THORChain, the best alternative to CEX | Chad Barraford

Transcript

we're building new D5 protocols that have never existed before ever in the space that actually not only competes against CFI in significant ways but it can do it faster cheaper and more effectively with full transparency alrighty everyone welcome back to another episode of zero X research this show is presented by our incredible sponsors chain analysis and Flipside today is December 19th now we've got a great interview coming at you for with uh Chad bear Ford one of the developers of Thor chain in light of all the recent centralized exchange drama it's a great conversation around the importance of cross-chain decentralized exchanges we really get into like the details of of

what Thor chain is how it works on the protocol level I tried to poke at some of like the more risky side of the protocol as well and you know Chad had some great responses of kind of like what they're building and why they're building it but before we get into that interview we're joined today by Xerox pibbles and Westies from the blockworks research team to discuss the latest Market happenings there's definitely a lot to unpack with this week and kind of you know just over the past couple months in crypto as a whole but we can dive right into things uh Sam you want to kick us off what do you got in the hot seat this week yeah the hot seat's pretty easy this week we've got uh basically dcg and Barry silbert he finally kind of broke his silence earlier today on Twitter and

we're recording on the 19th of December just for the listeners in case this goes a little bit stale by the time it publishes on Wednesday but he tweeted that there's a potential uh tender offer that they might be engaging in in order to try and basically decrease the discount that gbtc trades to nav by offering to buy back some of the shares on the open market I think it's up to 20 percent with um Capital uh in order to try and kind of provide more value to shareholders because last time I checked it's trading at about a 48 discount to nav so this would be a way to kind of even out that spread my one question is just if dcg is in a liquidity crunch I don't understand how they have the spare Capital to actually repurchase those shares from

shareholders at a predetermined price for a specified window of time um to me you know I've been seeing a lot of stuff on Twitter about maybe they liquidate some of their Bitcoin or eat Holdings outside of the actual trust because it's not clear if they could liquidate parts of it in order to raise Capital um so yeah that's that's an easy hot seat we're all still watching that one pretty closely not really sure how it's going to play out but definitely got the hot seat for the week yeah welcome back Barry silbert on this one it was uh the silence was deafening from him and you know I guess this is kind of ultimately the direction it seemed like it was going it's not great it's not terrible it's maybe somewhere in the middle you know we're kind of really uh yet to be seeing it with the true market impact of

this will be but uh this kind of feels like the last Domino and of course I feel terrible saying that you know it's the classic how much worse can it really get but you know I feel like we're like a couple months out from actually having the bottom in terms of of what can go wrong so it's good to get you know some of these final resolutions getting closer here's some speculation on where that money's coming from to buy it back if you look at the uh the berry coins and you chart those you've got like file coin near Mana or is it sand one of those they are all down horrifically this past week so uh that's definitely where some of the money's coming from they're scrambling for cash yeah I actually saw those charts I think it was

on Friday night that he dumped those too like everyone going into the weekend literally no trading volume so that's a good uh a good theory they're Pebbles I didn't really even consider that at all I had already forgotten about it over the weekend but yeah not much else to say on that front considering you know the Situation's still unfolding so Westie I'll pass it over to you so you can give your hot seat for the week yeah definitely uh my hot seat I have Ren which is a pretty popular wrapped asset protocol um and so like their main NASA is Ren BTC allowing you to use essentially Bitcoins price action on ethereum and they announced I don't know if it was a week ago pretty recently that they were going to shut down their main net and this sort of cause a couple issues and

first is around obviously the rent assets I think there's still 15 million dollars in assets outstanding for rent and so this is assets once they shut down I think it's on Tuesday this week uh that's assets that are essentially going to go to zero and so users are basically encouraged to bridge their assets back to the the primary chain that they're on and get their value back but it's also uh bad for its implications on curbpools I know run BTC was used in a lot of different sort of wrapped asset pools within curve and this also brings up the question um like can wrapped assets work in the long term or do we need to go with

something like Thor chain where it's essentially native to Native bridging from one chain to the other with actual native assets as opposed to wrapped assets so I'm wondering yeah what do you guys think about this this runs situation yeah they uh rent kind of got punched in the mouth and the the FTX Elemental washout um I think it was a couple earlier in earlier in the year I want to say it was around like the end of Q4 of last year they uh had a partnership with Alameda and Alameda actually acquired Ren and to kind of like prolong the the funding for the the protocol and of course with Alameda filing for chapter 11 bankruptcy that kind of all uh fell to the Wayside

and now ran the ren protocol and the red team kind of found themselves like being unable to continue the building of this and so I think their their game plan really was to close up shop on Ren 1.0 focus on rent 2.0 and then of course the issue that arises is there's no like they said they came out and said you know we can't guarantee compatibility between Ren 1.0 and ren 2.0 so of course like 1.0 assets wouldn't be able to be transferred over to 2.0 uh basically putting this like pressure on anybody holding you know Ren BTC which is their largest holding uh or any other wrapped assets and it's really just like it's been a constant theme throughout the entire year that raft assets are not real assets you know if this first really got shoved into the mainstream

when we saw the wormhole hack when it was like millions and millions of dollars of wrapped Ethan Solana it became like worthless and of course jump plugged that hole it's like we always just like need someone to keep plugging these wrapped asset holes which is ironic that you know this episode is going to be an interview with Thor chain which is essentially a bridge that gets like only deals in Native assets doesn't wrap assets if you swap a Bitcoin for eth then you know you give native Bitcoin you receive native eth and the the assets stay on both of their respective chains and it really just highlights like that's just clearly a better way to be pushing towards and it just has a different security model that it would need to kind of facilitate these things but you know raft assets just really those kind of need to die in

in this bull run and bear market so I think another issue that arises from this and this is more applying to crypto as a whole as if if you're someone who just like saw ran Bitcoin and like maybe this is a year ago and you're like nice that's Bitcoin on ethereum I can get yield on that and they like so you buy around Bitcoin maybe your um you're lping on curve or something what if you're just like not around your computer this month like what if you like took a little sabbatical you're often like the Himalayas or something like crypto as an asset class there are like so many things that you really can't set and forget like someone who

doesn't know who doesn't follow them on Twitter is not going to see that you know all this Bitcoin is just about to disappear and I think it raises like a broader a broader topic for the entire ecosystem still needs to be solved yeah strong agree with you there it's like you know uh like going into this bull run with all the Mania around it all my friends like what do I buy what do I buy and you know I try to like give my best suggestions at the time that's never happening again my answer is officially nothing stay away from it if you don't pay attention to it every day it's not worth your time like to your point Spencer you can't set it and forget it and like that's such a the mentality with like investing in stocks and equities is like you know buy an ETF

worry about it when you're getting ready to retire and like just for like yeah essentially forget you own it um and to your point that just that just can't be done here uh yeah I I just really changes my perspective on how I answer that question yeah and with all the bridge hacks we saw over 2022 and then you can 10x that number which is probably like 2 billion and you still don't even get to the number of centralized custodians so either have this you know fluid situation you got to constantly pay attention to or you have a centralized entity like custing it for you which VC also doesn't work so yeah stay clear of wrapped assets would be my best advice but Pebbles I know you got a cool throne for the week you wanna you wanna toss it over to you for that yeah

so we're looking at bit Dao they put up a governance proposal yesterday and they want to start buying two million dollars worth of bit token for 50 days starting on January 1st so this adds up to be like a hundred million dollars of a buyback and I think they have like a 300 mil circulating Supply so I think it's going to be really interesting to see if this does anything for the price of the bit token and I also just think it'll be a nice experiment and seeing how BuyBacks work because they don't always lead to sustainable price action it is also just an ultimate cool Throne

because bitdel sitting there with 1.7 billion dollars in their Treasury and they're like we'll just buy our token back it's fine what is uh that 1.7 billion dollars held in is it mostly like other tokens like uscc or eth that's a good question let's see if I can find it I actually just wrote a report on this so I know it off the top of my head it's like 425 million of stables and 350 million of eth and then the rest is bit so they Diversified really well but all of that came from buy bit which is I believe a singaporean-based exchange um and they were redirecting two and a half Pips of all Futures volume over to their treasury paid out in eth in usdc

and usdt so yeah I mean they are the only Dao who has that big of a revenue stream but then those were redirected to bit Burns so it's kind of a fluid situation and what Pitbull's brought up is kind of the next iteration of the buyback program so I agree I think it's an interesting one to pay attention to especially with their modular L2 launching on testnet and q1 of next year so I can for sure see something you know positive going for the bit token price but at the same time I'm a little bit wary of centralized exchanges doing weird things with tokens that they're closely affiliated with for pretty obvious reasons so it's also one I really don't want to touch but what I'm watching out for so they're buying bit back they're burning bit they're

generating income from an exchange they got 700 million in non-native token Holdings I mean that's kind of Juicy it's pretty funny to see um sort of opposites within D5 protocols so you have a bit that's just buying a hundred million dollars of the token and then on the other end you have sushi that's just absolutely strapped for cash like just cut half of their developer costs and are redirecting all the revenue back to the treasury it just yeah completely opposite situations which is interesting to see and yeah such a bad bear Market yeah there's irony in that too because bit launched and tried to do a treasury swap with sushi and the tokens are still sitting there in that contract like it's like

they never even really claimed them and I couldn't find any traces of X Sushi or sushi in the bit down treasury wallet so I don't even know what happened with that but it's funny that we're seeing these problems with sushi Swap and bit does sitting over here like let's buy back 100 million dollars worth of where I took it on secondary Dan do you have a uh cool throne for us for the week yeah I got the the Trump nft dumpers uh they got a nice little run up there I think they're 100 starting price so call 0.1 each uh ran up just shy of one eighth so almost pulled a 10x on it uh last I checked it was around the 0.55 uh range so I had a nice little pullback but still up you know 5x from mint price uh and it's pretty funny the blockworks

research put out a thread on this and I think Sammy were the one who authored this one and it kind of uh just highlighted what all went down with the nft and like you know Trump's like a 78 year old dude he doesn't he probably had very little to actually do it this launch but it's pretty funny to just kind of see you know it was pretty poorly executed nft launch um you know they used stock images that are like one for one rips from like Walmart and Amazon uh websites and it's it's just pretty funny to see like the poor execution uh and even some like you know Insider flows happening there was I think it was they minted like 100 or was it a thousand um of their own nfts back to the the Creator wallet so you know maybe trying to profit off their own uh

off their own mint but you know it is pretty interesting just kind of see how this all plays out and like when celebrities get nfts tied to their name uh you know the immediate reaction is like oh like this celebrity did this in this case Trump did this and it's like okay yes they you know signed off on it but you know Trump is not out here coding smart contracts so it's just kind of funny to see some negative backlash get directed to the person which is probably still rightful um you know like if a high profile celebrity is going to be doing things like this they they need to be doing their due diligence just like anybody else but yeah this was the the latest nft pump so if you if you were on the uh the selling side congratulations I think it's a good sign when we're sort of at

uh Peak boredom in the market that all of a sudden we have an nft launch that people are excited about even though like I certainly wasn't expecting people to actually be buying this nft but the fact we got you know little bit of a pump and some excitement around it yeah it just makes me a lot more optimistic and that really like in the next like three to six months even if we get cyber's price action on bitcoin and eth that there very well could be a big game launch big nft launch that actually does generate excitement even in the broader bear market so yeah I was just good to see something go off when everything else is pretty pretty sideways or down yeah Sean

agree there good sign and of course they launched that nft collection on polygon I'm pretty sure so yet another win for the polygon BD team getting Trump on on that on that Network so never surprises me yeah no kidding Long Live polygon BD um and yeah we can probably jump into uh some of our flip side Dash this week and as always you know shout out to Flipside they really do have the best on-chain data uh and in a time where it's becoming increasingly more important that data is free it's super exciting to see them doing things like this like I'm a huge fan of the data they're curating they have like 17 chains now uh and doing a really good job of creating data in the cosmos ecosystem So speaking of which you know we got Thor chain uh in

the interview this week and they have Thor chain data they do a great job of bringing in and curating that data their tables are are very up to date as well so looking at some ethereum data today if I share my screen here you might notice this is not a dashboard in a little bit of a different looking UI the flip side is kind of rolling out a beta UI to kind of give more of like a developer feel to um their their web web environment coding environment and a huge fan of it so far and they're doing a good job like working out the Kinks in real time so if you are messing around in this you know be aware it's a beta I think they're trying to launch the uh the full product in the beginning of 23. so I'm just around the corner but if you look here

we have a chart that is comparing the average volume share of ethereum Dex is between curve and uni swap apologies for the the colors here for the The Listener for the Watchers rather than the listeners but what we're looking at is just an average volume share and I smoothed it over a 30-day moving average just to kind of remove some of that volatility in the data curve has of 10 to 25 Mark volume share of the combined volume between the two dexes uh and what you notice is you know it's been pretty consistent on the lower end of that scale uh and there's been a couple jumps and most recently uh is this this latest move up towards 27 and you know this is kind of something the analyst team jokes

about or discusses quite a bit is like okay uni swap is by far the dominant decks it's been the it's been the ringleaner for quite some time uh will it continue that dominance going forward and you know somebody who's like really interested in curve and what they're doing and kind of building out the design uh the design space of a token and using the like they have the best executed vote escrow model without a doubt you know convex sits on top of them and has a huge plays a huge role in their ecosystem and lover hate ve tokenomics that's definitely uh so there's there's two strong camps there curve has successfully pulled it off to this point in time and it's interesting to see that you know they're kind of starting to call away some of this market share I'm curious any of you guys

have a take on you know will uni swapper Maiden the dominant decks or will will we see some some sort of like a transition uh when we move forward into 2023 and Beyond I think the answer is really whoever develops a centralized order book built on top of the decks I think that's who wins the volume and I know any swap funded one team to do that with a grant so if they get that done then maybe they keep that dominance but if not I mean I'm gonna go where the incentives are and if I have no incentive to use uni or provide liquidity on uni then I'm not sticking around I mean I don't even use

uniswap now directly I just use like a an aggregator so Tomatoes tomatoes for me I think that last Point's a great point though right like whoever throws the best price is ultimately where uh people will get routed to and you know the classic argument is yeah but uni swap has such a dominant brand name um and yes it does to this generation of users but when we onboard another million users I don't I personally find it hard to believe that they're gonna have that same feeling and now that crypto's become a lot more usable like defy today is much different than D5 two years ago and while it's still like you know feels a little sketchy sending some transactions here or there it's come a

long way in terms of UI ux so you know I personally don't think that that brand value is gonna like you have to think about how you're gonna capture the next wave of users because we're still at such a fraction you know there's like what maybe on the order of like 10 million people that are actually using D5 today yeah I guess the one thing that would make me think maybe they can keep the ball rolling is obviously their lead that they have right now but then the fee switch to discussion if that does go back to you know token stakers or whatever model they Implement to to kind of redistribute that Revenue back to token holders um I can just see like whales accumulating uni being active in governance and then placing all their trades there because they'd be making a percentage of what they're paying back

through whatever Revenue generation model it is so that's the one bull case I see but but I agree I mean there's better options out there why not use an aggregator at the end of the day I personally think uh the the one that wins is who best navigates the role of central future of eth and like uh people said I think it's gonna look more like a central limit order book than like an amm and so yeah I think there's a lot more time to go I definitely don't think um even with uniswap's market share now that it's game over um but yeah that's that's how I'm thinking about it yeah I think the one of the bigger turning points could be like uni swap I just really missed the boat on

um the transaction transaction volume for liquid staking derivatives right so staked eth is by far the most dominant liquid staking derivative and all of it that finds all of its liquidity uh on curve instead of uni Swap and so you know I think you know I think maybe I don't want to speak for anyone but I think we're all kind of in agreement in agreement that liquid staking Protocols are going to be a massive industry going forward um in the UI ux of using lsds is just such a such an advantage um and relative to having like you know having to run your own validator or anything like that so I I will I think that's kind of going to be the the bull case for other other dexes instead of uni swap is you know that's where a lot of those other dexes are where this

transaction volume is occurring for these staking derivatives and as that sector continues to grow so will those transaction volumes and ultimately so will the fees paid on those transaction volumes and so will the protocol revenue of other dexes uh relative to UNI swap so that's kind of my my bull case for other other dexes but you know I want to give another shout out to Flipside for really having the best data and making this type of analysis possible be sure to check out the show notes if you're somebody who likes to you know kind of analyze blockchain data and has some SQL skills then then uh yeah there's we got a little challenge for you to uh go through a bounty and you can earn some free usdc for doing so yeah I'd like to to take a second too to just thank our other wonderful sponsor chain analysis

they're providing all the the analytics tools that our industry really needs in order to help legitimize our industry and provide the tools for professional investors to to get active in the space they also um offer some great research in the space which is available for free on their website so I'd highly recommend checking that out if you want to learn more and they also have some great courses on all things crypto very Niche topics if you want to get really into the weeds I highly recommend checking out chain analysis for that kind of coursework that can help further your knowledge on the industry we'll leave all that stuff in the show notes so be sure to check them out sweet well without further Ado let's get straight into the interview with Chad bear Ford from Thor chain all right everybody

we're here with Chad barefoort lead developer of the Thor chain Community thanks for coming on Chad thanks for having me yeah yeah so I guess we'll just get right into it um I think it'd be really helpful if you could kind of explain to The Listener how Thor chain differs from other Bridge designs and and kind of like the different senses between the different design trade-offs yeah I mean for what I don't really consider Fortune to be a bridge uh I guess some might see it that way and that's a reasonable position to take us votes but uh when I think about bridges I think about um services that will wrap an asset and then move the asset to another chain like wbbc would be a wrapped asset that's a bridge you're creating dick and lay one asset like Bitcoin and then you're moving it to ethereum and then

like it's sent around ethereum's world doing whatever it does and Thor chains because it doesn't really do wrapped assets like this it just transfers value rather than assets and so you're basically selling your Bitcoin and you're buying ethereum right so that's why I don't consider it to be like a bridge because like a subjects exchange does this all the time I don't think anybody would consider binance to be a bridge although I guess you could make the argument but nobody thinks of it that way so like really more so Thor chain is more of a a centralized exchange that's decentralized rather than being a bridge just trying to Gap Two Chains with creating a rat Bitcoin other you know chain yeah that makes a lot of sense so I guess you're kind of like the decentralized alternative to a

centralized exchange and that kind of begs the question of you know with all the drama we've seen with FTX with blockfi and different urn products I know you guys just launched Savers vaults um could you kind of shed some light on what you think about the FTX situation how it's potentially benefited Thor chain and how it will over the long term uh well it saves me in some sense that it benefits searching I mean I don't want to see people lose their money just so it makes it more obvious and clear why something like 14 is valuable like I prefer people don't do the 10 billion dollars of their money like that's obviously awful um but yeah I mean like the the problem with with the C5 or Southwest exchanges in general is that you always are exposed to the human risk right and

humans are you know they're irrational they're corrupt they're incompetent they're and you never remove that never it doesn't matter what you do how many regulations you've thrown into the mix there's always the human risk right uh people just doing terrible [ __ ] um and FTF is just the latest like you know proof of that on a very large and large-scale way like it's shown in a way that was just like gargantuanly huge of how awful people can be and just burn other people's money to the ground it's just terrible but uh on the upside like I think one of the things that Thor chain is doing as a project is that a

lot of the services that we would see C5 own right like interesting interest on your Bitcoin or Bitcoin loans or cross chain swaps a lot of these Services were like the only place you could get them was through simplest services and Thor chain is a very unique uh protocol it's the only one trying to actually like compete against uh centralized exchanges in a meaningful way and centralized institutions like block five and you know and these kind of services as well and so like we are as a project as a community we're building new D5 protocols that have never existed before ever in the space that actually not only competes against C5 in significant ways but it can do it faster cheaper and more

effectively with full transparency L by the way and no borders as well we don't really care to if you're an American citizen or not right so like that's structurally what we're doing as a as a community and and I wish more people were kind of fighting this battle with us but I understand why it's a very difficult and ambitious goal so it's not easy it's not an easy task by any stretches of imagination but it is something that needs to be needs to be done yeah absolutely and you know you see like centralized exchanges adding support for various assets like relatively quickly um is there any challenges you know that arise trying to do this in a decentralized manner versus trying to do it like as a centralized entity uh I think we're actually um much more effective in that way than than C5 ever could be because Thor chain

is this concept called what we call Dex aggregation right and it's just really fascinating notion that that multiple dexes of multiple ecosystems can use Thor chain as a corridor to connect to each other and so every deck has access to the assets and the liquidity of every other decks in like the in the crypto space itself and so like the idea that you can go to any decks and get access to bitcoin get access to ethereum get access to some long tail assets on avax or or Cosmos or whatever you know cardano theoretically like anything right and that doesn't need to be uh be adopted by Thor chain directly it just becomes a corridor to

get from point A to point B and so like when you get to this place where every Dex has access to all assets across all chains well then how does C5 compete with that how is C5 going to like launch all these individual tokens which is very expensive for them to do right that takes a lot of money takes a lot of time a lot of vetting uh it's I mean it's a little more like hundreds of thousands of dollars of cost per token that a C5 has to spend to do that and in our case people can just create the pool on unit swap for example and then all of a sudden you have accessed from that token to every other token in the space so that like we are actually heading to it and fortunes literally plotting that

way yeah and it's pretty pretty impossible not to be excited about you know the the prospect of having a true centralized exchange like experience but decentralized um yeah and so that kind of like begs the question of like all right well if you're gonna do this there has to be sound like economic and uh security guarantees within the protocol so I want to kind of dive in on that side um and you guys kind of have like a pretty novel proof of bond consensus mechanism so I'd love to get a little bit on that and kind of touch on you know what the nodes are doing securing the vaults you know and just for the listener like uh you know the uh the way that Thor chain operates is it allows cross-chain swaps where the the node operators kind of like control these vaults which are really just Wallets on

the various chains and so um you know I'd like to talk a little bit about how that actually gets secured yeah so like um so unfortunate is its own token called roon and it actually uh is one of the best cases of why you actually need a separate token like a new token right so in order to ensure Economic Security that all the non-rune or the non-native assets that the 13 are secure people need to put up a bond of this room token and that room token needs the ability to go to zero like actually if the event were to occur where all the assets were still and all the Bitcoin the ethereum the Doge the Litecoin like all the avacs whatever was stolen then that point the room token would go to zero which is

actually a really important component for Economic Security because it will always cost a lot more money to buy the room than to just Burn It To Zero 0 and then acquire you know far less quantity of Bitcoin and ethereum and Doge and whatever tokens are on the network right and so like this is the only project that I'm aware of that actually has Economic Security of external assets right uh every everybody else in the space just basically like shrugs their shoulders and like oh yeah like the value of the pools can be far greater than the value of the bond in which case if somebody just bought enough Bond and then got a majority of the nodes and then stole all the Bitcoin all the like whatever the assets were going to be

that are far more valuable than the money they spent to get to that to that have that Bond it's just like well you've literally created an economic incentive to attack your network that there's nothing you can do about it that's not a good idea like we just recently saw with FTX according like they took like a 1.5 billion dollar like loan to attack Tara accordingly that's this is the room where people are putting around but like like there are people with big wallets with massive whales who have the time and the energy and the effort and the will to to do something if it's highly profitable for them and so this is why Economic Security is so important like we can't just assume there's nobody Rich who doesn't want to make more money that's not a that's not a bet that I would

personally want to take you know and so we need Economic Security to say like oh if you're super mega Rich you can go ahead and and spend 100 million dollars to buy 50 million dollars of Bitcoin ethereum various assets then that makes you the worst Trader in the world and you're a [ __ ] idiot you know what I mean like that's how like it just just go buy a hundred million dollars with the Bitcoin ethereum you don't need to spend all the money time and effort to like and the months that I would take to attack Thor chain to walk away with far less money that would be wildly silly and wildly dumb [Laughter] so it's really kind of important that Thor chain has its own unique asset to ensure that people always lose the more value than they ever gain

and so I guess the the count the common count argument there is okay well what if I shorted it on the other side and like tried to make the profit uh on that point a fair questions we actually really talk about this in the economic white paper which you can read we publish that two years ago or three years ago whatever hell it was so uh as long as Fortune is the primary market for the roon token this becomes completely impractical right if you get to a situation where most of the roon trading is on you know coinbase or something or something like this then you can run that potential problem right where somebody could short the token and then collapse the network and then make a profit but if if if the tail is basically whacking the dog that's what the dog wagging the tail like that's

when you can get in that problem but because they're so much incentive for incentive for people to trade on Thor chain to provide roon into this network as a bond or as an LP or whatever uh there's not much drive to put it on other exchanges you know it's all the all the incentive all the the demand centers are right on Thor chain itself right right and so talking a little more on the bond side of things right so if I'm a validator I have to post a bond and then be have a post a bond to a significant enough size that I'm then turned into the network and is that churn process exactly why I would say take a longer time to even generate the the attack against the network yeah because so the so the network does what we call a churn every like three or

four-ish days right and what that means is it's kicking out a bunch of nodes usually it's because of they've been in you know turned in for a long period of time or they have a lot of Slash points that they weren't operating their node very well or very efficiently uh maybe they didn't upgrade their version to the latest version and there's a there's a handful of things that could kind of trigger somebody to be kicked out but usually at minimum there's like typically there's like three that get younger at any given time maybe even five depending on scenarios and then new ones get turned in based upon their bond size so how larger bonds get chosen first over smaller Bonds in a sense and so if you wanted to take there's about I think there's like 86 or 88 nodes in the network today at some like distance if

you wanted to get two-thirds majority of that you have to like get your nodes to churn in and then they're eventually going to get turned right back out again so they have to get them turned back in again it's it would be a difficult process in a very expensive process because you not only would you have to get so many nodes turned in in but your nose would have to be far higher bonded than everybody else's nodes in the in the network which would just create uh an economic you know uh uh hurdle that would be you know expensive to get past right exactly and then I guess even you know on the other side of things like if you were to try to make the short on the other side it wouldn't be necessarily feasible because you'd have to short you have to borrow a token in order to short

it right and so if the economic incentive is to have all this net Rune in the network then there isn't even enough room outside of the network to to execute that trade and I'm curious so like you know Thor Chain's a cosmos chain that currently is not IBC enabled um does that play into any of the incentive is like not wanting to bring that Rune outside of the network yeah I mean there's a lot of been a lot of conversations about the value or or or risks that are involved with integrating with IBC um but that that is theoretically one of them being able to to beam your room to another uh chain which could be shorted there is a I guess a potential risk I don't want to consent to be a huge risk

I still don't think there'll be enough ruin on that other Cosmos chain to actually recreate like a significant problem to be honest with you um but I think IBC is um as a project we needed to do cross-chain bridging which is basically what IBC does like in some sense but we had a very different spec a requirement list than what IBC was trying to accomplish we wanted to be chained agnostic we wanted to operate not just within the cosmos realm of things we wanted to be able to to connect with basically any chain in the world right with very little requirements to be being placed when those chains to be able to interact with them and so like we wanted to support Bitcoin we wanted to report a theory we want support you know you know I don't know avax and and maybe Solana

and like other things because we want something much more powerful and flexible than what IBC is really capable of doing right right that makes sense and then you know recently on Twitter over the past day or two uh there's been some Anatoly uh the the founder of Solana has kind of been making this argument against the security of uh Thor chain and actually you know he is open that it's not against the economic model it's more unlike the technology side of things and I'd love for you to kind of like explain that argument a little bit because to be honest it's like very much in in developer speak and I distill that downshots a little bit yeah I mean Android and I certainly have a lot of respect for what he's trying to do so I'm not trying to throw any shade in totally or

at Solana or any of these things uh but what he's really talking about is something called rce which is like remote code execution and so that's just like a fancy way of saying uh some malicious hacker you know breaks into you know a validator's node and has then gains root access to it like owns that that server or whatever that hypothetically was talking about and to be fair he's absolutely right like if a vast majority of two-thirds majority of the validators of Thor Chains validator set were broken into right hacker got in through some you know exploit or some zero day thing blah blah whatever it might be and then own that node then that person would have the ability to

just to steal the Bitcoin the Civil the ethereum and seal those assets but that's true with like every computer system in the [ __ ] plans as well like every single one of them it's like hey if I break into all the computers and then I own it and I'm like well yeah that if I break into somebody's house then I own it too like in a second you're leaving it's like it's like I get what you're saying and you're right but like I can break into two-thirds majority not that I actually could or would but like I can break into two-thirds majority of Solana's nodes and then own it or osmosis or Bitcoin or like enter any like FBI's databases like literally like everything in the world works this way of like hey if you break

into it then you own it it's like well yeah that's literally how everything works so it's not really like to me it's not really specific about Thor Chain's design or implementation it's just like a general thing about computers are not secure if you break into them and I'm just like I yeah that's true I don't I don't have anything to say I don't have anything to say about that it's just the reality of how computers work okay thumbs up yeah yeah I know that makes sense I guess like the the the one thing to me is like Okay so let's say I took all two-thirds of Solana nodes control the network uh you know you still can't sign transactions that move funds out of users wallets and like the one Cavite with uh Thor chain is they are securing

these vaults that sit on the other networks that I guess theoretically could be drained if you did control the validators but at that point in my mind it's like okay well well broken is broken well you don't if you own two-thirds majority of the values that you don't need signatures to move funds because you own the network you can just literally just push an update that drink that moves funds from your wallet to my wallet I don't you know I don't require a signature from you to be able to move those funds I can still move those funds right and then on the Bitcoin case where because we have external assets that are not controlled by thoughts not like signed by 14 itself like it's signed by on the Bitcoin blockchain you need to develop an actual signature to move

those things and if you have two-thirds majority in the network you can generate that signature and move those funds there really isn't much of a difference uh between Thor chain and Salon in the sense like if you get two-thirds majority of the nodes on either case you can move any funds you want to any location without without any problems the difference is though to be fair to be objective and to be fair is it because Thor chain has uh like I think four or five uh Asgard vaults at like four or five different professional signature vaults you'd normally actually required it to break into I think 14 nodes that run the same uh aspective world to steal those particular funds so you wouldn't necessarily need a two-thirds majority to real estate funds you would need to get through 14 nodes which is different than Solana's case

but again so that doesn't do what we do they don't have the same like requirements they don't have the same challenges that we have and so we have a different set of things we have to worry about so you can still move funds around even if you get two-thirds majority you don't require signatures his argument that like oh full nodes won't believe it I'm like full nodes don't matter they're just like read replicas of all the data like they don't really matter the state is made by the validator set like that's the only thing that really actually matters if I want to move like Soul tokens from one well to another and I have two-thirds majority I can just I can just do that without really needing a signature right this is probably a good segue actually into one of my next questions which is okay so Thor chain

supports a wide variety of assets today you know we have Bitcoin and ethereum and down the chain recently adding uh the atom token to kind of like really break into that Cosmo side of things um and I'm just so like can you just walk us through like okay what's the process of adding a new chain like what needs to be done and what are some limitations to some chains and this is a good segue because right Solana is like one that maybe the the barrier entry to get uh Solana into the ecosystem is a little bit too high yeah so uh there's a there's a handful of things and there's docs I think it's like dev.thourcheen.com or dot org or something like this um where we document this process but the first thing you gotta do is you gotta create what's called a chain client which is the thing that basically

observes transactions and signs transactions on that new channel just call it so on for this purpose right they need to create like smoke tests which is basically a way of like making sure that all the code works and everything can spin up and work and Swap and and add the query to the child liquidity all the basics right all that kind of works and then the next part is uh adding to the what's called exchange.js which is a JavaScript library that just makes it really easy for web uis just to like add Solana like overnight without needing to you know rebuild the code over and over and over again uh and then the fourth part is just like marketing process like getting the fortune community and getting the salon Community to come together and and and inform each other of each other's uh projects and the what the value

proposition is all these kind of things is that we launch Solana with like liquidity with people actually providing liquidity to the network which would be obviously very positive uh in terms of requirements though like um technical requirements it's very very minimal um the only one that that the one I can think of is like um off the top my head is like can we generate private keys at random can I just generate my own wallet whenever I want to like that's a requirement like every blockchain supports that for example uh we ran into some problems with like we're looking into doing like the secret Network on the Cutlass chain um but they have like specific cover requirements they they require xgx like chipsets to to function uh and so we uh that creates too much of a technical

barrier for our validators to be able to run a full node of the secret Network unfortunately uh Salon is a problem because as you were saying it's very expensive it's like probably like two or three thousand dollars on Amazon to run a Solana node and that really cuts into the the revenue that the validators are earning like they have to they have operational costs and the more nodes the more chains we add the more operational costs they have to endure and then we have to make sure that the profit the yield that they generate is you know a good margin higher than the cost that cost to operate it right and so that's the challenge for Salon is it because they're so expensive it's like well is the network going to generate enough revenue from Solana to Warrant the high

cost that it would cost to validator so actually run run the note there's enough swaps can happen there's enough liquidity going to happen is there going to be enough is Anatolia going to be like you know tweeting about it and telling people they should provide liquidity into third chain or not like that actually becomes a you know one of the the uh the things to to consider but in the end like it's the network itself it's the values in itself that that dictate whether or not we add new chains or don't add new chains it's up to them they make the choices it's not made not anybody else so it's it's only the community that can make the final determination of whether or not the add Solana or not has there been any signaling done towards uh kind of like which assets are next and super curious

about if eth l2s are kind of on that list uh yes I think the probably the most likely chain to get added next would be played binance marching it's just like obviously this Mega huge uh economic Powerhouse and and hopefully there's some good like value there good like uh Capital um value there um l2s are totally possible right um both on the light like light network is possible um you know polygon is possible like all these things like technically it's kind of comical to think about it but like technically validators could use an like a Google spreadsheet as a data source if they really really wanted you know you wouldn't do that that's would be insecure blah blah all these things but like it can literally connect to anything right it doesn't have to be

even a blockchain technically speaking um but yeah they can do l2s that's something that people have talked about in the past and there's definitely some interest in there and it's a hotly debated topic of what is the next chain is it this is that that is it you know who knows and so my my thinking is that smart chat will probably be the next one and I'm hoping that Monero will be the next one after that because Monero would be huge for the industry do they be able to get in and out of Monero and centralized white without being kyc is to me that's a game changer do you believe that like adding some of these privacy chains increases the likelihood that it bring on like regulatory regulatory risks at all uh for sure it does uh the act of adding Monero it wouldn't or zcash it's not so

much the act of adding it it's more of the use of it so like if if North Korea started to push through six billion dollars through Thor chain siphoning things through Monero then I think that would that would trigger you know uh government to get more involved in that sense but at the same time like I I don't really try to think too much about what you know the meat space is going to be doing and how X person or why government would like it or wouldn't like it it's more about what is right for Humanity right like what is what is like that are the core beliefs as as our industry is about having you know self-sovereignty and the freedom of

decentralized Frameworks and public good networks to achieve whatever it is you're trying to achieve in your in your life financially or or or whatever um I don't want to I think it's morally right to Grant the freedom to be able to trade privacy assets if you want I think that's just the we had the moral High Ground Network and that the right to access to privacy exists prior to government before the government even gets minted and even existed the right to privacy already existed prior to them and so they don't really have the right to remove my sense of private privacy or anybody sense of privacy in my in my view so maybe that will happen and maybe it won't but if we're you know if we're decentralized enough uh it won't really

matter so much yeah I definitely agree with the ethos there um and I'm curious so if you were let's say monero's been on the chain and now all of a sudden like it's becomes for whatever reason it's just imagine it becomes obvious that North Korea is doing exactly that um do node operators have the ability to like uh turn off the integration with Monero at that point yep the note operates have the ability to enable or disable what the hell they want um we've only disabled one chain so far and that was Tara for obvious reasons um but yeah we have the ability to do that and and if the community really wanted to they could even like Blacklist specific addresses I I don't think we should do that personally and I

would Advocate against it but if somebody wanted to do that there's nothing to stop them if the community saw fit right so it's up to the community the community can literally do whatever the hell they want with this thing you know whether or not I personally agree with it or not so if they wanted to to take off Monero or something then they could but more than likely like to be honest with you like the Monero pool probably would not be deep enough to Warrant six billion dollar trade of North Korean funneling of money most likely uh but maybe I'm wrong about that if you can't tell we love data here at block reach research and chain analysis the leading blockchain analytics company shares this passion with us we use data

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security of the network kind of increases alongside tvl um does that do I kind of have that right um they can so if if the dollar price of room that the price of room goes up then that would actually trigger both the the security and the and the TV out to increase right uh if the TV is just increasing on its own it probably would not cause well it wouldn't it wouldn't so there's no direct cause of security increase but there's an indirect cause of hey people are LP more creating more buy pressure on the Rune asset which causes the room value to go up which causes security to go up and the same time as more tvl is added uh and and you know a greater percentage of the value is being added

to the tvl side the incentive pendulum kicks in which to kind of swings some of the yield away from the LPS and towards the nodes and as the the security increases the pendulum swings towards the you know the the the TV out of the pools right and so there's a natural incentive that kind of that pushes the yield towards the the player that we want to become more active and away from the person we want to become less active depending upon just the free market of that moment okay I see so that was going to be my question I was going to ask how do you exactly incentivize liquidity but it sounds like that's kind of exactly how you do it so perfect yeah the pendulum does so if the pools were like 100 full like they were equal sized

to the to the um to the security then the pools would earn zero percent apy and and the nodes would earn 100 of whatever the income was that the network is then generating so that incentivizes node operations like oh hey I'm making massive like yield here like I'm getting all of the E of the entire system to my wallet whatever let's buy some more room and add more Rune into the bond side and make make more money and meanwhile the The Pool Guys the LPS are basically like I'm earning zero percent yield in this thing I'm you know what am I doing here and then I'm just gonna start to leave and then this that naturally creates that impendulum to pushes back towards uh a two-thirds one-third that we try to push for and the whole design behind

that two-thirds one-third right is so that if I'm a validator if I were to like say okay you know I control some portion of these assets on these networks like if I was going to steal these assets or act maliciously towards these assets I would essentially be risking two dollars for every one dollar I could steal correct uh yes basically yeah yeah so that kind of ties back to just to how you know the whole network really is like this um economic incentives based system with the goal of creating like a trustless model right to be able to just swap acidate into asset B through the Thor chain Network and that kind of like you know that gets me into like the some of the more exciting recent developers right so we just launched the uh Thor chain Savers vaults um you know I've been watching the synth

utilization there like a hawk and and looks like uh the Bitcoin one maxed out you know in like less than a month uh yeah maybe even like two weeks I'd love to get a little background on what exactly the Sabers vaults are and kind of how they work yeah so when we launched the network um we launched with like just a regular amm and many we made some significant advancements like we don't have MAV attacks for example we use flip-based feed model which is much more efficient and effective way to charge fees for example we had a lot of significant advancements in Iams when we launched this thing but the the problem we ran into I think as a community is that if you think about like a Venn diagram right there's like two circles and then like a little sliver between the two of

them one of those circles is like people who want to earn Rune of the Rune and then other circles people want to earn Bitcoin on their Bitcoin and there are some people that will sliver in the middle that want to earn both right and that's basically what a dual LP or is that little sliver in the middle right in a matter of speaking and so we were talking to a bunch of like you know we were offering like Bitcoin yield for example and we were talking a bunch of these Bitcoin whales who were like hey come you know provide your Bitcoin into the Bitcoin pool and earn yield but then they'd say to us like well I don't want to sell half my Bitcoin into roon and then take on that price exposure the roon asset like I don't want to do that I'm a Bitcoin person I'm a Bitcoin you

know maybe I'm a maxi or whatever it might be right so we had a hard time like convincing those types of people to like provide an liquidity to to get our pools super deep and so then we came up with this idea of like how to do single-sided um yield like that you provide Bitcoin you get Bitcoin as your yield and you're not price exposed to the roon asset at all you just press exposed to just Bitcoin and we came up with this this design that Savers that we now you know launched a few weeks ago uh and so it's going to be our solution to this problem like how do we scale the liquidity in the network by offering something that nobody else in D5 land can offer and only centralized services offer like block five for example but then again they don't offer it anymore either

because they don't exist anymore they're now they're now six feet under in a matter of speaking so now like in a sense like the only place you can actually get Bitcoin yield in your Bitcoin is basically two places one is mining Bitcoin in a sense and and the other one is uh uh here on floor chain right where we offer like I think five percent of UI and so if we talk about where that Revenue comes from right so you're essentially just a single-sided LP in this scenario right like you only have price exposure to one asset in the pool where does the revenue come from well it comes from the pool itself right so like the pool is generating yield from swaps And Trades is also General from uh just from block rewards just like Bitcoin does uh and so all that's being put into the pools and that

generates some point of yield and then you get some percentage of that yield depending upon how many Savers you have in the network the Savers vaults are essentially built on top of a previous store chain uh primitive called synthetic acids can you kind of dive into what a synth is and how it's always uh secured to be or how it's always redeemable for one to one for the underlying asset and kind of like what that backing is yeah so what backs the the collateral of the synthetic of a synthetic asset is uh the pool itself the Bitcoin pool backs the synthetic Bitcoin uh assets and so it's back half by Bitcoin and half by runes so it's lived by the pool itself and so whenever you're um trading from synthetic Bitcoin to

like layer Bitcoin you're basically making a swap or a trade to the layer 1 asset and then you you know you leave with your layer one uh Bitcoin right so um the more synths that we have in the network the the more of a percentage the sense own of that pool in a sense and as since grow in value because bitcoin's price goes up by you know relative to the roon it just kind of siphons some value from the LPS to to make to make sure we've got this like this value this purchasing power required for all the synths is like the put aside and locked away for them to prove it there that they have the the value they needed to support their synthetic assets right and so essentially then like if I'm uh a

vault saver and I let's say let's say let's keep using Bitcoin for example like I'd say I have you know one native Bitcoin and I want to earn yield on this can you just walk me through the process of uh both what I experience as a vault saver so like the actual process of me uh joining the Vault and then what that looks like to me versus what that looks like to the protocol yeah so to you it's like super clean super simple you you can't get anything dumber than this um you literally just send some Bitcoin to an address that's like that's you just transfer Bitcoin that's all you do that's it that you're done nothing more and then when you want to take your Bitcoin out later you just send some dust at the at the network saying which basically the dust communicates like I

want to withdraw my Bitcoin and the network just send you your Bitcoin so for you it's just like super clean super simple you can literally do this from any Bitcoin wallet in the world doesn't matter they all support it right from the Network's perspective it's doing something much more complicated and subtracting all that complex complexity away for you so it's receiving your Bitcoin right and then it's contributing that Bitcoin that's value into the pool and then it's minting a synthetic big one like a one synthetic big one for the for your for your trade here there's a swap fee that's happening when you're when you're entering this position so you could charge some small fee for that uh but you basically are taking your one Bitcoin you put in the network and that work the Bitcoin gets added to the pool and then it mints a synthetic Bitcoin so

it gives you the claim on that liquidity in the pool to be equal to one Bitcoin so no matter what happens to the Bitcoin price it has that claim that like one Bitcoin worth of purchasing power or just like one Bitcoin is available to you right um and so while the network is is there and it's producing yield from the from the swaps and the block boards and blah blah blah these things the network will just Mint new synthetic Bitcoin into the Sabers fault right which basically just every allocates value from the LPS to the Savers it's like basically like the LPS getting like all the yield and then at the end of the block the network just says okay you got you know 100 bucks but 20 of that dollars should go to this to the Bitcoin Savers people so we're we're

gonna emit basically 20 worth which replace it just transfers value from the LPS to the Savers it's in the way of like an easy way of mathematically to achieving that goal and so while that's just generating all that Revenue you can sit there for as long as you want or as much Bitcoin as you want whatever whatever right now it's like five percent of py and then when you're ready the reverse happens when you when you withdraw you send a Bitcoin send some Bitcoin dust at the network saying I did this would just be making a request to withdraw all your Bitcoin it takes whatever amount of Bitcoin that you put in plus whatever you generated that twenty dollars we'll just say or whatever it might be and then mix a swap from synthetic Bitcoin back to layer one Bitcoin which there are swap fees that

are charged for that for that purpose and then you receive your Bitcoin on other side you do this whole thing from just a Bitcoin wallet you never actually got a Thor wallet you never really got Rune didn't need to touch it hold it whatever all happens just from your just from signing uh transactions on the Bitcoin Network this is really exciting to me because uh you know like from the day of first day I got into crypto I was like this stuff is so cool um but it's interesting to me because like I love just like the technical side of things I love the economic side of things but I'm like for Mass adoption to happen we need to simplify the [ __ ] out of this yes that's exactly what Thor chain is doing it's like obfuscating that insane complicated process Away by with literally just sending one

transaction and to me that's what like really gets me excited about this yeah that was one of our concerns about being being an LP in an amm is a complicated concept because you have to make multiple assets and then your price exposed to local assets which means you have permanent loss of shoes which can make it really conflated or hard to understand like are you up are you down like how are you performing and you're like it's just a really difficult thing to understand and so that's why we're kind of Shifting in some sense like at least some of the devs are like let's move away from the traditional LPS and provide them both sides and just move toward it's Savers as as the Avenue for most people to provide liquidity because it's so clean there's no impermanent

loss to worry about it's just like I put in Bitcoin and then tomorrow I have more Bitcoin and the next day I have more Bitcoin and the next day I have more Bitcoin there's no fluctuating yield in the sense of like oh I I'm up ten dollars I'm down 30 I'm up thirty dollars I'm down 30 like it's just like it only goes literally only goes in One Direction you're just earning more yield every day and it just goes in a single Direction which is just so uh easy to understand and easy to follow right so I think that's what we're gonna I think we're heading as a community is that we're gonna moving away from LPS along what we call protocol on liquidity to take on that role and then just allow everybody to provide Bitcoin to the network whatever assets they want and

just make the pool super deep yeah that actually leads me into a question I had I know you guys had IL protection like after like 100 days of providing liquidity is that still a thing is that something you think should stay a thing in the future what are your thoughts there yeah so the idea of aisle protection was just like we in the earliest days of third chain we wanted to remove as many like arguments or reasons why you would want not want to LP on the network right and Improvement losses is one of those like risks you take on as a as a dual set LP in any amm in the world um except for curve because everything is the same price um but um so we added that to to incentivize another reality was as we did the math I've been looking at like I think six to

12 months of economic data from the network from from from single chain chaos net was that like after 100 days people don't experience permanent loss it's like that's very low risk right um because they generate so many fees during those hundred days that whatever IL you're experiencing is not going to be greater than the actual fees that you generated the yield that you generated and so we added it in part because it's like not because it actually did anything it just gave people a sense of comfort but in reality it really doesn't actually really do all that much like it doesn't actually the network doesn't really require that much that much IL protection to be honest with you right um I think in total it's paid maybe about like three million Rune total out of you

know out of 10 billion dollars in transaction volume and 80 million Rune and bond and I think like 30 or 40 million and like it's it's a very relatively small percentage uh of that um so I think that there's now a debate to remove it to remove ILP the reason why that is because um we didn't have a method for people to get a yield on Thor chain without being exposed to Il but now we do with Sabers right so if you're if you're risk adverse and you just want to get Bitcoin your Bitcoin you want to get like less yield but less risk blah blah blah then this is your this is your thing for you jump into Bitcoin Savers right but if you're if you are risk on and you want a

higher risk but higher reward system than being a dual sided LP is probably right for you right and so we don't need to to you know um to come up with this Crux to convince people to be an ILP to be a LP anymore because we have another option for them that is that works effectively pretty well right uh so I think I think my intention my interests or my my I advocate for is just to remove ILP with grandfathering in people who are already LPS before like they they've already got the lp ILP like we've already guaranteed their ILP we don't want to strip something away from somebody that was already given it so grandfather and everybody who's like

already an LP and then new LPS into the future would not have access to that ILP right and then and that kind of is a good segue and into the next Point here so you know you talk about how there's essentially now two LPS within a pool right the the traditional two-sided double-sided LPS as well as the savers who just have that single-sided exposure and that kind of changes the risk profile of the the presence of sins or the presence of uh and Savers as well right changes the risk profile of those double-sided LPS can you talk a little bit about how exactly that changes and sort of how synth Caps play into this yeah so think about this way like um the network has um let's see I'll put this um

in a simple way as an LP you are based in some sense backing the value of the synths right like as a synth for as a synth receiver as someone who has a sense you provided one Bitcoin and the network gave you one synthetic Bitcoin minus swap fees right and if the Bitcoin price moves relative to roon in One Direction or the other that is either giving value to LPS or taking away value from LP so if Bitcoin is outperforming maroon then we need to take value from LPS to to ensure that the synth holders are are whole and that we maintain the value of their synthetic asset if roona performs Bitcoin then we basically take value from the synth

people and we give it to the LPS right and so in a sense like you can look at it as a dual Dual side of LP is like a slightly leveraged Rune position right in some sense like you're getting you're getting either more yield or less yield depending upon runes performance right and how much how much leverage there is is relative to the synth utilization of that pool so since they're like one percent there's like basically almost no leverage it's basically the same thing as if they're a zero right it's because it's so close to each other if there was 90 cents and 10 LPS well then it's like highly leveraged right I don't know the exact what x leverage it would be but like you'd be if if runes price performs

well relative asset you would gain a lot of money really fast and of course in the reverse Direction you would lose a lot of money really really fast and so if you're taking on like a leveraged position with the Rune asset versus the the other asset and the more synth there are the more risk there is for LPS in a sense the more leverage there is for the LPS I should say so taking on the Skeptics view here roon itself isn't isn't uh you know it's an it's an altcoin that uh tends to move about 2x the the uh change in Bitcoin in a given day right so if Bitcoin moves five percent you know runes probably seven to ten percent up and the vice versa is true as well right if Bitcoin

sound runes down more um so taking on a leveraged bet in in on an altcoin such as roon right like that would make some people nervous and um like because the immediate thought is okay what's worst case scenario is like let's say you know whatever for whatever reason rude crashes 75 over the course a week how would that affect the the pools and and the LPS within that pool yeah if that were to happen hypothetically the LPS would be would have more loss in in their position right some of their some of their principle might have been eaten up in some sense uh but not realize it's not realized until people actually leave right since leather leave or you leave yourself so it's like it's an unrealized loss or unrealized income depending on which

direction we're going I think like one of the things that I'm kind of fascinated by is um is that we just kind of like allow Dual side of these to become as risky as they want right to to like some high set utilization and then allow the Pol to be to be the the LP of Last Resort and so like maybe in the into the future it's like it's not even there's there's not even really any dual say LPS anymore except for people who are like really bullish ruined they want to this huge like Leverage position whatever and it's just like the P welp and Savers and that's that's all there is and if that if that's what it is then it's like a super clean simple thing like it's there's not a bunch of different products for people to worry about

they're just like you just get anyone Savers and you get your income and then you walk away and then everything else is just like abstracted Away by the protocol itself because the protocol can be bullish room like that obviously the network itself is very bullish its own asset for obvious reasons and it has a very long time view to look at like it doesn't really care about you know bull markets and bear markets it's looking on like multi-year multi-decade perspective like it's a much longer range Viewpoint than your average retail investor so it has no problem taking on you know bull markets and bear markets because if the network feels over the long term roon will you know outperform you know Bitcoin just over the like at any given time over the long term the network of the of a decade for example so the synth

caps today are 30 of the asset depth in the pool right so if there's 100 Bitcoin there can be 30 cents minted uh synthetic Bitcoin minted um does how do you feel about like how pushing that number hired is there a number that makes sense and does that change when protocol owned liquidity becomes active uh yes so um like I mentioned before the higher that synth utilization is the the more leveraged position the LPS would be taking right um and you really can't I mean you could but you don't really want to to enable the Pol to start providing liquidity uh to these pools below 50 utilization the reason why that is because if somebody

jumps in with a dollar a savings then the Pol has to dump in two dollars of room to to counteract that which means there's a dollar buy pressure and two dollars of cell pressure on the Rune asset which obviously we don't like that right at 50 percent it's a one to one it's like a one dollar buy pressure one dollar cell pressure and just like they just cancel each other out if you go further beyond that you go to like 70 centralization or 80 or higher now it's like like a two to one or a three to one in in and buy pressure then versus the cell pressure right so that that's like basically how the how the math works from uh from a high level right so but once you put it at also say we put this in the pl at 50 utilization that

means that that's that Savers can basically scale as high as it wants to all right because as more Savers enters Pol adds you know basically an equivalent amount of value on the other side meaning the sensualization stays constant at 50 even if you keep on adding more sins the synthesis will still save concept 50 because the p well is kind of adding the other side of it right in a matter of speaking you can do this forever until you get to the point where you get the hard caps of the of the network the security of the network right which is some number but like the Pol will allow the the sense to scale is far high as they would like to up until that hard cap right and so if since our 50 of the pool uh you know and since our

effectively liability is underwritten by the pool or the LPS in the pool is there a price change where um there becomes a point where like the pool is effectively like insolvent if you will it might not be the right word but where the the value of the sins outweighs the value that they should be redeemable for yeah so hypothetically if you were to see a Forex if it's a 50 Cent utilization and you receive a 4X price change in rooms value down or at its value up doesn't matter which direction or 2x down and 2x up depending on whatever uh at that point you would see that the the synth value and the pool value would be the same right which basically means all the LPS have zero value and descents have all of the value

and so there there will sits are happy is they're still happy they have sold their value but the LPS have basically have been more or less an unrealized wiped out in some sense right that's that's the theoretical uh thing now what would actually happen in that scenario is that the Pol would start pumping more value into the pools and by doing so LPS start regaining their value back right so the people is in some sense a bodyguard to the LPS that like as they experience losses the pul jumps in front of them in a sense and says I'll take some of that that losses myself and just to support the elps but even after even if they left at that point where they were zero in permanent loss protection still is

still there unless it's been turned off on them but like that would would be the backstop so in the end it is it's not even really LPS we're backstopping the value of the of these Savers it's really in the end it's going to be the reserve which is like 170 million which is I think like 40 something percent of the circulating of the supply of a roon itself right but like even if it goes this is kind of a fascinating things like even if it goes beyond that say it's a before expression we saw a 6X price change right where the network like really bad right now the value of the stints is greater than the value of the pool right and you might say to yourself holy [ __ ] we're insolvent we have all these problems the world's going to end blah blah blah reality that

actually it doesn't actually matter it's counter-intuitive that might sound because the network will still redeem your your synthetic Bitcoin for one Bitcoin right so as you start leaving the network and saying oh my synthetic Bitcoins I'm going to get back my layer one Bitcoin and leave you're still getting a one-to-one relationship the asset has not depegged in this scenario right everything is still fine in that regard and as you start to leave you push the network back towards quote unquote solvency even though it's never actually insolvent because the reserve is always there to provide whatever Capital it is the LP of laughter's word so as long as there's enough value in the reserve then then the synth value then we have nothing to worry about even if in the pool the sense worth more than the pool that actually doesn't even

really matter in the end it's not the pool that matters it's the reserve that matters and the reserve is always going to have far more than the pools because the reserve is Cap the pools are capped by the security of the network which is like 80 million room right now so you can't get to a situation where where the pools are like 200 million in in depth or whatever mathematically is literally impossible so it's very it'd be very difficult for the for the for the reserve to run out of money in that scenario right on okay so that makes sense so effectively like you know let's say like the roon asset price crashed 4X relative to uh Bitcoin like as that crash was happening the protocol on liquidity would be chipping in liquidity essentially keeping that synth utilization percentage right at 50

so like every time it Rose to 51 fall back down to 50 does that make sense do I have that right yep exactly exactly awesome and you've been so gracious with your time and so I I do want to be respectful of that but I do want to just quickly touch on thorfi lending like is that still uh something that the network wants to roll out and if you could kind of give like a just a little intro overview of what that really is yes um so leave us idea for this lending design that is very Innovative it's very experimental structurally very different than everything else we've seen in the D5 space but because it's structured so differently it allows to do things that nobody else can right Beyond just like the idea that we are an asset agnostic

or chain agnostic defy protocol so we are whatever Services we launch whether it be Savers or lending or whatever it's applicable to any asset on basically any chain more or less right so uh the fact that it supports like layer one Bitcoin loans that by itself is pretty gargantuan like that's a pretty major advancement in D5 that we can actually support layer one Bitcoin loans um but we didn't just leave it at that because that would be too easy uh we went a little further and we we designed something structurally so different than everything else we've seen before that allows us to do a loan that is zero percent interest so you pay no interest on it it has no liquidations so you even if your collateral drops below the value of

your debt you do not get liquidated you can still collect your collateral at any time that you want to wait which is pretty amazing to think about uh and then also it has no expirations as well you don't have to pay it back within a week or a month or six months pay it back in 30 years I don't really give a [ __ ] it's all fine so like it's a lending design that is that is unlike anything we've seen in defy and I don't think we've seen in C5 trackify like this is this doesn't exist in track fight either because it's not profitable for them because they they're a company they're a private entity they want to make a lot of money this is a public good Network it's a little bit different and so we can do things that nobody else can can structurally do which is really

kind of empowering and so this allows people to take out actual loans with their crypto and be able to live on that crypto and be able to buy things at coffee and houses and whatever else you want to try to try not to do meanwhile not needing to like be up all night long looking at your defy loan that's like about to get liquidated and you're not really sure and you're stressing the [ __ ] out about it or the inflation of the interest rate excuse me is inflating all over the place it's like it's fluctuating like crazy to like 10 20 30 40 whatever how it is and you're just paying these massive interest rates on something that like oh crap like I'm getting totally screwed here like those loans aren't really effective at doing what they do like they like they're

great if you want to like you know leverage up your position and do some Degen kind of style things but if you actually wanted a loan to like buy a house like D5 loans are terrible for that because they're so stressful to to have and like what if you don't will have more ethereum to pump into your collateral and you lose all your collateral and you get completely zeroed and then you're just like [ __ ] me this this sucks right and that happens people all the time like it happened to people with Terror it happened with people with like every lending platform that you can think of here but here it's so different like you always get your collateral back and that's really kind of uh revolutionary do you see Thor chain like you guys are clearly building products that are like really user friendly like

like actual use cases for real people do you think that door chain will be like the back end infrastructure and user interfaces will be built on top kind of like xd5 wallet or do you think that Thor chain will build that out into the future uh I hope the former because I don't want to be building that out I want I want other projects on the people to be building you know I don't think it's really needed for me to do it um I know that people are building writ uis around like D5 spots one xd5 four swap Thor wallet like and there's tons of them and even like the the Len the Savers product excuse me like there I know somebody's building a UI just just to allow any Bitcoin wallet to deploy like it's gonna be bitcoinsavers.com or some website let me know what the domain

is going to be but like they just basically have a QR code that you generates on the site and you just oh that's you know you take your phone or whatever or your Ledger or whatever you just like input the transaction information and Bob's your uncle right like it's going to be so clean and so simple that like hopefully Fortune just kind of Fades away into the background and most people usually have no idea it even exists right that's part of the goal like with Dex aggregation I talked about earlier but people are just swapping between you know different chains different assets they don't know if they're touching through a chain although I don't know they're using unit swaps UI to get some Bitcoin but they don't know that thought should is powering that entire system right and trustwallet just launched their integration the other day people

are going to trust wallet and they're swapping Bitcoin for ethereum for example they have no idea that Thor chains power in the entire thing but it is right so like thought you just become this like critical uh pillar of infrastructure that exists with the entire cryptocurrency space that nobody even knows exists gonna be insane yeah that's that's super exciting I can't wait to watch how it all plays out but thank you so much for coming on Chad we'll let you get to it um do you want to like tell people where they can find you real quick I mean you can find me on Twitter if you want to I'm pretty boring though there's the Thor chain and Twitter account which you can follow that and this group people in the community but like um yeah just learn more read more ask questions jump in our Discord right uh

the more you learn about this product in this protocol and what we're doing and how we're accomplishing these things I think more people are going to love it awesome great well we'll have you on again in the future and thanks for coming on