The Future of dYdX & Decentralized Trading | Antonio Juliano, Founder

Transcript

and I think the thing that makes me excited about all these things is they sort of multiply each other like if you have pre-launch listings like the ability to have oracles on thousands of markets the ability to have permissionless Market listings all of those things work together and just create a much better product and if you can imagine a world where anybody can list a Perpetual future on any pre-launch asset possibilities are endless like this is why people are excited about decentralized pers for a long time now and I think we're starting to see that finally come into fruition in 2024 and that's something to be excited about what's up everyone welcome back to another episode of zerox research March is just around the corner and I want to make sure to give you a quick reminder

to not top tick your prices of your D London tickets if you use codes 0x10 at checkout you can lock in a 10% discount on your ticket don't miss out on your chance to get ahead of the curve I'll see you in London before we get into today's episode just a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax legal or other advice all right let's jump into the episode what's up everyone welcome back to another episode of zerox research we have an awesome episode lined up today with Antonio the founder of dydx one of the most interesting and largest decentralized exchanges today it is Wednesday February 28th as of recording and as a reminder be sure to use code0x

research10 at app. blockworks research.com for 10% off your annual subscription Antonio thank you so much for uh for coming back on it's great to have you here thanks for having me guys yeah so I guess uh just to get right into things V4 has been live for quite some time now so maybe if you just give us a high level overview of how the migration from B3 has gone like the UPS the Downs as well as I'm curious like if you were making the same decision today to build a cosmos SDK chain would you do it with the current state of the infrastructure in like in contrast to you know what the state of infrastructure was back when you made the choice to make the move yeah maybe I'll start with the second part first I definitely would make the same decision

um it has given us a platform that we're just excited about and we feel is going to be able to scale to the level that we needed to I've talked about this for a while with the decision as to why we move to Cosmos rather than building on an L2 or another L1 that we could have potentially launched on um so it certainly was the right decision and we're excited about it I think that's really backed up by a lot of the volume that's happened on V4 to this point um so there's been over a billion dollars a day of trading volume still a little bit lower number of users on V4 then V3 um that's something that I think will

increase over time as people really understand the product get acclimated to it and one of the things we always try to do at dydx is ship more of a MVP version to start still we held a really high quality bar here um but we have been putting a good amount of work into improving the software um improving the product so that'll continue for a while as well yeah uh following on on that obviously you guys are innovating on a lot of different funds and one of those funds is the market listing modu that you guys recently launched making it super easy for anyone really to propose new markets how is that going and do you think the goal of 500 markets this year is achievable in 2024 I do really feel like it is achievable

um we try to set really high goals and that would be going from fewer than 50 markets to 500 so that's more that's more than a 10x increase um you touched on the new markets modal that we launched recently that's something that we are excited about and effectively just makes it a lot easier to use governance to add markets to the protocol and that's a way markets can continue to be added indefinitely we think that'll scale to some extent it's still a little complicated just because there has to be a governance vote around every one of these markets being listed um and some other complications there just risk considerations because all of the markets are cross margins the biggest things that we're working on

developing right now are isolated margin into the protocol itself so this is being able to isolate the risks of individual markets against the entire cross margin system so this just lets the entire listing process be much more aggressive because now um you can list things that don't have to necessarily affect the risk of the entire rest of the protocol so like every new asset right now since everything is being listed cross um affects the potential risk of the entire protocol whereas once we have isolated and there's the ability to list things there um it can be a lot safer so that just enables like the number of things that could be potentially listed to increase 10 100 fold so that's a really important piece of what we're building

and that should be ready in a few months the next piece of what we're building which I think is the critical thing to be able to get us to 500 markets this year and then more in the future is the ability for anybody to list a market without a governance vote so calling this permissionless Market listings it's one of the really big things that we're going to be working on developing in the next six months um but this once it's combined with isolated so once you can isolate the risk of one Mar market then you can be much more aggressive with the types of things that you list but also how you list them um so you don't even necessarily need a governance vote to list a new market you can just have anybody come um put down a certain amount of stake on that market it's kind

of similar to listing a market on Unis swap just like send a transaction and the thing is live that has never really fundamentally existed in derivatives so far um and we're excited about that being the Cornerstone of how new markets will be able to be listed going forward so I think once we have those two things then we'll see a huge increase in the veloc of listing new types of markets so this will mean things get listed faster more markets can be listed and the thing I'm personally most excited about with this is experimentation like it's not even up to us anymore um or it's not even up to governance anymore what things get listed on the product it's just up to the users themselves and as we've seen in crypto I think this is a

really core thing that people can be excited about when there is the opportunity for experimentation with the types of things that can be traded a lot of it won't work out but some of it will and it won't work out in the way you expect um but that's something I'm really excited about so I think the combination of all of those gives me a lot of confidence that we will be able to hit this goal of 500 markets listed by the end of the year bing up on that a few months ago I think in October or maybe November chaos Labs put out a governance post talking about two different listing approaches one was a slightly more liquidity driven approach and one was a orod driven approach is there a certain approach that the protocol or you think the Dow would sort of like Bean TOS or I another

way of phrasing this question is what type of approaches you idx planning to take to ensure for example sufficient liquidity for these markets that they see in the volume overtime Etc yeah good question and this is really the last piece of Listing New Markets because markets can be live but if they're not liquid like who cares you can't trade them um so this is a big thing that we're thinking about how do we solve for the 100 200th 500th Market that's on the protocol um how can there exist liquidity on it as I'm sure everybody knows right now dydx is an order book based exchange that gets basically all of its liquidity from more professional market makers and this is great this gives us the ability to have really great liquidity on the core markets that

are being traded but it's unclear whether this is going to work for the long taale of markets and I have my um theories that it probably won't work out super well so the next big thing that we are still thinking about right now but are being pretty aggressive with the timeline and our thinking here is if we can create some form of vaults amm on new markets um that is something we're really excited about too and the way we're thinking about this right now is to like basically at the protocol level have a list of every Market that could possibly be added so there'll be an oracle provider that will just give oracles for anything you can possibly trade um so there could be thousands of those types of things then the next

question is how does something go from the state where there's oracles for a given Market to it's actually tradable and you need to have some process for that because there's limitations on the protocol for performance um and generally you need to have some baseline standard of liquidity before you start trading a purpose market and the way we're doing this is by combining the market listings for permissionless markets with the Vault amms so effectively once a new Oracle exists for a new given Market there immediately will create a new Vault amm that people can start depositing into for this market and once that Vault has enough deposited into it and we think the

amount can be pretty small probably on the order of $1,000 dollar or so then that market becomes live for trading and this actually solves both of the problems at the same time right so it kind of solves this problem of how do you know which markets people actually want to trade well they're putting money into these vaults it's effectively similar to staking and solves at least how do we get some small Baseline level of liquidity on these markets because now there's an amm which yeah it might not be able to provide as high quality liquidity as a professional Market maker can but that's probably not required for the early stages of an experimental market and we see these amm as being a way to bootstrap liquidity first and foremost um and some bootstrap liquidity especially in these more Fringe markets

and we see markets on dydx likely eventually being kind of a progression from being amm at the start to eventually more professional market makers or whoever can start quoting on the order book um and providing liquidity that way and then as that happens probably the amm will become relatively less profitable over time and people can withdraw but that's okay you've already solved the problem with how do you bootstrap liquidity on this market so in a high level that's what we're thinking about building and again we're being pretty aggressive with resourcing around this and and trying to have this all Al and the next six months if not sooner nice that's super super exciting to hear on a similar note of shipping aggressively I think in a blog post recently it mentioned that you guys will

be integrating social elements and I think I personally I'm a big fan of the idea could you walk us through some of the ideas that you guys have in mind yeah so first of all just to be clear social is something I'm excited about especially in regards to trading I think it's just something that's really core to how Traders think a lot of traders that is um and I think one of the cool things about defi is that it is super transparent people talk about this a lot one of the concerns people have about defi is that it's transparent it's like how can I hide my a trading strategy from everybody else like how can I have privacy with all my trades and this sort of stuff and I've thought about this for a long time and I don't think this is an objectively better approach um like

there's some traders that want privacy some traders that want transparency but for the people that are using defi we should really try to lead into our strengths of transparency and just like make the whole thing transparent like you'd be able to see how everybody is trading on the platform it'd be really easy to follow traders to copy trade um to do things like posting trades to social media getting some virality around traders that sort of thing potentially you could combine this with vaults in a similar way to how hyper liquid might um so these are all types of things we're excited about the thing I'll say here is this is still we're not actively working on this right now um and I think that makes sense we really try to ruthlessly prioritize what we are focused on and this trade anything

thesis is the main thing we're working on right now social probably will be more of a six to 12 month plus type thing but it is something I'm excited about within the same blog post I saw that uh one of the goals for 2024 was to develop alternative clients written in other languages what's the rationale behind that and is that still a priority it still is a priority um and it's one of the big classes of users on dydx is more professional Traders or just people using the API more generally um so this is where most of the volume comes from um and therefore it makes a lot of sense for us to consider that a really First Class part of the product and the product for that is the apis that they

use and especially the clients around it so believe a python client was released recently there's a C++ client that's under development potentially a few other languages that are being considered as well one of the cool things around this is that these clients have not been developed by the core dydx team but rather people who are trading on the protocol and basically got a Grant to do some of this development I think that's something that's really exciting and is obviously enabled by the entire protocol being decentralized in open source now so that's something we're trying to lean into more as well yeah I know how product focused of a of a Founder you are as well so this I I probably know the answer here but I got to ask anyway so there's just been a ton of innovation and increase in

competition in the pers landscape so how would you define the competitive landscape how do you compete with the newest shiny token um yeah any Clarity you could provide on that would be great so this has been happening for a while honestly there's been a million per Sexes forever however I agree with what you're saying it does feel different to me right now um I think the difference the thing that's been going on for a long time is bdx included to be honest like there have been platforms that have gotten a lot of hype around token distributions some of those have stuck like dydx and some have not um and the thing you need to have to actually stick around this is a great product and I've said this a million times um so the reason I feel like the competitive landscape is different now

is a little bit intuitive but I I do very much respect the products of some of the competitors that are being built now especially I feel hyper liquid has a good product AO is pretty good um and I feel the biggest competitive advantage that dydx has over those platforms is that first of all we've shown we can be extremely Innovative in the space like basically all of the big or many of the big inovations and per Dees that of stock have come from dydx there's a reason for that um so this kind of vision I was describing before on trade anything I think we have a lot of credibility that we can go out and execute on any on that um right now some of those platforms are doing a faster job of than dydx of Market listings like

for example both of them I think had the starkware token on day one and on dydx it's like yeah the governance vote started on day one but you need four days for that governance vote to finish so it was live to trade a couple days later which is a big step up like we hadn't been doing a great job on Market listings for a while but still not on par with some of the competition but like why are they able to do that just because they're handling Market listings in a central way which can work and there's advantages to that but there's a reason why we're building in defi we want to lean into the advantages of Defi and I think the advantages of defi are transparency to some extent but especially user ownership of the products um and that's something I'm really excited about now I think

permissionless markets are a really good example of that just the entire thing being decentralized controlled by the community like the stakers on the platform receiving the transaction fees it all just kind of feeds back it literally is this open source software that's controlled by its users in the community um and we have to find ways to use that in the product it's not enough and I'm not sort of going to engage in the thing that's like oh but they're not decentralized enough so like you shouldn't use them I'm like I don't actually care like you just use the product that you want to use um and the product it should speak for itself I think there we have to believe there are ways that being fully decentralized does give us an advantage on the product side but the way I've started to think about

it is what are the things that are uniquely enabled by decentralization that we can develop into the product um and how do we build those things and people shouldn't have to care whether if this is a D5 platform or CI platform they should just be like oh sweet like I can list any Market that I want to trade on dydx I can't do that on binance I can't do that anywhere else um I don't have to know why that's enabled if I'm curious I can realize that's because the system is decentralized so yeah that's kind of the the tack I think we're we're taking here we we have built a product that is more distributed more decentralized whatever you want to call it um but we do really need to develop things into the product that show the power of

that following up there on the competitive landscape a little I I think pre-launch Futures is something that has found like relatively strong product Market fit uh throughout 2023 is that something that permissionless listings would eventually be able to support or it's just not able to be supported given sort of like the structure and like the methodology of his things definitely definitely and I think these things all work together so prelaunch listings are something that is on the road map for dydx um and we will develop at some point and I think the thing that makes me excited about all these things is they sort of multiply each other like if you have pre-launch listings like the ability to have oracles on thousands of markets the ability to have permissionless Market listings all of

those things work together and just create a much better product and if you can imagine a world where anybody can list a Perpetual future on any pre-launch asset possibilities are endless like this is why people are excited about decentralized perss for a long time now and I think we're starting to see that finally come into fruition in 2024 and that's something to be excited about yeah permissionless listing for prelaunch assets or even points sounds very very cool and I'm sure that would be such a big hit another wanted to ask sort of on the growth side of things so obviously you guys use usdc issued from Novo and as far as the latest numbers go I think maybe 80 million usdc has been issued by Novo and 50 million of that

has been uh sort of held within the dydx chain so how has the growth of noble helped in sort of dydx before overall growth and how do you see that partnership continuing to evolve in the future yeah that's been a close partnership for us for a while now we're in pretty close contact with Noble even when they were getting started um so and and we were in pretty close contact with some other platforms just to make sure that usdc within Cosmos well native usdc within Cosmos was a really big thing on that partnership side um I think something we're excited about that that's happened recently is just cctp within Noble um what cctp stands for is the cross-chain transfer protocol which

is effectively Circle itself acting as a bridge um and there being no Bridge risk when you transfer usdc between these different Chains No Bridge risk and and no slippage um when you're doing those transfers so that's something we're really excited about I think Noble and us to some extent are working with other platforms like centralized exchanges like could we get coinbase a binance to allow usdc to be withdrawn or deposited directly to dydx um that'd be really cool then you could do these deposits from centralized exchanges in seconds with no gas fees no Bridge risk and I think that's really exciting have you checked in on the numbers by chance like where most of the

usdc is actually originating from in terms of like uh origination chain I don't have a perfect sense of this actually um I would assume it's mostly from ethereum especially because that's where most people keep their money and where dydx V3 exists um but I think there's a sizable amount that's coming from other chains as well and there's a lot of Integrations with l2s gotcha gotcha um I should probably should asked this one too when you were talking about isolated margin and making sure that risk is kind of contained to not you know encapsulate the entire protocol so would you mind walking us through uh the whole Wi-Fi incident what exactly happened and like how that really worked yeah absolutely so on the

wifi incident which happened on dydx V3 so the old version of dydx and just as a precursor there's a good bit of stuff that's been developed into dydx V4 and V3 to some extent that would have prevented or at least majorly mitigated a lot of this issue um so what basically happened is there was an attacker which took uh I I believe it was a long position in yfi um and then really started on centralized exchanges in the SP poot Market pushing the price up quite a lot they were long on dydx pushed up the price quite a lot um and then they pushed up so much that they were able to tank the price really fast um and effectively withdraw like the protocol wasn't able to liquidate them

fast enough so it caed around $10 million to be lost from the insurance fund so no customer fund losses or anything like that but is a risk incident that we take really seriously um so that's effectively what happens on the inves ation side I won't go too much into this now but one of the cool things that blockchain is again is transparent so we actually found the person who did this without too much hassle um and we're in contact with law enforcement around this so we'll see how that plays out eventually but I think that's a really big point of positivity so like yes these things can potentially be possible on the risk side you can never have a totally risk-free system when

you're designing something like this um but just to have mitig ation and to be able to figure out who did it from a transparent perspective I think is important um so on the risk side specifically there's been a good bit in V4 that's different around deleveraging that would is effectively more aggressive that would have stopped an incident like this around things like variable margin fractions one of the things we're implementing right now is basically difference in like the initial margin fraction will scale up as there's more open interest on a given Market especially so on for for a given risk tier um so that would have not totally solved this but really mitigated the

attack because the attacker wouldn't have been able to take nearly as big of a position and it wouldn't have been as profitable so this is something we pay a lot of attention to and we're developing a lot around B4 yeah definitely better that that happened now then in the peak of AO Market at a much larger size but I think there's definely valuable Lessons Learned in there one of the cool features of dydx is that you guys use ABCI Plus+ for an invalidated oracle Network so I guess the first question there is how has the invalidator Oro Network been performing has it been accurate has it been performant and the second question there is are there any other plans on using ABCI Plus+ for any other features yeah so just a little bit on what ABCI Plus+ is it's just a more

efficient way effectively to get information in the blocks and one of the ways we use this on the D exchain is that the validators themselves as you mentioned are the Oracle price reporters this is really cool because then the Oracle price reporters are as decentralized as the chain itself like every validator is also doing the service of providing oracles um so this has been working quite well and it's something where there hasn't been any major losses on dydx V4 even though we've seen a lot of price volatility that's kind of the gold standard you should look at here is is the liquidation system actually performing effectively um what's the health of the Insurance Fund and the health of the Insurance Fund has been good on V4 and has been only growing over time um on

the Improvement side here one of the things we're working on right now is a partnership with skip protocol to integrate Slinky um which is effectively going to make the oracles even more performant so it'll allow us to have more updates more frequently allow oracles for many more types of assets this touches on what I was discussing for with the um oracles for all the new markets that dydx wants to enable so yeah this is something we're excited about and I think it's just an iterative improvement that also uses ABCI Plus+ and also vote extensions to some extent on V4 what's up everyone March is approaching fast and I want to give you another reminder not to miss out on D London it is coming it's right around

the corner and it's in March from the 18th to 20th we have three full days of content this is your chance to bump shoulders with some of the world's top Executives and have open dialogue with both attendees and speakers we're going to be focusing on a range of topics that I'll let Ren discuss for you first on the list we have Bitcoin Catalyst the Haring and spot ETF next we have a view from the buy side from investors on things like strategy portfolio allocation and more we also have a topic on Aras tokenization and stable coins which I think we can all agree are going to pay a large roow in crypto's future we'll also talk about global regulatory Frameworks like compliance best practices and the evolution of global standards that are shaping the global investment landscape we'll also have someone from the institutional front to

talk about infrastructure such as Banking and payments with financial giants like visa and JP Morgan and last on the list the macro case for digital assets so don't miss out on this Monumental event seats are limited so be sure to register today by hitting the link in the description and using the promo code 0x10 to save 10% on tickets see you in London one of the hottest topics going into the V4 migration was meev and the mitigation strategy around it can you kind of talk to that how it's gone and whether there's further plans uh on improving that system yeah this is something that has pleasantly exceeded our expectations to be honest um there hasn't been any major issues with me so far so just to recap the thing that we developed around V4 um is the ability to

have a score for each validator which is a numeric ranking of how much me they are extracting um and this is something you can see because the entire order book is transparent um and basically on V4 it is possible to some extent for validators to extract me as it is on basically every chain um but you can see it on V4 and we've made it really transparent um this is one of the other things skip is is working on on the dydx Chain they have this dashboard which basically goes through each particular validator what their score is um I think there was one incident where one validator had a slightly higher than the norm me score they wrote a good log post on this and then it was remedied pretty

quickly after that so I think this is all pointing to signs that at least for the time being strategy on me has been the right one um I think longer term there's still questions around whether just making whether me happens or transparent is the Only Solution that's needed um or whether there's some more in protocol uh mechanisms for how you could do matching like how you could keep the order book these sorts of things that could mitigate it much more at the protocol level we have done a good bit of research on this um not in a totally final state yet but have some good ideas here don't feel like it's necessary to implement right now um but we may do at some point holl up there I think there's sort of two camps that one can approach like

long-term me Solutions right the first is I'm going to let me happen but I'm going to find some way to internalize all of the M profits and distribute that to whoever maybe it's LPS maybe it's Traders Etc and then the second one is I want to like just prevent M from happening at all is there a certain camp that you lean toward it and if so why so I very much fall into the camp of trying as hard as we damn can to make sure Meb doesn't happen at all I think this just makes the product much simpler and it's always going to be better for the Traders themselves there are some approaches where okay like could you let me be taken from the Traders but then distributed the profits back to them

that are captured by the protocol in some way is possible but that's pretty hard to do and is always going to make the product worse than just a product that doesn't have to deal with this issue in the first place so that's really what we're coming from talked about the strategy we have so far just on the transparency side um but there are even some things that we are researching right now with ways you can do matching where me wouldn't really be possible in the case where like some minimum subset of validators are honest which we're excited about here's a follow-up question to that a slightly ridiculous example but say one day like 66% of the dydx uh distributes uh B data set my sort of amount of tokens dedicated to

them decides to say hey all right guys we're all going to do M um it's this like game the scenario where all of us uh make a lot more money if we all sort of extract MB from the system and since all of us are doing it you can't like really kick all of us out um because there's no for example any other info providers that are willing to run validators uh in that scenario how do you think you the foundation or like the protocol or the Dow would respond to an incident like that yeah I mean just to be clear like we're pretty far off from that right now I think everything's going quite well and so we've been really impressed with the quality of validators in in Cosmos that being said I'll engage with the hypothetical um and I feel like in that case yeah it really

comes back to like what exactly the situation is like are the quote like malicious or however you want to term the validators allowing governance votes to pass are they like rejecting transactions for all those sort of governance votes are they allowing like reaking of dydx to other types of validators that maybe don't fall into that camp there's a lot of different things that could happen here um so I think in in that case we would Advocate very strongly and look s up to us it's up to the dydx Token holders like where they actually want to stake to um but as much as they care about the health of the chain the future potential of you know why they're staking and all this sort of stuff I think they should

care a lot about meev there should be penalties like slashing that should be considered especially in these types of cases um so I think those would be things we would advocate for and yeah I mean the worst possible like Doomsday scenario again it's not up to us but like you can always kind of it is a sovereign chain so you can Fork like you can do other stuff and there are a lot of options available to you yeah that's like another prime example of the uh the main benefits of the sovereignty and the the design choices you made going over to the cosmos ecosystem but uh one of the bigger news I guess uh things of the last week or two has been Unis swap Foundation posting on the Forum to turn on a fee switch and then dydx on the

other hand has been doing this since V4 launch so what are your thoughts on the Unis swap uh fees switch proposal as well as just Revenue share with token stakers in general yeah so for UNIS swap in particular I think it's something that makes sense this is clearly something the community has wanted for a while for UNIS swap in particular um as he mentions this uh just in terms of the token holders themselves making the fees on the platform has existed on dydx V4 for a while I would argue that makes a huge amount of sense on dydx V4 because the token holders are literally providing a service they're staking is the same as you would do on ethereum or any other L1 in providing security to the network um so would have some questions around like is are like are

the token holders in Unis swap providing as much value to the platform maybe I know they combined it with like you have to stti to somebody who may vote on governance proposals and that sort of stuff but it's a little bit less direct than on dydx um but I think it makes a lot of sense and honestly I think it'll work out well for them um look you can see the pop in their token price and all this kind of stuff um so clearly that was good um and then I think this is just something we've really been advocating for for a long time just generally I Define it as the users of the platform and the token holders are the ones that control it um and if there are any profits if any like it should go to them the people running the infrastructure like the validators on

dydx so this is I think just a continuation of a trend that we've seen in crypto for a while I think dydx was earlier on this trend but I think it feels good to to see it continued in Unis swap yeah I think that that fundamental usdc revenue for the stakers is like foundational shift in terms of like the utility provides the token but I also think a big factor in I guess garnering a premium for for certain tokens Can often be um I guess it's utility and with that is stdyx obviously you guys have the integration with stride have you thought at all about maybe incentivizing activity across different ecosystems to get people to use stdyx

and defi or what what's your strategy there I am not totally sold that using St dydx in Dy is going to be the big thing that that makes a difference for call it the ecosystem of dydx overall that being said um it's something that I would be excited to see other people experiment with I mean I'm sure stri themselves is really thinking about this be the main beneficiaries of it and other people are as well so that's not something we're actively developing with the core team but even this entire integration of the stake dydx like we didn't even do any of it um it was all just stride and that's pretty cool just to see that happen um from a third party perspective and and again that's really one of the big reasons why we've moved

to this more decentralized model things can just happen and it doesn't even have to go through us or the core team we're excited about the partnership the integration with stride one of the things we're developing right now is an integration with STD ydx into the core product itself would be like the staking Tab and you can just oneclick stake your tokens directly in the product um exactly the same thing you could do on strides website today but just having that in one place should be really helpful for more adoption and more staking more security of the network I think one thing I wanted to touch on was uh dydx is validator set I was curious that I guess sort of a casat question but are you happy with the existing

level of distribution in dydx is validator set and are there any thoughts on incentives around Distributing or decentralizing the B data set even further so this isn't something I personally focus on as much so like somebody at the foundation would likely be focusing on this quite a lot more um but with my knowledge such as it is I would say that I feel it's in a pretty good spot right now it's not perfect and I think this is something we're pretty transparent about with the launch of the network in in general was there's going to be more validators over time probably at the beginning the stake is going to be a little more concentrated I don't think it's in a critical State like that or anything right now um but yeah absolutely we want to make it easier for

more distribution to happen I think uh stride and the liquid staking stuff is a good step in the right direction here just because then more the staking pool operators can take more of an active role in who they're staking to and probably there's going to be more decentralization in the validator set because of that um so that's I think the biggest lever that that we at dydx trading the developers have over this is what are the Integrations we can build into the products that make it as easy as possible to have a really distributed validator set we've seen some of the competitors go towards the modular stack so uh AO for example on the op stack uh also using I believe Celestia for da or at least plans to do that or maybe that's lra I

can't really remember might be both but what is your thoughts on that architecture do you think there's pros to going that approach or do you think just in general like owning the entire Tech stack is 100% the way to go I think they're straight offs yeah I don't think it's clear as clear as % one is better than the other um yes look there's probably going to be a good bit more base level chain security if you use a roll up it's a big point of it it's possible bridging might be easier though I think honestly for dydx given that we're only using usdc is collateral right now pretty much all of that is mitigated by having cctp um so yeah there's trade-offs there I think the op stack is a good one to

build on just because it gives you a good amount of customizability for what you're building into your chain itself is kind of similar to building your own L1 so I would almost argue that this architecture of having really custom control over the infrastructure that you're building on is the right way to go that's that's proven in basically every product that exists right now um but I think that'll continue and I think we try to be just moving like one step ahead of everybody else and having entire control like literally the entire chain and everything is the software that we've developed um so that just helps quite a lot just because you don't have to be beholden to whatever optimism does whatever ethereum does um we can develop things as we want

them to be and that gives you a lot of flexibility going forwards and I think this is just a general Trend that you see in technology where as the technology becomes more mature usually it starts out on a platform that's more General and is easy and like serves most of its needs but then you want to build things that are more custom for your application and you try to be more vertically integrated and that's exactly what's happened here following up on uh something that you mentioned sort of usds Cado we've seen some diverters exchanges introduce sort of yeld bearing versions of kado I think most not notably AO they introduce a yeld be bearing version of usdc collateral it's like 90% 10 is called usdc AE or something like that what are

your general thoughts on just yieldb collateral as a whole I think it is important I don't think it's as important as things like how good is the core trading and What markets exist so it's not a major Focus for us right now but we will get around to it at some point obviously it varies a good bit based on what the interest rate environment is like nobody cared about this a few years ago um but right now it is an advantage so it's something we're looking at um it's something honestly I feel Circle and coinbase could do a better job of with usdc itself um just be finding a way to share some amount of that yield back with the projects themselves or developers or whatever um but I feel that's in a decent space

right now but this is all relatively new um just in terms of yield bearing stable coins in general so it's something we're tracking but not actively developing right now I remember last time we spoke on the podcast you mentioned uh the importance of like mobile I guess tailoress to to the mobile user interface how important would you say that still is today and do you think a large percentage of volume on these pers exchanges comes from mobile or do you think most of it is still done on desktop most of it is still done on desktop which is the case on dydx as well um but so I would classify mobile as a debt that we are making um just in terms of can the market itself transition more from

desktop trading to mobile trading as we've seen in traditional Finance over time um I still think that's a good bet to make and there was just a V4 IOS app that was released Android app is is really close as well um so that's something that that we're excited about and I see it as yeah lesser than web right now but potentially a lot bigger um but our web product and web users the professional Traders are still by far the most important users there's a follow-up question to that are there any sort of like user Behavior insights that you think are really interesting that you could share for example I don't know maybe 10% of users make up 90% of volume or

surprisingly most of the Traders trade on sort of like New York Stock Exchange hours I would love to cure any sort of like interesting data points you have about user Behavior I mean this is something I feel you could probably find mostly on third party sites actually just like there's a lot of data about what's going on on the Chain which I think is a really cool thing so I don't have any huge ones off the top of my head yeah the trading is pretty geographically distributed as far as we can tell I mean I think you can see that and just like where like the IP addresses are located and also things like what time of day does the trading happen and that's pretty distributed Around the Clock um so don't have any amazing ones off the top of my head but we'll track that going

forwards I this is more of a thematic question that I just don't have a good answer to so I'm curious to get your opinion on it but in traditional Finance we see options in Futures contracts as the dominant instrument yet in crypto obviously perss are the dominant derivatives instrument why is this do you expect this dichotomy to remain throughout you know maybe the next five years um yeah any info you could share on yeah I do expect it to remain and this wasn't something I always believed but I very much do now and I think it's because the market structure in crypto is just fundamentally different where individual professional but retail Traders make up the bulk of the volume that happens in in crypto um or at least the bulk of the organic volume that happens in crypto and that's really

fundamentally different than traditional finance and those types of users want a simpler type of product that has more liquidity around it um and I think that is burps it was really interesting um one of the things that crystallized this for me is we had Arthur Hayes himself in for a fireside chat at dydx and I asked him this question like why did you guys do pers like how did you come up with this thing and it was interesting I didn't actually know this at the time but bitm started with options and they you know were very early with options in crypto and Arthur himself was doing customer service for bitmex at the time and everybody kept writing into him and being like what the heck is it xir like what is a strike price like I don't

understand these things like and Arthur would explain these things to people and in a really good way but ultimately had the Insight that like why are we doing this like could we create a product here that solves all these products for you problems for users um and doesn't have an xer and doesn't have strike prices it's just like you buy Bitcoin and it's just feels the same as if you're buying spot Bitcoin but sweet you can do it with 10x leverage um and there's some complexities around that like the funding rate but those are a lot easier to understand than yeah I have to buy this bespoke product every month um so I think it really fits with the type of traders that are in crypto right now and I think that'll continue from what you've said over like the past an hour or so the one to twoe road map for dydx

is pretty a strong focus on permission assisting figuring out sort of like a vault framework for these permission assist things what does a 10year road map look like for dydx 10 years down the road what do you want dydx to be I mean I've honestly started to think about road maps on a shorter term intentionally um which is part of where unknown comes from and I used to have for dydx this like two or three year road map for the company here's what we're going to build then this then this and I stopped doing that and I think that was actually one of the best things that I did at dydx is really only think about things on a 6 to 12 month time Horizon like we can think about the long term but we're going to have a lot more

information to think about the long term when we're in the long term so we just do it then rather than having a lot of plans around it that being said it is very important to crystallize the vision for what are we doing here like why should people care about this for the long term on that I would say that clearly crypto trading is a thing now it's not going away clearly it's going to grow over time and clearly derivatives are the biggest way that that crypto is being traded and I think that Trend will only continue into the future um and being able to trade those things in on a product that is fully decentralized that is controlled by its users um that does have fundamentally new types of features that you could not

have on centralized exchanges that's what we're building here and that's why we're excited long term so I don't know exactly where that's going to take us I think the vision is that combines with really growing decentralized trading and defi overall into centralized exchanges right now defi burs exchanges are about 2 to 3% of all burs volume in crypto um which is the bulk of all crypto volume period and that is going to grow a lot over the next few years and I think that's why you see pretty heavy competition in the space now um and a lot of people are excited about it so we're excited to really be pushing what is possible with that um talked about permissionless listings we talked about

the AB ility to trade anything on a derivatives exchange potentially it's things like social in the future um but we'll see where it goes and I think we'll get a lot of evidence as we go along and it's still pretty early days in this market awesome I got one more closing question for you I know you're at e Denver how is it is Denver as bad as everyone says it is how are the Vibes I like Denver um and I think the Vibes are pretty good obviously everybody is excited about the price there seems to be good amounts of renewed enthusiasm I mean I've been in crypto for like N9 years at this point so not to say I'm totally over it but I'm a little over the like whole in bare Market cycle and we really just try to to build through everything that doesn't mean I ignore it

I I think it is really important to to understand what's going on to feel the highs not to get too Hypes really to stay on track for the long term not to get too low during the lows um but I think it's good it's great to see a lot of people out building a lot of exciting things within crypto Defi and elsewhere so good energy awesome love to hear it all right Antonio thanks so much for coming on is there uh any last words you want to share with the listeners like where to find you learn more about dyx yeah so we are at Dy dx. exchange online um I'm at anonio M Juliano on Twitter and then we're at dydx on Twitter as well awesome take it easy and enjoy Denver awesome thank you guys hey everyone thanks for watching today's

zero X research episode I wanted to take a second and remind you about upcoming 2024 digital assets Summit in London this March seats are limited so hit the link in the description and use the promo code 0x10 to save 10% on tickets see you in [Music] London