In this episode, Bobby Ong, co-founder of CoinGecko is joined by Siddharth Jain, co-founder of DeFi Dollar. Bobby interviewed Siddharth on the background of DeFi Dollar, its stablecoins, its token and the use cases, more DeFi Dollar’s products, as well as DeFi Dollar’s plans.
[00:01:11] Introduction of DeFi Dollar
[00:02:42] DeFi Dollar’s stablecoins
[00:04:39] DeFi Dollar Dao token (DFD) VS DeFi Dollar (DUSD) token
[00:12:40] Utility of DUSD
[00:16:19] Difference between DUSD and MUSD
[00:23:03] When are Defi Dollar’s products going live?
[00:24:35] Thoughts on BSC
[00:30:45] Outlook on crypto in India
[00:39:05] Plans for DeFi Dollar in the next few years
Quotes from the episode:
“There's more than $200 million worth of Bitcoin volume and sets on Badger set. I think I'm probably low-balling the figure, but there is a lot of scope for that volume to come over via DeFi Dollar into interest building index. So these are some of the innovative products that we're trying to do.” [00:18:28]
"So we're releasing much of a more in-depth coverage of the interest bearing BTC this week." [00:23:32]
“We are hardcore Ethereum buff. Like we totally believe in the ideals of decentralization and how things should be, right. And that is the version that we're aligned on.” [00:25:11]
DeFi Dollar - https://app.dusd.finance/
CoinGecko - https://www.coingecko.com/
DefiDollar (DUSD) - https://www.coingecko.com/en/coins/defidollar
DefiDollar DAO (DFD) - https://www.coingecko.com/en/coins/defidollar-dao
Bobby Ong [00:00:00]:
Welcome to the CoinGecko podcast. I'm your host, Bobby Ong. Each week, we will be interviewing someone from the blockchain industry to learn more about this fast moving cryptocurrency economy. If this is your first time listening then, thanks for coming. The CoinGecko podcast is produced each week to help you stay ahead of the curve. Show notes can be found at podcast.coingecko.com. I highly encourage you to join our newsletter, where we send out top news in the crypto industry every Monday to Friday. Come back often and feel free to add the podcast to your favorite RSS feed or iTunes. You can also follow us on Twitter and Telegram @CoinGecko.
Welcome to the CoinGecko podcast. For today's episode, we have Siddhartha Jain, co-founder of DeFi Dollar. Siddhartha takes care of the business and operations bits at DeFi Dollar. He is an on-chain data buff and was previously working on ecosystem development at a Layer 2 scaling project on Ethereum. Welcome to the CoinGecko podcast, Siddhartha.
Siddhartha Jain [00:00:55]:
Thank you so much for having me, Bobby. It's a pleasure to be here.
Bobby Ong [00:00:59]:
Yeah. I mean just disclosure. I've invested it in DeFi Dollar in the seed stage, so happy to see where you guys have been going and share the progress that you guys at DeFi Dollar have gone on, right. So I guess, Siddhartha, let's kind of start things up, right? So, maybe if you can give a simple explanation of what DeFi Dollar is and what gave you the idea to work on this specific problem set?
Siddhartha Jain [00:01:20]:
Sure. So just to get started, right, as you know, DeFi Dollar is a stablecoin index, which is essentially can be like any of the other indices that people even in the web2 world are familiar with. What we're doing is kind of combining all of the major stablecoins out there, let's say USDC, USDT, DAI, TUSD, right. And then offering them as a basket offering. Essentially what that enables us people don't have risk exposure to just one stablecoin and in case of a black swan event, all of their holdings or a hundred percent of their holdings will not be at risk. And just because how the index is structured in multiple allocations of each asset, their exposure only gets limited to, let's say that particular percentage of the effected stablecoin. Right? So in a sense the idea was to create a sort of press catching mechanism to make most stable or stablecoin out there. Just because there's so much innovation going on in the stablecoin space, right. I will cover that later as well. But a new user gets really confused, when he just stumbled upon stablecoins, right? Like which one should I hold? Or which one should I not hold? Or what are the various things that a particular stablecoin can provide access to? So for us, it was to democratize access for users, who are new to crypto and are just discovering crypto to hold an index of stablecoins instead of going ahead and purchasing whatever they were going was probably there on the platform of choice.
Bobby Ong [00:02:40]:
So just to dive a little bit deeper. So DeFi Dollar basically has four different stablecoins, USDT, USDC, DAI and TUSD. And if I remember correctly or correct me if I'm wrong, they all split equally 25% each?
Siddhartha Jain [00:02:54]:
So couple of things here, right. But we saw the thing with us is we're both built on top of Curve at the moment. So we are using Curve LP tokens to back DeFi Dollar. When we launched, right. I think if you'll remember, we launched with the sUSD pool on Curve right. So the composition of the index back then also had sUSD in that, but right now what we've done, I think we've removed the sUSD pool into the protocol. And in turn, as we keep on adding more peaks, we keep on giving more and more choice for our users to diversify their portfolio. Now, coming back to the question where you said all four of them are at a particular percentage. The answer to that is no. Currently the weights are decided by the person's allocations in the yPool on Curve. So slowly and steadily as we keep on adding more pools, you just had to vote that include with the Curve team, right. To add the saave pool, which will provide support to sUSD and DAI. So this is one of our initiatives to actually ensure that the index is balanced in terms of more exposure to some of the slightly more decentralized avenues and stablecoins. In case the community really wants to shift away, right.
Because there's a lot of FUD happening with Tether and USDC right, sometimes. So probably the community has that option, in case they want a larger percentage of the index can be denoted in a decentralized, or let's say less custodial stablecoins instead of the major ones. Right. So gradually the, it totally depends on what the community wants. They can also vote to increase for some of the most stabilized ones. But they can also choose, right. There's an option that they can vote to make it more decentralized or more resistant to censorship, or these stocks that are there in the market.
Bobby Ong [00:04:33]:
Alright. Let's go into those things a little bit more later on, but I think for a start now, it's pretty much early high-level stuff. So I know there's two tokens in your project. There's a DeFi Dollar Dao token (DFD) and there's a DeFi Dollar (DUSD) token, which is a basket of stablecoins. Right. So maybe you can explain to us a little bit more about the differences between the DFD and the DUSD token.
Siddhartha Jain [00:04:55]:
Sure. So DUSD as we discussed. DUSD stands for DeFi Dollar. It's our stablecoin index. Right. And it's the core product. Everything in the DeFi Dollar ecosystem is intended to revolve around the stablecoin index, which as we discussed is currently supported by four stablecoins. But in the future there can be more stablecoins, which can be added. Let them be algorithmic. Let them be crypto [inaudible]. The intent is to ensure that people can just hold a diversified basket and not worry about the underlying price stability, because that is taken care of by the protocol. So now how DFD comes into the picture is, DFD is our governance token for governing things and making decisions on anything related to the protocol. So let's say, if we decide to add another peak to the protocol or liquidity pool, let's say from Compound or even on Curve. So the users of the protocol will decide, okay, whether they want additional exposure to some of these assets, or let's say some of these stablecoins becomes really huge, right?
One algorithmic stablecoin comes in and then people really want, let's say it can be anything, right. Some of the experiments which are ongoing or any new ones. So people can actually say, "Okay, we would probably want more exposure to a particular stablecoin." It can be algorithmic or any sort of stablecoin in nature. We don't discriminate against that. The only thing is we've not added a lot of algorithmic stablecoin support because we see that as still a very experimental sort of avenue. Right. And we have not seen a clear pattern emerge or one of these coins holding the peg. Because for us holding the peg and reducing volatility and the holding risk is most important. So DFD will be used for all these protocols governance decisions and also for some of the incentives that we give out to promote the adoption of DUSD. Because it's going to be a incentivization problem to start with to ensure that more and more people kind of come and use, obviously it is very tightly coupled with the utility bit, which I will be really happy to share more light on as to how we're trying to make DUSD very closely and tightly integrated with the DeFi community. Right?
I think you can think of it somewhat similar to how Maker and DAI operate. So DAI is the stablecoin. For us DUSD is the stablecoin and Maker is the foundation and as the backstop for DAI. For us in a similar way, DFD is the sort of backup and going to be the underlying asset that will be used in case of a black swan event, right. To get DUSD back to its peg, right. But that is the worst case scenario. There are other mechanisms that are in place to ensure that DUSD holds the peg. But yeah, the fallback option is on DFD.
Bobby Ong [00:07:28]:
Do you see the stablecoin space as a very competitive space? I mean they are custodial stablecoins like USDT, USDC, and then we have the overcollateralized stablecoins, like DAI, you have the zero collateral algorithmics stablecoins, like Basis Cash, ESD, DSD. And you have the fractional algorithmic stablecoins like FRAX, and then you have the stablecoin baskets like DUSD and MUSD, mStable USD, right? So like, what are your thoughts on competing in this very crowded stablecoin space? How do you see this stablecoin space evolving in the near, mid and longer term, I suppose.
Siddhartha Jain [00:08:02]:
I think that's a brilliant question. But that's something that we debated a lot on before starting the project. So we didn't want to make a new stablecoin out there. We know for a fact that issuing a stablecoin is getting easier and easier. It's very easy for people to just issue their own stablecoin depending on how they want to back it. Fiat-backed, or crypto-backed, or even algorithmic, right. And we're seeing a lot of experimentation in the field as well. I think the current market cap, I was just checking CoinGecko earlier right today. And the stablecoin market cap is around like $55 billion at the moment. Out of it, probably Tether has like $37 billion. So again right, we're very, very early in the stablecoin adoption phase, right. And there's just one guy who's taking like 60 to 70% of the whole market capitalization. And it's been the most dominant force for a long time. So we don't see all of these stablecoins as competitors. We see them as tools to actually grow the pie.
When I say grow the pie, I think it's more about ensuring that general people get onboarded to crypto and use some form of cryptocurrency as stablecoins to do transactions, let it be retail transactions or settlement or cross border payments or anything. So once we have a lot of these coins mostly getting into the hands of the usual retail crowd, right, I think then we will see the actual potential of cryptocurrencies unleashed. No one wants to really sell or transact in their Ether or Bitcoin, right. I think underlying is, it's going to be, if you going to buy something like the Crypto Punk, which again is going to be speculative in nature and you're expecting it to go higher and higher. But the point here is yeah, to actually enable retail commerce, of it obviously scaling coming in and everything. I think all of the network effects of everything that is getting built in DeFi, coupled with the Layer 2 scaling benefits that get unleashed, I think we will definitely see a huge, huge spike in not just the number of stablecoins but the overall volume that will accompany them as well. So we want to position ourselves very carefully out there. We're not saying we're creating a new stablecoin. Probably we will experiment with something in the algorithmic space, but yeah, that's majorly for academic purposes, then, let's say getting it out, but yeah, it depends on how those experiments go. Right?
The core offering is the stablecoin index, which essentially benefit more and more as a lot of these competitors emerge because these are not completers, they're partners. Right. They get integrated into the index. So currently we're just integrating four of them. But as the protocol matures, as we get more stable, as we get more battle-tested on mainnet. We've been live, since August of last year, late, late August, and since then we've achieved volumes of like the highest was around $17 million. Currently we are around 14 which are like very early numbers. Right. We're still trying to listen to the community and come up with features that probably they would want in the stablecoin index. And also coming up with utilities on the side to ensure that holding DUSD has some form of benefit for the community. And to keep on integrating, because integrations are something which can become a chicken and egg problem. Right. Unless you've got volume or lot of circulating supply, people don't want to integrate.
Right. And that's sort of a hindrance in getting adopted in the first place. So, the point is we know that the stablecoin space is very ripe for innovation, right? You'll see products like RAI, or you've seen the whole ESD, DSD, algorithmic stablecoin play out, right? We feel that these were just early attempts and there are more sophisticated and more mature attempts, even either building on top of these protocols or even apart from them. We will see a lot more innovation coming around in 2021. And we just want to be prepared for that. We design DeFi Dollar in that way, that the structure is very modular and we could plug into any liquidity pool. I don't know if you remember when Swerve got launched, the fork of Curve, we could deploy instance on top of that within like two to three hours. Just because we want to experiment where DeFi regions are hard. We really like to participate in the community effort. So the whole point is that we're very open to seeing where the space goes. We don't want to get constrained by whatever limitations are there at this moment.
And that is how we've designed the index for ourselves as well. It has a lot of ways in which we can plug into different liquidity pools and enabling it via governance has been our way of showing that we listened to the community and not just our top-down approach. We have discussions with our community in our Discord. One of the discussions led to this fact, people are really scared about USDT, and if we could increase the percentage points allocated, or just increase the exposure of decentralized or less custodial stablecoins in the index.
Bobby Ong [00:12:40]:
Who would want to hold DUSD and you talked a lot about a utility, right, just now, so what will be the utility of DUSD, except for someone who wants to have stablecoin exposure, but don't want exposure to only one stablecoin? Sort of want to diversify their risk.
Siddhartha Jain [00:12:56]:
[inaudible] very nuanced person right now, like the profile is someone who's not a degen, who's not looking for, let's say 300, 400% APY. Right. Uh, But it's sitting on a huge pile of money, probably. And looking for a way to earn a stable yield on top of that. For example, we've got the DUSD savings account, which has around $5 million currently net, and offers around 30% APY. And this interest is coming from the protocol earnings. Because we deposit our funds into Curve. And then the resulting LP token is deposited into the Yearn Finance Vault. So the protocol is generating interest not just from the Yearn Finance interests, but also from the trading fees on Curve along with the CRV rewards, which are getting farmed. So this is just one side of it. As in when we integrate more pools or the way that the protocol generates and converts also become vital. And we're also going ahead with a lot of integrations in the space, which are not limited to stablecoins again. So DeFi Dollar is not just about stablecoins. We are working currently with Badger DAO to create a BTC index as well. I'll probably share more about that later, but we kind of consider ourselves as not just a stablecoin team, but more of a stability labs incorporated, where we think that with let's say indexes or new approaches or new utilities that can be created around stablecoin. So for now the users are people who are aware of the risks that can be there in the market.
When let's say a decentralized stablecoin loses a peg or probably let's say for algorithmic stablecoin does not return back to its peg or if there's a bank run on some of these fiat-backed stablecoins. Obviously the system needs to mature a lot more to actually be able to withstand these major shocks. So if there's a black swan event, it will be even tough for us right now to return to the peg, but a short duration impact, right? Like volatility and decentralized stablecoins or even the centralized ones. That is something that we're building to handle right now. So the ideal customer would be someone who wants to de-risk their portfolio, number one, and people who are looking to own, let's say stable yield. It can be something like, we do not talked about it, but something that the CoinGecko fund. I think if you have a fund set aside, they can be deposited to get a particular interest rate, like a floating one or a fixed one. [inaudible] you don't have fixed, but it's just relying on the market, but are around 30% APY on your stablecoin holdings, right. Without any impermanent loss. So for DeFi reasons that's particularly like, let's say not that exciting, but what we're doing is we're focusing on geographies where people don't really have access to these innovative financial products. And probably are even getting negative interest rates in their central banks.
So the key thing is to make sure that they're the ones who adopted those. They're the ones who use it for settlement and then slowly or keep on increasing its utility in the CeFi-DeFi conjunction, where both of these things meet. And also initially the goal is take a more of DAI sort of an approach. And be very tightly coupled with all of the DeFi applications and ensure that the token has a very high. DUSD has like high velocity. It's getting used a lot, recycled a lot, being deployed a lot and not just being stashed. So, the goal is to ensure or keep creating that utility, right. We're still very early in terms of volume. So most of these approaches can be experimental, but that's our strength, to innovate and see what something that our customers would want.
Bobby Ong [00:16:19]:
And how would you say that DUSD and how we stack up against mStable USD, the MUSD, I mean, from a broad level, it almost sounds very similar, but I'm sure you know, the differences and you can share with some of the listeners here, what will be the main difference between DUSD and MUSD?
Siddhartha Jain [00:16:36]:
Well, I think, again, right, all due credit to mStable team, right? I think they were the first ones to come into the space and started experiment. But that being said, right. I think our approaches are a little bit different or fundamentally different, in the sense they consider the peg to be one is to one, right. If I'm not wrong. They built in the swapping mechanism themselves. So for us, that was a critical question, right? When we were doing the protocol design. Our V1, right, that we developed for the hackathon, right, I think it was based on Balancer and Aave. And we were doing some sort of swaps as well in order to keep the peg or issue the stablecoin, right. But then Curve came along right and it just about recognizing the potential of upcoming technology. And what Legos are already there so that you can build faster and more efficiently. So for us Curve is being brilliant in that sense. Right? So we started out building on top of Curve just because of that and with backed DeFi Dollar first peaks, right, of liquidity pools, by Curve pools, because the swapping mechanism is taken care of. And when that is done, we can focus on the remaining two things, which really matter to the community, which is stability and resistance against volatility, and also coming up with noble ways to ensure that there is some particular yield of protocol income that can be shared with the users.
So we're trying to strike a fine balance between the income that they can get and also the stability of the whole protocol, right. And mStable is also doing, I think those guys are doing brilliant work and they also have plans for BD. I think their BTC index is [inaudible], approach there as well with collaborating with Badger. Because most of the illiquidity on-chain, on Ethereum is captured by Badger's set point. We reached out to the team. They've had brilliant conversations and the product is almost like, I think this is a sort of a teaser. We will be releasing something very soon, this week.
Bobby Ong [00:18:25]:
Siddhartha Jain [00:18:26]:
Stay tuned for that. It's going to be huge, right? I think there's more than $200 million worth of Bitcoin volume and sets on Badger set. I think I'm probably low-balling the figure, but yeah there is a lot of scope for that volume to come over via DeFi Dollar into interest building index. So these are some, again, some of the innovative products that we're trying to do. We try to take a more holistic approach and work with, let's say, partners who are doing things and we can help them take it a notch above. Not saying that others are not doing it. It's just that we are very proactive in doing or we have another product that is currently undergoing building, which is the Option coin, kind of done that in conjunction with the open team. [inaudible] on the open Options protocol. We'll be using that. At the end, obviously it's going to be protocol agnostic. And we deem any Options protocol to come in and kind of issue the Option coin. I just explain Option coins in a very simple [inaudible].
Bobby Ong [00:19:18]:
Yeah. Yeah. Please do. I mean, like I think I remember reading this briefly, but like, yeah, please share what is this Option coins with us.
Siddhartha Jain [00:19:26]:
So the Option coin is just kind of imagine MakerDAO's DAI, right? So you have it on 150% collateralization is needed or you get liquidated. And to keep that safe, people usually collateralize it with 250%, 300%, right. So there's a little bit of a capital efficiency issue there. Or people don't get the maximum amount of their assets that they could have deployed elsewhere. So again, an experiment that we've had in our head is to unlock the potential of assets by coupling them with the Options protocol, which are coming up on Ethereum. Before us, the belief was that Options are at a place where AMMs were like probably a year and a half ago. And probably a year hence, we will see a lot of on-chain volume on Options. And probably even AMMs built around that to enable smooth liquidity flow. So the key thing that we're doing here is we're taking a put option. Let's say ETH is trading at around 1700, right? So you take a put at a price of, let's say 1600 and you combine it with the underlying asset, right? Let's say ETH. So now you've got a put option for ETH at 1600 and ETH as collateral at 1600.
And you fuse the two, right? So essentially the synthetic product here that you've created now has a price fluid. Whatever the price of ETH if you've got a put option, now that underlying asset will always, you can get it back, you can get traded back for $1,600, because that's the price floor. So that can unleash a lot of new use cases or integrations with protocols, where they need risk to be very clearly defined. So one thing that I said, like I gave you the mater example as well. So when this price floor is determined, even we can accept that Option coin as a form of collateral and DeFi Dollar and issue our DUSD against it. So it just helped unlock more capital efficient, your capital that can be deployed elsewhere. And also I think currently the issues that might be there are probably around liquidity, right? Like the Options protocols are not liquid, but I think that is something that will gradually get solved. There's a lot of action or there's a lot of development that's happening on Options protocols right now. And that being said, the key thing, right, let's say with some fenced protocols or government protocols is to get assets white-listed, I think it sometimes takes time. I think once you have an Option issued, then it doesn't matter, and you can probably even with low liquidity, if someone is willing to buy that put option, you can still have that Option coin issued. And have let's say a price floor for an asset that can be leveraged for other purposes, right? Whatever you want to do on-chain.
So basically opening up the market a lot more for assets with lower liquidity, but let's say higher speculation probably right. In that case, it's just people are willing to bet on taking the other side of the trade. So that is something that we are working on. So a lot of innovative use cases, right? I think we started with how we're different, but yeah, I think instead of how we're different, we've covered what we're trying to do differently because inherently the products are the same. I think they're trying to create a stablecoin index. The index composition, obviously it's very different and you can track it by comparing on the five websites, as to what are the coin supported. With our mechanism. I think we've been able to better handle the composition in decentralized stablecoin in our index. But yeah, people can observe that themselves. But we're very respectful of the mStable team. And we sort of see them as partners and collaborators. In order to diversify the meta stablecoin space as well. Because education is really important. First of all, we have to broaden the pie or to make people understand why a Meta-Stablecoin is needed in the first place. And then education is something that we can do always better in collaborations.
Bobby Ong [00:23:03]:
So I guess this is a question that you get asked a lot, right? So when live? All these products, right? So you mentioned that you have this product with Badger DAO. I suppose it's coming out sometime this week. And then, the Option coins protocol, like when is it coming live? And then have any other new products that you guys are planning that you haven't really mentioned yet and when is it coming live, I suppose?
Siddhartha Jain [00:23:23]:
I think just to manage the expectations [inaudible], we've sort of faced this in the past. We tend to under-promise and over-deliver, right? So we're releasing much of a more in-depth coverage of the interest bearing BTC this week. The product is supposed to go live this month. I think it should be by mid or probably by the third week. But again, I don't [inaudible] on that. The Option coin might have to wait, but we might have our testnet version probably later this month, but yeah, it can get delayed because currently [inaudible] totally on the IBTC index with Badger and obviously some of the other core protocol things, where we're handling the stability module as well. So a lot of these things are going away. There are some experiments that we're doing as well, which probably I'll not like to disclose right now, but yeah. Probably in sometime in the next podcast. I think we can share more like that.
Bobby Ong [00:24:16]:
Yea, so recently right. I mean, we start seeing Binance Smart Chain gaining a lot of traction, a lot of projects on Ethereum has sort of move, have created a version on BSC as well. Because of the high gas fees. And it seems that a lot of like retail guys who don't want to pay $30, $50 for gas on Ethereum has kind of move on to BSC. I'm just curious, right? Are you guys are also thinking of, what are your thoughts on BSC? And are you guys also thinking of building on top of BSC or that's not something part of the concentration at all?
Siddhartha Jain [00:24:43]:
So, I'm a retail guy. I can't spend $50 on gas and I really feel the pain of some of our users. I've got so many messages coming from our users who were like, I want to mint DUSD or I want to participate in some of these liquidity pools. But the gas amount is very high, right? Like for a $100, $200 transaction, they cannot just afford to pay like 30% of gas fees, which is I'm low-balling that number, but again, that's the reality, right? And the thing is we are hardcore Ethereum buff. Like we totally believe in the ideals of decentralization and how things should be, right. And that is the version that we're aligned on. But the thing right now is Ethereum at some stages has become unusable. When I say unusable, when you price out the retail guys, were actually the majority of who, well, we keep on talking about mass adoption, right? Mass adoption. There's no mass adoption without retail. There's no mass adoption without people being able to make transactions without spending, let's say more than 2 to 3% of the whole transaction amount on gas fees. That's just unsustainable. Not just for retail, but also from some of the more, let's say medium to not with obviously whales, but medium sort of traders or operators. That being said, I think it's really exciting to see how the BSC's ecosystem has flourished. Because you could see a lot of other attempts, other elements, which have been there for a far longer time, right. But have not got some sort of reception like BSC has got, right.
Like we have explored internally as to what we could do on BSC. If there was a Curve deployment we could probably do something very quickly, but we are evaluating the space in close proximity with other projects. Talking to the BSC team as well and trying to figure out what can be a good way. Because for us at the end of the day, I think what matters more is what our customers want. And our customers are really just want to use the protocol right now. Okay. And whether, they're able to do that and if it depends on our ability to give them an option to build on BSC that can definitely be a consideration. And I'll be actively exploring that. I think more details can be awaited on that, but that being said again, right, like Ethereum is however it started and probably with Layer 2 and other solution, right. I think Matic has been doing really well. There have been Optimism getting released. There has been news of Optimism coming along soon. So there will be a lot of options for people to choose from, but I think over time, yes, if there is a lot of transition still, and it is unsustainable, I think definitely makes sense for more protocols to explore. And it can be secondary deployments. Right? I think it just adds, so people can just fork, right?
That's the beauty of open source. People can just fork and deploy. But I think the confidence that I'm currently getting from the ecosystem is let's say teams like one in check, the protocols themselves have gone on to deploy on top of BSC, right. And which has led to value accrual for the community utility for the whole ecosystem. So that's something that I don't want to rule out. I really think that it's a wonderful experiment and has a lot of potential. And I'm just like really open-minded about this. And we will actually sort of exploring how that can be made possible and probably you will hear a lot more about this going forward from us.
Bobby Ong [00:27:53]:
What about Layer 2? You mentioned a little bit about Matic and Optimism. I'm suppose like as a DeFi project on Ethereum right now, like you guys must be cracking your head on which Layer 2 solution to kind of go forward with, because there's so many, it's such a fragmented market right now, and there's no clear winner for Layer 2 solution. So how are you guys thinking about this? And have you decided on what any Layer 2 solutions yet or still kind of in the deliberation phase?
Siddhartha Jain [00:28:16]:
Short answer, no. We're not zeroed in on any protocol, right? We would probably love to use Matic Polygon, just because we've had built it, get it where it is, but at this moment, I think we are, so we are a highly composable product. Just to understand what would be needed for something like DeFi Dollar to exist on any Layer 2 or Layer 1, I think. We need, first of all, an AMM, which handles liquidity so well, like Curve. [inaudible] we needed something like, Yearn Finance, which curates or crowdsources all of this liquidity and manages it in one single pool. And then there are so many other things like Cover protocol on which our users get insurance. So that, in case there's a hack, they don't lose any money. When we started of, we were using the chain Lingo Wrapper as well. So that's something that's obviously there in most of these days, but there's a complex sort of this composability tree that's needed. Right now, we don't see anywhere, where everything that we needed all our deployment of DeFi Dollars is already there. But I think these things are getting resolved slowly. So we're just keeping a very open eye, right. I'm speaking to these teams to ensure that we know. Because again, these are major protocols that we have leveraged and instead of reinventing, they can be people who just go and let's say fork Curve or Yearn and deploy.
But again there's no guarantee of whether the code will be maintained or whether, the delivery will be as high quality as by the original team. So the intent here is to wait for people to actually go and kind of converse. Because scalability is right now, not a tech problem so much as it does a social problem. There's a lot of signaling going on as to which protocol should more people adopt. The more projects that get onboarded, the more composable the solution becomes and that will allow a lot of other teams like us as well, which are just built on the cutting edge of DeFi, like highly compostable on top of protocols, then it will be an easier decision for us to make. But right now I think the core goal is to first, let's see how things unfold and as in when there is enough support for these protocols, we would love to deploy and just make sure that our users are not facing these troubles anymore and can rebalance their portfolios or probably just come in and out of the liquidity pools without spending like $200 in gas. And I even tried to help out the community by telling, sharing them time slot, right? Okay. That you do this transaction this time and this time. And probably you will not have to pay that much gas. So yeah, it's a real problem and we just want to see it solved as well as long with everyone else in the ecosystem.
Bobby Ong [00:30:44]:
You guys are based in India. Right. So I'm just curious to hear what's kind of the outlook for crypto in India right now? There's a lot of news, not so sure real or fake about the Indian government banning crypto. Maybe you can share some light on this for us.
Siddhartha Jain [00:30:58]:
So I think, Bobby, the thing was there was a ban, right? So when I say ban, it was more of central bank mandated, right? Like no banks can actually let's say work together with crypto exchanges or for banking reasons, right? Like they can't support bank accounts for crypto exchanges. So that was the ban that was there a couple of years ago, which was overturned early last year. So since then there has not been a ban. So crypto people are really trading crypto in India. It is not legal tender. But again, there's no restriction on holding, trading or even let's say development, right? Like development is not at all something that is outlawed. The whole thing with the government, right? I think you need to understand their perspective as well. I've been speaking to a lot of these regulators and policy makers. The thing is the government is sometimes pro blockchain in the sense of pro [inaudible] ledger technology. Right. But they also need to understand that cryptocurrencies are the building block for fundamentally open networks to sustain and incentivize and grow. So currently, they're just trying to figure out okay to protect people against these volatiles price swings and just to make sure that the retail guys don't really get taken advantage of. Right.
I think the regulation has to be made in a way that accommodates for all sides. Like entrepreneurs, businesses, the government, and every other stakeholder. Because our people are really, really strongly believing in the potential of crypto. There are a ton of developers. I think if you just go to Devfolio, they've got so many developers coming up in all of these hackathons. And building beautiful product. And just exploring the power of Ethereum. And sometimes I would even say other blockchains. So there's a huge, huge, huge talent pool, which is waiting to just explode onto the scene. I think in probably the last year, even you would have seen a lot of Indian projects come to the forefront, right. There have been some which has been there for quite a long while. Let's say Instadapp,, Matic Polygon and the like right? Like now you see more and more of them coming up right. At the fundraising or building products. Not a lot of them are live on mainnet, but yeah, I think slowly and steadily, people are getting there and the ecosystem is maturing. The thing is yea, right now, you're seeing the second generation. Probably generation 2.5 of startups coming out from India as when this matures, right. And we're also helping a lot of teams bootstrap or advising them on the best practices. We were really lucky to get help from people like you in the industry. And also let's say Calvin and George from Balance and Compound respectively right, early on when we were starting out.
So it's the same thing that we're trying to give back to the Indian community builders right now. And the only thing I can tell you, if people are not paying attention to India right now, I think it's a big mistake, right? Either for people in venture or even in product, because the sheer pace of innovation is really, really striking. And we have ear to the ground in India and they were like seven to eight firms in Bangalore where we are based out of in India. Now I know around ten to 15 just in the same area that we are based in. And just because of COVID, we've not been able to do any meetups or attend any of them, but I think once a little bit of these rules are relaxed, I think there are going to be in person discussions, which will even even hasten the development, right? Just increase the pace of innovation. So again, right, bottom line crypto is not banned. There are laws that the government is mulling over and rightly so, but I think there will be adequate discussions with the crypto community or the entrepreneurs and other businesses and everyone, before it comes out. If it is not the case that I think it will be a bad blow to the ecosystem. But I think for now the entrepreneurs are just focused on how to keep building, right? Even despite of that, because holding our currencies are a different thing and building an open permanent [inaudible] system is a different deal altogether. And we're focused on the latter. They're more focused on the development bits and on the bit that the government is concerned about.
Bobby Ong [00:34:56]:
Yea, it makes sense. If you think about it, like India has like a billion people around. And I mean it's kind of like, it has so many computer scientists and software engineers India and some of the Indian developers are the best in the world. So yeah, I'm not surprised there. I mean, Indian developers are not thinking about building in the crypto space.
Siddhartha Jain [00:35:14]:
Well, [inaudible] so many of them are right. And I think just this week, our honourable Finance Minister also commented that there will be a strategy for crypto in place, which will be thought over. So no outright ban. They want to see how innovation can be sustained but in a regulated way. So we don't blame them for that. Obviously the government has to protect the citizens from any sort of harm that they think. Right. But I think education is the only way that we can get all of these stakeholders on the same page and then probably hope for a lot more nuance discussions, right. I think [ inaudible].
Bobby Ong [00:35:48]:
Yeah, [inaudible] so much talk about like high level policy stuff here.
Siddhartha Jain [00:35:53]:
Got it. So we need more and more people to vouch for that. I don't know. So you guys CoinGecko come up an India report, right. I would be happy to help you. There needs to be education and there needs to be a lot more people, not believing in this FUD right, that India is bad and all that. There are news that comes in, but it's always good to get it vetted by someone in the community before sort of propagating some things like that.
Bobby Ong [00:36:19]:
How big is the retail crypto market in India these days? Are the young people in India, like for example, more interested in trading crypto compared to the stock market, for example, or are they more like traditionally minded or they're not even invested in any form at all? I suppose that's kind of a majority of people, but like to hear your thoughts.
Siddhartha Jain [00:36:36]:
So I can be a little bit biased in this, right? Because most of my friends or most of my frequent contacts are in the crypto space.
Bobby Ong [00:36:45]:
Okay. Yea, fair point.
Siddhartha Jain [00:36:46]:
But I do have a lot of these, let's say even top V school people, right? Our top tech school people, who are aware, but they're very much not comfortable working in this space, right? Like that is one problem that we face ourselves as well. Because of these FUD and sort of unclear [inaudible], people are not very willing to go ahead and actually, let's say take a bet on something as experimental. So that is one experiment level we just started. And then that becomes another experiment level where it's crypto startups. Right. To get a little bit shy from that, but I think, yeah, again, just creating education around that as something that we feel will ensure that gets more people in because I'd be lying to you if I say that not a lot of people that I know came into crypto when they started trading. So that is the gateway, right. Once they do that then so "They're not in it for the tech". I mean, that was very popular, but yeah, it happens the routers via the price action and then people come back and see such products are getting developed or there is so much potential. The research that they do for investing kind of leads them here, right? Like, Oh my God, what is this? They go down the rabbit hole and then they're very intent on building. I get messages every day from the community, like web 2.0 developers or people just paying to get a hold of.
So that is something that can be improved, but awareness wise, I think even if you go right, even the elderly to a particular limit have awareness and some of the more savvy ones have invested as well. So Indian investors are very shrewd, right? They will not let go of any opportunity. So the retail market is very diverse, right. India being a diverse country, I think it's very much different to the market anywhere else in the world. So I definitely feel there's a lot of scope and you can just see these sort of mergers and acquisitions and sort of investment activity that has been happening in Indian exchanges. For example, CoinDCX Delta, WazirX everyone knows got sort of into an MNA with Binance, right? So people from outside of India are really aware, I will say, but yea, even Indian users, I've spoken to a lot of the exchanges and the number of users which have been coming in has just been breaking record, right. So a lot more awareness has been created in the market.
Bobby Ong [00:38:59]:
Cool man. So yeah, I guess kind of asked all my questions here for now, for today.. So I guess the last question where do you see DeFi Dollar the next few years? And where's kind of the best place for someone to follow and stay up-to-date with DeFi Dollar?
Siddhartha Jain [00:39:13]:
I think to answering the second question first, right? I mean, to stay updated with anything Defi Dollar or please follow us on our Twitter @defidollar and we keep on posting updates and even sneak peeks at things and also come and join our Discord or Telegram. Whatever's more comfortable for you to stay updated. And with respect to where we see, I think that's something very beautiful in the nature of how highly experimental things are in DeFi and especially with stablecoins, I think you used to have like one variant of algorithmic stablecoin, right. And now there are more than probably I can count, like seven of them.
Bobby Ong [00:39:48]:
Yeah, so many.
Siddhartha Jain [00:39:50]:
More in development. So for us, I think what is important is to stay along right. Just not get left behind and stick to a singular approach. And that's what we're trying to do. The iBTC with Badger and the Option coin with open, right? These are some of the things that are there. We're looking at some of the other places where we could add value, right? Like via [inaudible] or using some of these other protocols on-chain on Ethereum. But yeah, I think probably looking in the future, we can look at a multi-chain sort of a presence. Not guaranteed, but I think as things unfold, definitely that and also some of the other unique features, which can be added onto DeFi Dollar. Not just being limited to more diversified index, but also to a broader utility. I think also getting very tightly integrated with DeFi. Right. I think that is something that you will see in the short to medium term. And definitely more and more experiments. And the longer the [inaudible] stablecoin, but the index spaces.
Bobby Ong [00:40:45]:
Yeah. Thanks a lot for sharing your vision where DeFi Dollar will be in the future and taking the time to kind of answer all the questions that I have for DeFi Dollar.
Siddhartha Jain [00:40:54]:
Thanks, Bobby. And I would like to thank you as well at having a disclaimer, obviously, right, that you guys are investors, but would highly encourage other people to reach out to you folks. You being brilliant in your support and have helped us at every step of the way. Let it be any small inquiry that I sent to you, any point in time. You will be really quick in responding and helping us out. So a big thanks for that. And would highly encourage people to reach out and work with the CoinGecko team. Couldn't recommend better partners to work with for sure.
Bobby Ong [00:41:20]:
Cool man. Thank you very much.
Siddhartha Jain [00:41:22]:
Thank you so much. Thanks for having me again, Bobby. Looking forward to coming back again sometime and sharing more with the community and yeah, let's keep this Goodwill going.
Bobby Ong [00:41:31]:
For sure. Alright.
All right. That wraps up the show. Thank you for listening to the CoinGecko podcast with Bobby. If you like our show and want to know more, check out podcast.coingecko.com. Or please leave us a review on iTunes. If you have any feedback, do drop us an email at email@example.com. Join us for more next week. See ya!
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