get like enough developer? Islands in the crypto.
If like the answer is like, oh yeah, everybody's just like
Anonymous and like as perfect opsec and moves to, like Malta
or whatever, like, it's not gonna happen.
Like, we're not going to build like this future that we want
all want to exist and that we feel like as better Financial
system from a world and less developers can build these
things in a legal way. So that's kind of just
motivating the problem. Like, I feel like it's
important. It's like, from my perspective,
like, literally impossible for us to build this future without
doing this. So, It's important.
And we are starting to do this at dydx.
We're certainly not like the biggest player, like the biggest
voice for defy. There's a lot of other great
people like the blockchain association like the defy,
education funds, other projects. Like, I know, you know, swap is
doing a good job in this, in terms of regulatory Outreach, I
think it's hard, right? Because there's tons of
different regulators and tons of different jurisdictions for us.
Our team is based in the u.s. so it's primarily like u.s.
regulation Focused. So, like we do go out and talk
to Regulators, but the thing we've really started trying to
do more of is going out and talking to policymakers.
We just like, basically, like senators or like their staff for
like people that are actually in government because the kind of
realization that we've come to. And a lot of people have come to
over time. Is that a lot of the laws that
exist right now just like literally don't make sense for
crypto, right? It's like let's maybe just take
an example, like an obvious example.
Like a lot of the Relatives regulation and the u.s. is based
around transparency, which makes a lot of sense, right?
Like you want to make sure as per like FTX that when you're
trading on a derivatives exchange, you know, where the
customer funds are right. Let's like pretty basic.
Like we can all agree that, that should be the case.
So a lot of the regulation focuses around that and there's
like, all these requirements and you got to have like people and
submit audit reports and all the stuff like whatever.
But in defy, like it solves it's like shall look.
On users can it's like a hundred times better than like any
auditing or Licensing we could ever do so like why the heck
like do you have to submit like an audit report for where the
customer funds are with defy like disco?
Look at it like ether scan right now, like it doesn't make sense
and there's like, even worse than that, like, a lot.
There's like, just not a lot of what, there's not any ways to
comply with, like, certain regulations for a spark contract
because the regulations just weren't drawn up with that in
mind. So like, you know, realization
to like, we feel like it's obvious that there needs to be
new policy. See not just like new regulation
for some of these things long-term and policy also is
just like much more open-ended, right?
I think regulation a lot of times comes down to what
literally are the laws. It's not really so much
Regulators jobs to like change the laws right where their jobs
to interpret the laws and enforce the laws.
But if you're sitting here saying well like some of these
laws just like don't really make sense, then you have to go to
the root of the problem which is policy.
And I think policy, Takes a really long time, right?
But we still feel like it's worth doing it because of the
time Horizon that we're building for, and, you know, we want to
ensure that developers can continue to build a lot of these
things in a legal way. Like specifically, I've done
some meetings with, like staffs of various Senators, things like
that. We have just recently hired a
really great head of policy that we're excited about.
And I think it's great that there are so many third parties
that are out there that are kind of making the case for defy to
policymakers. Hers.
And that's absolutely important and should consider.
But I think one of the things that hasn't happened so much,
but I think is really important. Going forwards is literally the
people that are building defy to go and make a name for
themselves and like, go and be the ones that are out there like
educating people on what what is D Phi, like, what how could it
possibly have solved the like, FTX collapse?
What are the risks? Like, how should it be
regulated? And I think just like starting
that conversation is really important and something that we
have really just started thinking about it, you ydx, but
I think will become more important over time.
Well, amazing. Well, final question.
And it may be a little bit like different topics.
So aside from dydx and crypto, what do you most interesting in
at the moment? Yeah.
He'll I mean maybe in crypto I don't know I just been working
crypto my whole career so I can barely even think about anything
else or don't know, that much at least but I'm excited about NF.
T is like I think nft is our something that's newer, right?
And I think they probably will experience this like trough of
disillusionment every new technology goes through.
But yeah, excited about things like open sea and Magic.
Eden excited for a lot of the infra work to continue on.
Krypto So we talked about some of it right?
Just like the l2's continuing to improve different L wands.
And yeah, I mean, obviously, I'm excited about defy, I don't have
any like, superhot takes for you because I feel like one of the
things in crypto is people just get excited about like random
stuff that doesn't make sense to.
And I think there was only like three or four narratives that
actually do make sense to me, at least in crypto, which is like d
Phi n ftes like infrastructure and like data basically.
I like I don't find anything else.
Super interesting, that that's not to say like nobody should
build anything besides that, like I would not have included
nft use and that if you'd asked me a year ago and I would have
been wrong but at least for the things that are proven those are
probably the most interesting to me and I think we have a long
way to go on them. Paul amazing.
Well, thanks so much Antonio for joining us really appreciated
how like 16th to the point. Like, you know, you kind of ask
the questions and like, went through kind of dydx is history
and what you guys doing, super exciting exciting.
And, you know, I'm really excited to see before.
What are you guys going to do in terms of billing that chain and
also in terms of just you know, pushing forward?
The I've chained teases the cosmos SDK, you know, tenement
like so many different things that I think are going to be
like, super excited. So yeah, excited to see what you
guys are going to build and how it's going to develop.
And hopefully we can, you know, resume that conversation at some
point in the future. Maybe when there's like 35 or
something like that, coming up sounds good.
Well, thanks so much for having me on and great conversation and
thanks so much for listening to tuning in and we look forward to
being back next week. Thank you for joining us on this
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