0:13

Welcome to Epicenter, the show which talks about the

0:15

technologies, projects, and people driving

0:18

decentralization and the blockchain revolution.

0:20

I'm Sebastian Couture and I'm here today with my co-host,

0:22

Meher Roy.

0:23

Today we're speaking with Charles Desaix. He's

0:25

the CEO of the DYDX Foundation. They

0:28

just launched the v4 AppChain

0:30

and we'll be speaking with Charles about DYDX,

0:33

the decision

0:34

process that went into evolving

0:38

DYDX into its own AppChain.

0:41

We'll talk about the launch, how things are going. We'll

0:43

also talk about the perpetual market, space,

0:46

MEV, and so much more. Before

0:49

we get started, a quick disclaimer. This is a sponsored

0:51

episode and some of us at Epicenter hold

0:53

DYDX tokens.

0:55

So Charles, thanks for joining us. How are you doing?

0:58

Thanks for having us. Seb, Meher, I'm really

1:01

pleased to be here. I'm a very early

1:04

fan of the show for many, many years. So

1:06

I want to start with a big thank you for

1:09

your hard work for the community, years

1:11

after years, bear market, bull

1:14

market. You've been educating

1:16

the community, giving the stage to many.

1:18

So I'm very grateful. I've learned a lot along

1:21

the years

1:22

and I'm sure most of the audience has as well.

1:24

Congratulations for the hard work and thanks

1:26

again. So Charles, you're

1:29

one of these guys who left France early

1:31

in your career to move to Asia. What

1:35

have you been doing for the last 20 years?

1:39

Oh, yeah, I've

1:42

been studying in France and Canada

1:44

and eventually did an internship in India

1:47

and I felt the energy in

1:49

Asia was just really addictive.

1:53

So I wanted to get my first job in Asia. And

1:56

long story short, I ended up in China,

1:58

then in Hong Kong. I started a business.

1:59

in Hong Kong sold this

2:02

business a few years later to one of my

2:04

customers, decided

2:06

to kind of pivot and make time

2:08

to upskill myself

2:10

in finance, which was a topic I

2:13

really liked beside my everyday

2:15

work. I was invited

2:17

later on by the Hong Kong government to

2:20

join them as the head of FinTech, working

2:22

on growing the ecosystem of FinTech

2:25

in Hong Kong. Hong Kong is one of the leading

2:27

financial centers and it has went

2:30

through its kind of reinvent

2:32

itself into a FinTech hub and I was

2:35

leading this together with central banks and

2:37

regulators over there. So

2:39

great experience at building and

2:41

shaping ecosystem and one of the vertical I

2:44

was focusing on was the Wooze blockchain,

2:46

so one of my

2:48

early loves. So I've been helping a lot of

2:51

leading companies at the time to

2:53

set a foot in Asia and start the expansion

2:56

in Asia from Hong Kong. Among them

2:58

was ConsenSys, which eventually

3:00

I joined. I was head of Asia

3:03

for ConsenSys for a few years,

3:05

helping Metamask, helping central

3:07

banks to build early CBDCs,

3:11

DeFi projects, NFT projects

3:13

all over Asia from Japan to Hong

3:16

Kong, Singapore and Australia. And

3:18

first of all, I joined the DIDX Foundation

3:21

now where I am the CEO and where

3:23

I work with a team of 20 plus

3:25

people which have had all over

3:27

the world very close to where

3:30

most of the users and builders around DIDX

3:32

are.

3:35

How did you come into this role as CEO

3:37

of the DIDX Foundation and what was that transition

3:39

like?

3:42

I spend a lot of time at ConsenSys,

3:44

right? So ConsenSys is a great company

3:47

where there is essentially supplying

3:50

and providing infrastructure for the space,

3:52

should it be in-fuehrer on the RPC nodes

3:55

or Metamask for wallets and

3:57

many other services. So I spend a lot

3:59

of time on it. I spent a lot of time building

4:01

infrastructure for their

4:04

use project and

4:06

institutions. I wanted to kind of

4:08

go out and spend more time at the application

4:10

level. And DYDX was

4:13

a very interesting project. DeFi

4:15

is a very confirmed use case. Within

4:18

DeFi, perpetuals are also

4:21

having tremendous traction and

4:23

essentially exist in DeFi and because

4:26

of crypto. Building

4:28

the Cosmos stack was also interesting. I

4:30

started my journey in crypto

4:33

with Bitcoin obviously like many in 2011.

4:37

Spent a lot of time on Ethereum. But

4:39

the Cosmos stack is definitely a super strong

4:41

candidate for global infrastructure

4:44

in the coming decades. So spending time

4:47

on DeFi and Cosmos also

4:49

getting more interactions with DAOs.

4:52

There was a lot of kind of new

4:54

topics I wanted to go deep diving

4:56

in. And kind of

4:59

leading the DYDX Foundation team is a lot

5:02

of activities. Obviously,

5:06

the migration from version 3

5:08

of DYDX to now the DYDX

5:10

chain and version 4 is extremely

5:13

intense but highly rewarding. So we're

5:16

having a lot of fun.

5:19

So DYDX announced

5:22

last year that it would

5:25

essentially move to its own

5:27

app chain. And this really sent waves

5:29

through the Cosmos industry. I think it was some of the

5:32

biggest news and certainly

5:35

very positive news

5:36

in the market

5:39

conditions that we've been in for the last year

5:41

or so. And it's

5:43

something I've thought about a lot in terms of

5:46

how chains evolve from

5:48

smart contracts to moving

5:50

to L2s to graduating

5:53

essentially to

5:55

becoming fully sovereign from the

5:57

consent

5:58

this layer all the

6:00

way to the application level. And

6:03

so I'm curious, what

6:06

was that graduation path like? And

6:09

actually before that, maybe what was

6:12

the decision making process of moving

6:14

to a Cosmos chain? What

6:16

were the criteria that we were looking for? Were there other

6:19

platforms

6:19

or protocols that

6:22

were contenders here? And

6:25

then yeah, what was that graduation path or that

6:27

upgrade path look like?

6:30

Absolutely.

6:31

Maybe to cover this question,

6:33

the best is to start with the history of DYDX.

6:35

DYDX was founded by Antonio Juliano

6:38

back in 2018. Antonio

6:41

is a former Coinbase engineer,

6:43

so he got very early exposure

6:45

to the space, in general to the technology, and

6:48

decided to fund DYDX.

6:51

So he's the original founder behind the technology

6:54

of DYDX. DYDX

6:56

started on Ethereum, mainnet, and

6:59

later was one of the very early movers

7:01

to layer tools with Starkeyx,

7:04

and is up to today one of the largest

7:07

contributors to the number of transactions

7:09

and level of activity on layer tools

7:11

in general. But I

7:14

guess the product team over there at DYDX Trading

7:16

has been always very independent and

7:18

focused on product and user experience

7:21

rather than trying to accommodate

7:23

some technology which was evolving. So

7:26

when you get your application to sit on someone else's

7:28

blockchain, you can get essentially

7:30

you can move faster and you can benefit

7:33

from innovation from others and

7:35

services from others. But it also

7:37

brings you some kind of challenges and

7:39

pedals. Sitting on general purpose

7:41

blockchain means that you will be sitting

7:44

on one infrastructure which is number

7:46

one, not yours, and also designed

7:48

to accommodate many different

7:50

types of use cases. And DYDX has

7:52

already been laser focused on one use case

7:54

which is essentially D5 for Perpetuals,

7:57

being a leading decentralized exchange

7:59

for Perpetuals.

7:59

was going to try.

8:02

So progressing with the

8:04

product and getting more and more traction, as

8:06

a team at DYDX started to look

8:09

at how they could essentially keep

8:11

evolving and deploying more

8:13

innovations and more features for

8:15

the product in general, and also

8:17

kind of mitigating as

8:20

a dependency they had from other

8:22

teams building these layer tools. And we all

8:25

know it's very hard work, and everyone

8:27

has been doing a fantastic work. But when

8:29

your application is going at very fast pace,

8:31

sometimes you just need to find

8:33

whatever will be required to

8:36

feed your work. So

8:39

there was a few trade-offs as

8:42

a number of transactions. Some layer tools were

8:44

still not there compared to

8:46

the growth of DYDX. A

8:48

few components were not able to be decentralized.

8:51

So on version three of DYDX, this is

8:53

public information. The order book,

8:55

which is one of the core modules

8:59

of decentralized exchange,

9:02

is actually off-chain. It's running on AWS

9:04

servers. There is not enough capacity

9:07

and throughput within any layer of two today to

9:09

host another book. So

9:13

adding this product, evolving,

9:15

but still adding some kind of avenues

9:18

for progress. The team at DYDX

9:20

has been essentially exploring

9:22

the different technologies available at the time. I

9:25

think the process started out a long ago also.

9:28

They looked at many different stacks,

9:31

the different layer two technologies, ZK,

9:34

Solana, probably Polkadot. I

9:36

guess the team has been really looking all around. And

9:39

where it was all starting, it was

9:41

kind of a reverse engineering

9:44

exercise, thinking, what do you need

9:46

for another book type of

9:48

exchange? And something

9:51

people don't necessarily know is that within

9:53

another book type of exchange, there

9:56

is a lot of market makers

9:59

and users. which are essentially

10:02

placing orders, concerning orders.

10:04

Sometimes they sell their match and they will get

10:06

settled. So there is a very high velocity

10:09

on the order book overall. So

10:12

how can you get the experience

10:15

on this systematic traders

10:17

need on technology and what kind

10:19

of technology can essentially

10:21

adapt and provide this. And

10:25

the chance of architecture for this

10:27

new DYDX chain which was launched a few weeks

10:29

ago now, was to essentially host

10:32

the order book not on chain because

10:34

you will get the constant latency of the block

10:37

time which is not providing a good enough

10:39

experience for traders. So the order book

10:41

is not on chain but technically

10:44

the order book is still de-sultanized. And

10:46

the way the decentralization is happening is actually

10:48

by hosting the order book

10:51

in the memory of the validator. So

10:53

the DYDX chain has been launched. The

10:56

DYDX chain is used for settlement of orders.

10:59

But at the order book player,

11:02

the order book is technically not on chain

11:04

but within the memory of the validators. So

11:07

this can really provide a very high frequency

11:09

and high velocity order book, similar

11:11

to what what Pader's experience

11:13

in an in centralized type of crypto exchanges

11:16

and also providing

11:19

a full control of the stack for

11:21

the engineers involved in DYDX.

11:23

Not having to depend on the progress

11:25

of the roadmap for the layer of two or ZK, being

11:29

able to really integrate the full technology

11:31

and keeping the pace of innovation,

11:34

the product deserve and the market pools.

11:37

Yeah, this is really interesting that DYDX

11:41

is a project that is starting with the product

11:44

experience first and

11:46

then the blockchain follows

11:49

from the product experience rather

11:51

than the other way around where

11:54

it's like you're part of some blockchain community

11:56

and you build your product

11:59

experience there. It's the opposite

12:01

way around and

12:04

the power of a Cosmos

12:06

chain is exactly that. I like you

12:08

can basically tell the validators to do whatever

12:11

is needed for the optimal product experience.

12:14

So that's actually interesting.

12:17

So this Cosmos chain,

12:19

it is not going to be EVM compatible

12:23

or what are its EVM compatibility

12:25

properties like and is it an issue

12:27

that it

12:30

lacks some forms of compatibility? That's

12:34

a great question.

12:35

For

12:37

the DYDX use case which is trading

12:39

perpetuals, perpetuals contracts,

12:42

essentially we don't have the same requirements

12:45

of compatibility as some other type of

12:47

use cases in DFI. So

12:50

if you are a lending protocol or if you are,

12:52

for example, an AMM, you will need

12:54

to have all kinds of assets around you and

12:56

a very large ecosystem. When you

12:58

focus on derivatives like the

13:01

DYDX, essentially

13:03

every trade at DYDX starts with USDC

13:06

and from this USDC collateral, you

13:08

will be able to express your opinion on

13:10

a synthetic product which will represent a

13:14

bullish view or a bearish view on any

13:16

kind of crypto assets, Bitcoin, Ethereum

13:18

and so on. So we don't have the same requirements

13:20

of compatibility as

13:23

some others. To come back to the

13:26

EVM compatibility question, in

13:28

these early days of the DYDX chain,

13:31

all the business logic is actually on

13:33

the chain itself. The goal

13:36

was really to design a formula

13:38

one of trading

13:40

for perpetuals and all the

13:42

layers we could essentially simplify our

13:44

abstract and get the business logic

13:47

integrated into the chain itself

13:51

and essentially helping to get the performance closer to be

13:53

optimal for the users. There

13:56

might be a time where EVM compatibility

13:58

will come, but at the moment, the chain

14:00

is starting with really this

14:03

focus on performance and this focus

14:05

on the sole use case, which is

14:07

a use case of the dydx.

14:10

Essentially, the dydx

14:12

chain is not like many

14:15

other layer ones, which will invite

14:17

a lot of builders building on the chain. Many

14:19

people will be building around the chain and the

14:21

core application, but the goal is really

14:23

to keep the leadership we

14:26

have on the market

14:28

as a protocol in a derivative market.

14:31

For people who don't know, a crypto

14:34

derivative market is 10x larger

14:37

than spots crypto trading. So

14:39

every time there is one Bitcoin or

14:41

one ETH being traded in the spot market,

14:44

about 10 times larger amounts is

14:46

being traded on derivatives. So that's

14:48

a very large use case, mostly

14:52

used by market makers, institutions or

14:54

posttubers. And being

14:56

focused on this since 2018 has

14:59

essentially helped dydx to grow as

15:01

today's the world's largest decentralized

15:04

exchange for crypto derivatives, which

15:06

represents about a billion dollars of trading

15:09

every day, about 80 million

15:11

dollars of fees collected on

15:13

the version three of dydx

15:16

and market shares which are going every

15:18

month versus the centralized crypto

15:21

exchanges. And if we want to project

15:23

ourselves a little bit in the future, if

15:25

you think of the journey of Uniswap,

15:28

which started two or three years ago, obviously,

15:30

Uniswap started from zero and today represent

15:33

between five to seven percent of the spot

15:35

trading market. There is

15:37

a potential for dydx to

15:39

really expand from this 1.5 percent

15:42

market shares today in crypto derivative

15:45

and growing, knowing that I think

15:48

the market in general starts to realize the

15:50

limitations of centralized

15:52

exchanges and start to look at

15:54

expanded the different venues

15:57

for expressing their opinion on the market.

16:01

When I was looking at DYDX

16:04

a

16:04

couple of years ago, one of the big

16:07

revelations I realized was when

16:10

you think of a Uniswap,

16:13

for the Uniswap

16:15

to successfully do an exchange

16:18

or an exchange like experience for a user, it

16:21

needs to have

16:23

control over the asset that

16:25

the user is interested in. So, it is

16:28

like NKR and ETH, somebody

16:30

has to provide an NKR, somebody has to

16:32

provide an ETH. So,

16:35

those things have to be there. But

16:38

with DYDX and actually the entire perpetual

16:41

market, what seems like a crazy

16:44

property is that you can have the entire

16:47

market exist with only

16:49

USDC or a stable coin

16:52

as a base. You don't actually need the

16:54

assets themselves in

16:57

the exchange. And so basically

17:01

the market can stand

17:04

on its own without even

17:06

a lot of bridges to any

17:08

places. As long as there is a stable coin,

17:11

the market can exist even if it

17:13

bridges

17:14

to other ecosystems, maybe

17:17

that seems like very interesting.

17:19

And so,

17:20

how does that work?

17:22

How is that possible? And

17:25

how does the perpetual work underneath that makes

17:27

it possible?

17:30

So, perpetual is a certain

17:32

type of future contract. So,

17:34

the future contract is essentially a

17:37

kind of an adjacent market to the spot market

17:40

where people will be able to express

17:43

their opinions should they be bull or

17:46

bears on one type of asset. Historically,

17:48

the futures market exists in

17:51

the equity world for quite some

17:53

time now. And they usually kind

17:55

of expire within the

17:57

end of the law. So, within three months, you

17:59

can buy shares. future sometimes up to six months

18:01

or more. And then the market will be

18:03

able to take a bet on and

18:06

defining a price of an

18:08

asset in the future. So

18:10

the future contract. The

18:12

innovation which came in 2018 via Bitmex as

18:16

a centralized crypto exchange out of Google was

18:19

essentially to create a new type of futures

18:22

contract which were not expiring at the end

18:24

of the month anymore but kind

18:26

of updating them

18:28

from the price of the underlying

18:30

assets on the hourly basis.

18:33

So this type of contracts are called

18:35

perpetual contracts because they

18:38

kind of bring the perpetuity and

18:40

the kind of constant liveliness

18:42

of this futures contract. So it gives

18:45

to traders an opportunity to quickly

18:47

enter into one market without

18:49

having to move the underlying asset. So you can

18:51

start with USDC and starting to see from my

18:54

USDC, I want to express my

18:56

opinion on the market on Bitcoin

18:58

or EIF, there is hundreds of different

19:00

perpetual markets available. And

19:03

being able to enter this market and exit

19:05

them very quickly without, I would say, the underlying

19:08

logistics. As a world of

19:10

futures and derivatives, as

19:12

I was mentioning earlier, a very large market, way

19:15

larger than the underlying assets,

19:18

should you think of equity derivatives or

19:20

commodities derivatives and crypto

19:22

derivatives as well. So it's a very

19:25

elegant and efficient way for

19:27

essentially traders in the market to define

19:30

a price and accelerates and

19:32

makes more, to move

19:34

the price discovery of any assets.

19:38

So in my mental model, so

19:40

if I go to DY DX and

19:43

I go long eat,

19:45

when I make the trade happen, let's

19:48

assume actually you are the counterparty

19:50

on the other side with the Zoom,

19:53

it's past. So you have gone short eat, I've

19:55

gone long eat.

19:57

Now, my...

19:59

is a purpose and position and yours too. So

20:02

I should be able to hold it for years if

20:04

needed.

20:06

Whereas

20:07

our durations may not match. So you

20:10

on the other side might want to

20:12

get out of position of the position, you know,

20:14

maybe 30 seconds later or 30 minutes later.

20:17

So

20:17

how

20:18

is that gap over?

20:21

How can I have something permanent

20:23

while you being my counterparty

20:26

and you are not actually permanently

20:28

there? Yeah, what is it that

20:30

the XNXC is doing?

20:32

So there is a complex mechanism

20:35

which people can document themselves

20:37

about at the YDX Academy, for example,

20:40

essentially working around the soldering rate

20:43

and the open interest overall, or

20:45

where actually traders will be compensating

20:48

or being compensated for variations

20:50

between their contract as it

20:52

is today and the underlying demands for

20:54

this contract. So one of these works

20:57

with the funding right around the dilated contracts,

20:59

which essentially every hour we can have checked

21:02

as a level of buyout and sellers and if

21:04

you've been too optimistic or not enough, there

21:07

will be a rebalancing made every

21:09

hour.

21:11

So what kinds of assets can

21:15

people trade on the YDX

21:17

today and what

21:20

is the roadmap for

21:22

supporting more assets? Absolutely.

21:26

So the YDX of a perpetual market.

21:29

Today there is about in the version 3 of

21:31

the YDX sitting on the top of Ethereum,

21:34

a layer of 2 from Starkeyx, about 30 different

21:37

trading pairs. So people can

21:39

trade Bitcoin, Ethereum and kind

21:42

of a long tail of assets.

21:44

As every market, Ethereum and Bitcoin

21:47

represent roughly speaking 80% of

21:49

the value. And

21:51

what is very interesting with

21:53

the now born YDX

21:56

chain is the upcoming upgrade

21:58

of the YDX protocol itself. where

22:00

the number of trading pairs

22:02

will expand to up to 100

22:05

and people will be in the near future

22:07

being able to launch permissionless markets.

22:10

So the type of innovation we've seen on the

22:12

crypto market with Uniswap where people were

22:14

able to start some trading

22:16

pairs and essentially starting a market in a windy

22:18

permissionless way, the same

22:21

is happening in the near future

22:23

at the YDX where people will

22:25

be able to launch perpetual

22:28

markets on their own, this

22:31

following risk framework as well as the

22:33

liquidity framework which

22:36

is being designed and voted by the YDX

22:38

DAOs. But that's a great

22:40

innovation which I think the market has been expecting

22:42

for a long time, making sure that you

22:45

can get essentially market launch

22:47

at high velocity but also in a

22:49

safe and

22:52

highly liquid way for new

22:54

perpetual contracts.

22:56

So this

22:58

idea of permissionless markets is pretty interesting.

23:02

Let's dive into that a little bit. What

23:04

does it mean to be able to create a permissionless market?

23:07

So what it

23:10

means is first and foremost

23:12

probably more trading pairs. So

23:14

the users will define that. It's a little

23:16

bit some of the magic of crypto when you

23:19

define software, you define a recipe and

23:21

then you let the

23:23

market express themselves with this kind

23:25

of new innovation. So where

23:27

I'm excited about is about the unknown

23:30

about this kind of innovation. So many

23:32

people are thinking, okay, there will be no more

23:34

mincoins, there will be more shitcoins markets.

23:37

That's one thing and if people want some

23:39

more of this, they will be able to launch those

23:42

markets. Well it's more interesting in my opinion,

23:44

permissionless markets really open a

23:46

new avenue for truly

23:49

new markets and the fi only

23:51

market to exist.

23:53

I think if we really want to see the defined market

23:55

to expand and to keep, I

23:57

would say, getting mind shares

23:59

and and kind of overtaking

24:02

as the legacy systems which have limitations,

24:05

we need to make sure that we essentially

24:08

set the DeFi market for permissionless

24:10

innovation as well. And where

24:13

we've seen some kind of peaks of growth

24:15

in the crypto market in general is when

24:17

this kind of innovation and this kind of new market

24:20

came about without

24:22

being able to be replicated by centralized

24:25

type of infrastructure. So think OptionEswap

24:28

for the DeFi summer think of

24:30

NFTs, think of different type

24:32

of innovations which came to

24:35

life and gave this kind of plan

24:37

for growth and hours of new users

24:39

coming into our space. And with the permissionless

24:42

market at DYDX I think we have

24:44

potentially a

24:45

very strong set of

24:49

components to really call for

24:51

this new innovation.

24:53

DeFi will keep expanding if we

24:55

keep inventing new products

24:57

which can only exist in DeFi. If

24:59

we only replicate or optimize

25:02

whatever exists in the traditional systems

25:05

we can have defined the growth and

25:08

cap the growth we can get access to.

25:11

So permissionless market means that users

25:14

will be able to define a

25:16

risk framework around this asset. The

25:19

risk framework will be considering for example

25:21

the liquidity, the age of the asset, the

25:23

type of the asset as well as

25:25

a market making kind

25:28

of framework as well making sure that when

25:30

a market is launched in a permissionless

25:32

way it does not become toxic. That's also very

25:35

important. Being remaining open

25:37

to innovation but making sure innovation is

25:39

not burning fingers of users too much. So

25:41

as I said we probably can, we probably

25:44

see a long tail of new

25:46

crypto assets coming up but also

25:48

we can think of new indexes

25:50

as starting to be traded in the relative

25:53

market as much as they are in the traditional

25:55

market as well. Thinking of new type of

25:57

asset if you want to express example,

26:00

your opinion on the

26:03

price of rice, corn, cocoa, or

26:05

some other commodities. Today some of these

26:07

markets are very much, I would

26:09

say, close to a little fuse,

26:12

for example, in the Chicago

26:14

exchange where you can trade commodities

26:16

and if you want to express your opinion on these markets,

26:19

you called today.

26:21

And I think that's the power of DeFi is

26:23

giving really the kind of internet

26:25

distribution to markets which used to be

26:27

very kind of constrained

26:30

in terms of geographies

26:31

and where permissionless market can possibly

26:34

impress us and surprise

26:36

us is by defining this kind of new product

26:39

which will be exclusively available

26:41

in DeFi markets and

26:44

kind of creating this new

26:46

demand and bringing additional

26:48

value, additional volumes, additional users,

26:50

new type of users as well on the market.

26:53

So as I mentioned, you know, commodities is

26:55

probably something which is interesting

26:58

to explore. Some people mentioned the insurance

27:01

market which we're also expecting to kind

27:03

of build some edge with permissionless

27:06

derivative market and

27:09

the permissionless setup at the

27:11

YDX might be something they will

27:13

be exploring. If you

27:15

want to look at building some new

27:17

type of indexes or all type

27:19

of real-world assets or crypto assets

27:22

and defining them in

27:24

a derivative way, this will be also

27:26

a very sanitized source for every

27:29

financial engineers to express themselves

27:32

and leverage the capabilities of DeFi.

27:36

So I mean the one product

27:39

I'm really looking forward for is we

27:42

have the Indian stock exchange is

27:44

called Bombay

27:46

Stock Exchange and there's an index

27:49

of that stock exchange, the BSC Sensex. I'm

27:52

like, I am really bullish on the India

27:54

story. I

27:57

want to buy that index.

27:59

I can't,

28:00

I'm living in Switzerland. I can't send

28:03

money to India because once you send money

28:05

to India, your money is trapped. It's

28:07

very hard to get it back outside.

28:10

And if you buy an index fund for media

28:12

assistance in Switzerland, the

28:16

cost structure of those funds is extremely

28:18

high. Like they are, these funds are 50 times

28:21

more expensive than your typical S&P 500 fund. So

28:25

I actually, I've been in India wanting

28:28

to bet on the industry, have

28:30

not. And I'm just waiting for

28:32

the day I can go long on some kind of BAC

28:35

sensex on Bitcoin,

28:38

on sorry, on DYDX. So like

28:42

that's kind of one of the things that

28:45

excites me the most. I don't

28:47

know whether this market will take off or not. You

28:49

should create it. You should build this permissionless

28:52

market on DYDX. Yeah, exactly. Right.

28:54

Like there's no index I can buy today.

28:56

So I actually need a

28:59

long perpetual contract on the BAC

29:02

sensex.

29:04

We will see how things get

29:07

to shape and how people decide to go. I

29:10

think the governance will be also important

29:12

around this product, making sure not all kinds

29:15

of products get to happen. We

29:18

still evolve into a world

29:20

with some regulations and some compliance

29:22

issues, which we don't want to do shortcuts

29:25

on. But there is definitely a

29:27

ground for a lot

29:29

of innovations and helping better

29:32

distribution to financial

29:34

opportunities essentially. Do

29:37

you think it's possible for DeFi?

29:40

I mean, we've been talking about DYDX

29:43

and Uniswap. And I think in

29:45

the context of what happened last

29:47

year with FTX, a lot of people were thinking,

29:50

certainly I was thinking about how

29:53

can we get DeFi to arrive

29:55

to a point where it can compete

29:58

and be indistinguishable from the market?

29:59

from the experience of centralized exchanges.

30:03

I know this is the DYDX kind

30:05

of mission and this is what the product aims

30:07

to be, but I mean, what

30:10

are the biggest challenges in terms of making that

30:12

happen? And do you think that it

30:14

is possible for DeFi to get to

30:16

a point where it's indistinguishable from

30:19

fully centralized exchanges and really

30:22

compete sort of on

30:24

par with the type of performance,

30:26

with the type of UX, with the type of like onboarding

30:29

experience that we get with centralized

30:31

exchanges?

30:34

I think we define it to

30:36

keep having his own identity and his own mission.

30:38

If we are just running after

30:40

replicating and

30:43

kind of matching the experience of

30:45

centralized exchanges or experience

30:48

in traditional finance, I'm very

30:50

confident we will get there, but will this be

30:52

sufficient to bring a lot of new users

30:55

to the space?

30:56

I don't think it will.

30:58

Do we have in our hands the

31:00

technology and the capabilities to create

31:02

new products which will be really unique to

31:05

DeFi and brings people into our space

31:07

the same way ICO has been bringing

31:09

a lot of people in our space back in the days? The

31:12

same way NFTs have been bringing artists

31:14

and collectioners in our space

31:16

and now people in the video games industry

31:19

are building digital

31:21

assets out of NFTs within the video game

31:24

space, because it's very unique and

31:26

only blockchain or crypto

31:29

infrastructure can provide that. So I

31:31

think it's very important to keep innovating and focusing

31:34

on this kind of innovation. DYDX

31:36

focusing on purpose is one illustration

31:38

of that. The other things to keep thinking

31:40

about is also how you keep building

31:42

public blockchain infrastructure which

31:45

can get different points of entry. I

31:47

am a strong believer that not everyone

31:49

will start a crypto journey with a metamask

31:51

wallet as some people will come to

31:53

crypto via their existing financial

31:56

service providers. So if you think of your

31:58

banker today, is

32:01

probably for the most part, and

32:03

it's core business is deposit, so you drop

32:06

your salary every month and they make a little bit

32:08

of money out of your deposit.

32:10

And then banks for the most part are all doing

32:13

the same.

32:13

What they do is they package services for others.

32:16

So I think the distribution also of RDI

32:19

will evolve, some people will keep

32:21

going directly maybe to

32:24

the services they use, should it be Uniswap,

32:26

DYDX or some others. And

32:28

some others will be essentially

32:31

being offered access to DeFi

32:33

via some hybrid gateways.

32:36

So I strongly believe that the new wave

32:38

of FinTech will essentially be sitting on

32:41

DeFi infrastructure, so DeFi as a

32:43

backend, and the fourth end will be

32:45

some kind of FinTech

32:48

user interface where they will

32:50

provide customer support, they will provide

32:53

simplified UX and

32:55

just simplify the onboard and

32:59

off board of users

33:01

and front of the role in the space. So

33:03

really the way I feel DeFi

33:06

will keep progressing in the years to come is

33:08

via really so DeFi

33:10

type of innovation, as well as

33:13

being a little bit more open to

33:16

a variety of entry

33:18

doors into DeFi, and having this

33:20

kind of hybrid and gateways to DeFi

33:22

which will be the traditional players,

33:26

which will be coming with

33:28

the errors of customers. And I think

33:30

we see that already happening slowly

33:33

but surely. Some years ago, Coinbase

33:36

was offering the ERL program which was

33:38

essentially allowing Coinbase users

33:40

to get access to compound and

33:43

simplifying the experience for

33:45

them. And I think it was very meaningful in

33:47

terms of product experience. If you

33:49

think of what Robinhood is doing, we

33:52

were thinking that the world of equity trading

33:54

was kind of stuck at the Charles

33:57

Schwab or whatever bank experience.

34:00

And yes, they came and provided better

34:02

experience for stock trading and

34:04

they also started to un-borb their users

34:06

on crypto. And this is really a big

34:09

impact in terms of consumption

34:11

of DeFi. So I think the

34:13

traditional finance and decentralized

34:15

finance will overlap. And I think

34:17

also the distribution

34:20

of DeFi will evolve very quickly. The

34:22

same way the internet was initially

34:24

distributed by a handful of internet

34:27

service providers. And nowadays

34:29

we get access to the internet via our phone,

34:32

via our fridge, via

34:34

our laptops. There is multiple ways

34:37

for machines and our service to access

34:39

the internet.

34:41

So the charging legacy thing that

34:43

I find quite crazy about the perpetual

34:45

story and the

34:50

permissionless listing of markets and the

34:52

IDXs

34:53

that

34:55

the idea of the perpetual contract

34:58

was actually invented by

35:00

the economist Robert Schiller in 1992. Because

35:04

prior to that CFD

35:06

contracts for a difference existed, but

35:09

they would have defined time

35:12

limits and he invented the perpetual. And

35:15

then the perpetual was summarily

35:18

ignored by traditional finance

35:21

for 26 years. There

35:24

was this no trad-fi perpetual market

35:26

that you can do anything meaningful with. And

35:30

then it's the rise of crypto

35:32

that gave life to the first

35:34

perpetual market, which was centralized

35:37

and then DYDX centralized and

35:39

now decentralized. And

35:43

Schiller meanwhile himself is a prominent

35:45

crypto skeptic and he mentor

35:47

of the perpetuals. And

35:51

now kind of like with the permissionless

35:53

markets, crypto

35:55

perpetual markets are just

35:58

around the corner of integrated. you know, like

36:00

what would be traditional assets, indexes,

36:03

and stocks and commodities.

36:06

And it's

36:07

really an interesting story that like

36:09

how crypto can take an idea from

36:11

TratFi and

36:13

actually bring it to success, hopefully

36:16

in TratFi itself, right, for shares

36:19

and commodities and things

36:21

like that. So it really demonstrates

36:23

the power of permissionless innovation

36:26

that our industry has.

36:29

So DYDX just launched Mainnet.

36:33

It's in the alpha stage currently. Yeah,

36:37

give us an overview of like

36:40

the current state of DYDX in

36:42

these early weeks. What

36:45

is the activity on the chain staking tokens

36:48

being bridged over?

36:51

What's the snapshot of DYDX

36:54

right now? And what should users expect

36:56

when they go to DYDX as

36:59

the platform has just launched? What kind of features are

37:03

live and what kind of things can they do with the platform?

37:07

So the DYDX chain was launched a few weeks

37:09

ago by the G&E validators

37:11

together with the DYDX operation.

37:15

So right now, the kind

37:17

of migration of the Ethereum

37:19

DYDX token to the DYDX chain

37:21

token is undergoing. We have

37:23

at the time of recording about 3 million tokens,

37:26

which have been already staked. And there

37:28

is millions of tokens coming on a

37:31

daily basis to the chain, who essentially

37:33

prepare the chain and secure

37:36

the chain further. The community,

37:38

we wrote in a few days to move

37:40

away from the Anfa period to the beta

37:43

period, where a limited type

37:46

of trading activities will be allowed for

37:48

a limited number of trading pairs, as well as limited

37:51

trading value. And the full launch

37:53

of the chain should be happening in the coming

37:55

weeks.

37:59

for token orders

38:02

either decide to migrate from Ethereum

38:04

to the DYD Exchange is to stake

38:07

their tokens with DYD Exchange validators.

38:10

So what the community decided

38:13

some weeks ago was to essentially distribute 100%

38:17

of the fees collected by the DYDX protocol

38:20

to the validators and therefore to the stakeholders.

38:23

And the fees are coming in the form of USDC.

38:26

So that's also something which is quite new in

38:28

our space. Usually when you see

38:30

a new chain being launched, it's essentially

38:33

secured by validators and

38:35

these validators are rewarded but with

38:38

inflation of new tokens. In the

38:40

case of DYDX, DYDX is already

38:42

an application which is a great

38:44

level of success leader in this space and

38:47

all the fees

38:50

collected by the protocol will be rewarded

38:52

to stakers for the DYDX

38:54

chain in the form of USDCs. So that's

38:57

a very strong proposition

39:00

and I think a nice and interesting

39:02

twist of business models for many

39:04

people in our space where when you

39:06

have reached a certain level of growth and certain

39:08

level of operations

39:11

essentially and you decide to totally open

39:13

source and deserialize, all

39:17

the people contributing to the security of the chain

39:19

gets rewarded and that's really

39:21

why we see so much interest right now

39:24

in people bridging over to the DYDX

39:26

chain and sticking with validators.

39:29

There is about 60 validators which can

39:31

be active today within the chain and

39:34

there is a set of about 120 validators

39:37

which are kind of competing to be within

39:39

the active sets of

39:41

the chain.

39:43

So one thing that

39:46

we noticed was that there's currently

39:48

a lot of the voting power, the

39:50

validator voting power that's concentrated in

39:52

a small number of validators. I believe the top

39:54

three validators have something close to 50% and

39:58

the top validator has I think over 30%.

40:01

What's going on here and how

40:03

are you dealing with some of the challenges of distributing

40:06

that validator set? Because I believe

40:08

that there aren't any, for

40:11

the moment, there aren't any plans to have

40:13

a delegation program from the foundation.

40:16

So how will you deal with some of this, some

40:19

of these growing pains?

40:21

So that's something we pay attention to. The

40:24

chain is only a few weeks old. It's

40:27

not totally active yet. So this

40:29

kind of voting power rebalancing

40:32

is something to pay attention to but is not

40:34

representing a risk at this

40:36

point since the chain is not totally active and

40:39

the trading has not been activated yet. There

40:42

is the folder, the divided exfoldation

40:44

will be sticking in the

40:46

coming weeks. So we are defining exactly the

40:49

kind of policy around that. But

40:51

what is interesting to see is that there is

40:54

a different type of validators coming up, different

40:56

type of token holders also migrating

40:58

and the DAO, the

41:00

divided ex DAO and the community has also

41:03

voted an incentive program

41:05

for the coming months where essentially traders

41:08

will be incentivized to use

41:11

as a newly launched a divided exchange and

41:13

divided ex protocol. And

41:15

this will be essentially increasing the number

41:17

of the number of fees distributed to validators.

41:20

One dynamic we keep an eye on is also

41:23

the localization of validators.

41:27

When you are in the world of trading, as

41:29

you can probably see in the world of equity

41:32

trading, there is a certain

41:35

type of optimization large

41:37

trading house will put

41:40

in place is to be co-located or

41:42

located or closest to the marketplace.

41:44

And it's interesting to see here in the topology

41:47

of the divided ex chain and the new

41:49

divided ex protocol that the other book

41:51

is now totally desaltranized.

41:53

So we will probably see in

41:56

the coming months

41:57

some interesting dynamics and I also

41:59

really know idea where it's going to go exactly,

42:02

but probably at some point the localization

42:05

of the servers will might be kind

42:08

of trying to be not too far

42:10

from one another just for the optimization of

42:13

latency and making

42:15

sure that you can get the best and the

42:17

most optimal information.

42:20

So one more time, the other book on DYDX

42:22

Chain is distributed. It's sitting

42:25

on the hard memory of validators and

42:27

the validators keep whispering and updating

42:29

each other.

42:32

When two orders match, if

42:34

there is two orders matching at

42:37

the same time or more or less at the same time, at the time

42:39

of consensus the chain will check exactly

42:42

the kind of time stamps and let

42:45

the write trade happening. The

42:48

chain is young, the chain is going fast

42:51

and we have also some very professional

42:54

validators which is also interesting to see how

42:56

this industry of validators is getting more and

42:58

more professional. And I'm very confident

43:01

that things will balance right. The only

43:03

days are just showing a strong interest

43:06

and some early movers, but things will

43:08

balance in a healthy

43:11

way in the coming weeks.

43:13

Yeah, this is really interesting because like, you know,

43:16

DYDX is decentralizing as a protocol,

43:18

the governance is decentralizing, you know,

43:20

we want to have provisionless markets and I think

43:23

that sort of like aligns with the ethos of

43:25

crypto and certainly is something

43:28

that's quite encouraging. But at the same time, there's

43:30

this, you know, as you mentioned, there is this pressure

43:33

for validators to be close to where

43:35

the customers are, where customers are

43:38

initiating trades from. And I have

43:41

a feeling that with DYDX at least, you know, large

43:43

trading firms are using DYDX are going to want

43:45

to interact with validators that where the

43:48

servers are close to them. And that might

43:50

lead to some amount of centralization.

43:52

Let's say that there are a lot of DYDX

43:55

traders or institutional users,

43:57

say like in New York, we might see a lot

43:59

of the validators. validators moving to that area or

44:02

having sort of like validators being

44:05

co-located in areas close to where

44:07

the users are. What

44:10

kind of risks does that present in

44:13

both in terms of I think like governance of the chain,

44:15

running the chain, things like power grid failure

44:18

because we're moving in a decentralization

44:21

from the protocol governance side but at the same time some

44:24

of the infrastructure might have some aspects of centralization

44:26

that we need to deal with. How do you deal with that and how

44:28

do you balance that out?

44:31

Sure, maybe just a quick

44:33

decision. There

44:36

is no users from the

44:39

US are geo-blocked

44:41

from the early days of the YDX. So the

44:44

example of traders in New York does not

44:46

apply to the YDX but

44:49

just to take the concept we have

44:51

the world of finance which is I think

44:54

different kind of hubs. You think of London,

44:56

you think of Singapore, you think of Hong Kong,

44:58

you think of Tokyo, you think of India.

45:00

So finance is a global industry today

45:03

and some of these markets are kind of close

45:05

to outsiders but the world

45:07

of DeFi is actually open. So I

45:09

think we will see some probably clusters

45:12

but eventually the world of trading

45:14

and we see that in the crypto markets. Crypto

45:18

markets are operating 24-7 and we

45:20

see part of the world. Asia is one of

45:22

them, Europe is another one where

45:24

we have like big clusters of activities.

45:28

So will validators

45:32

kind of clusterize in a way? Possibly

45:36

that's something we will see in the future

45:38

but at this point in time the

45:41

set of validators of the YDX

45:43

chain is well spread. That's

45:45

something interesting to see how the

45:48

kind of topology of the network will evolve

45:50

over time. We see this kind of concentration

45:53

also for legacy

45:55

networks such as Bitcoin or Ethereum

45:58

where you will see big hubs of the world. validators

46:00

being for the most part in Europe, in

46:03

some part of Asia. So

46:05

we should not deviate too much from

46:07

this, but it's interesting to see how

46:09

the layer of the trading firms

46:12

with a kind of shape, this type

46:14

of clusters we might see in the coming

46:17

years on the DYDX chain. I know

46:19

there is DYDX grants program which is working

46:21

on a lot of dashboards

46:23

for the new chain, so users and everyone

46:26

will be able to really keep the pulse

46:29

on the protocol, understanding how things are evolving,

46:32

where the trades are happening. So

46:35

that's very interesting to see also a new infrastructure,

46:39

literally at the opposite of the centralized

46:42

crypto exchanges being totally transparent

46:44

where data will be able to be consumed and

46:47

to derive decisions or to derive kind

46:50

of governance decisions or trading decisions depending

46:52

who you are as a user.

46:55

I think this might be a good time to talk a little

46:57

bit about the different entities that

47:01

govern DYDX. So we talked about the DAO

47:03

already, there's the foundation. What are the

47:05

roles of all of these entities

47:08

as it relates to DYDX?

47:10

Absolutely. So the original company behind

47:12

DYDX is DYDX Trading Inc.

47:15

created by Antonio

47:17

Giuliano, he's a CEO over there. The

47:20

foundation was created two years ago. I

47:23

am the CEO of the foundation, we are a district in

47:25

Zug in Switzerland and the foundation

47:28

is really focusing on decentralized governance,

47:30

enabling the DAOs, doing

47:33

a lot of go-to-market activities in general

47:36

to activate and connect with the different users

47:38

and builders of the DYDX

47:40

protocol.

47:41

And we have also two DAOs. So

47:43

the DYDX growth DAO

47:46

has been built by the

47:48

community, it's funded by the community.

47:51

Most of the wealth in DYDX ecosystem

47:53

is in the end of the community. The foundation

47:56

is not the Lord as you can see

47:58

in some other blockchain ecosystem.

47:59

system,

48:00

we don't have the majority

48:03

of the tokens at all, the vast majority

48:05

of the tokens are owned by the community gradually.

48:08

So besides the grants, there is

48:10

also since early

48:13

January this year, the DYDX

48:16

operation, which one more

48:18

time was created by the community following

48:20

a series of routes, as well as funded

48:23

by the community. So they receive about

48:25

six million years of funding. And

48:27

they're all as the DYDX is

48:30

really to run some core infrastructure

48:32

for the DYDX chain, such as the indexer, for

48:34

example, they are running a front end

48:37

and making sure that the operation

48:39

of the chain are fully functional.

48:42

Technically, the chain is run by validators.

48:45

But the operation now is making

48:47

sure that all validators

48:49

get the right level of service and the right

48:51

distribution of updated software whenever

48:54

they want. So that I will

48:55

say that that's

48:58

for the four

48:59

entities which are visible outside

49:02

of the DYDX ecosystem.

49:04

But overall, there is probably 20 to 50 different

49:07

companies

49:08

building and co building around the YDX.

49:11

So if you look at the number of customers involved

49:14

with the YDX today, if you bring

49:16

together people doing research,

49:18

people doing different dashboards,

49:20

the validators team, you probably have 500

49:23

to 600 people working on

49:25

the YDX today. The YDX is a

49:27

protocol of builders for traders.

49:30

And there is a lot of builders

49:32

we need. Should they be software developers,

49:35

validators, dashboard,

49:38

indexers, full node providers, people

49:41

doing research on any of these and some other

49:43

strategic topics for the protocol. So

49:45

it's a very fast going ecosystem,

49:48

which is very interesting also is,

49:50

I would say the different type of

49:52

engineers you will get to meet within the

49:54

ecosystem. Obviously, you've got blockchain

49:56

engineers, which are

49:59

specializing building and operating

50:02

blockchain systems, but a lot of financial

50:04

engineers also, which will have a

50:06

very good understanding of APIs, very good

50:08

understanding of the pace of

50:11

consensus and how another

50:13

book should be read and optimized, people

50:15

which are focused exclusively on the NED, for

50:18

example, doing research or building

50:20

code dedicated to that. So there is

50:22

really a large panel of talents, which

50:25

is super energizing.

50:28

So Charles, I'm actually curious,

50:32

given that the order book is

50:34

being run

50:36

with validators itself,

50:40

it's a decentralized order book. And as

50:43

far as I know, a new construction for

50:45

the industry. How will the MEV

50:47

landscape

50:48

shape up in DYDX

50:50

because of this new construction?

50:53

Or is there something like MEV at

50:55

all?

50:58

So there is obviously any potentials

51:01

within the chain. That's the question which has been

51:03

a focus for many since the early days.

51:06

So DYDX Protocol has been

51:08

working with the SKIP protocol

51:11

to put in place some first,

51:13

I will say, mitigations and

51:15

first data collections infrastructure

51:18

in place with a new chain.

51:21

Corey Swann also has been doing some research via

51:24

the grants program of the DYDX

51:26

Grants DAO on how MEV

51:28

could be impacting the protocol

51:29

overall. The reality

51:31

is everything has

51:33

been put in place for the early days

51:35

of the chain to exist and to mitigate

51:37

as much as it can MEV. But

51:40

MEV is an ongoing topic.

51:42

I think just the forces of the market, the

51:44

traders, everyone involved

51:46

with the chain will keep optimizing,

51:50

will keep exploring these things. But

51:52

before you get enough data and data

51:54

collection infrastructure put in place,

52:00

you can't really go further

52:03

too much. So there will probably be

52:05

an EV on the DYDX chain as

52:07

there is on Ethereum for example,

52:10

but all tenants are really

52:12

in place to make sure that

52:14

this will be identified and mitigated

52:17

as well.

52:17

The DYDX community

52:20

has been really vocal about being

52:22

tough with the EV practitioners,

52:25

so should the validators misbehave

52:28

eventually there is a lot of conversations

52:30

right now on how they can be slashed

52:33

and possibly kicked off of the

52:35

chain very quickly so that

52:38

all the marketplace in general stays

52:40

as healthy as possible.

52:43

Tell us about how you're integrating with Skip and

52:47

what's the technology that I mean they're providing

52:50

this block SDK

52:53

that allows chains to construct

52:55

their blocks in ways that really

52:57

serve the purpose of their use case. What

53:01

are some of the ways that Skip

53:04

can benefit DYDX and

53:06

also in terms of how MEV should

53:09

be handled, I know it's ultimately up to the community,

53:11

but what is your opinion

53:13

about how MEV

53:15

should be distributed or what types of MEV

53:19

should be allowed to be

53:21

utilized by validators and what

53:24

other types of activity should DYDX

53:27

ultimately prohibit?

53:31

So the Skip program is run by

53:34

the DYDX Greysdau team,

53:36

so this is an independent group

53:38

of the foundation, but essentially Skip

53:40

has been already publishing some kind

53:43

of dashboard which scans

53:45

constantly the

53:48

other books of the different validators to understand

53:50

which validators will get the latest and

53:53

most updated order books as well

53:55

as which validators will start to misbehave.

53:58

I think maybe put a trade

54:00

in place, having some kind of information,

54:03

there should not be leveraging. So

54:05

that's already, that's always something which where

54:08

you look at the kind of trade

54:10

flow of a validator as well as you put this

54:12

trade flow against the other book

54:14

and you start to try to identify

54:17

if there is some kind of trade

54:19

practices which are unfair and

54:22

not healthy. So that's really what SKIP

54:24

has been able to put together today. The

54:26

foundation is not involved directly with

54:29

the building of other software

54:31

itself but more in the ecosystem

54:33

of the whole. The way I see MEV

54:36

evolving over time is I think

54:38

it should be very highly monitored MEV

54:41

is not necessarily always bad but it has to be kind

54:43

of constrained and understood to make

54:46

sure it remains something which does

54:49

not become an LLC within the marketplace

54:51

overall. We've seen

54:54

in some other protocols within Cosmos

54:57

where MEV was redistributed

55:00

either to stakers or maybe to some community

55:02

treasury and that's something which

55:04

can probably be explored with the

55:06

community. Once again, the

55:09

protocol is fairly young, there

55:11

is a lot of potential MEV

55:13

and I'm confident that overall

55:15

the right decision, the right upgrade of

55:17

software will be made so that it's

55:21

not counterproductive within

55:23

the protocol.

55:25

So what has it been like working with

55:29

the Cosmos ecosystem? What

55:32

is your impression of the

55:35

state of Cosmos and I

55:37

think from my perspective, like DYDX

55:41

very much utilizes the

55:43

Cosmos stack but it doesn't really identify

55:45

itself as a Cosmos chain. I sometimes

55:48

describe it as Apple

55:51

uses the Unix and a lot of the Linux components

55:54

but it doesn't brand itself as a Linux

55:57

operating system. with

56:00

DYDX and Cosmos and

56:03

yeah, what are your thoughts

56:05

on like the Cosmos ecosystem generally?

56:08

The Cosmos ecosystem has been, as you said,

56:11

very, very much welcoming DYDX. So

56:13

we got a lot of helpful

56:16

support from many different teams within

56:18

the Cosmos ecosystem. And that's something

56:21

which goes beyond the crypto Twitter where people,

56:23

I kind of argue all different

56:25

things. The reality is when you come as a

56:27

builder in the Cosmos ecosystem, you're more than

56:29

welcome and there

56:31

is no competition. It's basically about

56:34

growing the pie of crypto in general

56:36

and we happen to be working on the same

56:38

stack. So a lot of support

56:41

from their use projects, really

56:44

welcoming DYDX overall.

56:46

Something we've been noticing

56:48

is a

56:50

different level of our tools

56:52

around the Cosmos ecosystem versus the

56:54

Ethereum space. So if you need a

56:57

multi-sig, if you need different things, there is not

56:59

so much choice yet within Cosmos,

57:02

but good products are coming in definitely.

57:06

I think there is also this specific identity of

57:08

Cosmos. Server and chains

57:10

means that not every project is dedicated

57:14

the same way and has the same kind of culture

57:16

as you will get if you're coming from Bitcoin

57:19

or Ethereum. Some Cosmos chain

57:21

has been running

57:23

their own things without being too much involved

57:26

with the community itself.

57:28

It does not mean there is no interest, but it means

57:30

these teams are leveraging the

57:32

software in different ways. Some

57:35

people say DYDX is really a product focused team

57:40

and not kind of blockchain agnostic

57:42

and I would not disagree with that the same

57:44

way if you think of your users and

57:47

you want to keep improving the experience for your users,

57:51

if an engineer from WhatsApp or an

57:53

engineer from Zoom

57:55

wants to move away from a certain type of database

57:58

to another one, please visit our website at www.dysh We should

58:00

do it for their users

58:02

and their business overall. But overall,

58:04

the relationship with Cosmos is great.

58:06

We are connecting. We are also, I guess, enabling

58:10

quite a few projects with the

58:12

DYDX coming within the Cosmos ecosystem.

58:14

I'm thinking of Snowboard. I'm thinking of

58:17

some other projects which we are building

58:20

together with DYDX, different infrastructure.

58:22

So overall, it's a very positive experience

58:25

and we were glad to contribute in

58:27

being a good citizen of the Cosmos ecosystem.

58:30

Are we branding ourselves as a Cosmos stack?

58:32

No, because our users don't really care. The

58:35

same way I have no idea exactly what is

58:37

the software behind the podcast

58:40

I'm listening to today. I just

58:42

care about the content, the team, and the people producing

58:44

this. So I think that the

58:46

most important and eventually is bring more people,

58:49

adding this kind of product

58:51

soul focus rather than trying to get

58:53

the full stack

58:55

as a tribe.

58:58

Yeah, I mean, I think that makes a lot of sense. I think if

59:01

we zoom out, right, if we zoom out crypto

59:04

and all of the communities

59:08

that exist within crypto and

59:10

sometimes the rivalries

59:13

between different stacks of the tech, it really doesn't

59:15

matter in the end. In the end, we're all

59:17

trying to build a more decentralized,

59:20

more permissionless, more trust minimized version

59:22

of the web and certainly of

59:25

the financial system. And

59:27

I think that that approach makes more

59:29

sense, right? I mean, we want to build products that work,

59:32

who cares what technology is underlying

59:35

those products as long as users

59:37

are able to use them. The user

59:39

experience is good and they reap the benefits

59:42

of that technology being open and permissionless and

59:44

trust minimized. Which I think

59:47

brings me to my next question, which

59:49

is this talk that you gave at Cosmoveris,

59:53

which was about this concept of

59:55

astropolis. So for those who didn't see the talk, I'll

59:57

put the link in the show notes. But yeah, one thing I wanted to say

59:59

is that

59:59

What is this idea about, can you sort

1:00:02

of break this down into like your vision for the future?

1:00:06

Absolutely, the goal of this exercise

1:00:09

was really to kind of project

1:00:11

myself, the foundation, the teams into

1:00:15

what could be the YDX in 10 years. So

1:00:18

it's really some kind of fiction exercise,

1:00:21

projecting ourselves in 2033 and thinking,

1:00:26

okay, how is the world around us and how

1:00:28

is this technology stacks and

1:00:31

tech tribes are evolving?

1:00:33

So

1:00:34

in essence, it's more about looking

1:00:36

at how the community have been evolving

1:00:39

and how the users are evolving

1:00:41

around the run-tip to NdFi in general.

1:00:44

Obviously, we will see more and more machines

1:00:46

as they are already today, but not always visible

1:00:49

to us more and more machines using NdFi,

1:00:51

should they be AI allies

1:00:54

or AI agents and starting

1:00:56

to manage their own smart

1:00:58

contracts, manage their own payment systems,

1:01:00

going in and kind of put assets to work

1:01:03

on NdFi systems. So that's something

1:01:06

I think which is coming and

1:01:08

we kind of come slow and

1:01:10

burst into our face very quickly,

1:01:13

thinking that, showing that it brings

1:01:15

value and also looking

1:01:17

at

1:01:18

how

1:01:19

our community of builders will

1:01:22

be competing maybe among each other. I

1:01:25

don't think we will compete on technology so much

1:01:27

anymore, but we will more compete on ethos

1:01:30

and the way we implement things. I

1:01:32

think this is really given that all

1:01:34

the technology we are building is open source, the

1:01:37

things which will make us trust this

1:01:39

project or this brand or this community

1:01:42

will be really the ethics and

1:01:44

the reasons and the values we are putting

1:01:48

into our works and projects.

1:01:50

So yeah, I really invite everyone to kind

1:01:52

of look at these

1:01:54

talks and hopefully find some inspirations.

1:01:57

When I look at the YDX more and more,

1:01:59

more closely within the context

1:02:02

of projections in 10 years.

1:02:05

I see the UID exchange ossifying

1:02:08

the same way Bitcoin or Ethereum

1:02:10

have ossified or are ossifying

1:02:13

and more and more applications,

1:02:15

thousands of derivative markets happening and

1:02:18

more and more index

1:02:19

and probably more and

1:02:21

more of their own apps with

1:02:23

AI and the crypto

1:02:25

market in general. Being able to

1:02:28

enable, for example, DAOs and

1:02:30

humans behind the DAOs

1:02:32

with providing better reports, helping them

1:02:35

to take decisions, automating

1:02:37

certain level of decisions, getting more kind

1:02:40

of neutral access

1:02:43

to data and seeing also

1:02:45

more and more users of

1:02:47

the UIDX, should they be institutional,

1:02:50

so a large user starting

1:02:52

to invest with their own resources

1:02:54

and deploy personnel

1:02:56

on the protocol.

1:02:58

So not only kind of using the

1:03:00

software but contributing

1:03:02

to the software and open sourcing the

1:03:05

software they are using

1:03:07

and the innovation they put into the software.

1:03:10

That's something we see also here and there.

1:03:13

We see some large companies deploying

1:03:16

resources, deploying engineers for Ethereum,

1:03:18

for Bitcoin, for Solana. We

1:03:21

start to see also signals that

1:03:24

users or major users of the UIDX

1:03:27

are deploying resources, deploying mindshare

1:03:30

to make the software evolve, to provide

1:03:32

feedback, to bring additional tools around

1:03:36

the protocol itself. So that's very interesting

1:03:38

to see also how this concept

1:03:40

of public good can be much

1:03:43

more closer to business

1:03:45

and eventually kind of

1:03:48

accelerating the flying wheel and making

1:03:50

sure it keeps growing and

1:03:53

helps the protocol to keep dominating

1:03:56

its market such as

1:03:58

the perpetuals for the UIDX.

1:04:02

Yeah, it was a really inspiring talk. For

1:04:05

me, it resonated with, because

1:04:07

it is very forward thinking

1:04:09

and it is sort of a fiction, right? It's

1:04:12

kind of like sci-fi future, like the talk. It

1:04:15

reminds me a lot of this talk

1:04:19

by Mike Fern that he

1:04:21

gave in 2014, I think at Google or something

1:04:25

where he's talking about the future of crypto and

1:04:27

how crypto will

1:04:30

be used to sort of

1:04:32

power this army of self-driving

1:04:35

cars. It gave me the same sort

1:04:37

of vibe, so I really enjoyed it. I encourage

1:04:40

people to go check it out. You

1:04:42

mentioned Urbit in your talk, and

1:04:44

so I'm curious

1:04:47

how you see Urbit tying into all this.

1:04:51

I guess Urbit is a bit of sci-fi also

1:04:53

as it is today.

1:04:54

There are some bits and pieces which are concrete,

1:04:57

but

1:04:58

it's not exactly ready. So that's probably

1:05:00

why it's inspiring, at least for me.

1:05:02

I see the ingredients are there,

1:05:04

the product experience is not exactly

1:05:07

here, but it's a good inspiration.

1:05:12

It's probably, at least it makes sense to

1:05:14

me on how computing is evolving and how

1:05:16

we will be able to

1:05:18

consume networks and being part

1:05:20

of networks in a different way. Disanalyzation

1:05:23

comes with crypto, but there is the overall decentralization

1:05:26

of the Internet which needs to make some progress

1:05:28

as well. And how much progress we've been making so far

1:05:31

is questionable. More and more big

1:05:33

firms are open sourcing, but it's still

1:05:36

very much in the

1:05:39

end of a selected few. So

1:05:43

community is making a bet on decentralizing

1:05:45

further the Internet resonates with me, so I'm

1:05:47

paying attention to Urbit to

1:05:49

that extent. And I have to say I'm very

1:05:52

impressed by how much things are happening. It's

1:05:55

often stuff like this with some people

1:05:57

or small group

1:05:58

of builders, I think an idea.

1:05:59

and it looks a little bit random

1:06:02

but yet interesting so you try to pay attention and

1:06:05

eventually you see them making progress

1:06:07

and it surprises you so when I see

1:06:10

for example people being able to deploy

1:06:12

their own fault end of

1:06:14

Uniswap or

1:06:17

Osmosis within their their

1:06:19

Arabic instances without adding

1:06:21

too much conflict of rationing and making sure this

1:06:23

is a right fault end they are

1:06:25

running I think that's interesting if it's

1:06:28

ready for mass market and I think so will

1:06:30

it be ready at some points probably

1:06:33

well I say I would say

1:06:35

the journey though it's on the timeline but

1:06:38

there is definitely something happening there and I'm

1:06:40

paying attention

1:06:42

so on this topic

1:06:44

of the intersection of AI and crypto

1:06:47

then there are kind of like many

1:06:51

business leaders many strategic thinkers

1:06:53

that you know okay somehow these

1:06:55

two these two areas

1:06:57

are are going to have an intersection

1:06:59

there's going to be a merger and

1:07:02

there'll be AI agents which

1:07:04

might be running on top of LLMs and

1:07:07

they are transacting on

1:07:09

on on on blockchain

1:07:11

so the common element is always

1:07:13

okay there is an LLM or a model that's

1:07:16

huge that's intelligent that there's some software

1:07:18

written or top of that utilizes the model

1:07:21

there's a agent that behaves intelligently

1:07:23

and then that agent can

1:07:25

plug into a crypto blockchain and

1:07:27

it can do some transactions on the blockchain

1:07:30

and then you can go to kind of

1:07:33

Valerie the company that's like building this

1:07:36

blockchain agent integration and Knossos

1:07:38

is doing similar things that

1:07:42

piece feels clear

1:07:44

okay they can be agents they can transact

1:07:47

on to crypto agree what

1:07:51

I have never felt clear about is

1:07:54

what

1:07:55

will these AI agents like maybe an individual

1:07:58

agent or maybe even a small of AI

1:08:00

agents,

1:08:03

as acting with crypto,

1:08:04

what will they do for the user?

1:08:08

Like what is mine, what

1:08:10

do you think is your unmet

1:08:13

need today that is

1:08:15

swarm of crypto AI

1:08:17

agents will be solving in 10 years?

1:08:21

Things that needs

1:08:23

are not

1:08:24

clear yet because there is a lot

1:08:26

of needs which will come up from there. The

1:08:29

way I start my thinking about AI and

1:08:31

blockchain, blockchain is creating very

1:08:34

high quality data sets, that's number

1:08:36

one, which is like super easy

1:08:40

for AI to kind of

1:08:42

digest and produce

1:08:45

value out of this data set which comes clean

1:08:47

and very well labeled. So that's number one. So

1:08:50

probably a faster kind of processing of data

1:08:52

in general. One

1:08:53

way I see AI is

1:08:56

more AI allies,

1:08:59

not only independent and autonomous

1:09:01

kind of agents, but agents

1:09:03

which are my own ally to whatever

1:09:06

I'm doing within my day. So if

1:09:08

I'm participating in governance, for example,

1:09:10

within a DAO, today the DAOs

1:09:12

are still very young and are still making decisions

1:09:15

based on sometimes a

1:09:18

proper data sets and proper

1:09:20

flows. And sometimes it's only

1:09:23

a lot of politics, right? So what

1:09:25

I hope to see and what I feel will be coming

1:09:29

in due time will be DAO

1:09:31

governance for this blockchain ecosystem, which

1:09:34

will be based on much more data

1:09:37

related reports and kind of helping

1:09:39

people to take decisions or helping anything

1:09:42

DAOs to make, to kind of

1:09:44

avoid the politics or avoid the

1:09:46

kind of latency of human coordination.

1:09:49

So essentially enabling human further

1:09:52

into this world of blockchain DAOs.

1:09:54

It will help also to give identity

1:09:57

to agents in general, making sure they consume

1:09:59

the right data.

1:09:59

they don't get corrupted

1:10:01

by a broad flow of information.

1:10:05

So

1:10:05

there are many use cases, but

1:10:07

the way I can find myself

1:10:09

comfortable thinking of

1:10:11

what could be in

1:10:14

five to ten years would be just

1:10:17

a constanil

1:10:18

which will help me as

1:10:20

an individual if I am part of a DAO

1:10:22

in Tripto, or maybe which will help

1:10:24

my DAO or DAO and part of a

1:10:27

DAO to essentially provide more accurate

1:10:30

and updated reports, helping

1:10:33

to measure whatever KPI we've been putting

1:10:35

together and mitigating

1:10:37

the weaknesses humans have from time

1:10:39

to time. So really seeing AI as

1:10:42

an ally rather than autonomous

1:10:45

agents or competitors with us.

1:10:48

Cool.

1:10:49

Well, Charles, this

1:10:51

has been a really fascinating episode,

1:10:54

really fascinating conversation. And

1:10:57

yeah, thanks so much for being

1:10:59

here with us, sharing all

1:11:03

the interesting things happening in the DYDX

1:11:05

ecosystem and also opening

1:11:08

our minds to the future of DeFi

1:11:10

and what things might look like in the next decades

1:11:12

to come. Certainly really excited to

1:11:14

see DYDX

1:11:17

moving closer to its sort

1:11:19

of moving out of alpha and beta

1:11:22

and into more like production phase.

1:11:25

And really excited to see all

1:11:28

of the interesting perpetual markets that people will

1:11:30

be building there when the

1:11:33

professional markets go online.

1:11:37

So yeah, thanks again and we'll look

1:11:39

forward to see you soon. Thanks, I appreciate

1:11:41

the talk. Thank you, Cheers.

1:11:46

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