🎙 "We Said Let's Start With Uniswap and See What We Can Unbundle:" Pranay Mohan of Hashflow

In this week’s episode, we talk with Varun Kumar and Pranay Mohan from Hashflow, a new decentralized exchange that wants to unbundle Uniswap. What this means is, they want to keep the non-custodial side and the liquidity pools, but instead of finding prices with smart contacts and a formula, they use market makers applying their highly specialized strategies and algorithms behind the scenes. Anyone can become a market maker, and some may open their pools so that others will be able to share their capital in exchange for a portion of trading fees. Their bet is that they will combine machines and humans in just the right way, to provide cheaper rates at lower prices.

We talk about their launch, their upcoming token, and more broadly, we dive into their big vision for Hashflow and DeFi —and it's that one day all of the world's liquidity will flow through open networks.

They explain why they didn’t build on Layer 2 -- and it seems like these founders are cautious enough about the state of scaling solutions that they decided to hold off until they’re fully convinced.

We also got philosophical, talking about the history of money and how crypto allows us to break away from a debt-based system that’s forced upon us to a voluntary, incentives-based design where each community can choose and experiment with monetary theory and policies, and manifest that into code.

But first we get into how these aerospace and chemical engineers got into building a decentralized exchange.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau and Dan Kahan.

🎙Listen to the interview in this week’s podcast episode here:

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🙌 Together with:

• Zerion, a simple interface to access and use decentralized finance
• Balancer, one of the leading DeFi automated market makers (AMM) for multiple tokens. Dive into their pools at https://balancer.finance/!
• Kraken, consistently rated the best and most secure cryptocurrency exchange, which can get you from fiat to DeFi
• Aave, an open source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.

Varun Kumar: Absolutely. Thank you so much for the kind introduction and I'm super excited to be here. So yes, I am the founder and chief entertainment officer at Hashflow, so for entertainment value. So that's it. Yeah, the story is quite interesting. So before crypto, obviously, I was an engineering student studying my Ph.D. at Stanford, and ended up never doing my Ph.D., and joining the industry and becoming a big boy. And then in the interim, the course, I think I met a friend called Ric Burton in a hot tub, and that set the premise for my journey into crypto.

Camila Russo: That sets the tone pretty well for crypto.

VK: Yes. So it was one of those things in San Francisco, we’re sitting there and Ric said, you should look into Ethereum. Like, you know, if you're building a satellite system, I'm pretty sure you can figure out Solidity. And I'm like, that sounds interesting, but where do I begin, right? And that's how the discussion started, and then it went into the whole notion of money and such. And then that took me down the rabbit hole, just the discovery of how money works.

My first realization was, I had no idea how money works. I'm like, okay, money is something that grows in the farm, I reckon, but turns out that's not the case. So that took me down a rabbit hole, which we can talk about after Pranay’s introduction. It’s an interesting story of how the dots connect and how one thing led to another and that led to finally what we see on Hashflow today. So Pranay, go ahead. Sorry.

Pranay Mohan: Yeah, my background is not as entertaining. But my background is somewhat similar to Varun in that I also come from a hard engineering background. I studied chemical engineering and started my career in oil and gas and CPG, or Consumer Packaged Goods. And I think the inflection point for me to start migrating into tech and software was in 2013 when the Snowden revelations came out, I was working on a project at Frito-Lay to make the best potato chip. And I'm not kidding, that was literally my project to make potato chip slices more standardized so that at the margins, Frito-Lay could save millions of dollars.

And so when the Snowden leaks happened, the ennui of what I was experiencing as a potato chip engineer bubbled up to the surface. What Snowden shined the light on in terms of the surveillance dragnet that all of us were a part of made me realize that the frontier no longer existed in the physical world, that it had moved to the digital realm. And if I was going to play any role in dealing with the human rights challenges that will emerge in the next 100 years, I need to move to software, I need to become a technologist. And so that catalyzed that movement into tech. But like every kind of aspiring young techie, I ended up at big tech companies putting dog filters on people.

“What Snowden shined the light on in terms of the surveillance dragnet that all of us were a part of made me realize that the frontier no longer existed in the physical world, that it had moved to the digital realm. And if I was going to play any role in dealing with the human rights challenges that will emerge in the next 100 years, I need to move to software, I need to become a technologist.”

So in 2017, when the whole crypto boom happened, I started reading up on it, getting more interested. And in 2018, I helped a friend host a conference where I met some really brilliant people in the space. So people like Olaf Carlson-Wee from Polychain, Jutta Steiner from Parity, Izzy Meckler from Mina. And I realized, okay, this isn't just a virtual currency trading, it's not just speculation, there are these really brilliant people building some really cool shit in this space. And so I finally felt like I had found my “Rebel Alliance”, and that's what put me into that proverbial rabbit hole. And now it's a mind virus, I can't think about anything else. So that's how I'm here chatting with you.

Ideological Alignment

CR: Nice. So how did you two meet?

VK: We met at Stanford Blockchain Conference last year discussing philosophy of money. I was telling Pranay about the journey of why I got into crypto. I think TL;DR was the realization that essentially, money in its current form, what we called fiat money, is a modern form of slavery. And moving away from that, moving away from a debt-based monetary system to a user-based incentive design choice was a powerful narrative for me to look into crypto in general.

To take a few steps back, if you go all the way to bartering, and think of that as a giant mesh network of people trading items with each other, that’s the most primitive fundamental form of trading, where humans are trading items with each other. And they have some value attached to it, but really, it's just goods changing hands. And then eventually, what happened is some commodities became more prominent or traded more often than the others.

In fact, we started seeing a pattern where some commodities became the standard through which all trades started taking place. So we could say that the technology of money was discovered, where there was an incentive for most people to own certain items and use them to trade other goods. So you can see this transition from a mesh network to a multi-centric, but distributed system, where some commodities became the money.

“With crypto, what is interesting to me is we actually get to break that will, where we get to get away from a debt-based system that is essentially forced upon you through the logical violence to two-way system of user-based incentive design where you get to use the money of your choice. You can freely experiment with monetary theory and policies, and manifest that into code, and anybody can have the choice to use the money they want to use, which is what inspired me to get into crypto.”

But then we realized, well, this is great. But if you want to scale this to geospatial regions across continents to conduct trade, scaling physical money is kind of hard, right? So the way we solved it, the way we overcame the physical constraints of commodity money, was by inventing something called currency, which we can think of as a Layer 2 scaling solution to the underlying hard money whereby you had these custodians emerge who would keep your money in custody, and then issue claim checks that could be used to redeem the underlying money. And this paper could be used easily to scale across different regions, but institutions would recognize these bills, and they will give you the money that's sitting there.

This could be seen as without the first fundamental modern form of banking system where institutions would issue you claim checks that you could use to scale and then they will keep money in custody, which eventually led to the John Law system later. But then even before, fast forward 1600s to 1900s, what we saw as the gold standard until 1913 when the Federal Reserve became a thing.

The emergence of Federal Reserve, I almost see that as a forced network update on the system to move away from Gold Standard to what we today call fiat. With gold standard, we had currency backed by money where money was gold, and currency was essentially a dollar bill, a claim check, an underlying money. But the moment you move away from that, you change or you get rid of the money paid and currency paid and merged into one. That's called fiat, which is essentially what we had after Bretton Woods, after the 60s, what we use today.

By fundamental design, it has to be borrowed into existence, and then you as a network user of the US network are forced to pay rent for its usage in the form of taxes and fees. But the only way for you to pay that rent in the same currency that you borrow is to borrow more. So the only way you could do that is by borrowing more from the system. As a result, it's a perpetual debt-based cycle or infinite regression, but there's no point of time where the user would be truly debt free. Really the only person who wins in the system is the one who controls the system, right, so it's a zero-sum game.

And with crypto, what is interesting to me is we actually get to break that will, where we get to get away from a debt-based system that is essentially forced upon you through the logical violence to two-way system of user-based incentive design where you get to use the money of your choice. You can freely experiment with monetary theory and policies, and manifest that into code, and anybody can have the choice to use the money they want to use, which is what inspired me to get into crypto. That was the discussion we were having. And then we were like, okay, I think we agree on many, many things, we should probably work together. So I think I spoke too much, but Pranay, you can add something there.

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