"It's Not About Fighting for People Already in DeFi, But About Bringing More People In:" SushiSwap's 0xMaki
In this week's episode we interview 0xMaki, an anonymous DeFi developer contributing to SushiSwap and Yearn Finance protocols. We talk about growing Sushi beyond its drama-filled beginnings as a fork of Uniswap, into a DEX that can hold its own as the second-most active trading platform in Ethereum DeFi. He goes into the main pieces that set SushiSwap apart with its margin trading and a soon-to-be-released smart contract suite to easily launch tokens. In the works is also an NFT trading platform. And all of this innovation is coming from a community of contributors, and not from a centrally organized team.
We talk about Uniswap V3, and he says that while the concentrated liquidity concept is interesting, he doesn’t think it will be the holy grail for AMMs and says Sushiswap is also working on a way to make liquidity pools more capital efficient —though he didn’t go into much detail on how. He shrugged off the fact that Uniswap introduced a business license to v3 and said SushiSwap wasn’t planning on forking the code. In the end he says, it’s short-sighted for DEX competitors to be fighting among each other, as they should be fighting outwards, to bring more people into DeFi, and not inwards trying to win over the people who are already here.
The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau and Dan Kahan.
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- Aave, an open source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.
0xMaki: Yeah. Sure, I've been involved in crypto since 2015. Since then I kind of lost touch with crypto until I discovered Ethereum. And then in 2017, I saw the whole kind of ICO mania, didn't participate or partake too much. In 2018, when the bear market came, started to see some very interesting projects growing. 2019, we have like, the whole DeFi kind of protocols coming up to life and 2020, where it's kind of the pinnacle with DeFi summer. So that's kind of where I took action and started to get involved more, I guess, closely with the community where I could.
Basically, I saw this project, SushiSwap, that was open to the community. I just jumped in and started to get everything moving, making sure that this was not left for dead basically. Because I think a very community-oriented project was important with very good values similar to Yearn, inspired by Yearn actually. And then here we are today, one of the top AMMs. So that's kind of my background.
Camila Russo: Cool. And just briefly, I mean, were you a developer? Did you have technical experience before going into DeFi? Or were you more kind of a finance person?
0x: I was involved in Web 2.0, mostly.
Spicy Sushi
CR: Oh, got it. Cool. So when you got into SushiSwap, that was I think one of the biggest dramas in DeFi’s short history, the whole forking of Uniswap, Chef Nomi. For those who are listening, SushiSwap is a fork of Uniswap, right now the biggest automated market maker or decentralized exchange in the space. And SushiSwap forked, or copied the code, and added a few things, including a token which Uniswap didn't have before. And this rallied a lot of support, and also a lot of money.
And then when Sushi was kind of at the peak of its post-fork success, Chef Nomi, he was one of the people who started this project, he ran off with the funds, with $14 million worth of ETH at the time, but then returned all of the funds again. So this was just, I mean, it was like a soap opera. I remember covering it. It was incredible, the story, completely crazy.
So I would just love to have the opportunity to hear the side of the story from you. I know it happened, kind of it's like ancient history six months ago, or however many months ago for DeFi. But it's still to me one of the most riveting stories in DeFi. So we don't have to kind of talk about this too much. But I would just love to hear from you how that was like, especially the moment when you saw that Chef Nomi had run off with the funds?
“...back then, I guess it was the most crazy story we saw in DeFi for the year. But since then, we kind of evolved stronger than just a fork.”
0x: Yeah, it wasn't expected. But I think everything has been sort of mitigated, and we kind of grew stronger from all of this. This is kind of past history, and to be honest, it wouldn't be fair to just think about Sushi with just, I guess, the initial story. It's way more than a fork today, we're more than 14 people full-time. We have a very broad suite of projects that are emerging.Just two weeks ago we had Kashi finally launching on mainnet, which is very exciting to me. And then we have MISO coming up, probably end of this month, if not, in May.
So yeah, I mean, back then, I guess it was the most crazy story we saw in DeFi for the year. But since then, we kind of evolved stronger than just a fork. And I think that with our new AMM coming very soon, we're going to prove that this is more than just a fork. And the market is pricing us like it too.
Differences from Uniswap
CR: These are definitely points that I want to talk about. This idea of that you are more than just a fork, I'd love to hear the breakdown of this. So the obvious thing when the fork first happened was the token, now Uniswap has its own token. But what are the main differences with Uniswap? Like, what would you say are SushiSwap’s biggest innovations right now?
0x: If we're talking just about the token, Sushi has the fee switch activated, which is basically like accruing value to Sushi holders. Aside from that, right now we're seeing innovation on the front of Kashi, where we're talking about money markets for DeFi. We're fixing the oracles at the moment so we can enable it on any single market that is on Sushi. Because you know, this is kind of the very key aspect, I would say, in making sure that it is safe and secure, which is not very easy to do, because you need very efficient, very accurate price data. So we're working on this.
We did start with Chainlink markets to make sure that we had a very accurate price oracle. And then we're going to be expanding this as soon as possible. What is very interesting is at the moment, people can create their own pair, but this will become trustless very soon. We're thinking by end of the month, we're going to… Basically, the thing is we were thinking about launching, I guess, later but we decided to launch earlier with a rolling basis update. So right now, we have a limited amount of markets, I think it's 10 if I'm not wrong, enabling you to long or short with leverage.
“But this is what is interesting is the innovation doesn't come necessarily from the very top of the team, it comes from the community. They're asking or voting on what they want to see happening and then we execute following their lead basically.”
So that is one of the innovations we have recently that is being worked on by another team instead of Sushi, which is basically like the perfect launchpad for every single digital asset, whether it is NFTs, whether it is a tokenized object, whether it is a ERC-20. This is the perfect place to conduct, I would say like a presale, or something sooner. So a sale like the Hashmasks that went quite viral in the ecosystem could be enabled by MISO with a tranche-style option. This is the sort of innovation we're working on and pretty much at the moment, that is what’s in the pipeline.
So if we’re talking about what is going on for Q3, we've been seeing a lot of traction in the NFT segment, took some interest by our community. There has been like a proposal to start working on where they charge for NFTs. It’s still like the ideation process. But this is what is interesting is the innovation doesn't come necessarily from the very top of the team, it comes from the community. They're asking or voting on what they want to see happening and then we execute following their lead basically.
Sushi Structure
CR: So it's interesting what you were saying about all the innovation that's going on in this SushiSwap ecosystem and how that innovation is happening is also interesting. Because, I think, we're seeing different models of managing protocols arise. One is a more traditional model of a centralized company building a decentralized protocol, that's kind of more of the Uniswap, Compound model. But then there are other more community-led models of building protocols. And I think Sushi is an example, Yearn is another example, where all these proposals and changes are coming from the community instead of from a centralized structure.
So obviously, that has its pros and cons. I wonder how you're experiencing this type of work. Like does it get to a point where it's just hard to get things approved, too many voices? Maybe, is it hard to get quality code shipped if there are just too many chefs in the kitchen, I guess, is a good analogy? It might get hard to actually cook something or make a Sushi roll. What do you think about the difference between the two approaches?
0x: I think what is very interesting and what we see kind of forming up inside of Sushi is, we have distinctive teams actually working on different products. So you can see MISO, it's being built by a very different team than the team building Kashi. Ultimately, all of them are adhering or leveraging our own sovereignty, our guidelines that we've created in-house, to make sure that everyone is on the same page. We're also using the same stack for the front end, and so on, to make sure that everyone is able to switch seamlessly between each other’s project.
And then, so all of these SWAT teams, if you want to call them, are all dependent on a central “design department” or PM, kind of making sure that all the gears are well oiled up so there's no blockers or anything like this. So ultimately, we're just seeing a very different type of coordination happening.
And I'm actually very surprised to, I've seen someone working on solving this, and it's called Coordinape. It's the first product here you see that it's kind of adapted to this new reality of you don't know who you're going to be working with in maybe three weeks or four weeks potentially. Because some people just want to get involved but don't want to full time. So they're literally just coming in being “contractor” for two to three weeks and Coordinape is solving all of this.
“...all of these SWAT teams, if you want to call them, are all dependent on a central “design department” or PM, kind of making sure that all the gears are well oiled up so there's no blockers or anything like this. So ultimately, we're just seeing a very different type of coordination happening.”
So it's very fascinating to see people finding solutions to problems that were not a thing back then, or I would say, in their normal work environment. But it can get very messy to kind of recruit all of these Telegram channels, Discord groups, and so on and so on. Ultimately, it's part of the, I would say, model that those are at the moment. And once we have a full, perfect blueprint, everyone else is going to be using it. But at the moment it’s still in the experiment phase, everyone is figuring out what they can do, how they can do the best way and so on. So it's less efficient, I would say, but we're getting there. We're getting where it should be done. So ultimately, it's the same result.
CR: I mean, it's definitely fascinating to see these new business models or just working models emerge from this decentralized ecosystem. And yeah, maybe being a full-time employee for a company is something of the past or something that's simply not really part of this new era, this new kind of finance. But instead you are a contributor, not an employee and a contributor to many different projects, not a single project.
And I mean, the way that payroll is run is different, the way that teams organize is different. It's just really interesting to see this kind of play out real-time and how teams are organizing accordingly. But if it's not more efficient, why do it? Like what's the main reason for working in this way, in this kind of DAO system?
0x: No one in my city has that much experience. So I think that you're limiting yourself if you are trying to hire locally. You can hire “remotely.” But for this type of project, just setting up a legal structure is quite the hurdle. It's very difficult. I don’t see why would we be building the future of finance from companies? I think DAOs are the future too. And ultimately, like I said earlier, we're still figuring out all of the details. And you know, like, everyone is sort of not being happy with the current context of Snapshot and so on. But it seems been working very hard in making sure that Snapshot actually becomes a very good way of managing DAOs where you don't need… Like it is “as effective as on-chain” bonding with a Compound governance contract or the Aave one.
“I think that you're limiting yourself if you are trying to hire locally.”
So I think we're going to get there. And I do think this is the best way to work, to gather people who are passionate about getting involved in the space, there's way less barrier. We don't care if the person is from India. We don't care if the person is from Europe, South America, etc. Everyone can be contributing, and there's no problem with getting the person paid, or else via bank. So, that's why we're doing it.
Anonymity
CR: Yeah, it's awesome. And last question on this topic, but why be anonymous? I mean, there's obviously kind of like the regulatory side to it. But yeah, is it just that, just reducing risk or just something else?
0x: It's more simple.
CR: More simple for what?
0x: For everything.
CR: Okay, I guess you don't want to talk about why you decided to be anonymous? Alright. So on the other kind of innovations that you mentioned, the token and fees accruing to the token, Kashi, would love to dive into Kashi, can you explain what this is?
0x: Sure. So Kashi is the first product built on top of BentoBox, with BentoBox, which basically acts as a new infrastructure layer for every new product Sushi is going to be building moving forward. What is very interesting is that this is very gas efficient. For example, doing a transfer on Kashi is almost gasless. It's very low. How we can leverage this is that all of the assets are sitting inside of the BentoBox contract. So Kashi is built on top to enable margin trading, where you can basically supply assets and you can borrow assets.
What is very different than I would say something like Cream Finance, which is also part of the Yearn ecosystem, is that we're optimizing for an interest rate of 80%, meaning that this is for a very short term, speculative purpose. It is not meant to basically leave your assets in there for a very long period of time or optimizing for TVL. Like it's not the more TVL in that matters, it's more about which assets, and the assets which are in demand are used to long or short it.
So someone that wants to take a position, a very new, shiny ERC-20, can do so by creating a market on Kashi and supplying a very tiny amount of the asset then basically making the APY be very high so people are incentivized to supply in there. So that is the idea again of Kashi.
“So someone that wants to take a position, a very new, shiny ERC-20, can do so by creating a market on Kashi and supplying a very tiny amount of the asset then basically like making the APY be very high so people are incentivized to supply in there.”
CR: Okay, so enabling margin trading on ERC-20 tokens in a way that lets users take long and short positions on these tokens and it's optimized for short-term trading basically. Right?
0x: Exactly. What is very important is that there are already lending pairs. So anyone can create like a pair, like I just said. It's up to the user to choose which one is safe to supply. And also, all of the risks, the LTV [loan-to-value] is up to the creator of the pair. So you can have very aggressive lending pairs where it would be unreasonable to have the same on, let's say, Compound because there's a high risk of liquidation. In Kashi, some pairs can fail and it won’t affect the overall system, the overall health.
We also have flexible oracles, so they're both on-chain and off-chain. At the moment, we're only at the Chainlink oracle enabled, which basically contributes to the liquid interest rates that I was talking about earlier which target 70-80%. And all of the suppliers that can be used for flash loans to provide extra revenues to suppliers basically, and also be voted to be supplied somewhere else, ultimately, like a percentage. So for example, all the Sushi deposited in Kashi or the BentoBox, I can use this strategy to be staked in xSUSHI, so they can earn a portion of this Sushi deposit in xSUSHI. So that's the idea behind BentoBox and Kashi.
CR: Oh, my God, it sounds super complicated. Like how are you able to make sure that the tokens that you're depositing on Kashi and BentoBox, I mean you're using them twice?
0x: Yeah, these are voted on by the community and this is only a conservative LTV. So only 20%, for example, of the Sushi on Bento can be lent out. It's very similar to the Balancer V2 model, where some assets can be lent on Aave while they’re not being actively used.
CR: Right. What's the risk here? What happens if those assets are suddenly, there's some huge price swing or tons of market volatility and suddenly, Sushi needs those assets that are being lent out somewhere else?
0x: So this could only happen if people wanted to withdraw all at the same time. Right?
CR: Right.
0x: And that's why there's only a 20% LTV. So only 20% of all of the assets can potentially be lent outside and they can achieve at any moment right. So in theory, this is not a problem because they're they're in a very safe strategy. So for example, for xSUSHI, it's for Yearn, it will be staking the governance contract, and so on and so on. Like, we won't be seeing Yearn strategies being involved, because that could be risky. So it's very conservative. It's there, but it's not like something that would cause any kind of risk to the system itself.
MISO, A Smart Contract Suite
CR: Okay. And then what about MISO, you mentioned it will be launched pretty soon, you said end of the month, what's this about?
0x: MISO is actually completed at the moment code-wise. We're waiting for the security audits. We did a Q1 update recently on Medium that I would recommend everyone to read about, where we put an auditor on the retainer of three months. So they will be auditing pretty much every single new contract that we're putting out, whether it is Masterchef V2, limit orders...
In this case, MISO is basically a launchpad for any single ERC-20. And people can create their own kind of presale leveraging the various models. So let's say you want to be launching a new asset or a new project using a Dutch auction, you can do it on MISO. You can also go for a very regular model, similar to what just happened with the Genesis event on Fei protocol, so where the amount of ETH gives you a similar amount of token and then you can do preswaps with it or you can just keep it as is.
“In this case, MISO is basically a launchpad for any single ERC-20. And people can create their own kind of presale leveraging the various models. So let's say you want to be launching a new asset or a new project using a Dutch auction, you can do it on MISO.”
So that is what MISO enabled. Potentially, can be used for NFTs too. For example, you can see tranche type of sales, where the first 100 contributors, or investors are incentivized in a different way than the last 50. So, this is all possible with MISO. And what is very interesting is, it is built in a very open way so people can create their own recipes. We call them recipes internally. So a Dutch option is a recipe, and so on and so on. And what is powerful is that you can also opt-in for a liquidity mining program right in the MISO interface, you can opt-in, for example, what percentage of the token be invested by the team, and so on and so on. We make it very easy to launch these new assets.
“...what is powerful is that you can also opt in for a liquidity mining program right in the MISO interface, you can opt in, for example, what percentage of the token be invested by the team, and so on and so on. We make it very easy to launch these new assets.”
CR: Oh, cool. So it's kind of like a drag-and-drop token issuance system?
0x: I'm not familiar with drag and drop, but…
CR: Just like, an out of the box thing, you know. You don't need to do so much work, you put the pieces together, and then you're done.
0x: Exactly.
SushiSwap’s Valuation Versus Uniswap’s
CR: Cool. So I was looking at the SushiSwap metrics versus Uniswap. And was seeing that Uniswap is doing about three times the volume that SushiSwap is. It has two times the liquidity, it’s currently collecting three times the fees. But looking at the Sushi market cap versus Uniswap, the difference is huge. So Sushi is at about $2 billion market cap, and UNI is at around $16 billion. So while on the other metrics, UNI beat Sushi by like 2x or 3x by market cap, UNI beats Sushi by around eight times. So wondering, why do you think the market is pricing SushiSwap this way,?
0x: I don't really focus on all the price actions. I focus mostly on volume, TVL metrics. So I couldn't answer why the price is behaving this way, perhaps it’s the fact that we are distributing tokens very heavily to the community. We want to make sure that everyone can have a say in the project. So we're highly incentivizing various communities and so on. Maybe it's because the price is closer to its real value. I, personally, have no clue and am not interested in all this speculation thought.
“I don't really focus on all the price actions. I focus mostly on volume, TVL metrics. So I couldn't answer why the price is behaving this way, perhaps it’s the fact that we are distributing tokens very heavily to the community. We want to make sure that everyone can have a say in the project”
Going To Whichever Chain Users Choose For Scale
CR: Alright. It makes sense. So, right now, obviously, one of the main problems for using DeFi is the high Ethereum gas costs. A lot of projects in the space are migrating to, or thinking of migrating to Layer 2, others are building on other Layer 1s. What are SushiSwap’s plans on this?
0x: Right now we deployed on every single side chain or EVM compatible blockchain. So, basically, we are waiting to see where the community is going to be moving to. We are seeing a lot of movement to Polygon at the moment. We're very interested in various ecosystems, we're waiting for Polkadot to launch. There is a proposal that was posted very recently that passed about Sushi joining forces with Raydium and Solana to basically enable SushiSwap there. We're about to finalize, talk and work with the team to see how we can leverage each other’s knowledge and communities.
But ultimately, we're not going to be the one saying where we're going. We're not going to be conducting any purity tests. If people want to go on Binance Smart Chain, so be it, we're going to be there for them. But if they want to leverage something else, we’ll be happy to be there too. So that's how we can approach the whole scalability problem. I think the most innovative solution or exciting ones like Optimism, Arbitrum, and zkSync are not out yet. And once they are, we're going to see actual liquidity moving to Layer 2.
Right now, everyone is still on Layer 1, even if there's an alternative. I think it's mostly a security problem with xDAI, with Polygon and so on. That's why people don't want to “move there.” Maybe they've not been incentivized enough. Who knows? I cannot speak for everyone, but the majority of project composability and everything is on Layer 1.
“But ultimately, we're not going to be the one saying where we're going. We're not going to be conducting any purity tests. If people want to go on Binance Smart Chain, so be it, we're going to be there for them. But if they want to leverage something else, we’ll be happy to be there too.”
CR: Right. So it seems like SushiSwap will go wherever the community says? But you're deploying to as many Layer 2s and Layer 1s as possible to be ready for whenever that happens?
0x: Exactly. I mean, we're starting to see that happen a little bit on Polygon because of Aave opening up and moving there. We're already on Polygon. I think we've been there since early March, if I remember correctly. We're not providing any incentives at the moment, mostly because, like I said, all the action is still on Ethereum mainnet, on Layer 1. But once we see traction there, we will potentially start a proposal for incentivizing various layers, or perhaps move when some of the new apps will be only on Layer 2. I have no clue what it’s going to take to bring everyone over there because that's what everyone wants. But nobody seems to be making any move. So we’ll see. I mean, I don't have the entry. If I had it, I would be working on it.
“I have no clue what it’s going to take to bring everyone over there because that's what everyone wants. But nobody seems to be making any move.”
CR: And you were saying you think that is because some of the most viable or interesting solutions aren't totally ready yet, like Optimism, zkSync, those are not 100% ready for primetime, I guess?
0x: Yeah, security is, I think, the most important aspect of all these Layer 2s or sidechains since it's not 100% safe at the moment, I think that's what we're seeing some people are going to more actively.
CR: And interesting to hear your take on cross-chain, like it seems like you're not, like other Ethereum projects, so tied to the idea of staying 100% on Ethereum and even opening up to something like Binance Smart Chain which some projects would definitely not consider. Interested in your broader view here. Do you see a cross-chain DeFi winning out in the end, a multi-chain future?
0x: I have absolutely no clue on this. I'm not closing the door for anything. Personally, I hope we're not moving towards a future where Binance Smart Chain is the dominant player. That would be very ridiculous. But I do think if Ethereum can scale, and I think, zkSync, and the other solution, Arbitrum, like they were going to, depends on the, they have all these other kind of Layer 1s probably going to die from it, unless they have like a very competitive aspect or very key builders in their ecosystem, which I'm starting to see on Polkadot. I see some very interesting individuals building there exclusively with a very good philosophy.
On Solana, I mean, we're starting to see one or two projects getting traction. So if one kind of heard about the COPE airdrop. People are starting to pay attention to other projects that could potentially not be happening on Ethereum, mainly everything related to, high-frequency trading. But aside from that, I think it's going to be perhaps a multi-chain future, but very niche, I think, where everything is happening on Ethereum, and more specific applications like NFTs are on Flow, for example, or I don't know.
“...I think it's going to be perhaps a multi-chain future, but very niche, I think, where everything is happening on Ethereum, and more specific applications like NFTs are on Flow, for example…”
Personally, I'm not a huge fan, but I can see it happen. And I can see that happen. And I'm not against it. Ultimately, as long as we have a new way for finance, I'm going to be happy, and if it is decentralized and censorship-resistant. That's all that matters.
“Ultimately, as long as we have new financial whales for finance, I'm going to be happy, and if it is decentralized and censorship resistant. That's all that matters.”
Why DeFi Matters
CR: And maybe you can dive into that a little bit. Why is this new financial system winning or developing further important to you? Why have this more open and permissionless system? Does it come from your own experience with traditional finance, what is motivating you to be building in this space?
0x: Interacting with traditional finance is awful, I think, and we are self-sovereign individuals fighting for this. So that's pretty much it. I don't think I need to go at length to say why it is so important. Sending a transfer should be very easy between two individuals in this world and there shouldn’t be intermediaries trying to block us in any single way.
“Interacting with traditional finance is awful, I think, and we are self-sovereign individuals fighting for this. So that's pretty much it. I don't think I need to go at length to say why it is so important. Sending a transfer should be very easy between two individuals in this world and there shouldn’t be intermediaries trying to block us in any single way.”
CR: Cool. I wanted to also talk about Uniswap V3, the big kind of innovation here was concentrated liquidity. What were your thoughts there? Do you think this is a good step forward for AMMs? And do you foresee implementing any of these ideas to Sushiswap?
0x: I think it's very cool. I mean, the Uniswap team have always been kind of innovating in the space. They've been here for quite some time. Uniswap V3 is very interesting. The problem is right now we can’t see it behave in action. Right? So we don't know exactly how it's going to be looking like. I think in one month or two months when more people are using it, they’re leveraging it, we’ll see how the LP behave, and so on is going to be very eye-opening. In the meantime, I don't think it makes much sense to come in from something that is not “available” to play with. But the capital efficiency that they've been, I guess, working on is very nice.
Like you know, the NFT part for LP token is something that I found strange at first, then the more you kind of dig in, I guess all the ways developers can leverage it, it's interesting. They thought about a lot of things for sure and that's why it took so long. Ultimately, it's all going to be about how long those assets are going to be behaving with all of this LPs. Are we going to see more “sophisticated” actors preying on lazy actors and so on? Who knows?
I think it's too early to comment on it. And I think it's going to be interesting with Uniswap V3 with Layer 2 on top is going to be interesting. But I don't think it's the holy grail of AMM. I think it is a good step in the right direction. For Sushi, we're going to be leveraging some sort of capital efficiency too, but we're not going to be forking any of the code.
“I think it's going to be interesting with Uniswap V3 with Layer 2 on top is going to be interesting. But I don't think it's the holy grail of AMM (…) For Sushi, we're going to be leveraging some sort of capital efficiency too, but we're not going to be forking any of the code.”
CR: Well, and right now, Uniswap has made it almost, I guess, illegal to fork the code with its new copyright. What did you think about this? Having forked the original code of Uniswap, the fact that Uniswap is now introducing this kind of blocker for future forks of the protocol?
0x: It doesn't matter, I think. Yeah, it doesn't matter.
CR: Because you weren't thinking of forking V3 anyways?
0x: Nope. Nope.
CR: Right. So can you tell us more about this capital efficiency that you're planning for Sushiswap?
0x: Our developer is going to be posting about this very soon. So I'll let him to do the whole kind of technical legwork.
CR: Okay. We'll have to wait then. You also mentioned work with NFTs on SushiSwap and integrating NFTs somehow. Anything else you can kind of, any details you can draw on that?
0x: I have no clue at the moment what the community decided on or finalized on. It’s mostly going to be aimed at making NFT easier to “trade” after they've been auctioned on potentially MISO.
The thing is, there's like very different type of NFTs. Right? There's like the generational one where there's like multiple thousands of units. There's the one on ones. Now we're seeing people actually working on fractionizing the one on one. Fractional.app is one of these projects. We're seeing projects to index of NFTs. I think that at this point, there's enough kind of action and traction in the NFT space to be an actor.
“ I think that at this point, there's enough kind of action and traction in the space to be an actor.”
And the proposal has been put up, I think, one or two weeks ago. It's too early I think to even talk about it in a serious way until we have like some code written. Like, we have code for MISO. We've called for limit orders. But for Natto, it's still just an idea, I guess.
CR: Okay. Very cool to see so much innovation, even on NFTs which just recently kind of blew up. I'm really interested to see how they will fit into just purely DeFi protocols, mixing NFTs with DeFi and how to make these things interact.
0x: Yeah. I mean they're going to be so relevant, even if the art part like you said just blew up. But ultimately, the LP position of Uniswap are going to be out and we're probably going to be using more and more of them for actual DeFi or financial purposes. So we're positioning ourselves to make sure we are there.
CR: So interesting how kind of in this new Web 3.0 world everything starts to become money. Like the lines between what's finance, what isn’t finance starts to become blurry when you're interacting with blockchains which have really value at their core.
0x: Totally agree. I think what was very nice about the NFT part though, a lot of traditional artists that are not necessarily involved in crypto got to know about what is MetaMask, how to mint a token in NFT, etc, etc. And I think people are overlooking this aspect. I think a lot of people have a bad stigma of crypto. People just think Bitcoin, I missed the boat or the number will go up, and so or a bubble. NFT, that was the first time they heard about this concept. And I think that was very novel.
And that's why people get excited again about this whole kind of universe. And then they come in with a, I believe, like, a fresh mind and they see oh, now we have DeFi. What is DeFi? Oh, that's not Bitcoin. That's not as boring. Oh, this is actually a way that I can earn on my US dollar. Oh, I can take a loan against my own assets. See, that's like, what I think was the most interesting about part of the NFT craze, not just this obviously. But fascinating…
NFT fans “they come in with a, I believe, like, a fresh mind and they see oh, now we have DeFi. What is DeFi? Oh, that's not Bitcoin. That's not as boring. Oh, this is actually a way that I can earn on my US dollar. Oh, I can take a loan against my own assets.”
CR: No, I agree. Yeah, it was awesome to see people who were never interested in crypto before take a second look and participate with the space. It's like, we got a whole new wave of creators and artists getting interested in crypto. Where before it was mostly, like, speculators, traders, people, like sound money kind of digital gold people. So we're getting a whole new wave of newcomers into the space all because of NFT. So it's pretty cool to see.
And that makes me think of, Sushi, correct me if I'm wrong, but it seems very much targeted to kind of the DeF degen. Like, all its offerings are very much highly speculative or at least require some level of risk or technical knowledge or at least financial knowledge.
Is it on your roadmap to start targeting a more widespread audience, like a more newbie audience who maybe doesn't want to take the huge risk of yield farming and wants to take safer bets into DeFi or are you going to stay loyal with your degen audience?
0x: I don't see how we couldn't be able to get it... I think an interface for people that are like beginners and more another one for more pro people. I think right now, Uniswap has 50,000, 90,000 users monthly or something actively kind of using the Dapp. Sushi has 2,000 or 3,000. We're making twice, two times less volume or something like this, you said, metric-wise.
The way we're thinking about this is we're going to be making sure that a hosted or custodial wallet app, that it’s easy for these users to use Sushiswap in the future, so integration with things like Torus, I think, that's right name. I’m not 100% of it. So making sure that for them, it is as if you were signing up for an account for any single kind of web 2.0 website.
CR: Oh, interesting.
0x: Yeah, want to make sure that we democratize this. With MetaMask login, it’s like, I don't know how to use this and my trade is not going in. Can I purchase with credit? No, I cannot. See, it's still very complicated. And people that I meet for the first time that are not into crypto, you have no choice, but to send them to centralized exchange at the moment.
There's absolutely no way a DEX can compete with a centralized exchange at the moment. Is this ever going to change? I think so. But we're still a long way away. It's going to be a long way, I think, a few years, at least, mostly because we're trying to build new financial rails while they're still in the old system. And there's like a very complex regulation aspect here that I don't want to dabble into, because each time I talk about compliance, my brain is losing cells and so on. So I try to not.
But in a way, right now, I think we have enough traction, and we have enough projects coming up to keep kind of catering to this degen audience, and they are actually very savvy user, they’re power users and not being, they’re the one who understand all of this the most. Very valuable individual and community members lobbying, and ultimately, they're going to be helping us shape this, I guess, onboarding for newbies in the future.
We are conducting user research for many of new UIs that are being developed. And the truth is, UX in DeFi is really difficult to get right in my opinion, like in a way where people are not savvy with Ethereum or MetaMask and so on. But even then making them store your money on their cell phone and so on, it's not obvious for everyone. So, we're going to get there, I think but it's going to take some time.
“We are conducting user research for many of new UIs that are being developed. (...) But even then making them store your money on their cell phone and so on, it's not obvious for everyone. So, we're going to get there, I think but it's going to take some time.”
CR: Yeah. No, totally right. So I think you're doing what most of DeFi is doing right now, which is focusing on DeFi native, the trader who can better assess the risk, who has just more experience in the space, who already has some capital to risk in DeFi, and they will, I think pave the way for the more mainstream user once the whole system is stronger.
But interesting to see that you're already researching and making headway on this, and I think those fiat on ramps, like Torus, or others are just easier ways for non-DeFi natives to start using Sushiswap on other DeFi apps will be exciting to see how more kind of mainstream users start to interact with these things.
0x: Yeah, I think there's enough room for multiple DEXs too… It's very important to see how much of liquidity being spread over. Uniswap, Sushi, Balancer, Bancor, a lot of others are coming up, I'm pretty sure on other chains too. So it is very key to understand we're not fighting inward, but outward; we want to bring more people inside this ecosystem. It's not about winning just inside DeFi, like that would be so closed-minded, or short-sighted, I think. It's really more about like, making sure that people can have like all these opportunities.
“It is very key to understand we're not fighting inward, but outward; we want to bring more people inside this ecosystem. It's not about winning just inside DeFi.”
Right now, they're probably not going to start on Ethereum sadly, they’re going to start on other sidechain which is disappointing, but hopefully, we're going to be able to scale before all these newcomers are onboard, which I think, by the way, is just the beginning right now. The day we're eating more than $100 billion, we’ll be fine. It's just going to be the start.
“Right now, they're probably not going to start on Ethereum sadly, they’re going to start on other sidechains which is disappointing.”
CR: Totally agree. Great. Then to wrap up, I'm interested in what about Sushi that's being built right now or even just in DeFi in general, has you the most excited, like what are you looking forward to seeing shipped?
0x: Being shipped like in DeFi you means or infrastructure-wise, what is?
CR: Ether like just anything that you've been waiting to like see?
0x: Yeah. So it's very interesting to see algo stablecoins coming back into the spotlight. It's been writing a lot of ink lately for good or bad reasons, doesn't matter. I think all those stablecoins are very fascinating because you're kind of… Right now, most of DeFi is running on stables, that are “not necessarily “permissionless.” So this is quite interesting to see, identity and insurance is also very nice project. Bright ID which has not taking enough traction yet is fascinating to me. The day we're kind of solving identity, it's going to be very useful for cyberattack and so on. And so like everything that worked governance, I'm still waiting for, I guess, the perfect on-chain way to do everything, I don't think one token, one vote is the way to go. This is very prone to governance takeover by whales. So we're going to find something, I do know that there's a project like the example they’re experimenting with this good reputation, and also tokens and so on.
Ultimately, I think the next thing that I would like to see built is something that I don't even know off myself that we're going to see popping up in maybe two-three months by someone that is hopefully anonymous.
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