Vega Protocol | Crypto Interview | DeFi Trading Tech & Tooling | End-to-End DeFi Trading Products

published on August 2, 2020

hello it's brad laurie your blockchain brad and today a very special interview with barney mannerings he is a co-founder of a very important protocol known as vega protocol all about d5 derivatives

Platform and protocol itself barney thank you very much for being here to educate us all about vega thanks for having me greg you're welcome mate now i've heard a lot about you you certainly bring a lot to the space

You have a lot of experience as well bunny do you want to just touch on a little bit of your background so that you know we can get to know you a bit better about where you come from and why you

Entered into this crazy world called blockchain yeah sure so i'm a computer scientist uh sort of originally by from university and i spent most of my career kind of designing building

Trading platforms in the kind of already michael traditional c5 space i guess um so i worked as a kind of technology management consultant with a lot of sort of big main clients large

Investment banks major international stock exchanges and things like that on there on their trading platforms design and build but i got into got into bitcoin pretty early i've been

Reading about it for a while and started mining in about 2013 uh acquired some ethereum in the pre-sale as well so really started getting getting into the space and i've always

Been very very interested in kind of decentralization and cryptography uh but also in kind of disintermediating the middlemen because certainly working in centralized finance you in a city like london you discover how many

Companies just make a ton of money by being in the middle of things that ordinary people and companies have to do and that doesn't feel very fair and i see this as kind of a way to wait to fix some of that and

So when the opportunity came along to start vega and actually get right to the core of those problems in a way that would be really really impactful it was something i just just had to do

I see and made i also noticed that you have a computer science background when i was reading through some of the the information about vega you have a lot of experience in capital markets as well so do you feel like you have really brought

That expertise and utilized that i noticed also your team is exceptional when it comes to engineering experience but clearly you know you do have those skill sets to really lead out and and support vega as you build this

Yeah definitely and i think it's really important you know one of the one of my sort of favorite quotes about crypto from uh matt levine at bloomberg is that uh crypto and d fire kind of doomed to

Learn all the lessons that the centralized financial system learned over the last 300 years in kind of rapid speed but they seem to be learning them one by one and um that's something that i noticed you

Know there's a lot of things there's a lot of very smart people in finance solving real problems and it's easy to connect to the the problems with finance as it is today uh and

Assuming it all needs to be thrown away and start again and there's actually a ton of real technology problems and market incentive design problems and other things that have been solved

Uh in centralized and traditional finance already and to throw all that away and start again was going to be a very long and tedious process and so one of the things that really was

At the core of founding vega was to know that we are experts and understand the crypto space and how to build blockchains and build crypto systems but also that we're taking that relevant

Experience and filtering it and throwing out the stuff we don't want to keep but taking that relevant experience and building something that actually solves the same problems that finance does and hopefully even better and

Addresses those things up front rather than kind of waiting to blindly discover those issues as you know as we've seen recently with some of the attacks that happened on because like these addicts

And yeah and those are all quite predictable things that would happen with the lack of kind of protections built into markets and the way things have been designed and we're trying

To avoid making too many of those mistakes that me and the rest of the team particularly actually tamlin from a markets and trading background she's a very experienced trader and

David is a is a very experienced quant front office on the risk side and their experience particularly as well as mine really helps us build something that avoids the the well-known pitfalls at least yes and

Certainly as someone who's been researching and just being one of the proponents of education in the space i've known of vega for some time and certainly uh you know we've had

Interactions before and also some of your colleagues in the space and your team members and that's because obviously there is a dearth of these kinds of provisions built in for d5 we're going to explore

That in detail but let's go back to the beginning let's let's discuss you know what you stand for fundamentally what vega actually is for the audience and also just a quick um

Piece of information for all those wondering this is entirely free this is all about trying trying to provide education information for all of those listeners who are wanting to know more about what vega stands for

But there is no financial incentive for me to do so this is really just about education now in terms of what you stand for a protocol for creating and trading derivatives

On a fully decentralized network so that's where the d5 comes in do you want to just touch on those ideas of d phi and derivatives so we can really understand vega as a protocol and platform

Yeah absolutely and i'm going to start i'm going to start with derivatives because i think it's kind of it's interesting to see where it fits in and one thing that you'll notice if you look at any major

Financial sort of system is that the derivatives markets in terms of notional outstanding volume and that's sometimes a troublesome metric like if you buy an option for 10 cents and it's

On 10 million dollars worth of stocks it's super out of the money that's 10 million dollars of no stock so it's not quite the same as 10 million dollars moving around but the

Notional size of derivatives markets is hundreds and thousands of times larger than the underlying markets and regardless of the goodness of that metric

The important thing is that actually derivatives have a really important purpose and you know vcs and investors like to talk about unbundling in terms of companies and startups unbundling aspects of

Products and services and derivatives do that with finance they unbundle risk so they let you decide what risks you're happy with what risk or not what which you like to sell to someone

Else effectively hedge or get insurance against and that's super important for markets because most people can't control the risk they have financially if you're a manufacturer you can't

Control the fact that you're exposed to the price of the metal that you need to build something or the fluctuations in the currencies where you export but that's not your core business your core business is

Building this thing and so you might decide that you want to sell those risks to people who do understand them or perhaps people who have the opposite risk um and that's really what the route is

Allowing allows you to sit there and go right this risk i don't like i don't want to have to be exposed to it i want to sell it and the goal of derivatives markets ideally would be to do that as cheaply

And usefully as possible so to have a very specific derivative that specifically addresses the risk i'm selling like if i'm acquiring a certain rare earth metal i don't want to have to buy a derivative

That hedges the price of a different metal i'd like to buy it to hedge the price of the specific thing i'm exposed to and then i want that to be as cheap as possible like i don't want to have to

Pay anything more in fees than i need to and you know the problem with the markets today is that both there are there's too little breadth because there's a very small number of people

Who make the markets and decide what gets to be a market so unless you're a very major company you might not have access to the market you want either it might not be available in your region or the specific

Market might not be available and then and again unless you're a big company unless you're plugged very into the center of the financial system everyone else pays multiple layers of fees on that and

So you know the derivatives thing is really important for d5 because fixing finance isn't really about fixing in in the long run i want to fix the financial system rather than money isn't really about fixing who where the

Trades happen of you know where i sell my gold for my other stuff it's about fixing the cost of participating in that system and a huge amount of that cost comes through derivatives but also

Derivatives are much more complex than underlying spots so whereas i can do a you know an atomic swap on bitcoin's blockchain and trade x for y because it's just traded it's happened i've got

Rid of my x you've got pretty away we've made a trade and everything is easy derivatives have this different feature because they have a they have a life cycle they have a link so a derivative contract would last a month or three

Months and during that time we can win and lose money and so you have to go to this system has to be able to risk manage that and decide can barney afford to pay the losings

He's making on this position if he's losing and that if you just say you have to give me all the money you could possibly owe some derivatives are impossible because that could be theoretically

Infinite but also it's a very expensive trade to enter because you might have a you know one in a billion chance of owing millions and millions of dollars but if you ask everyone for the millions of

Dollars then the much more likely thing where they only are 100 is not going to be worth entering the trade so derivatives tend to be traded on margin for that reason and

Doing those margin and risk calculations safely ie in a way where someone doesn't suddenly owe more than they have and that puts the whole of the other trader at risk doing that safely requires computational

Power uh and the blockchain systems that are available today like you know ethereum bitcoin etcetera don't have the raw processing power available in their smart contract systems to do that in a

Very effective way which means you have optimal solutions for derivatives in d5 uh even now either you take entire parts of it off chain and then you have this kind of asynchrony where there's

Risk that the chain gets delayed and so you don't get to close someone out until it's too late or you make really really naive assumptions and decide on the margin is 25 percent

Regardless of injury 2 or 50 and then you some people get really inefficient capital and other people get to walk away owing more money than they have and so you know

That was the big thing we were right no one is solving this for derivatives and you can't do it on ethereum or on any of those general purpose chains so we need to design a blockchain that works for that and that's where the

D5 thing comes in because once we started doing that we realized actually there's a bunch of other problems so you know the biggest one is fairness and klaus kassar we are so lead blockchain researcher he's been

Doing um byzantine full tolerance research since pre uh pre-satoshi's bitcoin paper right he has now come up with the famous protocol and the goal of that is to say the way that you make blocks in ethereum

Isn't very fair like you know for default purposes being able to pay a higher fee to get ahead and get into a block which is how the ethereum network actually sequences blocks that's really bad because if i just look at the memory

These guys are all incorrect with unit swap and i know the mark is crashing so i'm just going to pay a higher fee and get ahead of them i don't even need to know the price they put in i can just get ahead of them

And like guarantee that they're getting a worse deal because they've got less money than me right and that's really bad well let me just jump in there for a second for the audience because obviously we can go

We're going to go very deep in some of these details but what's interesting is that firstly you mentioned the importance of d5 we hear the buzzword of that going right across the blockchain

Domain right now and you also nuance some of those key platforms for example or you mentioned them such as ethereum not cutting it for the kinds of needs that you needed to build and that's the protocol comes into play and

We'll talk about that but also just more generally derivatives themselves you know they exist in the mainstream they exist in sort of centralized marketplaces they exist all the way to wall street so we

Know there's strong use case for them we know that there's a very very high demand in crypto as well arguably the greatest you know volume comes from derivatives in that sort of

Market share so let's talk about the tech in detail and what sets you apart so one of the things i wanted to ask you about was the security aspects in building our proof of stake for example

Um and and how you built your architecture to really showcase that you you are needed and that you are basically providing things that ethereum and others could

Couldn't provide yeah absolutely so um you mentioned like sort of two things here one one was around security and then around sort of showcasing that we needed so i'll start with the the second one because it kind

Of follows on from um from what i was talking about a minute ago and um so the first thing there is one of the things i strongly believe is that we are not going to are not trying to replace the theory

So you know i don't think that stable coins and tokenized security should be issued on vega in fact when we launch we may not even support doing that um i think that the best place to issue

Them right now is ethereum and it's probably going to continue to be particularly with ethereum 2 and it's sort of performance and speed upgrade like i don't see much reason to move that to

Vega you know obviously we could support that issuing an asset fairly trivial operation and if it became demand for it later maybe we would but right now i think the best place to do

That is on ethereum and it's really not something we're interested in competing with and we love that ecosystem and want to be able to tie them together so vega is integrated into the ethereum ecosystem with a

Bridge contract which allows you to trade erc20s and ether on vegas so really you're not trading and thinking it's not creating new things and you will eventually even be

Able to take out a position on vega using an ethereum smart contract by the bridge as well so really seeing ourselves that he's not replacing it but the need for it comes when i was talking about that fairness

Problem where someone can get into a block um where they shouldn't be able to and they can get ahead of other traders because they've got more money than them um you know the research

The class has just published allows us to build a protocol that actually sequences differently and provides a certain level of guarantee of fairness and he did a great talk at

Dystopia labs recently which is online which you can which you can sort of learn more about that and the paper will be up soon as well but that's one of the aspects we need it because we need fairness because

No one who trades on the syria current markets and he's trying to seriously use derivatives to manage their business no one is going to enter into a marketplace where they believe that people with lots

And lots of money can screw them over by paying for placement in their block and so that fundamentally is going to be a barrier to adoption and that's one of the major reasons we focus on it and then obviously the other reason i

Mentioned around the fact that you just can't run complex derivative products with efficient use of capital in a safe risk-managed way on something like ethereum because of

The speed of the overall network and that's the other thing we've done is instead if you look at ethereum you've kind of got this thin evm layer which provides a virtual machine that can run any

Contract right but it's its generality is also its weakness here because it can run any contract but it runs it kind of slowly whereas what we've done is we've built a very thick virtual machine layer

That contains lots and lots of financial primitives and this is something where the the trading experience and the finance experience comes in because every major bank has these systems they have big libraries at risk algorithms

Big trading platforms they have these huge technical infrastructures for managing and valuing and trading and settling financial products they build that stuff

Once and then they have a sort of higher level language a data format if you like or a domain specific language for specifying the products that reuse these things every time

Look at d5 today like every single every new lending protocol has a new protocol like despite that lending is just a subset of taking out a position it could just be buy cell the protocol could be the same for every

Contract but it's not because everyone rewrites all of the fundamentals of trading every time they put a protocol alignment theory well vega is totally different right with this stuff needs to look fast it

Needs to be safe it needs to be well tested and it needs to manage risk effectively employ capital efficiency we build it once we build it super efficiently and every product built on top is a much

Thinner layer of product that can access and reuse all those things it can have an auction mode based trading it could it could have bonded curb based trading it can have continuous order book based

Trading whatever the best trading mode for that product is but it really uses the stuff built into vega and it means that it gets the upgrade you build a better trading mode you make it faster lower

Latency safer every product gets that the products are much simpler to build uh and they and they work much faster and much more sort of the better risk management all of those things so

You're really doing those things putting that all together into one network and then connecting it up to the ethereum ecosystem that's kind of what allows us to give something that attack it sort of feeds that demand

And hopefully feeds the demand that's currently getting diverted to centralized crypto exchanges because the sort of sophisticated on-chain solutions aren't there yet i see and one of the

One of the things that you have coined in your white paper and even in some of the discussions is the idea of democratizing derivatives now just to be clear and correct me if i'm wrong but essentially you're a

Specialized protocol you spent years with your team building this out to optimize the the whole point of what you're trying to do which is essentially offer a whole suite of products

Of derivatives themselves and doing so with high throughput low latency and all and even low cost so that once again you've spent the time building out a high quality protocol now in doing that obviously you know

It's taken it's been quite an arduous pro arduous process but are you also a platform because that's what i wanted to also clarify with you in being a protocol are you also you

Know providing for a proper you know facility that is regarded also as a platform for people to utilize yeah absolutely and you know one of the things that i always we always have sort

Of debates about and it's very difficult it's like also the platform protocol network it's kind of all of those things right you know the protocol tells people how to interact with the platform

And the network supports it all and they're all very interlinked and i definitely think the platform aspect is really important and that means that you know when the protocol is live on a

Network there is a platform that someone can go to and say i understand the product and i would like to launch a market in that product you know we had conversations for instance with

People who are launching a spot exchange for um hash rate hash rate future sorry spot cash rate they're launching spot hash rate exchange and they're interested in hash break

Futures and they're like well maybe we've got a business plan where we're gonna raise three million dollars and go and build a centralized exchange for hash rate futures now in some markets that makes sense and

Is is worth doing even now but another mark is that's just too much money and is that market doesn't get created when vega is alive no one will need to do that

Because instead of we're talking to these guys about not doing that because we're saying to them well if you wait for vega which we're building anyway and is in test that now and works then it will cost you maybe a few

Thousand dollars to do the research and work needed to basically parameterize a product to make a proposal on the vega network and then as long as the vega community believes the proposal is in good faith

And it's not fraudulent that's going to get voted on to the kind of listed markets of the network and that's not something we control that's something the network's you know users and

Token holders control that product will get voted on it'll become tradable as a market and you didn't need to build a centralized exchange and you didn't need to to do any of those things and so you can

Spend three million dollars uh attracting liquidity providers and you know going out to the market to get them to use your exchange instead of somewhere else and so

Right really the opportunity there to create a product and to also you know the power of the democracies you then share in the revenue so you know the trading fees are dynamic but they go to

The market creators and the market makers who support that market so you use your three million dollars to bring in business and trading on the market you deploy the product you become a

Market maker market creator in that you now earn a kind of a stake in that market as far as the protocol is concerned and every time people trade they're going to pay a small fee and then you're going to

Make some revenue for having created this thing that the the community uses and so that and sorry interrupt but that also shows the scope of what you're building because you're an end-to-end

Uh sort of system you know if if that's okay to describe it as or a technology that provides for the the all the way from the the plat the platform itself and also

The derivative technology that underpins it but in terms of trust for example when we talk about permissionlessness um having listened to some of your discussions that's really you know

Important obviously to the whole team so where does that fit in when we when when we know that we can engage as it's ready in the protocol it's open to as you mentioned an

Opportunity for people to create products utilizing the protocol but you also offer key products as well so how does one engage in the world or in the spectrum of of permission from missionlessness in

What many people are deeming the c fighter d5 spectrum how do you situate yourself along those lines and and with regard to trust for example yeah i mean ultimately i think we will

Never create a we'll never create a system where you need to rely on us to trust the network so we'll never be kind of starting c files so it'll never be the

Case that we have access to your funds uh that you're trading on bay with all that we can send to your market uh when vega launches it's likely that there will be a relatively small number of

Validator nodes operated by like the largest token holders or sort of stakeholders who again with no contractual relationship or no structural organizational relationship developer at all uh

There'll be external people but there'll be a relatively small number of them probably and they will be running the notes so uh and that gives us a sort of not quite centralization but a sort of a

Permissioned nature in that those people will be people who probably know who they are and we can talk to them we can kind of say hey look this is how it's going we used to deploy this security update

Or we've seen a fraudulent fraudulent market being proposed we need to make sure we vote that down they don't have to listen to us there's certainly nothing that will force them to but as long as we're not being

Malicious they probably you know will work with us to get the right solution out there but certainly there will never be a point where if we decided to access your money or to close down the market you create it but we'll

Just not be able to do that i say so the really you know the direction of you know what many people deem as that pure d5 goal but you're being pragmatists about you know

Moving in that direction and doing what you need to uh to cater for what is essentially uh transformative or very innovative technology now what are what are the benefits barney

Of d5 when it comes to things like price when it comes to things like composability obviously they need to be built in the value sets there especially given that if you do a comparative analysis often

Centralized parties can be cheaper they can be faster so how do you compete in in that sphere and how do you offer products that are you know underpinned by technology that can

Really uh meet those benchmarks and then go beyond that yeah so definitely so cheaper is one where actually the long term d5 should be cheaper and if it's not it's probably because you're using the

Wrong blockchain or the wrong practice protocol and what i mean by that is like if the transactions are just super expensive then maybe the blockchain is one of the things i always think about is ethereum requires you to pay for

Every transaction in gas and that's actually bad you talk about prices that's bad for prices because if a market's going to be a primary source of prices so if you're if you're like uni swap you're not a primary

Source of price you actually require an arbitrage to a centralized or another exchange of setting the price in order for the uni swatch price to work so that's not designing isn't this true for them but if you're

The primary source of price then what you need is as many signals from the market of the true best price for something as possible so if you then charge someone gas which is a variable fee

Every time they send you a price signal in the form of an order um then you're getting best bet worst price determination so for vega submitting transactions with new orders is free we use a kind of client-side

Proof of work to avoid spamming orders that along with the marginal requirements but the actual order doesn't cost you anything so unless it trades you're not going to pay any fees to vega

That means we're getting a better price determination which means you get more accurate prices more quickly and then in terms of the cost of the network because all like i mentioned before that kind of thick layer of

Finance primitives is running on the bare metal running super fast that means that actually we can provide much lower cost um to run a market overall than having to rely on external

Kind of sources of risk management and things like that or or having to use the ethereum vm and pay gas and so over the long term i believe that you should be able to make

The cost of trading on vega should be not far off the cost of the infrastructure you know obviously they're going to want to everyone's going to take their little smaller slice of the pie but the actual

Incentive mechanisms in vega are designed to balance the fact that the cheaper it is the higher the trading volume and vice versa so actually and as you see in the centralized

Markets actually even with high with high trading volume fees go down to centralized markets because doubling the volume is better than getting 10 more fees and that's often kind of the

Relationship you have the same will be true in vega but because you're not having to pay any of these middle men they're sort of centralized costs um you're only paying people to provide

A real service you're paying for the cost of running the server you're paying for the cost of you know the the risk capital for providing liquidity but you're not paying for a centralized middleman who's

Rent seeking uh the cost overall should be lower and the lower cost means you get lower spreads on the price as well because you know one of the ways people recoup their cost is by having higher spreads

You get higher volumes so the virtual cycle should mean that cost and price-wise vega is good um performance-wise that's something we're working on we sort of have a just under one second block time and

Test network and average about 08 182 seconds in testnet last time i checked it might go up a little bit as we have more nodes for mainnet but we also have some research in the

Works where we might be able to get an order of magnitude better um look out for a thing called flocking on that which will uh probably be coming up within within the sort of next year-ish so it won't be

There at launch but it'll be a thing we had and that will be able to give us kind of like you know maybe 50 millisecond latency or something in the whole time so and they can be very significant um you

Know changes to the overall outcome overall experience obviously for the user because many of them won't see all of the intricacies of the technology underneath when they do

You know interact with your your interface and the user experience obviously we've onboarded a few people recently to the interface and one of the regular comments is people actually if

You're a realtor if you're a trader who trades a lot you know it notices a little bit slower than a decentralized platform if you're not a regular trader if you just trade

Occasionally or if you don't trade much people are just like i can't tell this is using a blockchain and barney that's quite amazing i'm sorry interrupt but the the reason why i've always wanted to talk to you is

Because you did spend so much time with your team in building this protocol which is unlike many to be honest i mean the amount of time the amount of resources amount of money

That's involved in building this out is substantial so you just want to touch on the time you took to build this out so that that user experience and that ui is so seamless and is so good and so

Competitive yeah absolutely i mean i think you know when you look at um it's very difficult you can't compare this to something like a an ethereum based d5 protocol because they're just building one layer of the

Second we need to build all the layers and we are you know we're not building everything from scratching we're using tendermint as the underlying blockchain and uh

You know we're the system we're building is actually a bit blocked in agnostic so if tendermint turns out not to be the most performant or secure option in future we can actually swap that out or we can fork it and improve

It um over time with our research we're using 10 minutes at the moment so we didn't build the very bottom consensus layer from scratch but we are customizing it

And really what we focus on with the time is getting the protocol right and it's kind of it's one of those things here sometimes you can iterate something and you can build a build a version put it out there

And say okay let's just mvp iterate and that's very easy on it if you're building an app and it's very easy if you're building something relatively small but there are a lot of parts to the pro of the protocol

The trading price determination you know how trading works you've also got the kind of protections in so the kind of things that stop um people from manipulating the price or stop the market from getting dangerous

If the liquidity is very very low you have to build that we saw the likes of black thursday so we don't want to see those again so uh obviously you know it's imperative that that be built in so

Yeah please go on yeah and then uh and then obviously you know on top of that we've got about the risk management we've got about how it settles everything we've got to build a bridge to ethereum so people can trade

Their ethereum assets like there's no way i was going to launch vega with a kind of hey there's this network here but you have to create some weird asset we created like

People don't want to do that so you have to build that register theory you also have to build the risk management stuff and then alongside that we've got a small team building what we call vega console

Which is a dx entirely decentralized there's no centralized servers involved but it's a very sort of professional quality trading front end with kind of a configurable layout multi-monitor support

Uh ability to kind of really organize your workspace how you want and see and and use every aspect of the protocol so it's not like if you want to propose a marketer get involved with some of the other

Decentralized aspects of the protocol it's not like you have to drop into writing code we're actually exposing all those things via that vega console and anyone can go and write code and

Interact with the whole protocol by coding one as well there's no restrictions on that it's an open open protocol open network but by providing a kind of sort of professional front end so that

People who aren't coders can access and get and use vega on the same terms as those who do understand the tech we're sort of doing all those things in parallel because we think that it's important that when vega launches as a

Network and when people come along to use it you know one of the differences to some of the other protocols that have been created is that we need people who are traders by profession not

Coders to come and support this because we want there to be liquidity we want there to be good prices and so we're really focusing on that kind of end-to-end experience you know we're in testnet now so we kind of

If you like de-risking you know we started seriously building the production version of this at the beginning of last year when we raised our save funding and you know we're in testnet now sort

Of about a year later uh so you know a year of building that's out there in testnet and then by the end of the year we'll be in a sort of maintenance alpha so yeah that's really

Important to us to get that end-to-end thing working and to really demonstrate something that shows people how it's a step forward because if we launched something really really early that wasn't to step forward and was just

Kind of kind of difficult to use and kind of worse than what's out there already then we're not really helping and and we have some amazing investors who have been willing to support us and say yeah this

Is a 5-10 year journey to do this and so you know take the take the one or two years it needs to build build the first version right and barney much respect much respect to you also for doing that because

That clunkiness you know that you alluded to that can happen you know by that premature release of code or of of technology it's already been evident in the the crypto space now where people

Have rushed you know in to try and capitalize on sort of the nascency of this space but really they weren't ready so i'm it's great to hear from you that you didn't do that with your team you're

Making sure that everything all the all the eyes are dotted all the t's are crossed and all the hard work has been proven and tested and hence the test nets now as you move

Forward towards mainnet now in terms of features yeah there will be some rough edges to be sure yeah and they're always going to be obviously because nothing's set in stone but

You know having known and followed your team for some time it's clear that you've gone into a lot of detail you know a lot of a lot of depth when it comes to getting that code right making sure that again that user can

Really engage because in the day you do need users you do want to track that sort of a a large part a lot a lot of market share are arguably in such a competitive space so to do that you also need to have

Good quality features built in and some of the things mentioned are things like built-in liquidity and then connected blockchains to collaterals another thing that's mentioned

Pseudonymous participation and a straightforward market creation so do you want to just touch on those a little bit all the ones that you think are the most important to reference in in terms of

Your value yeah and so we already talked a bit about sudan's participation and and and the kind of decentralized network and obviously the same in vega and we do have some tools that we're

Building which won't be available alpha release will be available later around compliance for people who have regulatory needs in this autonomous environment but um perhaps that that

Might be a tough one at the time because there's a lot of detail there and it's not kind of straight away we can we can always defer that to a detailed one yeah and it's super important in the long term that people can feel they're

Compliant in any regulatory regime and that's something we're very focused on but you know the alpha launch won't have all of those tools um but the one i think is probably worth

Really digging into a bit is the liquidity part because there are two reasons this is super important for a decentralized platform the first is i see this weird thing when people

Launch something that's fully decentralized but they retain the complete control over like the website that you actually go and log on with and what markets are tradable and

That seems like you're missing an opportunity because if you're going to do that why aren't you just running a centralized exchange you literally just say i don't want to do the

I don't want to talk to the regulator and get a license to run uncertainty change like if you're going to control all the markets then i don't really know why maybe you want to be non-custodial and that's

Beneficial but do non-customers but so to me it's really important that if you're going to decentralize the protocol you actually need sometimes the protocol including the creation of markets you

Give to the community the ability to create new things and new markets and products that you hadn't thought of you know ethereum success i would say a large part of ethereum success comes down to

The creation of the erc20 standard as soon as that standard was created every new token that was issued was getting issued on ethereum because people could build tools around it and as soon as every token and every

Stable kind of issue on the theory that's obviously where d fight is going to happen right so i think ethereum success comes from that permissionless creation and we want to have that missions creation

So that's one aspect of it and the liquidity incentives come in there because if you're a market creator and you get an early and you create and support a market early we have an equity-like model where it's

A bit like seed funding a company if you get in early in a market and it grows you receive a larger share of the sort of fees that get paid on that market than someone who joins later and that gives you this really strong

Incentive to spot the need in the marketplace and to take a risk on creating a new market it's much cheaper than much cheaper and creating a market and creating a centralized exchange but it's still not

No risk and not no time it does require some effort so you know to reward you for taking that risk when it works well that's an important part of it and giving you that equity like stake in the

Future of the market and aligning those incentives is important then the other one is just liquidity like firstly markets are useless without liquidity i don't know if anyone ever use like ether

Delta or four delta like i i haven't actually logged in for a while but when i first did i noticed that you could trade every single one of 1500 or whatever you had permission this innovation great

Every single one of the 1500 erc20 tokens could be traded with every other one problem was almost all of those yeah 1500 by 1500 is a lot of markets but almost all of those

Had basically nothing on them because no one was using them so part of that is actually saying this network can do that it's got that permissions innovation but in order to make it useful we're

Actually not going to just create every market we're going to ask the community to say do we want to support this market and if we do are we willing to commit for a share of the revenue to providing

Liquidity and so what you end up saying is yeah this market proposes an idea for a market and if people come in and it's a bit like almost a kickstarter if it reaches its liquidity target the

Market can launch and people can know that they can go and trade on it and there will be a real price and there will be orders on the other side and if it doesn't reach that target then you know it will sit in a pending state

For a while and eventually not get created or maybe will get created later when the interesting increases so that allows us to ensure that although people can permission the secret markets

We're only going to create the markets that once they're created will be useful there's no point permissions being able to do something that makes the platform more confusing because there's hundreds of useless

Markets that aren't useful we want it to be you can permissionlessly create something it'll be useful we want to marry those two things together and then liquidity is also important

From a risk point of view because if you your position starts going against you i want to be able to close your position out before you own more than you have just said sorry your position is closed you haven't put any more margin in

Uh you can you can toggle your margin if you want if you don't i need to go to close you and the best way to close you is simply if you bought then you sell and then you sell someone else and if

There's no one else to sell to we can't close out your position and so the network has to take on that risk or the other participants have to take it on so you know incentivizing liquidity also

Allows us to properly risk manage everyone's position and keep the whole thing healthy and so that's why the the protocol has dynamic fees so if you have a relatively low liquidity market

The fees will be higher that means all i would like to market make that market because i can earn high fees if it becomes high liquidity and there's no problems and there's lots of liquidity the fees can get lower and

Lower which encourages people to trade so that dynamic in liquidity incentivization is absolutely crucial to creating sort of well-functioning markets on vega right and once again it reinforces that pragmatic

Approach building in that market making as well i notice that's referenced and that relates obviously to your liquidity now one of the things that perhaps that we didn't touch on enough is

Because you did discuss ethereum but you are agnostic you know by by design and there's also references to your cross-chain capacity you mentioned tendermint so that alludes to the potentials of something like cosmos

For example are there any thoughts on uh developing this technology to integrate with other platforms in the future with other smart contract platforms um so that you obviously can expand your reach

Yeah absolutely i mean i i really think it's very important to be able to do that i think the most obvious place to go first is bitcoin um obviously most of the institutional and

More professional trading that actually goes on despite the success of d5 most of the institutional professional trading that happens in crypto albeit mostly on centralized exchanges is in bitcoin

And so supporting bitcoin and token various token platforms on bitcoin is an obvious next step and something we're sort of actively investigating but not building yet um and then you know then there becomes

Like a sort of bifurcation point and there's multiple options that we can do we can we can go after other direct change integrations if a chain starts to become very very big cosmos becomes the place

Or if near protocol comes along and starts displacing ethereum too because it's there first or something right we can come along and go okay actually we want to integrate directly with that and we can do that then

The next option is there are kind of these cross-chain protocols like the interchange stuff that cosmos are doing where they're kind of going actually we want to be a hub

For cross-chain value movement so we integrate with one of those and then go actually now we can kind of trade these assets from multiple chains and then the other option is the kind of things like i think it's tbtc and wbtc

Where the existing chains you know bitcoin ethereum whatever start to wrap tokens from other chains so actually once we've done bitcoin ethereum we might turn it might just discover

That people start people have really good trustless ways of wrapping tokens into erc20s and we no longer need to build as much and so i don't know which of those three ways it'll go

Maybe we'll build a few more direct integrations maybe we'll do something with the interchange stuff or maybe more and more tokens will get wrapped on ethereum or somewhere like that and it won't be as necessary but

Really that's got to be based on the community's demand people are banging down the doors saying actually we are doing massive cross-border payments on ripple and we want to be able to use ripple

Xrp in derivatives transactions to hedge the risk of those will probably going to grow the ripple you know and we've heard some people have said that to us and then that's one one option right and so

Really it just comes down to what's the community raring to do i say i don't want my ideology there i want to be driven by where can people use this usefully right and you know for someone looking

At utilizing your platform it's great to know that you have that flexibility built in where you can just follow where i guess the users are and where the interest is

A huge advantage of being uh kind of you know one of the events of being sort of our own blockchain that is plugged into other things kind of like a side chain to all of these other chains is that we're not you know inextricably

Linked to any one of them yeah and that's a big that's a big deal especially when you're given that everyone's looking for the best protocol that's going to offer d5 derivatives and you're arguably going to provide that

So it's advantageous also for those platforms because it's going to increase overall uses for them as well now with regard to your phases of development you want to just touch on you mentioned test net now

Obviously you know with your team exactly where you want to go main that's obviously a key goal in the future especially this year so what's the what are the milestones coming what's the big plan

Yes so current i guess what we're kind of in a we're a private test net and we're in a kind of community expansion phase if you like so we started off with some very close

Collaborators kind of onboarding people in quite in-depth sessions because one of the things that i've noticed in my career is that if you give something to a thousand people and ask

Them for feedback you'll get a thousand undirected comments that mostly tell you the three things that you can also see if you log in and spend five minutes trying to see what's wrong with it whereas if you sit down

With someone for two hours is a trainer and you work with them or you get on a zoom call with them and talk to what they're doing you start getting into the nuances and getting useful feedback so we've been going deeper

Rather than wide initially with the feedback and that's been really really helpful what we're starting to do is involve more of the community so we're starting to kind of reach out into different

Communities that we're part of and our own community and starting to say look you know we'd like to bring you on board and do some of that stuff with you and you know we're going to be running some sessions where people can

Uh you know like interactive building and building a trading bot on vega and running some competitions around that kind of stuff and you're doing similar things with other

Types of onboarding session and community activities so we're going to go from kind of just depth first to a little bit of spread into the community and getting more people using vega

And then with the ultimate goal in the next couple of months and the exact date is still tbc within the next couple of months of having a public test net so basically hey you can download the wallet you can create your

Own id and you can go go trade on the public public test net and start giving us feedback in a comm in a more permission this way because i'm really excited to open it to

Everyone and we also want to make sure that we're doing the open to everyone someone in russia doesn't just log on and ddos the whole thing yes that is what i wanted to ask you

About with regard to github as well because obviously you spend a lot long time on this you want to make sure that you you can capitalize on the success of this when it is gradually released until

Those open and public scenarios so how available is some of the code right now for example as you progress more and more towards an open source completely open source situation yeah so at the moment not not

Much is available um and really there's a there's a trade-off on a small team it's we're still a relatively small team and that trade-off is the worst look for an open platform open source

Project is not to not to pay attention to its community and his and his issues and his pr's and github and so if we just open sourced everything now we would either

Have to do all of our development and design work very very openly with the community which which creates quite a serious um drag on the team it's a lot less to do and we

Yeah and there's a lot of the designs that are already known and we just need to build it right so if we open and source it now we have to do everything like that or we have to kind of ignore the community a bit

I know those are a good look so actually what we're doing now is we're going to build this like no one is it's not live with real money like it doesn't seeing the code would be nice for the people but

It would be distracting for us so as soon as we get to the point where actually we open sourcing some things you know like i mentioned some of these like initial bots and things will be open

Sourcing and then as we get towards main network source more and more and eventually with the goal of everything being open um that's really the approach and the main alpha goal is

Is q4 this year so you know getting into that public test net spending a few months there completing our audits with code audits and security audits uh doing some incentivized kind of test

Net stuff as well so basically you know effectively offering to pay the community for finding bugs and for trying to break the particularly economic systems within vega and the security

And once we get to the end of that and feel like we have some reasonable confidence but we're launching a limited alpha main network sort of a subset of things you know run by external validators you know and

All of that um and that that will be the kind of the first kind of public release with real money see and it's great to know that you're taking this time as i said before

To make sure that all of the checks and balances are in place and that there are those clear feedbacks given those deep experimentations from people who actually do trade do actually do use

This um lofty goals in some respects perhaps for that q4 target but it does sound like you're the team that really do achieve each of their targets

Or to date so is that fair to say that you're very confident as a team that you are going to meet that deadline i i'm going to give it a few i'm going to give it a 50 confidence and you know like i think

We've achieved the big big headlines well when we first started the company uh we managed to get a kind of a basic order book running on a decentralized network really really

Quickly and so the first set of targets we created was far too ambitious they were like i will haven't made it into two six months and as soon as we started trying to design it we knew that that wasn't

Possible so um and since then we've had much more realistic targets i think there are a lot of things that should be allowed to delay a maintenance like if we find things in the audit that

Need to be done in the code audit we should not go into mainnet right if there are a set of validators who we think are good people to be the first validators who are ready to

Run it and you have good practices and if we aren't ready to do that we should probably delay launching the main net so you know i'd say sort of 50 50 like i think we in terms of all the things we can control

We seem to be in a good place for a q4 launch we don't know what's going to happen in those things if people find big issues we won't be afraid to say we need to take the time to get it get it closer to

Right but we are also very focused and driven by the idea that getting something with real real trading real money and real products in the hands of the users

Is the best way to find a lot of these problems and is the best way to kind of iterate to making sure that vega is really solving problems for people and something people use so you know we're pretty pretty keen to get

There this year um but you know if any of those big things crop up around security or around the mechanism design in vega which we find in the in the test net or something and then yeah we will be affected

If we have to right well it will make your investors happy to know that i think because obviously they want to make sure that you're here for the long term you want to make sure that you can essentially

Provide the technology for years to come you know decades to come in fact now if anyone wants to go and look at the team and look at the credentials certainly do so i won't go into that with you today

Barney but i did have a look and it is quite quite outstanding the the depth of engineering experience that is in your team i will say now with regard to the use

Cases they want to touch on more specifics of that because again derivatives themselves are you know a very collective term so if we talk about things like betting options insurance futures you've

Referenced these in your talks but there's a plethora of potential here um where do you want to focus you know in on when you when you do have those active users from the from the get-go

Yeah and then to me the the key is the back goes back to that liquidity thing right so the protocol wants to incentivize liquidity the liquidity incentives only pay you if other people trade like if you just sit

There providing liquidity there's no money in the system to pay you so really we're actually working with community we have a thing called the market make early access program and you know

Obviously if anyone is a market maker and might make an organization and wants to chat about that please get onto twitter or contact me or something um but that program is about effectively

Saying to the market makers in our community who are really interested in what mega is doing first we want to educate you so we want to say this is what vega is this is how it works this is why it works like

That this is these are the incentives then we want to collaborate and say okay does this work for you here's the revenue model does it make sense would you be able to use this if it was in the right product

And then we want to work with with a subset of those those market makers to say you know actually who's actually interested enough that they're keen to launch something on day one

And provide liquidity and so we're allowing that market maker early access program and that group of people to direct our our interest of where we focus rather than making it sort of my pet

Project or tamlins or whatever and um certainly the the initial interest we've seen firstly weirdly actually i was i was surprised by this a little bit is bitcoin us i was like

We're sure everyone just bit mex right everyone uses bitmex but actually what we've seen is a lot of people saying we are ideologically uncomfortable with how much of our money

Is on bitmaps or maybe we don't we're not certain it's safe or maybe they close the close the exchange for an amount of time everything i wonder why um and so yeah exactly and so

We've actually seen more and more people say you know we don't want to stop trading a little bit but we'd love to put some of our money on a fully decentralized custodial platform so

A bunch of market makers are interested in just launching that kind of bitcoin us dollar and the great thing about that is everyone knows how to trade it so it's a very easy first step so probably almost

Certainly someone's going to launch that market at launch and the other areas of folks you know i mentioned hash rate derivatives we noticed people are really interested in that

Some of the uh some of them some sort of friends of some of our investors in south korea actually who are market making firm out there have come to us with a business plan for launching uh effectively like cfds

On stocks so kind of like you know leverage synthetic exposure to like us stock prices um based on stable coins over in korea and you know they think there's a big market for that and they'd like to

Launch something like that potentially so you know that's another potential option and we're working with these market makers on those as there's a really wide range what i'm

Really keen to do actually is to say within a few months people can see the range they can see you can do a crypto us dollar you can do something like euro us dollar as well

Like to actually say you can just hedge a normal currency risk maybe we did maybe someone would be interested in launching something like an oil futures contract that's been in the news a lot recently

So maybe that would be something that would be a fun thing to launch and say hey you can do oil futures with with dye or something you know yes and what's gonna die because i know how big you are on trustlessness

And die also obviously correlates there so there's that potential in that scope for you know argue hopefully you know more uptake of die as you move forward in that derivative space yeah exactly and i don't i i do not know

Enough about the ins and outs of the stable coins to have a have an idea where the surefire winners are i think the interesting question is probably going to be whether you can get away with

Algorithmic stable coins for serious use in the long term in terms of price stability and risk or whether you end up needing to have um if i set back stable coins there's certainly algorithmic ones have their

Problems maybe for shorter term contracts it's okay um but yeah like i think you know what we really want is a broad range of markets that demonstrate the applicability of vega across all these

Different areas so that people in the community see this and they're inspired to create their own markets and don't sort of pigeonhole it as oh it's just for trading crypto for instance

Got it well it sounds like the scope is immense there and as we've been talking about there's a lot of interest in all these different products that that will come forth as you develop now just want to talk about tech for a

Moment just to clarify for those who perhaps you know that are tech minded and you've gone into a lot of detail in your own tech stack so if we focus on the protocol and we go deep into that just

Briefly you have your consensus layer then you have the vita the vega protocol engine uh with all of the different aspects built into that and then all the way to the client at the end so

Is there any way you could give us a summary just of the complexity but also the integrity the quality of that tech stack that really enabled for everything to you know perform or or continue

Performing in such a way where you do have you know a significant protocol that's highly competitive in this area of finance and i think integrity and complexity are sometimes

Two words that are difficult to you know difficult to marry because the more complex the harder it is to prove you've got integrity in terms of the software and robustness and the way the the secret as far as i am

Concerned is it's about managing and compartmentalizing complexity so actually what you find is the complexity in vega is emergent so this tech stack is a bunch of quite simple components wired together in the right

Way that's had a lot of care and thought which has emerging complexity you know when you take settlement it just kind of goes what how much is this worth therefore let's calculate how much of

Needs to be sent from this person a to person b it's very simple calculation when you take mind in it simply says what is the size of this position what is the change in value of the position now calculate a margin when you do

Trading it's like here's my order book and all the orders match them and produce a trade and each of those things is a simple enough concept and well understood and easy enough to test

But you wire them all together in the right way and what you get is that whole vega thing which we've just spent like 45 minutes discussing right and so the way that that's kind of yeah the integrity comes from managing that

Complexity and compartmentalizing it it also comes from you know testing it very very rigorously getting it out there getting people using it letting people look at it and audit it

As well and then the other thing that's important about the complexity is that you don't want to expose the complexity that even if it's emerging complexity i want to expose it to the user like

And i don't i don't know how well i think d5 does this look because if i want to submit attraction a transaction to i want to buy something on an ethereum based d5 protocol

I have to download an ethereum node and i have to shape an ethereum transaction and send an ethereum transaction if i want to buy something on centralized exchange i have to find connect to a centralized exchange api

And send a buy order now as a trader what i'm interested in sending a buy order not creating an ethereum transaction and one of the things we've built on vega is the concept of our validator knows which

Is the things that you know the core that everything runs and then an ad value-added read node layer which contains databases and apis which makes your node look like a

Centralized exchange you can connect to it as a developer and go submit order here is my details and it will send you back a reference which you can then query the node and find out the price and the trading and

How it's going up you can send a council you can send an amend and you don't know there's a blockchain you you have a wallet with some private keys over here you unlock that wallet and provide that

Info to this api that runs on your node but then you treat the api like it's a centralized exchange you don't have to worry about there being a blockchain i think that's really really important

You can use you know you can query the blockchain if you want you can look at every block you can run a block explorer we have a block explorer running internally we'll open that scene as well you can do all those things if you care

About it as a blockchain you want to look at blocks and verify signature but if you want to trade you can treat your node as a centralized exchange and just trade and that's music to the ears once again

Of the trader because it's easy it's going to be performance it's going to be competitive and then for those who are the devs in the space they're going to be looking deeply into all of the different details

Of this tech stack because they're going to play around with there's no doubt to build out their own products and and experiment with your platform um what about the token dobani um i wanted to ask you more about that in

It with regard to the overall tokenomic design the overall sort of fuel for your ecosystem for your platform and protocol um what is the plan there with regard to the likes of you know tokenization yeah

So the vega token itself you mean yeah yeah yeah yeah so so that token is i mean it's a proof of stake network right so the primary goal of that token is for you to be able to

Stake that token or delegate it uh to act as a validator or delegate to value to devote and support that validator um also to participate in those governance decisions so when people

Propose markets and want to change some premises on the network that can be done via a governance version there's a bunch of that in the white paper but and that's a really important part of the network as well

And for delegates you'll either be able to keep hold of that governance vote yourself and delegate it's just the kind of staking aspect of the token or you can delegate the governor's vote as well

If you don't feel like you know enough to participate um so that's really what happens and you know it's worth it worth talking a little bit about about the the upside for the token holder

Obviously is in terms of fees uh something that's really interesting about that is the the fees come in the underlying currency of the market which i think is really cool because

If you create a blockchain where you're charging people a certain amount per transaction in a kind of general purpose token then what happens is everything ends up correlating to the price of bitcoin and ethereum

Because that's the price of transactions on blockchains but we've seen this recently if you look at some of the most more recently launched decentralized trading networks you've seen their token prices

Start to become uncorrelated because they realize that the revenue you get from running from having the token is related to the trading volume not the price of ethereum particularly

If a lot of that trading is happening in stable coins like usdt or die then why would your price be correlated with ethereum bitcoin if eighty percent of the trading is in euro and us dollar stable coins then

The price is going to be more correlated with the euro and the us dollars so your income stream and the price of the token should be correlated with the underlying assets people are trading and the amount of volume on vegas so

Basically you know the price goes up and the revenue goes up if more people trade on vega right and that's important because there's a real lack of correlation

You know with regard to the the protocol platform in question and the token itself often we see this complete coupling with with bitcoin's movement for example btc's movement

Um with regard to many of their so-called altcoins out there so if we just go back to your design when we talk about that delegated proof of stake of the that model um some arguments you know in

This space right now they're saying that uh often staking is used really as a means to try and reduce supply or circulating supply that's out there and treat it more as a sort of a means

Of deposit in the bank so how do you get around that kind of argument when clearly it's designed for uh real utility and trying to essentially fuel the whole protocol that you're building

Yeah i mean so as i said because these are not paid like you don't need vega tokens to trade on banker um so in in that respect the the supply doesn't need to circulate very fast like it is much more like

Owning a sharing in a network like um but one of the things that we do want to do is encourage community ownership so obviously if if you just leave it as it is then

Eventually you could end up with a small number of people earning large amounts of systems because the way you invest in these things that's almost almost the starting point and it could get worse from there uh so what we

What i expect to happen and this won't happen initially at launch because i think initially launch um we'll be in we'll be in kind of a progressive decentralization mode as i mentioned where we have a number of kind of known

Validators who start off and we kind of open up to the token holding communities validators but eventually what i expect to happen is there to be some um

Some way of distributing tokens to people based on their usage of the network so effectively if you've staked your tokens maybe you receive a 10 return every year in fees but it

Costs you one or two percent every year in in tokens and you can buy those tokens back with the fees if you want or you can lose them and then equally if you're trading and

You've paid that amount in fees you paid that amount of fees but you receive some tokens as a thank you for being involved into being a user and as there's a kind of a way to get users

Invested in the platform we haven't worked through the full economics of that model and exactly how it'll work whether it'll be everyone every token holder is taxed or whether it'll be like token holders who

Don't delegate or ones who do and receiving i'm like there's a bunch of different ways you can do that and whether you treat it as a tax or some other method um and then equally who do you actually

Give certainty if you give it to the market makers you give it to every trader you give it up to the threshold so they have to register there's a lot of questions there and there are open research topics within

Vega at the moment how best to do it but certainly we get out of our alpha mode and start to open up more community participation in validating and in governance uh what we

Will do uh when you see some of these people like compound doing the same sort of progressively increasing their community access and involvement and stakeholding in the governance and we will do the

Same thing like eventually once we resolve those research questions we will create a way that members of the community and people who are active on vega and use vega and create value

Uh are rewarded in tokens even though it doesn't cost them tokens i see and i like that you're still working towards that through open research because obviously you know many parties they start with you know

Thinking about the token itself and they tend to be those that are really trying to capitalize on price appreciation as opposed to that the integrity of the protocol that you're really building so

It's great to hear the approach that you're taking there um and it'll be interesting to see the developments that you make with regard to it my view on this is a there's a really interesting thing a lot

Of people kind of like how can we make people buy the token and pump the price making it valuable right like we hear that a lot to me the way that the thing will make it most valuable will be if trillions of dollars of

Derivatives are trading on it because then everyone's going to potentially be making a lot of money the next thing will make it the next most valuable will be if people think that trillions of dollars of derivatives are going to be

Trained not that people think someone in finance is going to buy it next week you know no matter how many people are going to pump it that's not the real source of that real estate value is

People really think there's a chance that huge amounts of derivatives are going to be trained building this and so we're entirely focused on proving to people

The huge amounts of general issues again trade knowledge and not proving to people that someone is going to buy it next week i see and you know i'll look forward to talking to you more about that token you

Know plan as it moves forward as it becomes more clear for your team but i want to also talk about some of the things we do see emerging some of those centralized entities like for example by nets

When it comes to the comment commentary about 100x leverage or 125x leverage those kinds of very you know what what many would regard as unpalatable sort of risk

Are you concerned all about that given that because of those kinds of advertisements that are just you know saturating the space that many people flock to those platforms um and perhaps aren't really aware of

The immense risk involved in those kinds of uh derivative offerings and lose a great deal i mean some of us caught the wrecked rate in that it's very very high for

Many people who just aren't aware of these kinds of products that are available yeah and this falls on media and in the uk certainly the same argument happens around spread betting you know

There's high leverage government has recently introduced a bunch of things which i think also actually would include any crypto platform which was operated in the uk as well like around how much

Leverage you can offer a consumer who's not classed as a sophisticated investor right you know ultimately the same problem exists gets gambling and at a certain point unless you are an

Extremely experienced risk manager above a certain amount of leverage you really shouldn't be probably taking it i don't know whether regulation is the right answer i suspect it might not be a very good answer i suspect educates

People on risk is better um but it is a problem and it's something you know in crypto we've enabled a bunch of a lot of gambling in the guise of trading and it's something we're very very keen not

To do in vega and one of the one of the things we try and do is actually we probably will eventually end up showing you the amount of leverage you have but i we much prefer to talk in the in the

Terms that professional traders use where you talk about how much capital you're using your margin when i say i've got a trade with another 100 000 and i'm using 15 dollars of margin i can calculate

That you know six six times leverage or whatever that is but really what i want to know is how much capital is it costing to have this position that one and i want this position because

I believe x or i'm trading off x risk and i've got enough capital to pay that margin even if it goes up and so professional traders talk about risk and margin not leverage and we are trying one of the

Things we're trying really hard to do with vega is to give people all the same tools professional training like if you look you know look at a spread betting operation in or you know something like

That in their trading room where they hedge the risk their client clients are taking they will have price graphs and trading platforms that will show them their risk it'll

Show them how risky they're being and where their biggest risks are and what their size of their position is if you go and look at things like the actual platform they're exposing to the consumers it shows

Alerts that might make you want to trade and flashing lights and trade ideas and indicators that you can use to convince yourself you know that the price is going to go up and so there's a mismatch you know

They've got all this information about their risk and they know how to make a profit safely but they're exposing to their users flashing lines and things that excite them and make them want to take a risk

Exactly failure is flatten that and go everyone gets professional tools if you're trading on vega what we're going to show you is how much risk you might take what that could mean you know how likely you are to lose that

Position over 10 20 30 minutes an hour two days and so we want to give you the same professional tools that everyone else has in their trading rooms and say this is how it works and sure if you end up

Gambling you end up gambling but i definitely think some platforms are just going after the gamblers and going after that high leverage and whatever certainly with vega we're trying to avoid doing that you know obviously you

Can't choose who trades on permission this network but we're very much trying to say this is this is built for traders and it's built for people who trade and want to trade and know why

They want to trade and it exposes the kind of risk management tools that you need to trade usefully and professionally for your business or you know because it's your job or whatever else it is

So by the way and barney i have a lot of respect for that approach because um i don't know if you know but i'm very vocal about the kinds of risks that many of these young people in crypto are taking

With these high leverage platforms and don't have that education and don't have the tools and don't have the knowledge but what you're saying is you're taking a reverse approach and i really do genuinely respect that mate i wouldn't

Be talking if i didn't where you're trying to make sure that they are provided with all of the options of information the whole suite of tools to really give them the best chance to make

Informed decisions as they start to engage in this world of trade trading of derivative trading so how do we though uh circumvent the problem though if we look at the core problem as

Extremely high leverage when you mentioned in certain regions like in the uk certainly in australia and other regions there's caps on uh some of the the extent to which

People can leverage you also mention that's not the core focus of your platform but how do you redress the risks for those who are still willing to take that

And not educate themselves just run in and try and do and engage in the sort of pure crypto casino and the gambling side i mean you know i think there's two things i think there's education in this

Community like if if you educate enough people then the people who refuse to educate themselves will find that the community of people around them and their friends also try and help

Like not always you know obviously you always get problem gambles but i like the analogy of skiing is a good one like skiing is pretty dangerous if you went to the top of a black run straps and

Skis on and had never skied before and just point your skis down you might really hurt yourself and it's going to be a very bad idea but no one ever does and why do they not ever do that because

They're educated that skiing is pretty dangerous and because the other people around them when they do it also know that that would be pretty dangerous and so anyone who was thinking of being even i

Know people you know have gone on skiing how they do little knowledge and tried to be a bit bullish and go up there having had one half hour lesson trying to get up and do something and their friends like say no come over

Here and stop them and so i think of it the same way like you know we're going to a world of permission business we can't stop people having access we can as people who do understand the

Risks and there's people who are leaders in the community we can try and educate and we can provide resources for that we can find models spreadsheets graphs posters whatever uh sessions you know all those all those

Different resources youtube videos everything we want to educate people on that and then we can also say that it's a bit like the kind of herd and unity thing people talk about viruses right you know

If 80 of people are immune to the risk because they understand and educated the other 20 won't get too far without bumping into someone who helps them and so you don't actually need everyone to get educated you just

Need enough people to know that most people aren't going to do it and people will always go off the rails and people will always have their own personal demons and get addicted to things and stuff like that

And so you're not going to get to everyone you don't want to stop it but i think if you have a community that understands that and feels a responsibility to it and then you

Educate that community and you educate as many people as you can you think in general people will learn you know what is too much risk and in general they will look out for each other got it and it's a great point you make

And also if you're competitive with regard to price and uh low latency high throughput all the things that they're looking for they're probably going to gravitate towards you for that seamless experience but how do

You cope what are your thoughts on the manipulation that does exist in some of the current um platforms the centralized platforms in crypto for example there's question

Marks over the the veracity of the team or those question marks about some of the sort of concerning conduct behind the scenes of course you know if you own an

Exchange then unless you do something very special in terms of like running quite complex cryptography to prove that you haven't then it's very very easy for you to just

Front run or manipulate or do what you want you know and there's different types of manipulation you can go don't like this volatility just going to close the markets not let anyone trade oh

There's a technical issue or you can shove your orders in in front or you can let your friends orders go in front and have them pay you for that there's a lot of different ways that can go wrong and

You know ultimately you have to decide to trust them and you if it's the london stock exchange you probably trust like you know there's enough orders there's enough regulators and they have enough

Incentive to make money as a very overpriced centralized middleman that it would be ludicrous to imagine in my view and i have worked with them it would be ludicrous to imagine that they would ever even dream of like

Trying to manipulate the markets to make money it just doesn't make sense but if you're a small centralized crypto exchange yeah i mean you kind of just have to take your chances with that both

Both with that and with whether or not they just get hanged and lose your money you know and so i think i do think you know one of the one of the sad things at the moment is

That there's so much of crypto that's decentralized that is ultimately reliant on centralized exchanges like if your cool dab is dependent on a centralized exchange for total liquidity it won't

Work without it well we've not built a decentralized application yet you built a mostly decentralized application that's still anchored in a centralized marketplace for the

Core like you know the core sort of life force that gives its protocol meaning and makes it all work so you know really we want to fix that and i think

In the absence of being able to trust everyone to run centralized exchanges and knowing that we don't really want to go back to the model of a small number of very large trusted exchanges trusted

Institutions then you know again it came back to the fairness protocol paper that klaus putin is putting out uh for vega which is about how can vega prove what level of fairness is giving you so we go we

Define fairness this way and we're going to the protocol like this if you verify the code and see we've implemented like that we can prove cryptographically that you got that much fairness and that

Nothing that was more unfair than that protocol allows would have got through really decentralization that's the only option you need that proven fairness yeah and it's something no other protocols are really talking

About they're talking about oh we mitigate front running by doing x not we have a protocol that's proven to be fair exactly and it all comes together right and it comes down to that verification

Process as opposed to trust you want to minimize that and allow for that transparency of proof which you're offering but also you're arguably a first mover when it comes to d5

Derivatives you know right down to the protocol level are you confident that that's the that's a fair call that you're really taking advantage now of moving out uh

Q4 for main net as something that really is needed but also there isn't a lot of there's a dearth of it right now a true d5 focused derivative platform and protocol yeah i think i think it's a very good time for it i mean firstly

There are a few if you take very simple derivatives like synthetic assets there are a few people who have launched recently and use it synthetics and future swap and people and platforms like that doing doing

Interesting cool things on ethereum and other places and so you know there is there is now some demonstrated other activity and demand in around the fringes of this but compared to the sort of what i call

Product parity which is the idea that we want to be able to say if you could define if you can trade this derivatives product in the traditional financial system you should be able to trade it on vega

Um that won't be available on day one but it's something the platform is built to support um yeah there's no one doing that yet as far as i know um and but i think it's a good it's the

Right call firstly because with those more simple products that are being launched and with what's going on in places like bitmex and derebit we're seeing demand for this in crypto products

Secondly a lot of a lot of the timing comes down to how does crypto go mainstream you know d5 is the most mainstream thing in crypto and it's still not mainstream it's just it's just got adoption within

Crypt and so but we're starting to see a lot of people you know people like argent building wallets which make it super easy like i can imagine now i can imagine a wallet app that lets

You create both an ethereum wallet and a vega wallet at the same time loaded up from a credit card and transfer the mummy virus via a stable coin to vague i can imagine

That in a nap and i can imagine it being as easy as loading up the centralized trading platform yeah two years ago i couldn't imagine that there was so much still to build whereas now we're

Nearly there and so we're getting to that point where the people who will actually want to trade derivatives you know they're a small import export business they want to hedge their currency risk

Where the ui and the regulatory clarity and all those things that are coming are getting to a point where they would actually be able to see this as a real option and actually consider it as a business

Consider it as a way to do it so i think i think the timing is pretty good um obviously there's going to be you know the uptake initially is going to be within the crypto world and that's useful we'll get our feedback but we're

Always kind of looking slightly beyond that too there are we know there are lots of use cases where we can make things cheaper faster better create new markets for people outside of crypto

And the crypto engagement and use of this is really just part of a stepping stone to being sort of more generally useful right and it's also when we look at the the volume proof there's only very few

There's very few applications right now even on ethereum that are evidencing um high volume or significant volume in terms of real uptake there's a lot of noise out there a lot of sort of fake volume as

You know but what's great is that everything's leading in the direction of d5 especially in that derivatives market as well and barney just one other question i want to ask you with regard to the

Investors obviously there's a really strong list of investors and and they are important and also for those wondering i had to change audio to change the headphones but

To get back to that the investors obviously are fundamental to make sure that you can build this protocol out you have the funding do you want to just touch on the nature of that funding um

And how what they're kind of what the agreements are so that obviously we see that they are invested the long term because we have seen vc type pump and dumps as well yeah absolutely so you know the uh we've

Been very careful and very strategic around around the investment we took a seed round last year led by pantera and you know all of those all those investors are invested for you know the multi-year long-term really

Um and certainly that's uh that's been very important for us and will continue to be important you know as we raise more money uh in future we will we will want to do a similar thing here we're certainly

Only very very early on this journey and what we don't want is to kind of um have most of our money come sort of hedge fund like trading really we really want to have investors and partners who are there for

The long term and these investors have been amazing they are they're they're token investors so they really have aligned incentives in terms of the actual uh performance of the platform they

Cannot you know they don't make money if we uh pivot the company to somehow making money out of the ip or some other weird stuff like they make money if the platform is successful

Which is excellent and they've been incredibly supportive you know they have been helpful in bringing us uh market makers and introductions in that respect they've been incredibly

Patient and helpful in onboarding we've onboarded almost all of them to the testnet and they've many of them have spent several hours with us on zoom course you know just going through

You know giving feedback using the test net and providing their insights so we're incredibly lucky to have that kind of investor base um and what about lockups barney as well have you have you locked up your

Investors so that they genuinely are there contractually for the long haul as well yeah absolutely everyone is uh everyone is every investor is locked up i can't remember the

Specifics but it's certainly um it's long term certainly every investor is currently locked up um has uh you know ramsey and i and and the rest of the pounding team uh in terms of our incentives there as

Well so everyone is kind of locked up and again as we go to the future through to mainnet and beyond and future realms there will be continue to be kind of you know we'll be

Aiming for sort of locked up uh locked up holdings right and i do apologize having to ask that it's just that obviously we've seen all kinds of things happen in the crypto space with regard to transfer transparency or

Lack thereof and vc you know i guess manipulation of tokens to capitalize and then leave so it's great to hear that the whole all parties involved in what you're building are longitudinally

Focused building out something of quality is there anything that you wanted to mention with regard to your future goals or your your vision of of everything as you

Build towards mainnet and as you start to really showcase a a real application for d5 what's something that's you know you want to send a message to your community

Sure and i think you know firstly like we really want this to be a community effort so like get involved download vega uh when it becomes available as a public test and engage with us on twitter our forums

And communityvegas x-rays as well we're going to start running more and more competitions getting more info out there if you have questions you know particularly around how things work or

You're more interested in and how to build for vega then you know let us know and reach out we want to do all of this stuff kind of more and more in the open so you know over time we'll become more and

More focused on making decisions and doing things in a way that the community can see and get involved with because i think that's really really important and i think you know in in the long term what we really want to do is

Give ourselves the best chance of having a huge impact and so not only are we focused on kind of launching this year but we're also focused on how do we go from a kind of a relatively

Low key alpha launch where we we iron out the kinks uh and then how do we spend 2021 you know after the q4 launch how do we spend 2021 sort of finding the product market in the hockey stick growth

And making sure that we're well positioned in terms of funding welcome position in terms of our strategy in terms of our relationships in terms of the market makers and people already on the platform

The stability of the code itself and everything you know to really grab the initiative that we create by launching that public main net in q4 and turn that into a really really amazing success story in

Terms of growth of trading volume in terms of people actually using vega and in terms of demonstrating some of those things we talked about well bonnie funny really no one could have said it better clearly you're

Setting yourself yourself up for arguably serious success with your team giving yourself yet that another year or half a year to get towards that main net everything you've said is really

Suggesting a confluence of all those variables to provide for a leading a d5 reviews platform protocol for the future already it's a hot topic right now a lot of people are wanting

Something like this it's going to be great to see you enter into this sort of this crypto game as they call it but mate if anyone wants to get in touch with you or wants to go and engage more with the

Community which social media sort of um means are there available for people to get involved i'll put them all in the links below as well so that people can but you want to just give a bit of a plug to your social

Media yeah absolutely so we have we have community forums at communityvegaxyz uh we have a twitter account which is actively limited and sort of active at vega protocol uh i

Have a personal twitter which is at barnaby which is b a r n a b and double e um it's a strange spelling of my name but yeah so that's uh those are the main main ways got it well i'll put them all

In the description below and barney as a founder as one of the key members of of this project of this protocol of this team thank you so much for making time today for all those listening it was entirely

Free it's all about education on the blockchain looking at what is leading in the space and d5 absolutely is the buzzword right now and looking at derivatives all these suggestions are that volume is

There and we certainly need more discussion about what's available in a trustless permissionless framework or offering this this team this vega protocol is really at the cutting

Edge of this discussion and we get to see exactly what's going to come forth at mainland but it is exciting times wish you all the very best barney as you build this with your team

And hopefully we can catch up mate before mainnet and really just continue to discuss how you're developing so that people can become aware and get ready for what what is vega protocol

Awesome thanks brad i'm really really excited to continue the conversation with you but also you know with all your sort of subscribers and with everyone else in the community like we really do want to make this a very

Open and collaborative process and i'm very happy to sort of take questions feedback and and all of that by their social channels so thank you

Absolutely mate you're very welcome and for hopefully others looking to our content creators hopefully they can get in on get on a call with you as well barney engage in more of that discussion spread

The word of your value and really allow for people to understand more in the crypto community and beyond of what is coming for derivatives for d5 derivatives

On the blockchain take care mate and hopefully we'll catch up again soon thank you very much for your time yes

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