This is epicenter, episode 493 would guess, choose a macedo.
Welcome to epicenter the show which talks about the
Technologies projects and people driving decentralization and the
blockchain revolution, I'm feeling slow chat, I'm here
today with Brian crane. Today, we're speaking with
chosen macedo, who is head of Delphi Labs, that file apps is
part of Delphi digital, a pioneering, crypto company that
has three divisions research, Ventures and laughs the main
focus of f of x. At this point, is Mars protocol
and ud5 focus top-billed leveraging.
The cosmos stack. You're welcome, Jose to
epicenter. Thanks very much for having me
big fan of the show and of of you guys as well.
Yeah, awesome. Yeah so glad to have you on
after so many years of being like in a similar space so as is
customary on on epicenter. I guess the first question we
asked and really is sort of, you know, how did you end up in
crypto? So I think for you this is a
quite interesting story. So excited to hear a bit about
it. Yeah, it's a long as it's a long
story. I started off playing in my, in
my teens kind of playing, professional poker, which was
the way that I first got into, like, economics and Game Theory
and stuff like that, then I went to University, studied politics
philosophy and economics. There started a couple
businesses, including like, very random businesses like a
cleaning company, a martial arts academy, all sorts of different
different stuff. And then actually someone came
like a friend of a friend came to train at my martial arts
academy, and this person who still in crypto, but I think
doesn't like to be Ducks has quite a bit as well in terms of
getting people into crypto, but they kind of talk to me about
and it just made sense to me pretty much instantly.
I had heard about Bitcoin a bunch of times before people
even offered to settle. Look into it.
And also it wouldn't have played for me.
I think the kind of just pure non-sovereign money thing, but
the world computer thesis really, really did click for me.
And so pretty much like a week later, I had put everything on
hold, like, all the businesses and everything and it was just
kind of diving down the rabbit hole.
Reading everything I could on on crypto and I'm like, monetary
history and all sorts of stuff like that.
And then yes started working in the space pretty soon after just
because I wanted to find more smart people to kind of learn
alongside It started off as a as an analyst at a company called
like amazed expect in the days, you know, if you guys remember
that as like a community management company from from,
from the Ico days, I was just like speaking to a bunch of
Founders. Assessing a bunch of projects.
We worked with like bank or and a bunch of other kind of cool
projects. And I was writing research, I'm
on my blog in my spare time and kind of connected through that
with with outside written a post on aetherium back with a theorem
just was just kept going down. And people were saying that,
that that there would never capture value that it was going
to zero those, the famous, Texas Capitol blog, if you remember
that, where they were like, short the theorem and I just
wrote a piece just basically said, why, I was bullish,
ethereum and Valley. Captured actually talked about
the IP 1559, which was already being discussed in the ethereum
forms back then, and yeah, Delphi cited me, one of their
research reports, and then I went on their podcast, we
started collaborating and kind of the rest is history.
Arted, Delphi Ventures, co-founded that and then
co-founded Delphi labs. So definitely sort of like an
interesting and you know, unusual type of organization
because if you can talk a little bit about, you know, how to tell
if I get started. And like, you know what, did it
look like when you joined? So when I joined Delphi was a
pure research company. So and that's kind of how it
started. So most of the the kind of
co-founders on the research side come from traditional Finance
actually from from equity research at Bloomberg and
Deutsche Bank. And in 2018 they fell down the
cliff the rabbit hole and thought you know if we can get
paid so just like learn about crypto and write about crypto
that's like the dream job so they started that and just
started writing like really good research, right?
I mean I remember at the time when Started in crypto, I
started in 2017, but by the time, I was really looking into
this stuff, I was reading by far, the best research in the
space and what I was doing was mainly Consulting, amazing.
So, I started off analyzing projects and then I kind of
figured out that the main problem that every project had
was just like token academics. Like the a lot of times the
project was cool but the token just didn't make any sense.
It was just like a medium of exchange, right?
Like you in order to use this network, you need to use our
token and that was like, never going to capture value.
You and so I kind of built a niche just focused on designing
good. Good.
So komodos and that was going with you.
Well, and basically I came to Delphi to help with research but
also lead the Consulting side of the time.
So oftentimes was mainly focused, purely on research and
then when I joined, we started labs and started focusing on
Consulting where we did like token design mechanism design,
eventually smart contract work as well for projects, like Ave
and door chain and Bouncer and stuff like that.
Pretty much. At the same time, we started the
Delphi Ventures which is which was our fund.
So I was a long story but we basically spent all of 2019
trying to raise money. We have this anchor investor
that was like started off in four, twenty ten for ten and
four five. Then like didn't didn't end up
investing anything and had a bunch of other funny fundraising
stories from 2019. I mean I think we're pretty bad
fundraising but it was also really hard in 2019 with the
bear market and stuff. Everyone thought crypto is Dead
had a bunch of meetings like all around Europe and the world, the
people that was super frustrating, like, remember
having one dinner with one guy and at the end of the dinner, he
was like, oh yeah, but I'm, I'm in, but can I pay cash?
I was like, no, we can't, we can't blow into your money, sir.
I'm really sorry. So yeah, it's really
frustrating, but in the end we didn't get any external
investors for for Avengers. And so we ended up putting in
just our own money. So we found synthetics was it
was a project were really bullish on and we worked with
them on their risk framework. And stuff.
And so we made a bit of money there and then we found through
our chain, which we want it to be the first investment for the
fund because we thought it was just synthetics.
But for a use case that had like more product Market fit, you
know, like it was clear that people wanted to trade Bitcoin
on Chen, whereas synthetics like it wasn't this clearly wanted to
trade synthetic assets. So we wanted to invest in it,
make it the first investment of the fund and we made an OTC deal
with the team and then at the time that was going to close our
investor pulled out and we just like put in our own money.
Money basically levered up like credit card debt and everything
and yeah, started with about a million dollars of our own
Capital, the seven of us together and kind of grew it
from there. Yeah, it's really cool.
And I think, you know, obviously, today we're also here
a lot to talk about Labs, which your head of, and you sort of
mentioned, it was created in parallel, sort of, for the
Consulting first. But then you also, you know,
started basically incubating or building your own projects.
Can you talk a little bit about how that came about, for sure.
And so yeah, people get confused about that Fashion World, equal
Partners in kind of the three businesses roughly and then we
will focus on different parts. So there's the research the
ventures, and the labs, and 7. We all focus on different parts
of the business. So yeah.
Lab started off focused on Consulting.
So yeah, did some work with Ivan torch and stuff at some point we
realized that we gained a lot of Ip and and built a really good
team doing consulting and Consulting tends to get like a
bit frustrating after a while, right?
Because people don't always take your ideas on and you just you
just feel like you want to be in their building rather than like
kind of Consulting on how to build and So it's just like cell
cycles and Gantt charts and stuff like at a certain point
you kind of get bored of doing all that stuff.
And so yeah, we started kind of incubating our project projects
from from scratch and at the time we had n defied kind of
Salon in Terror as its ecosystems.
We were most bullish on started building building on on, on both
of those, but quickly, kind of realized Solano was way earlier
and more difficult to build on them.
The entire this was like an early 2021 like, I'm getting
your transactions included in a block in Solana back.
Then was difficult and there was a bunch of like closed Source,
libraries and stuff. The made it the made of
challenging. So we ended up making the kind
of fateful decision to focus most of our building efforts on
Terra and that started off really well launched kind of
Astro Port first and then and then Mars on Tara?
Yeah, it was there a pretty successful while Terror was
successful. Last report had about, you know,
one to two billion and TBL. It was a top-five decentralized
exchange by volume within like a month of lunch.
Yeah. And had a pretty exciting, robot
plan. And then Mars also had about
nearly a billion in TV Land was yeah it was just getting kind of
getting getting started one when Tara collapsed since then we've
been kind of obviously working with those projects to help them
find a new home. Did a bunch of research on that
ended up choosing Cosmos has a new home and you know wrote a
big research report on that and it has to report is now live on
on a bunch of different chains on Cosmos, Mars has its own
chain and then has its first outpost on on osmosis and yeah I
guess the evolution was started off with Consulting.
Then we went to kind of building our and incubating are on our
own projects and the idea of that was always that Mars and
asked report would be kind of an example of showing people what
we can do and and like how how successful we can be in the
value, we can have two projects and then we could use that as an
example to kind of attract other smart.
Builders to come to come and build with us and scale it out
from there. But Mars and asked report kind
of became so successful at a certain point that they didn't
make sense for us to do anything else.
And now we're and also like the required, a lot of our
attention. But now those projects are
pretty much independent and so we were focused back on the, on
the accelerator and I'm kind of attracting new Builders it to
work on like all the other ideas that we think are exciting as
well. Well, yeah, you definitely want
to talk more about the accelerator later.
So if you're cetera, right? So you guys are focusing on the
terror ecosystem. What what do you biggest
learnings from that episode? We went into Tara with, with our
eyes like wide open, to be honest.
So like we had been involved in ESD before and and like, we'd
always been kind of fascinated, by decentralized, stable coins.
I think maker was the first project we have recovered on the
research side as well. So, we kind of understood the
risks. And we always pointed out the
risks and like wrote threads about the risks and stuff.
So, it's hard to say that, that what happened was, like, people
call it a Black Swan, it definitely wasn't a Black Swan,
right? It was, it was, it was a known.
Risk. But I think probably one thing I
learned in general, from from from 2022 was just that like
building wrote like in crypto, everything that can break we'll
break and so I think building robustness into your systems and
building for the long term is more important than kind of like
short-term success. And I think you saw a lot of
examples of like stuff breaking and in 2022 that looked like it
was super That's all right. Whether it's whether it's Tara
or FTX even like I remember after a certain point had like
even I think well into sort of 2021, they had like
100-something employees and I was like that's not that much
bigger than labs and look what they've built like damn this.
These guys are like super smart, you know where we need to?
We need to catch up, we need to work harder and then you realize
that there were like holding private keys on a Google Docs,
right? And doing all sorts of crazy
stuff like taking all sorts of shortcuts and I think 2022 ended
up. Revealing a lot of that, a lot
of the projects that you thought were successful, we're taking
shortcuts that you couldn't see, but they became obvious as soon
as there was like market stressor and I think a lot of
the times the projects were that happens is where the flows are
sort of covered up by charismatic leaders of some
sort. Right?
Where you know, humans are naturally attracted to kind of
like charismatic leaders who want to you you want to follow
and I think the projects where that ended up being the biggest
problem was when where there was that?
When people kind of look past the flaws of the project because
they had this, this kind of magic meter.
So I think one big lesson that it reinforced was kind of the
yeah, don't trust verify and just be more annoyed.
Like, kind of our GC game Shapiro says, like be more
suspicious of what's going on. And I think that was probably
one of my biggest learnings from 2022 and it also affected how we
like, build, how we incubate and how we think about the space,
we've always been pretty long-term oriented and actually
like Tara was a was a long-term bet when we made it like Tara
wouldn't when we started building on it was nowhere near.
What it what it ended up as like UST Supply was under a bill
while under a bill and and so like and we felt that if that
wouldn't take off until there was some pressure on centralized
stable coins which would which would take a while.
And so just wanted to kind of build towards that definitely
didn't expect. This is the the success it had
and think like in hindsight it's pretty apparent that like anchor
was a mistake. Keeping yield that high was a
mistake. Yeah, and it was frustrating
because I didn't get ended up being the mistake, that every
other algorithmic, stable, quite mad.
She just a gross apply to, to quickly compared to like the the
base of real demand that their actually is.
So yeah, it said I was the that was the biggest lesson and did
you like I guess building Mars Back Then and Now building like
its own cause your own Cosmos chain with it.
Did you apply like these learnings you would you say like
in practicing in some sense, like could you give an example,
maybe of how you Yeah. It's a great.
It's a great question. Yep.
First of all, we always focus on like five years from now or like
10 years from now when we're thinking about making these
decisions, like in terms of product in terms of protocol,
like like and so, one example could be one we're looking
around for where to build like layer choose looked really
exciting, but realistically, layer choose are still extremely
centralized, right? You're relying on like a
centralized sequencer most of them don't even have.
Fred proofs in production of Assisi caves is very far away.
And so for us that was like something that we didn't want to
deal with like we do we do we didn't want to deal with those
centralization risks and those like potential technical
technical issues, the same thing with kind of Apt us and Suey.
It was like they were exciting ecosystems but still very early
for us and like Cosmos dress like the the kind of Cosmos SDK
stack was super battle tested, right?
Even tear itself. The collapse of Terror was like,
kind of a notch on On that Stacks, you know?
Yeah, like that, it made it, it's really robust.
So that was like, one of the, one of the big reasons why we
decided to stay on Cosmos. And also why we decided to kind
of, or the project decided to launch literature on chain
because it's just like the way that gives you the most control
and flexibility over over over what you're doing.
And so yeah that I think that was a big thing.
Also like why I decided to kind of launch an osmosis because we
thought that team was Long-term oriented throws a like again,
very battle-tested stock. So that was an example of kind
of that coming into play. But I think in general, you can
kind of see it in a bunch of like small decisions that you
have to make day today about how to do things whether to take
shortcuts or not. You know.
Like if you want to list even listening something like St at
some right, you see a lot of other money markets this that
and just use the atom article price, you know.
And that's that's like most of the Time that might be fine but
there's some percentage of the time where it deep eggs in the
protocol actions up with bad debt and sort of Mars will never
will never use. Take take shortcuts like that,
right? Oh, it's always going to be be
trying to do it the right way even if it takes longer, even if
it means it's not as not a competitive, not as competitive,
or product in the short term. Yeah.
And there's a, there's a, there's like loads of I think
when you're that the an exercise that we did actually labs and
which was really cool was just doing the values thing.
Like I always thought that was just like corporate Um you know
like very corporate thing yoke is because most values are just
like sound bites, right? Like honesty or like Integrity
or whatever and I think the way to do those values, right is to
have values that actually have like meaningful opposites right?
Where there could be. We're like let's say you choose
for example long-term oriented you some, some companies value,
like Facebook is like ship fast and break things, right?
Which which is like in a sense the the opposite of long term or
And like long-term earns, it might mean you actually ship
slower and you don't move as fast.
And so I think like having those setting up those values is
really important. And for us we're definitely more
on the slower. More careful side, especially
after what happened in 2022. Just kind of reinforce that, and
it also means like certain projects that are out there
right now. I don't want to mention them
them by name but like somebody threw out there right now that
they're like, growing really fast.
It definitely have like problems with their with their Tech
stack. Whether it's like, multi Sig's
holding, you know, Billions and billions of dollars or just like
unstable chains or like with the that have like deep reorg.
So whatever. I think those things are things
that were much more careful with right now.
When we think about launching somewhere, So let's talk a
little bit about more. So, on a high level, like what
is the vision for Mars? And how has the vision changed?
Since the time you were building on terror or versus like, where
it is today? The best way to describe kind of
the vision for Mars in my mind and obviously different people
have, it's a decentralized projects or different people
have different Visions for it in different beliefs on where it
should go. But for me it's like like an FTX
like experience for defy and like that sounds.
Even like that was the vision before I have 2X collapse and I
think now it makes even more sense.
Why you'd want that, right? Why you actually want to
decentralized and not centralized and they are doing
with that is just having this this sub account, where Are able
to have like, all your default positions, your yield farming,
your lping, you're staking your trading all in one single
account with a single kind of like, margin threshold.
And so the, the way I think about it is kind of like
building a sub account for defy, where you can do all your
unchain activity, from this one account, and perform like levers
interactions with, with every single protocol from from one
account. And for me, that was the real,
that was the reason that I like the end that I used FTX.
Over a rather exchanges, right? When you use something like
Finance, it's like you have like your spot account and then
you're isolated margin account in your cross margin account,
and your futures account, and like, everything is separated
out. You have to transfer from
account to account and it's like everything was built by
different teams. They don't really talk to each
other and it's just not a great user experience.
You can end up getting liquidated on your futures
account, even though you have a bunch on your on your son, your
spot account, right? As it is just not as capital
efficient. So, and I think that's
ultimately, The name of the game and Define finances like Capital
efficiency, right? You want your your Capital to
sit somewhere where you can do the most things with it?
And I think if you build that there's a bunch of stuff stuff
that can that can come off it because for example, I think
stable coins actually is also a capital efficiency problem and
something that can be that can be built on top of a system like
this because like I think algorithmic designs are kind of
like that. At least I won't be You know,
fucking around and finding out with, with algorithmic designs
anymore. And so, I think what you have
left is just like that based designs and the issue with that
based designs is like a capsule problem, right?
It's really hard to bootstrap enough enough Capital, to
actually, to actually make a stable coined this large enough
to satisfy like the man for stable coin.
And so, what you end up seeing is they have to take on
centralized collateral and they just don't grow that fast,
right? And so, although successful
stable coins, end up being built around centralized Exchange.
Ages because they have the most Capital, right?
Like u.s. DC was built around, coinbase
tether was built around bitfenix, back in the day and be
USD, was go around finance and those are the three biggest
centralized stable coins by market cap.
And so my kind of hypothesis is that the winning decentralized
stable coin will be built around the winning decentralized
exchange because it's just a debt product.
It's like another debt, you can issue against your account and
so I think whoever ends up building that decentralized FTX
We'll end up having like being in a good position to build
decentralized, stable coins and a bunch of other kind of like,
important things. Right?
And Chris is back in the beginning, you know, you were
building on terror, right? So, it was basically an
application on the terror chain, whereas now, it's sort of like
its own chain. But like, you know, this Outpost
concept which I think you're maybe we can get into.
Is that is that how what does what changes that?
Did you did you also when it was on care, of example, that you
also imagine that you would like to try to integrate lots of
assets from other chains. Why are some sort of bridges?
Or like how did you imagine that back then?
Yeah, I think with Mars actually, the plan was always to
eventually be its own chain. We kind of saw that as a, as a,
as an interesting model and and like, we didn't, like, obviously
there's two ways to yeah. Well, so yeah.
I want to start off with an application on terror.
I think we almost saw the appeal of being being being its own
chain, but it was more. So so that it could be anywhere
because Mars is a, is, is a credit protocol, right?
And so, Ideally should be available anywhere that there
can be demand for credit. And at the time, the most demand
for credit was on was on Tara, Tara had the most growth the
most like stable coins as well and so it had the most demand
for credit but we definitely saw like we were never tell him Max.
He's right. We we knew there would be other
ecosystems that succeeded. And so we wanted a like a chance
to be on there. And this sort of have an outpost
design, which actually Sonny was one of the one of the original
people who Kind of describe this to us made a lot of sense to us
because with with credit it makes like there's kind of two
options when you when you build these app chains, right?
The one is you put like all the assets on the on the option
basically and make everyone move that move their assets over or
you keep all the assets on the edge right on these on these
outposts. And like the first model is kind
of like Fortune, right? And the second model is more
like sushi where it has a person of under bunch of different
chains and for us for Protocol the latter always made more
sense because if you want to build a decentralized FTX like
experience and build that winning decentralized exchange,
you kind of need synchronicity and atomicity, right?
You need things to happen fast and ideally to be on the same
execution environment so that you can do things like
liquidations right where you need to contract needs to
observe another contract State, and then call, you know, call
liquidation function. This kind of thing, we wanted
that to happen synchronously and also just like trading itself.
It needs to Needs to be fast. Like already five second blocks
aren't that fast. And so like, if you have to wait
for Friday, Siri layers and stuff is just not really, really
feasible. And and so yeah, the vision, the
cool thing about the have an outpost model is it means Mars
can expand like, anywhere anywhere.
They like that, the Hub can send messages to which right now is a
lot of places. There's a like with IBC.
Obviously it's caused much James, although there are people
working on Bridges to a theorem and stuff as well.
But you can use other Bridges to send messages anywhere.
Mars could have I'll post anywhere, right?
And then it becomes similar to, like a traditional, like, the
metaphor we use, sometimes is like the traditional business or
back right, where you have the headquarters of the bank, but
then they have Bank branches, all around the country, and
sometimes also in different countries, right?
And that's kind of how we see Mars, where you have the Hub,
which is like the headquarters, which does the accounting thus
taking the and governance. And then you have all these
different outposts that serve different.
In Chains a different different markets as it were with credit.
Yeah. so you, you know, you mentioned visionrider of this
FTX decentralised FTS like product and then you mention And
I think it is also, you know, like spot trading like lending
derivatives and yields a lot of different stuff.
Do you imagine that Morrison build all of those and where are
you focusing right now or would it be sort of that like Mars
will leverage those in different places and I don't know have
some sort of yeah can you can explain little bit like yet to
what extent is all like building.
Mars versus, you know, kind of assembling different pieces
together. For sure.
And so this was always the. So I think the answer is when I
assemble different pieces together, when I integrate with,
with stuff that already exists, rather than build everything and
that was always the vision for Mars, right?
And on terror. There, it had this primitive
called smart contract, credit lines, which kind of Leverage
you. Farming is an, is an example of
that, which is just like, you know, if you think about Ave or
compound, you can only borrow less than what you put in,
right? Because You could do anything
with the capital so I can never give you more than what you have
is collateral because you could just run away with it, right?
And there would be no incentive for you to ever pay back with
with Mars. The idea is that Mars can lend
to Smart contracts that are performing a certain action.
So, for example, margin trading or leverage deal farming?
Right? And then this Mark.
So. So in the case of margin
trading, for instance, let's say you want to go Long, Adam, Mars
could lend, you stable coins and then by the And hold the item as
collateral and then effectively liquid at you, if Adam drops
below a certain like Threshold at specified in the smart
contract. And so, that's much more similar
to what a centralized exchange does.
Right? Where centralized exchange can
give you 100 x leverage on something because they hold the
collateral and what they loan you and they can liquidate you
right. Whereas, for a normal money
market, it's difficult to do that.
So the idea with Mars is just to extend that concept to any kind
of smart contractor or Borrowing activity, never staking
leveraged up being even nxt's like if they have enough.
Liquidity could also be included into this to be anything that
you can do on Chen where it can be like the activity can be
encoded into smart contract and the collateral in the smart
contract has enough liquidity that Mars can reason about how
to liquidate it. If the activity goes wrong, Mars
can extend credit for it. And so, it's like a very cool
concept because eventually, as more and more things get tough,
Agonized, you can extend it to like real world things, right?
Like a mortgage is effectively just a smart contract credit
line, right? As long as the house could be,
could be tokenized and put into a smart contract, then that can
be included into this. And so, the idea with it is is
not that Mars would go on, like, build mortgages and build spot
trading and market rate and everything like that, but that
it would integrate with existing Primitives and act as a sub
account, built on top of all these different defy Primitives.
Now there's like, Certify an edge case there, which is with
designs that have their own leverage built in because there
it's it's slightly different. So for example, like a CDP like
a maker like CDP, if Mars were to integrate with something like
that then the whole point of Mars is that you have this
credit account with one liquidation threshold, right?
But if you integrate with something like a CD P there's
actually two liquidation thresholds.
There's the the CDP liquidation threshold and then and then Mars
is like Edit account, the quotation threshold.
And so there's sort of two different approaches on how to
do it. The first one is just to do like
a D5 saver like thing of rebalancing, right?
So if your CP is, is, is about to get liquid at it, but you
have extra like borrowing capacity on your credit account.
It would just borrow from your credit account and add
collateral to the CDP for example, or pay down some of the
debt of the CDP and vice versa, or Mars can build those itself
and kind of integrate. Them into the credit count
account itself. And I think like one interesting
case where that comes along his perps where I think like there's
no perps currently live on on Cosmos.
And so some more contributors are considering kind of building
that up as part of my eye so that can be offered as part of
this. Yeah, maybe we can take it back
a bit and you can sort of, I guess we talked a lot about Mars
already but maybe it helps to sort of break it down into like
the components that Mars has for the listeners.
Yeah, for sure. So I guess the best way to think
about it is, Mars has lenders on one side, right?
Which are lending like similar to how you would land on Ava or
compounder or traditional money market.
And then on the other side, you have borrowers, which on oven
and compound. Its people that like borrowers
are always lenders as well, right?
You have to deposit Capital into the into the protocol in order
to lend because you need to have collateral.
On Mars, you have none lender borrowers, right?
Which are people who are actually just like trading or
their leverage, they'll peeing or doing something like that and
they're not actually lenders. They're just borrowers, right?
But they want to, for example, use some u.s. d.c. to go long on
Adam or they are they want to use some Adam too short, Adam,
right? So I think that's the big, the
big difference that in on on Mars you have this other class
of borrower, which doesn't need to have collateral on the
platform but actually just wants to do.
Activity with the capital. That's, that's, that's being
lent out on the platform. And then, in the middle of that,
you have middle is probably not the best way to say it.
But you have like governance, which decides on the risk
parameters for this different lending activity, and
effectively like its takers, would have skin in the game and
decide how the protocol should work.
What kind of use cases? It should lend to.
And what the risk parameters for those?
For those use cases should be Yeah, so basically, for each,
like sort of collateral type, your settings, some sort of
ratios and this is done via governance votes on mars.
Or is there like some algorithmic component or is it
like purely governance? Yeah, so Mars right now is it's
like the view one is more like a traditional money market.
So yeah, each each collateral type would have a would have a
governance vote regarding risk parameters and asset listings.
Go through governance, vote with with V2.
That'll be kind of where the credit account functionality
goes live and then like every specific integration would have
a governance vote. So for example, if someone wants
to Go margin loan, Adam. That would be a specific
integration where Mars would integrate with the mm on that
chain, whether it's osmosis and the case of Osmosis or if it's
elsewhere some other mmm and and basically like integrate that
margin trading functionality instead of and set risk
parameters for that as well, like liquidation levels, Max
leverage, this kind of, this kind of thing.
And like, for example, the rate at which people can borrow and
lend, is that sort of a little bit like compound or depends on
kind of, you know, the supply and demand in is, it's updated
continuously based on that Yep, it's very similar to that.
It's like a curve, like a king curve that tries to Target some
optimal utilization and and rates go up like, you know,
Kings at the optimal utilization and then rates go up.
Very aggressively to punish kind of illiquidity.
We did play around with like a dynamic interest rate model
using control theory, but it was just like too many variables to
lunch with the start but I still think that's.
That's interesting. And yeah, there are other things
that are interesting there too but I think Now, it's where you
like, Mars is using the kind of algorithmic formula.
So you talked a little bit about some of the components in terms
of, you know, borrowers lenders. What about if you look at it, in
terms of technical architecture, you know what are the components
of Mars protocol, technical components of Mars protocol, I
think like Larry or someone very best position to speak about
this. But there's basically Mars Hub
which is the chain level where governance happens staking
happens and and fees get get get sent there as well.
Then you have the the Red Bank which is kind of like the the
Ave or compound like module where you can do lending and
borrowing and the interest rate formula is enforced and all
that. And then You have like the
credit account which will be its own module, which is called the
credit manager, which effectively like managers all
the different Integrations, that of different, borrowings that
can be done with Redbank assets. Yeah, I'm sure like someone like
that. I could probably go into more
depth but that's, that's the, my understanding Yeah, makes sense,
I think maybe also like interesting to hear sort of
this. Mars, I guess, one of the first
to have this, like happened spoke model with the that you
have. Do you think this is like, going
to be the standard design for interchain applications?
I think so, I think in a way it already is the the standard
model like something like Ave or you to swap.
Effectively has a model like this right where the the Hub
sits on a theorem. But then they have outposts on
like polygons an avalanche and stuff like that and it's already
actually governed from from a theorem actually don't know how
that's done. I think there's some form of
like crushing messaging that's use there but that I think that
are already is like the model for a lot of How, how defy works
there are there are advantages to doing it the cosmos way to
having having your own chain instead and then terms of what
you can do with that. But yeah, I do think this is
going to be like a pretty standard model for how about
question applications are are deployed.
So the advantage is being sort of that, you have this shared
liquidity across the different outposts which I guess.
I'm gonna swap you don't really have since you have like a new
pool and you're not really able to share their liquidity.
There only like the government's decisions can sort of be
transported I guess to to the other chain.
Yeah, you could do that. I mean like yeah with uni swap
there is no concept of shared liquidity and not with Ave
either but like arbitrageurs effect.
If we can, can do that functionality right?
Both on you swap and on other, you can you can kind of our are
the rates. I think with Mars.
The team started off with this concept of a bouncer at the
chain level which would effectively like move assets
around the different outposts to try and equalize the utilization
rates, right? Which just means that if there's
a lot of borrowing demand in one place and not so much in the
other then it would move in. The set is a lot of borrowing.
Nylon Chen a, but not so much on chain B.
It would move assets from Shane be to Chennai, to try and like
satisfy that Demand, right? I think now, the team's kind of
moved away from, from, from that design, for, for a few reasons,
one of them being that there might be a reason why that the,
the rates are lower and under certain chin and hiring another
one, like people might perceive it to be more risky, for
example, and it's in, it's useful to have that like Market
signal and it could also lead to situations where Like let's say
chain is being hacked. Your just consistently putting
more Capital into the chain that that's being hacked, right?
And so, instead how I think the Mars team is thinking of
implementing that is just as a vault strategy, where as a
depositor, you can choose to deposit on one Outpost, or you
can choose to deposit into this Vault, that rebalances, your
deposit around different, outposts to maximize the rate,
right? And that way, it's a decision on
the lender side, rather than being a protocol and Fortune.
So one of the especially coming back in today, this is why I go
very common criticism that, you know, the theorem people would
have. Again, something I caused most
was that hey, you know, you really want to have this sort of
like synchronicity and you know, you can make like one
transaction and it calls like, you know, different smart
contracts at the same time. And this is like very powerful
and example of newspapers like the / loan thing, right there
like, In one transaction, you can like for some money do
something make a profit, pay back the money so you can
basically like get capital for free without having to put up
any collateral. And, you know, this was kind of
the prime example. Now, of course, Cosmos doesn't
work like that with IVC. I think at the same time you
said that the Outpost can have this sort of like, you know,
instant functionality. Right.
But can you can you talk a little bit about Out, you know,
how do the output, how does this work?
And you know, where does the asynchronous nature of like IBC
and, you know, interoperability still come in?
And, you know, do do any kind of like issues arise from this kind
of design? Yeah, it's a good it's a good
point. So I think if you look at the
state on different smart contract, chains like Solana
theorem and start like, generalized more contract
chains. You actually see that
composability is, is sort of like a meme, right?
That like their most of smart contracts, that doesn't actually
touch each other, and most things don't need to touch each
other. So I think that that is bullish
for the for the cosmos thesis. That's I think Defy is like,
almost all the composability happens on defy and I think
that's one of the, the use cases, where you actually do
need that synchronicity, and that, and that composability.
And so for us, or for me, rather speak for myself, the way I see
the cosmos thesis play out is like IBC is is definitely like a
big part of that. But another big part of that is
just having control of your own blog space and being able to
customize your layer one to sue. Shoot your own use case, right?
Which is if I'm launching on a generalized, more contraction,
but actually, I don't have any benefit from the composability
there because I'm, like a Steppin or some kind of other
application that doesn't like, like most applications that have
to use, Etc that don't really leverage composability.
Then, why not launch my own chain, where, I'm not competing
with anyone else or block space. And I can customize consensus
and like different parts of the of the architecture to actually
suit. My use case And said, that's the
way I see. I see that happening and then in
terms of D Phi, I do think and I could be wrong about this
obviously, but I do think most effectivity will happen
synchronously in a single like environment in a single chain
especially like Advanced defy use cases.
Which for me like that is sort of one of the biggest killer
apps of crypto is like speculating speculation and I
think that like needs Has to happen, like, for that to be, to
be like a enabled in a way that's competitive with a
centralized exchange that needs to happen in a synchronous
environment. So, the way I kind of see it
developing is, you'll have like many different app chains,
specialized for their own use cases.
And then you'll have a few D5 focused options, which are kind
of like the city centres and assets will be bridged to those
chains. Trust this Lee using IBC and the
financial speculation stuff will happen there.
Whereas like the real activity will happen in the in those
options. And if you think about it, it's
kind of similar to the real world, right?
Where you have, like, if you're building a factory, you don't
build it in the end actually producing stuff.
You don't do it in the city center.
You go, you go to a suburb somewhere or to the outskirts
where real estate is cheaper. You're not competing with, with
like Banks and, and like stores for real estate.
And then when we need to raise money or whatever, you go into
the city center, right? And so I think that's, that's
kind of how I see it happening. With Cosmos where you have
osmosis injective Neutron say kind of competing to be like
these defy, hubs you City centers and then you have a
bunch of different like app chains that are specialized in
their own use cases. You know, there's already
obviously like hundreds of them but there's going to be more and
more. And those are sit on sit in the
suburbs, basically, and connects to these defy chains via ABC, so
I don't see defy apps themselves being built levees.
IBC just because of how slow it is, although there will be use
cases for it, right? You see all those Moses, they
have their, their swap, their like cross chains.
What functionality that they call it an outpost, but it's
very different from from how, like, Mars are asked to report
seeing how post where with us most is, it's like if I'm on
Juno I can swap through osmosis and all that happens is like I
said, I want to swap Adam for USD.
See, the atom is sent to as Moses my IBC.
It's Swapped to you a sec and then the u.s.
DC is sent back to Juneau, right?
Whereas with with like Mars astronaut concept of an outpost,
the swap would actually have to have the liquidity would sit on
Juno and the swap would happen there so that it can happen
fast. And then you can do leverage on
top of it and use it as part of collateral in a credit account
in this kind of thing. Mars is also like the March out.
For example, is also one of those app chains, but it
connects the those, you know, kind of marketplaces City
centers, where you think a lot of the, you know, the kind of
financial activity is going to happen.
Yeah, exactly. I think Mars would want to be
present anywhere like that, as an outpost would want to be
present anywhere that it thinks might have a chance of becoming
a financial center. And then that will have and thus
will have demand for leverage and then the Hub.
Yeah. It's like a, it's like a suburb
where just governance and so can you count happens and managers
all the outposts. Yeah, so one thing I find
interesting here because I like, you know, you spoken with Sonny
and when you're Sunny with describe, what's the vision for
as Moses, he would actually be like, hey look he's he's also
this should be kind of like a decentralized finance, you know,
and all of the the functionalities that binds our
scenery. Should be there like, you know,
launch pad, you know, trading Market, in a way described,
pretty, similar to how you describe Mars, right?
But then obviously, You know, it's in a way of Moses is sort
of like covering this spot exchange functionality at the
moment and focusing on that. And you guys take like very
different approach in terms of like how to address this.
So I think there's a very interesting in how you do kind
of have like a similar long-term Vision but like completely
different architectures and at the same time kind of also like
working together. So yeah, it's very fascinating.
See that Yeah, it's a great question.
I think we have pretty much the same exact Vision as, as Sonny
of the sort of decentralized by an answer, decentralized of t x,
which is also why it made a lot of sense to build their.
And yeah, the way I see it is osmosis is looking to become the
D5 focused chain. And so initially, it was an M&M
chain and it was focused on on spot.
But I actually think Osmos is vision is bigger and the goal is
to become like a D5 Focus chain and to then have a bunch of
different Primitives. Launched on there to fulfill
that like Finance like functionality.
And so I think like, osmosis is now working on concentrated
liquidity which also moves it more away from the amm right?
Because I think concentrated liquidity is like univ III
style. Concentrated liquidity is not
really an AM anymore, right? It's more like a It requires
like Advanced users to be able to use that properly.
And so I think there will be other protocols that are merged
the provide the mm like functionality that do the the
passive kind of liquidity provision and then Mars will
provide like the credit phone functionality, the like wraps
around. All the different use cases.
There's protocols launching with levana and a bunch of bunch of
others. So I mean, I think we have the
same vision and our view is that like there's so much to build to
make the vision come true. That the best thing to do is to
partner with like really smart builders that they can build.
The can focus on building different parts of it rather
than try and build build everything yourself.
And I think like the opposite approach is something like dydx,
right where it's going to be their own up Jane.
They're also focused on the decentralized finance Vision
specifically on like Leverage trading and preps but they're
actually trying to build out the whole stack themselves and
they're an awesome team where investors so definitely have
have a lot of Respect for them, but it's just like a different
approach, right? And it'll be interesting to see
which one wins out in the end. Yeah, makes sense.
Maybe I guess the sort of wrap up the talk about Mars.
Can you sort of you mentioned quickly like Mars V2?
Can you like sort of talk a little bit about the roadmap for
Mars? Where is it at right now?
Like you know what's coming next?
Yeah, I think the next big launch from Mars is Mars V 2,
which will be the credit manager, which enables the the
credit account functionality, and really like the, the most
interesting in my view, part of Mars, which is that, that, like
sub account for defy functionality.
And yeah, I believe like Mars is also looking at launching
different outposts, but I think the most significant sort of,
for me is the is that credit account, Mars you to lunch?
Maybe one more thing that does. The other side is, the is the
perp side, which I think Mars will either end up partnering
with with with someone to do to do perps and kind of looking at
a few different teams that they're looking to do that or
sort of like building them like or having some of the
contributors build that do that themselves because I think
we're, we've been, we're really interested in, in some of the
kind of modern part design. It's like the article based
perps because I think especially designs like gains and we
actually put it in our list of lists of ideas for the
accelerator are super interesting because you can get
centralized exchange like execution, right?
Because you're importing the price from a centralized
exchange, without actually needing the liquidity right
without actually needing like to bootstrap.
Like a really deep order book or a really deep mmm, or something
like that. And with something like games,
you actually only need U.s. DC.
So I think it design like that would be super interesting for
Cosmos because, you know, Cosmos has made of USD, see, unlike
something like GMX, you don't need like, Ethan, link, and the
native assets, and unlike something like dydx or or or
perp like an M&M protocol or inaudible protocol.
You don't need that deep liquidity and market makers and
stuff like that. So I think having a protocol
like that and then integrating with the credit account, such
that you could use your your the Quality pool, shares, you're
staking whatever else. You you might have in your
credit account, as collateral to then trade perps.
That's like really the like an awesome user experience and I
think the vision that that Mars is looking to build towards So
you talked in the beginning a little bit, you know, Mars and
asked report and I was somewhat independent, and you can go back
to the roots of incubating and you guys also has made an
announcement the other day about accelerator.
Yeah. Tell us a little bit about that.
Like, what? See how does it work?
And yeah. Well his the announcement in
about Yeah, yeah. This is actually the initial
Vision when we started building. As I said was that we wanted to
basically attract because we've always liked the reason that we
started building was we had this we had a lot of views about how
things should be built. We had like a long list of ideas
that we do. We wanted to build and we didn't
have like the end and we didn't see people doing that.
So we wanted to kind of like pull up our sleeves and start
start helping To make that happen ourselves and the idea of
Mars and last report was that they would be the initial
projects, where we take a more active role.
And then that acts as like the proof that the of what we can
do. And the value we can add and
then we can, we could like, scale it out and do more of a y,
combinator style thing. Although, we were never going to
be like, more of a y combinator style thing, in the sense that
we work with external teams to help them build out their
Visions, right? I guess the difference between
what we want to do and what, It does is rather than y combinator
is is obviously like more of a spray-and-pray approach.
They do have their request for start-up list but they accept
kind of any kind of idea and any kind of space.
And then they have this this this program for us.
We wanted to go out there with the list of ideas that we think
matter. Like we always wanted to say we
think about the space a lot and so we have like a list of things
that we think should exist and then find like really good
Founders and teams to come and help build out those ideas.
And for a lot of those ideas, we already have Designs and stuff
like that. And so yeah, that that was kind
of the how we saw the accelerator and, and the, the,
the sort of the reason we want to do it is just that since,
like, we've been in crypto, six years, and we've helped like,
we've been involved in investing Consulting and building like
multibillion-dollar, super successful protocols, we've seen
all the different we've seen. The first of all, how hard it is
to build a crypto project, right?
There's like a bunch of things that make crypto way harder than
The normal startup, there's like the legal side, it's super
challenging and that everyone spends a lot of money and time
on there's like mechanism, design, and community, and how
to make these things actually decentralized, which people
spend a lot of time Lon there's hiring which is hard because
it's like, recruiters don't really work.
And so we wanted to just kind of take all the lessons that we've
learned doing this and really transmit them like a new
generation of startups and help build the next kind of
generation of really important protocols.
So yeah, we thought really hard. We spoke to practice and we
Worked with and also, to start really hard about what would we
have wanted to, to have a support?
And what we wanted to know when we when we started off in this
journey and that's kind of how we designed the accelerator.
So the idea is that we're going to pick a few teams and like
that the hackathon which we can talk about is a way that we get
to know more teams and get more date on teams to potentially
work with. And then with those teams we're
going to work with them, like, very intensively for kind of
three to six months, although we're obviously work with them
forever. And the go, there is just to get
them, get them set up, get their legal structure set up, get the
protocol design done, help them, hire help them set up, good,
operational practices, upset, everything like that.
And then like get them to their first successful, fundraising
round, help them, help them raise that.
And then obviously, we'll keep working for with them from then
on. But that's really the goal to
take like five or more. But for this first cohort, we're
focusing on five like early-stage projects and really
like share everything. I've learned about building in
the space with them and like, help them get to that first
Milestone of successful fundraise.
And can you talk a little bit about?
I guess what sort of ideas are there on your list and maybe
also I guess ecosystems you're looking at is this like specific
to you know, build on Cosmos SDK or are you like more broadly
like whatever substrate chain you using?
We're yeah. So for the first first cohort
we're going to focus purely on Cosmos, we think it's easier for
us to add value. If we focus on one ecosystem,
that we have deep knowledge of and we're excited about and also
like we just have more of a network there and stuff like
that, but we're for the second core and like, third and stuff.
We're definitely going to kind of consider it again and see,
whether it makes sense to stay on Cosmos or go to an equal to
or even something more kind of speculative like a, no, Or
something like that. What kind of think through
everything from from first principles there?
The approach we kind of take to this is just to think about,
from first principles, like five years from now, if crypto is to
succeed more broadly and if specifically Cosmos is to
succeed, massively like what things need to exist for that to
happen. And then how can we have the
hackathon in the accelerator, be places where those ideas, get
get built. That kind of thing.
And so we think about it in every sector, as kind of, as I
was saying, sort of like, defy metaverse in gaming and ftes
and, and also like identity and governance and think about each
of those sectors, one needs to exist, and what doesn't exist
now and then trying to, like, spec out some solutions for that
to get teams thinking about how those, how those could be built.
Yeah. Because I think like, if they're
am, is the clear leader right now in terms?
Of like traction Dev activity liquidity, all of that, but it's
still pretty small in the scope of things.
Right? And so I think every Co system
is sort of one or two killer apps away from from kind of
unseating if they're a man in my mind.
And so I think part of it is there's some things that are
clearly successful in the theorem that the other
ecosystems need to have. But there's a lot of things that
haven't been built yet at all where I think ecosystems can
differentiate. And I are you going to be
spending most of your time on the accelerator on more
assertive, like split your time. And where is your personal
Focus? Yeah, good question.
So I think for for for me, yeah, probably split time amongst like
Mars and asked report is still really important to lapse there.
Like the first, they're like our babies and also, I think they
need to succeed for for the accelerated to succeed, like
their products that were more deeply involved in.
So really important for us that they succeed.
But they have like independent teams that are super smart that
are there thinking about this stuff all the time.
So I think we Take more of like an advisory capacity than air
and so I'm mainly focused on. I think my main focus is going
to be the accelerator moving forward and really like building
up a new and also because the accelerator especially this
first cohort, well actually if it's successful be really
important for for Mars and asked report success to write.
Because it's going to attract a lot of really important projects
to to Cosmos. Hopefully, and also a lot of
projects that actually Can be potential Integrations for Mars
and ask report to. Yeah, thanks so much for coming
on Tuesday. I think we covered a lot about
like, yeah, Mars, the Delphi story and the accelerator I
think are really excited for what for this to exist in the,
in the cosmos ecosystem. And yeah, thanks so much for
coming onto epicenter, to talk to us.
And yeah. See you see you around in
Lisbon? Yeah, I really appreciate you
guys having me and thanks for all the smart questions.
Hope it was. Hope it was useful for people.
Absolutely, thanks so much as a Thank you for joining us on this
week's episode. We release new episodes every
week. You can find And subscribe to
the show on iTunes Spotify, YouTube SoundCloud or wherever
you listen to podcast. And if you have a Google home or
Alexa device, you can tell it to listen to the latest episode of
the epicenter podcast, go to epicenter dot TV /, subscribe
for a full list of places where you can watch and listen, while
you're there, be sure to sign up for the newsletter, you get new
episodes in your inbox as they're released.
If you want to interact with us guests or other podcast
listeners, you can follow Oh us on Twitter and please leave us a
review on iTunes. It helps people find the show
and we're always happy to read them with thanks so much and we
look forward to being back next week.