Building a Fully Onchain Exchange: Inside World Markets | Aurelius & Hersch

Transcript

If possible, you should build the entire thing onchain. That is super counterintuitive. You ask any engineer, you know, the matching engine, etc., none of that can can exist on chain. And so this with this counterintuitive insight, we asked ourselves, do we think the EVM will eventually get fast and cheap enough to support a fully onchain exchange? Nothing said on Zerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio, Ryan, and our guests may hold positions in the company's funds or projects discussed.

>> What's up, guys? Welcome back to another episode of Xerx Research. Today, I'm joined by Lucas and Hirs from World Markets. Thanks for coming on, guys. >> Thank you. >> Thank you. Perfect. Um, for our uninitiated listeners, do you guys want to give a short introduction into yourselves, World Markets, and why you guys decided to build World Markets? >> Yes, sir. Um, I'll go ahead and start. So, so my name is Lucas Marcus Aurelius on Twitter and, um, so I started my first crypto company in 2017. Uh, co-founded it as a CTO. that was also an exchange. So a derivatives exchange with

a hybrid architecture. Um and then sold out to Amber Group in 2021 with insights from that business. Uh launched essentially started working on security and trading infrastructure which evolved into a hedge fund a multi-manager hedge fund across DeFi and DeFi. Um and then started working on on world markets. Uh essentially the um sort of the core ideas and inspiration and insights for world markets came from the first company uh from this like you know 2017 to 2022 period um or 2021 but uh uh started the firm you know thereafter.

>> Perfect. Um and then you guys are building on Mega E right? Any any particular reason why you guys chose Mega E or >> Yeah. So one of the core insights we had in the first company was uh there's a relationship between the risk engine and state synchronization. It's technical. We can go down the rabbit hole if it's interesting but it uh it suggests that you should build the whole exchange for for crypto exchanges and really for exchanges across asset classes if possible you should build the entire thing onchain. That is super counterintuitive. you ask any engineer, you know, the matching engine, etc. None of that can can exist on chain. And so

this with this counterintuitive insight, we asked ourselves, do we think the EVM will eventually get fast and cheap enough to support a fully onchain exchange? Again, this is like 2021, 2022 2023 etc. Um, and we decided to make that assumption that it would kind of akin to Morris law. And so that was the the sort of insight and the impetus to to launch the the venue. And then um in terms of uh putting on Meg, Megith is the only uh you know blockchain that has credibly solved that problem. Um so the first and the only um

both on the tech side uh and then it's a a bonus that they have also the best ecosystem or best emerging ecosystem in the industry. Uh so for us it was an easy decision. >> Okay, I think that makes sense. And more specifically what you're referring to is that um well I guess let's dive into the gas cost section of it because I guess I haven't used mega very much. What is the comparison to let's say another L2? We can go with base although I know that has and then compared to maybe another L1 EVM like monad is the big one. How how much cheaper is it that it makes sense that you can put everything onchain on mega? You don't have to have the exact

>> Yeah, that that's a great question. So um I can give exact numbers so it's helpful but um uh in in short there are two parts to this. one is the structural computation of like gas costs and kind of um uh the relationship of gas to like other things uh in in the on the blockchain or or in the ecosystem. So that's the structure and then the second is you know the actual cost. So the actual cost is it depends on exactly um how you build the app because the op codes have potentially different pricing and um there's also kind of a you know like being constantly improved uh by the mega team but it's meaningfully cheaper

than bass. Um the target cost is to be about 10x cheaper than bass. Um uh and so it's it's it's cheaper and kind of moving in that direction. The structural advantage that Megith has as compared to to somebody like Monad um he mentioned is for L L1's there is a dilemma between the uh token holders or investors and the apps. So because the gas token is the network token like is the thing you own that you know becomes valuable. If that price goes up then you reward the investors

but you penalize the apps because you know uh say a purpose exchange um is not going to be able to you know effectively operate right it's too expensive and and vice versa you can make it very cheap but you know an L2 like maybe doesn't have the dial um they can you know there there's we're all incentive aligned in terms of like where to where gas should go. >> I think that makes sense. And then last on the gas stuff is um or I guess choosing to build on Mega E as opposed to um having your own app chain is one of the common takes. I think we used to have this before Hyperlid as well, but it got even more popular obviously since Hyperl became successful. Um was this idea that you

shouldn't have a purpose exchange compete with other apps for blockspace. Um, obviously you guys are building on Mega E, so you're going to be competing with the Mega Mafia apps as well as like whatever else is launching on it. What's your take on this? >> Yeah, that's a great question. So, there's a there there are two parts to to this question as well. Every all my answers have at least two parts. Um so the the first and most important thing is that um I actually think that mega ETH is there there's sort of this this paradigm historically of okay exactly what you said either you're an app chain or you're a general purpose chain and you need to you know choose and they have trade-offs and good luck.

Um I actually think Mega ETH is in kind of a new category if you will is sort of like pushing the frontier on this um which has arisen organically from our from our interactions and from working with them the last you know number of months and that is uh that you can kind of get the best of both worlds. So you it's actually possible to have a general purpose chain like mega e but then uh fine-tune or improve the RPC infrastructure you know the sequencer to like more efficiently compute or operate certain apps um which is the work that we've been doing with Maggie. So not all transactions need to be treated equal

and in fact should be treated equal. And the benefit of this is that the apps get the best of both worlds. Actually you don't have to pick and choose if you have like really good collaboration uh between the apps and and the chain which is again unique to me if you compare this to like other ecosystems. Um and so I think that's the kind of the first part of it. The the second part of it is okay well what are the benefits of being on a general purpose chain. I think not a lot of people talk about that when it comes to this discussion and to simplify it uh exchanges and all financial applications need distribution. The irony is that if you talk to the same people who think that

per need to be on app chains they will also tell you that distribution is 95% of the game. Well you got to pick or choose. So all of the money is on Ethereum L1, Ethereum mainet, like slow expensive Ethereum. So pretty clear that like you know distribution matters when it comes to your ecosystem, the chain. >> Yeah, I think that makes sense. Um okay, let's get into world markets. Um you guys have a very handy tool on your docs page that says what is your unique features? But I want to so I'm going to start from the very top of those which is Atlas your risk engine. So this will be fully onchain.

>> Yes, that's that's right. And the the app is is live and public. Um we're still bootstrapping liquidity. Per's liquidity is pretty good. Uh lending liquidity has like just started to come online uh this week as as being um not massive but significant enough for people to properly use it. Spot liquidity is next. >> Okay. So maybe let's start it from the very top. So you guys are doing per, spot, and lending. How does um I can see how spot and lending works well together. Do does the per and lending work with each other or maybe like a general um overview of the architecture and how everything links to one another?

>> Yeah, great question. So it's all so every market is on an order book including the loans. Loans are 10day duration fixed rate. That's super important. Anybody who's used D5 professionally uh is, you know, kind of aware of the very painful risks of the variable rate lending and the cross collateral pools and and all this stuff which has resulted in a lot of a lot of losses. Um uh there's none of that on world. So it's it's fixed rate and you know you get that rate for the term of the loan and then you can choose whether to renew it. So um okay. So so you have these three you know separate markets.

uh what unifies them is the the margin system i.e. the Atlas the risk engine and I guess a really good question which is what's the relationship between say per and and lending right so the venue world does a couple of unique things the first is that um you can borrow under collateralized uh for spot assets that's really useful for um any kind of yield bearing tokens what you see in DeFi is is like loop lending you know no more one click right So that's the that's where spot is is useful.

That's also useful because as the lender like let's say that you're trading per you want to get interest on your collateral, right? Pretty straightforward. Like right now if you get a hyperlid, you know, lighter, those dollars just sit there. They're unproductive. It'd be really good to get a, you know, 7% 8% return on those idle dollars. You can do that on the world. Um, taking it a step further, world understands net market exposures. So if you're short ETH per and you're long say ETH then it understands uh that those net to zero or if the you know um

notional value is the same but that those net off and we'll compute risk primarily on the the market exposure instead of the gross exposure. There's a little bit of risk consumption that goes into the gross exposure uh you know due to liquidity and such but bulk gets on the net exposure. >> Is this not done currently on other purpose exchanges on deck? >> Yeah, it's not done on on any DeFi exchanges whatsoever. No DeFi apps. >> Interesting. And the undercolateralized lending I assume is only to makers.

>> No, you can like just borrow and then buy a spot. You you can borrow, you know, if you have a $1,000, you can borrow $10,000. Um >> Okay, it has to be an F. >> Yes, you can't withdraw it. >> Okay, that makes sense. Um okay, let's talk a bit about Atlas maybe at a high level. Um so it brings I guess all three of them together and then compared to the other risk engines that exist, it actually computes using user spot balances. I assume they're borrowing as well. takes that into account >> of course >> and their purp positions.

>> Um, how did you guys >> how did you guys come up with this or I guess is this how it's done in the traditional world where it's like this is just how it should be and you're just bringing it on to >> Yeah. Yeah. Great question. So um essentially the way we came up with it is really an intersection of like three experiences or observations. one is our first company um where we learned uh a lot about you know I mean uh my my my co-founder of that business is um something of a a financial genius and uh we explored thoroughly

risk and um uh how the risk can kind of relate to a matching engineer etc. So, and then also again like sort of architecturally the relationship between the the like why doing things fully on chain actually allows users to make more money. Um I can get into that. It has to do with like atomic execution and you know looking at like state change post execution state but um that's like the first experience. Okay. Second experience, traditional markets is way more capital efficient and uh what's interesting is and what's really exciting is that you have these

financial relationships in traditional markets that we're describing here. None of this is new. This is all being done in you know highly liquid assets in the traditional world. What is new relative to the traditional world is you can't do everything in one place. typically due to regulation. Regulation being there largely for a number of reasons, but largely to prevent conflicts of interest and manipulation that can occur when all of these functions are in one place. Um, and so, uh, doing things fully on chain allows us to credibly solve the conflicts of interest, um, as well as, you know, kind of prevent manipulation.

uh and you know transparency etc which the traditional world right for the last 2,000 years of financial history that's never been an option. So that's super exciting for us and it's also why we anticipate listing you know FX and RW you know that are highly traded um in addition to crypto. >> Okay I think that makes sense. So from my understanding, this exists in Tradfi, but in Tradfi, it mainly exists in different venues, but they're able to do it because they have legal repercussions. In crypto, you don't have legal repercussions. So you have to bring everything under one hood. Like you can't do under collateralized lending and withdraw the assets that you buy on spot, but you don't have conflicts of interest. So you're able to bring everything under one hood and make

it work. >> Yes. >> Yes. Yes. That's that's the core of it. we can avoid the the sort of inherent problems of traditional markets. There there are other there's also like settlement and you know how the markets form like as you know broker dealers, prime brokers, exchanges all relate to each other, custodians. I'll skip the rabbit hole, but you're you're correct somehow. >> Um and then fixed rates. You mentioned that it's annoying to have variable rates. Can you talk a bit more about that? Like why you guys chose fixed days and why 10day?

Why 10 days? >> Yeah. So, so, so the duration is a is a little arbitrary. It could have been two weeks. Um, it could have been a month, but we think 10 days is appropriate just from our own experience trading. Um, and uh um I mean most of the experiences and the decisions that come in designing the exchange come from our own experience running a hedge fund. So like and and the nature of our fund is is unique. Um it's not like we want we we run sort of a single strategy where you know we come to the office every day and figure out how to make it faster, how to make it smarter. Uh we actually source like every professional trading team in the industry or at least you know as many as we possibly can. Um I think we

we probably know uh maybe not the most but close to a number of trading teams and we due diligence their strategies and then construct portfolios where we kind of pick a little bit from each one so the best of of of each team allocate that all runs in our infrastructure. So we also see every trade and with that knowledge um have a lot of views on how to design a venue. So, one of the biggest problems is particular if you have any size and you're in DeFi, DeFi is primarily yield.

Um, and we can get into like the, you know, the market structure and the market micro structure. But if you're a borrower or lender, usually you're like, you know, looping yield. Uh, and that's kind of like, you know, other than me, what people do on chain. If you use a pool like a or Morpho or frankly like any lending protocol today almost then the because it's a literal pool the rate is determined based on the quantity of A versus the quantity of B in the pool right kind of quote unquote supply demand. This creates a major issue because let's say that you you know either due to manipulation which happens

all the time and I can explain why uh or due to like just kind of you know the market structure or poor liquidity you can often in your looping right borrow like typically you put in a token you borrow a bunch of another token and then stick it in something else that borrowing rate can go from like 3% to 100% overnight. night and it can do that because either it's very low liquidity and so that's just like a natural market force or because you know onchain data is public. Somebody sees that you're in that position and that it's very hard for you to unwind and if they can spike the rate on you then they know they can get paid like for that

duration. And so it's actually an incentive to kind of screw people over. Um and the pools are not designed to prevent that uh really at all. That makes sense. But you guys are going with a order book model, right? And not a Well, I mean, I guess you can't do a pool. Are you working with um Avon or is it a separate order book model? >> Uh totally separate. >> Yeah. So um we know the Avon team like those guys are great. Um but our protocols uh don't have any kind of connection.

>> Okay, that's fair. Um let's get into the ADL bit or specifically the no ADL bit. I um I don't understand ADL enough to have a very strong opinion on this. I know it was a very big thing uh couple months ago in October. October, right? 1010. >> Yeah. October 10th. Yeah. >> Do you kind of want to talk a bit about um maybe give us like a cursory overview of ADL and then why you guys decided not to go with it? And I would love like a uh a take on why you think ad exchanges using ADL are you can get creative on that if you don't like them or think they're [ __ ] like up to you but like any

>> so so ADL what's really interesting about about this ADL feature is that it's been around for a very long time but until very recently nobody had heard of it. I mean, obviously professional traders know what it is and talk about all the time, but in terms of sort of Twitter and retail and kind of within the broader um, you know, news cycle, there's been almost no mention of it. And the reason it's now talked about so much in my view uh is because it's this most obvious like data point or delineation between a casino and an exchange. It

highlights that sort of dichotomy. And when you look into it, you know, you you think, okay, wait a minute, like there is not an exchange on the planet, at least not to my knowledge. for any asset class outside of crypto where the exchange can take over your position at will arbitrarily and close it not only when they want to but at what price they want to. The only institution that I'm aware of that does this is a casino.

And so traditional markets over the last several hundred years or thousand years uh have evolved for exchanges to become increasingly trustworthy, right? Like integrity is potentially the single most important feature of any large financial market, right? So ADLs highlight that. All right, I'll I'll pause there for kind of why I think ADLs have come to the picture recently and can get into sort of the technical details if maybe like we can talk like that.

>> No, I I think that makes a ton of sense. I also think in crypto people like to find something when they lose money, but I get your point. So in trad I mean there's no ADL mechanism. How does I mean I guess how does it work? So in crypto we have ADL and then outside of crypto what is the so that the exchange doesn't incur bad bet it's not a thing I guess >> right right um so the first thing is that it's actually not necessary which really makes you wonder kind of like what the heck is going on right um so the way it works in traditional markets is you have an exchange and obviously different exchanges have sort

of different you like very nuanced details, but let's ignore that. And uh people match. Okay, that's all the exchange does. So where you get into kind of like something akin to ADL territory if you were to ask say you know Binance or Hyperliquid uh well why do you have ADLs? Like when does this happen? The answer is if one side of the market can't pay the other side of the market or one user can't pay another user because the price has moved too quickly that in order to avoid the exchange

incurring debt, we need to forcefully close out uh you know the side of the market that's winning so that they can then pay the side you know the losing side can still afford to pay. The way this actually works in traditional markets is uh that function of like creditworthiness is owned by a clearing house. So the clearing house is typically owned by members who contribute like their own capital as collateral and then the members the sort of uh people who are employed by the clearing house or um you know maybe like delegates or or functional members of the clearing house they uh settle with each other and uh

essentially like you know work out and avoid these kind of problems. And usually the simplest, you know, solution is just that one, things are a lot more capital efficient. Um, so it's not just like isolated margin all the time. Uh, and two, you like as the market moves, your margin account is updated like immediately. So, you know, you're you're having to like repost collateral and like your credit is being adjusted and that's all very transparent and these people have been doing it for a very long time. Um, but you don't need ADLs because you actually know everything on chain. So, I can talk about how we do it and how we avoid those risks. But >> yeah, that was going to be my next question.

>> The the the fundamental uh problem that we see is the exchange should never take over your position. There's there's liquidation, which is when you can't pay your your you know, that's a different story. You need to get liquidated. But if you're winning, like what? You know, it doesn't make any sense. So the core problem with the exchange taking over your position is that it leads to what's happened at Binance and OKX and Buy Bid and Hyperlid, which is they all now run internal trading desks.

Hyperlquid is way more transparent about it and so like they get a lot of credit for for you know being kind of groundbreaking in that way but you're very in a very real sense trading against the house and these trading desks for a lot of these exchanges and all their history was actually what generated a substantial portion of the revenue not trading fees right it's literally the casino so that like the the casino know starts when the exchange is allowed to control your positions right at at its will. The way to avoid that is for counterparties to always be bilateral. So, and for risk to be sort of scoped on a bilateral

basis. So, let's say that you're long and I'm short and the market goes way up right now. You're winning and I'm losing. It goes up so quickly that I can't pay you. What should happen if that scenario happens and and that scenario that scenario really shouldn't happen. I'll explain why but if it does happen then the the loss i.e. I can't pay you that loss is written off by you as my counterparty and by you alone. Okay. So instead of making $100 you would have made $80 which is bad right? This is this is a terrible scenario.

Uh but it's not sort of socialized amongst like all participants and the traders have the ability to actually uh control who their counterparty is. So let's say that I think that you're taking too much risk. I can actually switch my counterparty um on this on this purse position. And let me then go into what I mean by taking too much risk specifically and why this scenario shouldn't happen on on world. Uh it is possible but it it should be very rare at a minimum.

So remember a for ADLs the exchanges can unwind your positions when and at what price they want, right? It's literally like their discretion in terminal trading desk. the risk parameters on world which effectively determine leverage and how much of an asset you can hold and you know your sort of margin consumption right which determine counterparty risk. Those parameters are all fully on chain and fully transparent. And so two things happen due to that.

One, because there's perfect information symmetry between the exchange operators and the traders, those values should actually kind of adjust towards an equilibrium, which is optimal. That's the first thing. The second thing is that let's say that you don't agree with us, that you think like, yeah, these guys are idiots. like we think the ETH, you know, uh stats are just way too risky, right? Then you can actually uh avoid you have some you have some discretion to avoid taking having counterparties who hold a lot of perks.

Um and so that's how you this works on world. >> Okay. I think that so instead of socializing it um because with socializing I guess the exchange can do nefarious things and get away with it potentially. Um you enter people into are you worried that there might be some additional complexity on the UX side or is this not something that or are you guys offiscating it enough? It's it's obuscated like if you go to the UI like none of that none of that stuff is um you know you don't interact with it unless you like really drill down and and then you can't um but I mean if you think about ADLs like there isn't you

know your position just disappears and it says like auto delever right that's that's the whole UX um so >> okay I think that might have >> okay I I want to I want to dive a bit into the GTM side. Um, specifically, how many markets do you guys have listed currently and how many I guess what's the listing strategy going to look like? I I you mentioned FX and real world assets, which I assume is a big thing, but do you guys want to chat a bit about that?

>> Yeah. So broadly speaking, we list major highly liquid assets. We um one of the reasons that uh is is you can think of it as like a disadvantage or kind of um uh a structural advantage depending on on how you want to you know look at it. But one of the reasons that other exchanges cannot so easily just like create universal margin is because the go to market um I mean hyperlas this was hyperlquick go to market um and then I think there's like a whiteboard in lighter office that says like copy hyperl with zero fees and that's sort of

the whole strategy so inherently then it's lighter go to market but um the uh the go to market was that list like list assets quickly, right, that people want to trade, they can't get anywhere else. And so when you're first to list, users come and even if users don't trade those assets for a very long time, they stay on the exchange. And that um strategy did exceptionally well, right? Like and the centralized exchanges actually worked a very similar way um but have obviously been kind of slower to less than Hyperlid.

The problem with that is if you want to do if you want to have like great capital efficiency and um you know universal margin, you actually can't allow users to take super high leverage on this like really longtail stuff because it will introduce counterparty risk to everybody else on the exchange. And so there is a sort of structurally different approach here where you choose to either go like the really high quality asset route or the like fast listing asset route. Um now you can do a little bit of both, right? I'm sure that you'll kind of see us do newer some newer assets and hyperlquid uh improve

their capital efficiency. Um but uh big picture it's like for across like crypto and you know traditional markets where we see and I'd say the really big driver the maybe the biggest driver is when we list something we have a view on how traders are going to use it. We don't like just list [ __ ] and then you know think the market will show up. And we have this view because we know what people do and you know work with them on the trading side. Um and so there are a heck of a lot of trades that would be would make a lot more money for

essentially no additional financial risk uh if the capital efficiency was good if the exchanges were were properly designed. And so like you know that's kind of where we focus. >> I think that makes sense. maybe less retail and more people who are trying to run strategies that just they cannot right now on June. >> So yeah, there there are two user groups. One is institutional and for the stuff I've been talking about on this podcast. Um like that's the that's the value propos the value proposition is very clear. They understand these nuances for retail. Um there are kind of two parts to this go to market. two to three parts. One is Megith's ecosystem.

Um and and that's really like the the kind of the the first and the earliest uh you know retail go to market um which is obviously you know um we think going to do exceptionally well in the coming months coming quarter. Okay. Two is everybody, you, me, your mother, my mother wants to make more money, right? And and wants to make more money safely. Like if you go to the grocery store to buy milk, you don't want to get mugged. Like you're going to go to the grocery store, that has a less chance of you getting mugged when you buy milk. It's universal and it's forever, right? So safety is and I think retail users have

an understanding of that intuitively um when they do the research and and when they kind of understand the differences between being on chain not etc. All right so make more money for less risk that's thing number two for retail. Thing number three is the way that markets have traditional markets have evolved. This is not the way crypto works. But I I have I do think crypto will kind of evolve in this direction. Um although perhaps a little bit differently than social markets have evolved. Exchanges like one question I like to ask people is what is NASDAQ's UI look like? You know what about the New York Stock Exchange, right? Like exchanges have evolved to be a

fundamentally institutional business. And part of the reason is because to benefit the institutional side of things, it adds complexity that retail generally doesn't want. And you also, you know, working with institutions, you're allowed, it kind of gives you um uh it's not just complex complexity, but economies of scale, etc., etc. And so retail is then served by, you know, dealers, broker dealers, etc., um retail aggregators and this is interestingly not what we've seen in crypto historically um although I think that's largely because the things the apps that did

this blew up Celsius right blogi etc um but we are seeing that happen on me on on mega and I think that we will see this happen more so as kind of defi and and the industry evolves where apps that you know face retail are hyperfocused on servicing retail, right? We're talking so hit one is really a perfect example. You know thousandx leverage like there is no exchange on earth that is going to offer you a thousandx leverage, right?

That is also servicing institutional clients. Not going to happen. Uh you know it's built as like a you know arcade finance cing. So they but but hit one is an institution and they think and they operate like an institution and they trade on world markets and so that brings retail flow. >> Okay, I think that makes sense. I um in terms of kind of slightly related to this, are you worried about USDM being the the asset that people are going to trade instead of USDC or USDT?

>> Yeah, that's a great question. So I would say that um there are kind of two parts to it. Fundamentally uh it's not a concern but it is something to monitor and what I mean by that is um USDM uh is backed by you know very stable assets to my knowledge. I don't own it or control it obviously. Um but it's it's backed by treasury bills, right? Um and so as long as the pipes are clean and the dependencies are clean, it has a fund administrator uh anchorage um and is um you know managed uh in a kind of traditional uh you know congestive way. So

that as long as as as all that you know stays clean and and you know as as we expect then really it's you know a wrapper of treasury bills and obviously nobody has a problem with that. Every institution on the planet and probably a lot of retail uh is going to be sensitive to a new stable coin. People don't like new stable coins, right? um it's like its only downside. Yeah. So, you know, George Soros, etc. um so there's there's going to be a kind of initial hesitation that needs to be addressed with the market and to kind of ignore that I think would would would

you know uh you know not be especially wise but it's easily solved with you know transparent monitoring and reporting and you know how kind of like everything in Trojan markets is solved. Um and so uh yeah I think as as long as and and obviously meith has you know to my knowledge like full intention to do that and everybody's aligned in terms of our interests of making this very stable um and it allows me to operate sequencer at cost right so it creates incentive alignment which otherwise wouldn't be there um and is kind of a net a net benefit to the apps the traders and you

know the the users in the ecosystem. Um it just requires you know monitoring and and transparency. >> Yeah. But no um I guess I have um two more questions before we wrap things up. Um I guess one of them it's kind of a wrap-up question. The first one is um what is the next big thing for you guys like over the next I usually say 6 to 12 months but I feel like you're I don't want to do six to 12 months because you guys are relatively early so let's do like three to six months. What is what is the big thing that you guys are you would want for listeners to do or have as a takeaway or try out?

>> Yeah. So so the Megath ecosystem is going to be coming online in this time. um you know it's hard building an ecosystem and it's hard building the apps. We're starting to see uh I would say the end of the beginning right where the apps are you know us included shipping final updates or allow going to allow users to it's not going to be a perfect experience but it's going to be a good experience and users will be able to see the value and uh you know grow the ecosystem as we like continue to improve. Um and you're see you're going to see that for you know a large a large number of you know meg projects. So that's super exciting and I think being

in the ecosystem paying attention to that um is going to be you know the thing to do and right now we're in a bare market but if you look at like the best investments of the last 50 to 100 years right since like 1920 the very best investments were made at the bottom of the bare market across asset classes and across time right so if you want to set yourself up for success. I think the thing to do is pay attention to the na youth ecosystem so that when the next bull market comes, you know, you've put in the time and the work and and you know, accumulated whatever is points or you know the

experience and um and and can monetize that. So that's one. Two, vault. What I am super excited about is essentially marrying what we did in uh the fund and what we are doing with world. If you look at the vaults of like lighter, hyperlquid, you know, etc. and and even just what you have in DeFi today, you know, Morpho, yada yada, these vaults are limited. Obviously, hyper liquid and lighter performed exceptionally well, but kind of limited to like single strategies oftentimes without an ability to scale uh without like you know the returns decreasing and

so you know the capacity constraints etc. What we're doing is uh our vault will source trading teams across the industry. will pick the best and these trading teams will compete for capital and fees with the returns being passed on to the depositors. And because this is like real DeFi and not what I call pretendfi, uh which is centralized exchanges calling themselves decentralized exchanges, um you can actually take that vault token and stick it wherever you want. You want to leverage it up on Morpho, right? Like be my guest. you want to stick it back in the exchange

and use it as collateral, that's also an option. So, um I'm super excited about that because I think the yield coming from the protrading teams who are able to take advantage of all these nuances of the exchange. I think that's going to be like super sexy. >> Yeah, I think that makes sense. Are you using anybody for the vault infrastructure or is it being built in house? Um we're potentially going to work with Enzyme um as our partner. That's sort of who who we're we're thinking about at the moment. Um there's this vault is able to actually trade outside of world. So it can also in order to take advantage of like

arbitrage opportunities um but fully on chain or at least not fully on on dexes and on chain. Um and so it it has a lot of infrastructure that is um it's it's a relatively complex infrastructure. It also uses you know Uly um for you know security and um >> yeah that makes sense. Um my last question is for Hersh which is how he got involved in world markets because he hasn't spoken the whole day and I want to give him a >> finally finally I'm back. I'm back. Oh my god. Yeah. sort of like uh uh the way I got involved was funny enough was through uh my old boss and Kevin who's like another co-founder at World Markets

and uh Kevin just randomly DM'd me on Telegram. He's like, uh, cuz he got my ad through my old boss. And Kevin was like, "What are you doing?" And I'm like, "Nothing. Just like funemployed trading, right? Just, uh, I don't know, just trying to like seize as much money from the market as possible through trading." And, uh, and he's like, "Here, man. I'm building something cool. I want you to be a part of it." And I'm like, "What are you building?" Right? I'm like, "Is it just another perex?" And he's like, "No, the pitch was this is like the endgame for Perex, right? this is like the the final evolution of what financial like like markets should look like on chain. And I'm like, okay, yeah, this this is really cool, right? And I'm like, has anybody done this before? And

he's like, nope. And I'm like, who else is on the team? He's like, we have Lucas, we have another person, Mo, and uh and it's a small team. And he's like, we're trying just trying to build up like the best freaking exchange possible. I'm like, I want to be part of it. And uh lo and behold, I'm like the the the dog that's helping build world markets. Very good. Very very good. >> One thing I I want to mention kind of on the back of or what Hurst said is a bit bit more context about the team very briefly. So there's there's one individual who I don't talk about enough on these things and that's Mo. So Mo um is Mo's been writing code for 40 years.

Uh and is uh I mean I talk about these things um because I have a pretty face. Uh but um I'm like 5 foot seven by the way so make but yeah it makes like nothing with the ladies but um so uh uh these ideas really come from Mo um he's kind of the uh uh I don't want to give I don't want to talk talk about too much but he's kind of like the the the brainchild and and genius if you will of um understanding like what's actually in the market today, having the traditional markets experience. Um, and being able

to like synthesize this uh in a way that's architecturally robust. Um, and that is a like very very hard problem to solve. And the reason that we have a lot of confidence in um sort of our remote and unique value is because the only way to solve that you can't hire like 10,000 physicists and solve like uh you know special relativity, right? Like it doesn't matter how many physicists you have, it doesn't give you an like one person to sit in a dark room for however many years and just like pen and paper, you know, think like one step to the next. Um uh and and and that's Mo. Um so if you know he he kind of

deserves all the credit here to be honest. Um and then we recently brought on Gareth um as our um COO. So Gareth uh went to Harvard Harvard Law um was an attorney for a long time, New York regulator. Um and then was uh Andrew Cuomo, Governor of New York's kind of right-hand guy. um I don't know if he would allow me to say that like that exactly but um uh uh ran his PR and um you know his co campaign and uh incredibly incredibly talented and then there's hers who you know and Kevin McCovven on the BD side as well.

>> Very good. Well, massive shout out to Mo um as well as the rest of the team. Um, I'm going to give um, we'll put these in the uh, show notes as well, but I think most people should know her. She has a bit too many followers, but it's Teddy Respecttor um, Marcus Aurorelius Lucas's Zerox Larpist and of course follow World Markets Inc. at World Markets Inc. and make sure to check them out on Twitter as well. Um, guys, I really appreciate you taking the time to come on today and chat.

>> Thank you, man. We appreciate it. >> Thank you. Thank you.