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Audio and transcript from the April 14th, 2022 installment of “Conversations with the Coop” with Joseph Delong - Founder of Astaria, Former CTO of Sushi, and Former Ethereum core developer.
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Crypto_Texan: Hello, everyone. Welcome to conversations with the co-op. This is where we source questions from the index co-op community to gain insights from today's leaders in crypto and DeFi. I'm your host crypto Texan. And today on the show, we have Joseph DeLong who was an OG Ethereum and DeFi developer, and founder.
Joseph, how's it going? Thanks for being on the show with us today.
Joseph Delong: Thanks for having me. And it's really exciting to be a founder for the first time. Honestly, like I've always been kind of. In close proximity to early stage platforms. And I've never gotten to be like the dude that is helping found the platform, which is pretty cool.
Crypto_Texan: That is exciting. And another thing I forgot to mention another tag for you, or title is fellow Texan, which I love. There's a lot of great Texans in the Ethereum space in general, and you are one of them.
Joseph Delong: Ah, thanks. We have quite a bit of people in Dallas, a growing group in Austin and a little community in Houston.
And about nobody in San Antonio. For the most part, I would say most of the people who are here are traders by nature, maybe one other developer. So in the San Antonio area.
Crypto_Texan: It's interesting to see how. Texas is starting to become just a hub and just a very welcoming place for the, I guess, digital asset and blockchain space in general.
Are you kind of getting that sense of.
Joseph Delong: totally. I think part of it is, Texas is a super lenient and tax laws is like, you see a lot of people kind of leaving California New York right now. And what do those places have to offer is a lot, right? Like in proximity to capital like environment in California, in New York, it's like proximity to capital kind of being the center of everything.
It's very interesting. Just being tax advantaged with maybe slightly less attractive outdoor experiences in Texas is doing really well
Crypto_Texan: absolutely. I completely agree. That can be the part that Texas does lack a little bit. Is that. I don't really have an ocean front. We have a Gulf front, which is okay if you've ever been down there, but anyway enough about Texas for now, let's get started by just talking about your background.
I think you've got a very unique background that brought you to the space. Would you kind of just mind sharing, just tell us the story of who is Joseph.
Joseph Delong: Sure. Yes. I started when I was young, I kind of like didn't have any real direction and didn't really have much opportunity. So I kind of fumbled. I left the house when I was 18.
Pretty standard for the United States. And I kind of fumbled from like job to job, like just not really doing anything until I wound up landing in the air force, which was I think very beneficial for myself. Long-term and I was in the air force for four years. Did that got out? And went to college or using like GI bill, which is this basically scholarship for veterans to go to college, like a hold over from world war II.
And then I started working at a bank called USAA. It's like mainly served veterans and their families and I helped them start like a blockchain lab there. And then I was working on like it theories, some stuff for the bank. And then I met Johnny Ray, actually. Who's like the co-founder of LA.
At USAA, then we built a prototype, had the first east Denver for like in, it was very similar to like SETI at home for doing like big math problems like that sort of stuff. Big computation, distributed computation built that kind of on the first IPFS stock or first load PTP stack with a little bit of like theories.
Coordination for that stack. And then show that to Joe Lubin and try to get like acquired or invested by. The consensus and he didn't really like that, like the platform, but he liked us. And so he hired us to do the east to core development for consensus. We built the tech of client together in the world.
We both jumped out actually at the same time, like just by coincide. He jumped out to found element. I jumped out to work for dapper labs for a little bit, worked for dapper labs for a little bit. And then Maki asked me if I wanted to work at sushi. And so I worked at sushi for like approximately a year leaving in December of last year.
And after was like, like all sorts of like crazy and turmoil, like surrounding that. So I just kind of took a break for like a month, took my family to like Hawaii and Dubai in Egypt. We didn't like all the flux. Then, like I met Justin and we started working on Astaria, which is this capital efficient lending platform.
And he really liked the design and I really liked Justin. And so we, we kind of clicked and we started Astaria and we'd been like fundraising and building ever since.
Crypto_Texan: that is a really interesting background. And so you mentioned that when you were at the air force, you feel like that that provided a lot of, I guess, benefits for yourself.
Do you mean. Did it help you prepare for the blockchain crypto world? Or maybe just like helps you grow as a person? Like, can you elaborate on that a little bit?
Joseph Delong: totally. It was mostly like financial opportunity. This is like coming from a background where I was like extremely destined. The super poor, just living on a shoestring budget.
And then the air force comes along offering something like 35 K a year for me at that time. And in 2004, that was like crazy money, you know? And after that, I got the opportunity to go to college, which really wasn't available to me before financially and maturity wise.
And so after. Getting out of the air force, kind of have this opportunity to get educated and go do something with my life.
Crypto_Texan: And so you also mentioned at USAA that you helped them start up the blockchain lab over there. And I'm curious as to like around what year was that? And then did they already have a blockchain?
That was 2016? Okay. No, that's fine. 2015 and 2016.
Joseph Delong: They like started in, stopped at once during like a pump cycle. We started it on another pump
Crypto_Texan: and that was kind of like around the, if I remember, like that was around the time where people were saying blockchain, not Bitcoin. Right. Was that kind of the mentality?
Joseph Delong: That was totally the meme. And we got them moved so far along. Actually Hudson worked with me at USAA. That's where I met Hudson. I know him. He worked in the blockchain lab. He helped start it as well.
Crypto_Texan: Well, Hudson is a great Ethereum core developer or...is he's a developer. He led the all, all core devs call for quite a while.
Joseph Delong: He's a, he's a developer in that he's been educated in development, software development. He primarily does project management. And so he'll, he'll lead the all core dabs calls and did project management for all core devs.
Crypto_Texan: I think he was at flash bots too recently for awhile.
Joseph Delong: Or he was, he was there then now he's taking a break.
Crypto_Texan: It sounds like.... Well he, and he and I were actually like messaging the other day. I think we're going to grab a drink next week, but that's besides the point. That's interesting. It's just interesting that you and Hudson met at USAA, but I think that's just kind of how these stories unfold sometimes.
If you remember, like way back when from like an institutional standpoint, obviously USAA was interested in the blockchain space, blockchain technology. Can you think of any other organizations, institutions who were also looking into blockchain around that time?
Joseph Delong: USAA, EY, Ernst and young state farm Liberty mutual.
I don't remember like a bunch of insurance companies from city group.. A lot of like banks and insurance companies were interested in that. And a lot of them were doing like lots of interesting and experimental stuff, but this whole blockchain, not Bitcoin thing tainted the, the design space. Because in the essence of private blockchain is what's great as a coordination mechanism, right?
Like you got to consider to these fortune 500 companies are never talking to each other. They have no systems integration. Like we would do subrogation settlement, which is like repayments after an insurance loss. A bunch of different companies who would do all of that. You think we'd have like a computer system that we'd talk to get to it?
No, we did it all by mail. It was like internet packets that arrived by the mail. Cause they would immediately like scan them in and OCR all the data in. And then, then you start to like computerize, generate a check and then wrap and mail it back to the other companies. So like having fortune 500 companies like talk to each other or having connected systems.
Pretty interesting, but generally just like private blockchains are stupid. Like don't make any sense because if you know who your counterparty is, then a Paxos algorithm is just as effective. The real innovation in blockchains that really innovation of Bitcoin was trustless. Cause Byzantine General's problem had been solved for some time by knowing who he is.
Crypto_Texan:. That makes a lot of sense too. It's interesting to see too, probably from your perspective, cause you were involved in this so early on. That like just the attitude and how the attitude about blockchain and blockchain technology has evolved over time. Do you know if USA is still involved in that space at all
Joseph Delong: the insurance subrogation system that we started for them to basically put all their subrogation on chain, as I understand that is still moving along, but I bet that there are, I think of like, just generally the attitude has changed completely.
I think you can like how absurd. That Hayden got his bank account shut down by chase Manhattan, JP Morgan chase. Isn't like, is the primary lead investor in consensus. They are buying up Bitcoin like crazy. And they're like, oh, let's shut down. Like, Hey. And it's like personal bank account, like absurd, but like, that's kind of like some ways we've grown in some ways we haven't.
But I think about it. All the people who are kind of like, would be super negative in this space, but it's funny, like once the capital came kind of everybody shut up and they just became working for a regular company.
Crypto_Texan:. And I think a lot of the things that they are talking about, like just everything being on chain and having these protocols be decentralized.
So you don't have to rely on any. Centralized mechanism for control because when you do have centralized control, that is a centralized potential point of failure and that's a centralized risk. And I think I just kind of look at DAOs and protocols the way that they're operating now. And well the layer one is decentralized and the protocol might be decentralized.
I think maybe the teams working on those protocols are utilizing centralized services for coordination, like discord, for example, and get hub. You know, if those were to shut down I, I feel like there's a huge risk there. And do you, like, do you see that as risks for,, protocols in DAO communities or in like, what other risks do you feel like are out there that maybe aren't necessarily being addressed?
Joseph Delong: That's interesting.. I think,. Discord centralized services that you have to lean on are really problematic. I think generally the. DAO's people think of DAOs as people or a group of people. And I think that's probably the wrong way to think about it. I think Alice should be what you're calling the coordination tools.
DAO is not comprised to people. People are using a DAO or people are co-coordinating through a day. Cause those kind of puts finite constraints on what you can and can't do. But the reality of the world is that you're going to need much more latitude to operate. So say for instance, that index co-op wants to have a hosted front end.
Right. They're going to need to sign a contract, which means they're either going to need one person to be the sacrifice, to sign that contract, or they're going to need to set up a legal entity. And once you set up a legal entity, how does control of that legal entity flow? Is it flow like directly to the DAO because there's not a perfect analog to the DAO.
So like there's complications with that. Or you need to pay a vendor. The vendor wants to be paid. Regular money. Right? So you, now you need a bank account. What do you do? Somebody in your DAO and they're sexually harassing somebody else in the DAO. How do you kick them out? Right? They have like, let's say they have a bunch of the tokens.
Can you kick them out? There's is there a way to force them out? This is like, these are all of the like regular problems that are in the world that regular corporations deal with. DAOs, just aren't ready to deal with.
Crypto_Texan: I totally agree there. And I think another thing that you're kind of touching on is that I think we're starting to see the merging of these two worlds, right?
The traditional Meet-space world versus the decentralized blockchain world. And as those two worlds are converging, or you're kind of saying that like the lines are getting blurred on what we should do to move forward, right? Like you have. Does it form its own legal entity, which might go against some of the philosophy of sofa, like the hardcore OGs of the space.
So that you're seeing that, I guess it's, it's more of like a philosophical quandary, right? Is that what you're saying?
Joseph Delong: I think people see it as a philosophical quandary, but like in reality, we just have to deal with the realities of the world until. Like legal recognition of a DAO in the same way.
There's legal recognition of a corporation as an entity, an entity being like somebody who can act in the courts, somebody who can hold a bank account, like the corporate equivalent of person-hood, we just can't do it without the necessity of having some coordinating corporation.
Crypto_Texan: that makes sense.
And I think the type of person who is working in DAOs or working in web three in general is probably, maybe has a different mindset that someone that works in the web to traditional finance world. And you've, I'm sure you've done your fair share of hiring developers. So like what, what do you see as like the differences between those types of people?
Because you've worked with both at USAA and other jobs, what do you look for when you're hiring developers and what are some of the differences and similarities you see between those two worlds?
Joseph Delong: Sure. The design constraints for blockchain are much different than the design constraints for web to, for instance, I, everything has to be.
Design that the maximum attack that can happen on the system is a grief attacks where there could be a theft of funds or attacks where there could be breeding frozen funds or something like those are design constraints that you think about when you're building in web three, that you don't necessarily think about what you're building in web two, because you're like, okay, Messed up the database.
Let's just go roll back to our earlier copy. And that's fine because there's no money involved really. Or if there is money involved money that's controlled like a paper contracts and not by digital contracts. And this is a real issue. In the blockchain space. So very often you'll hire web to developers and they'll think, oh, let's remove all this like Byzantine fault tolerance stuff.
You know, it's taking up a lot of space or it's taking it's like, it's really labor intensive to deal with this like decentralization aspect. It's like that's, without that, there's nothing right. That's the core tenant. And it's just an ethos that you probably have too. You either get it or you don't.
Crypto_Texan: That's very interesting. Something you said, just like, so very plainly that I haven't really thought about is that basically digital contracts are a lot less forgiving than web 2 or TradFi contracts. And so do you see yourself having to retrain when you do hire people from web two and move them to web three, do you have to retrain them on just like what we perceive to be very basic web three things like the Byzantine generals problem or Byzantine fault tolerance is?
Joseph Delong: Luckily when people are leaving web 2, to come into web 3, they're kind of like into crypto a little bit already. So they have an idea of the principles, but if you're hiring somebody fresh out. You have to talk to them about what it is, why when you're hosting a front end, you can't keep a database of users. Right? Like why, when you're hosting a front end, that the greatest fail over has to be into a safe state where the user can access it.
Right. Like saying that we'll have a very sophisticated host with load balancing in et cetera. But the fail over is an IPFS front end that we is a static implementation of the same UI, right? Like, why did we have that is because we want the end user to always be able to. Access their funds are managed their fault in a decentralized manner.
Crypto_Texan: And when you were working in this space, I know that you have deployed on various various layer ones and layer twos and side chains. Did you feel like that each community in each side chain, each layer too had its own personality or a culture? Or did you feel like it was, it was pretty much the same.
Joseph Delong: They're totally different. I think. And then also the other consideration is that those people. Who are on that chain are very much like getting rewarded in the native currency. So like, say if you're on Avalanche or something, you'll be getting AVAX. And if you're on BSC, you'll be wanting to get like BNB.
And so they have like kind of a vested interest in there, but totally, like BSC is like this wild west of scam chains and. You know, optimum, arbitrary, or like if theory, some light polygon is like, this is probably like an old perception, but polygon was like the wild west for token farming, et cetera.
I think that's right. They each have their own little personality.
Crypto_Texan: Did you find that some teams for much easier and much more accommodating to work with than others? I'm not going to ask you to pick out specific chains, but what was that like and what, like other frustrations, like, do you run into when you're trying to coordinate.
Two different entities in the web three space.
Joseph Delong: Well, what two entities? You mean like the DAO and this chain you might be deploying to? Yes, yes, yes, exactly. Oh it's like we have a lot of latitude to do what you want and when you do, you're able to kind of make a lot of progress in coordinating with these other checks.
Polygon was amazing to work with. I really liked those guys and they were very interested in pushing up polygon. And so they gave lots of rewards for that to be given out to the users. And that was, that was pretty great actually. And they've had a very good kind of like business minded on what they were doing.
Crypto_Texan: Well, that's great to hear, obviously, something I kind of wanted to pick your brain on a little bit was just on the market making side of the DeFi space, because I think when you look at a protocol like uni swap V3 and the concentrated liquidity provision that it allows, I kind of see it as a platform for maybe professional market makers and maybe not so much for a retail and passive market makers.
So do you think that like the uni V2, X times Y equal cave forks have a place in the DeFi world? Long-term and if so, like how can those forks or those passive market makers, I guess if you will, how can they differentiate themselves from that capital efficiency that union SWAT B3 provides currently?
Joseph Delong: Like I think the jury is still out on B3 and a lot of ways I think the design is so good. Like I've come around to that over time. I think initially, like my impression was that it was not that interesting. Um, I think something like V3 on a platform like bento box will probably be the last design of iteration for AMMs for a long time, because the design is so haphazardly efficient and intelligent.
But V3 is like think 90% of the positions in V3 are still underwater. So that it's that great for liquidity providers is great for producing a price, but if it's not good for liquidity providers, long-term what are they going to do? They're going to walk away. And if you produce a really good price, actually efficient, what difference does that make if your liquidity providers are walking away because it's an unprofitable.
Crypto_Texan: That makes sense too. And yet when you say liquidity positions are underwater, Do do you mean they're out of range?
Joseph Delong: Oh, like they are in impermanent loss.
Crypto_Texan: Oh, impermanent loss.
Joseph Delong: And compare that to any of the two. I think part of that is to do with the path independence. And once you go above range, it's like, if you want to adjust to get back in range, that requires you to swap in the same pool that you were just in to adjust to range, which it turns your impermanent loss into a law.
To adjust your range. And so it's just not that profitable for LPs yet. I mean maybe, maybe long-term they becomes profitable, but right now it's not looking so.
Crypto_Texan: And I think it's also very interesting. I mean, there was this conversation for awhile about DeFi apps, possibly creating their own blockchains.
Like I know compounds hinted at this for a while, and I think there's some other protocols who have touched on it, but do you see there in the future being like a. And have a chain or a, or a uni swap chain, just app specific. Or do you think that conversation has kind of gone to the wayside in light of the multi chain universe?
Joseph Delong: I think Compound is like quietly, like swept that under the rug, the whole design of Ethereum and EVM compatible blockchains is composition is I have other contracts that I can interact with. I may see application specific roll-ups that would be interesting to kind of get at a gas efficiency gain, but application specific chains are relatively irrelevant because it is this scaling design.
That makes sense in conversation, but when you put it to paper, it doesn't make sense. Right. It's kind of the same argument of why don't we just raise the gas limit, right. Raise the gas limit to like 50 billion gas per block. Wouldn't that be great? it would be great because what, like we can't propagate blocks and you have huge like data availability issues.
And so like application specific chain is like I of the same decider. Like let's just scale by increasing block space. Right. It's just doesn't work. Right.
Crypto_Texan: Absolutely. And when you're talking about the app specific roll-ups would you not lose some composibility on those as well? You totally
Joseph Delong: would lose composability.
They would be designed in such a way. That would allow you to have like some sort of cross roll-up in between two roll-ups to maintain composition, which is like, you could do like some cross chain composability too. But like, I just don't see anything in that space for cross chain besides bridges. This is like, let me move the tokens from chain a to chain B and that's basically.
Crypto_Texan: And there are still just so many hurdles in the define ecosystem or that the DeFi ecosystem faces in gaining mass adoption. So I'm wondering, just like in your mind, like what are those hurdles to gaining that mass adoption and what are some solutions that you could just think about on how we can overcome some of those hurdles?
Joseph Delong: Okay. So there, I'd say a few major problems with the user experience that aren't really discussed. I had this opportunity to come to me one time. It's like, you can put your company's name on a former car and you can pay to do that or whatever. Right. But like, let's say that you do that. Okay. And let's say you're a unit swap.
Okay. And you put unit swap. Work on a formula one car April show up to uniswap.org. And they don't have an Ethereum wallet. Don't have any theory on them. Don't know how to pay gas and they can't pay gas. What are they going to do on your website? So
Crypto_Texan: I was on mute, but I was laughing over here because that is such a good point.
Joseph Delong: Right. So the first issue is, is wallets. Okay. So we need some wallet solutions that are like custodial or like pseudo custodial non-custodial kind of thing. Like these like hybrids. So that's the first thing we need to. Second thing we need to do is economic abstraction. These are gas relaying services that allow you to submit a transaction.
And pay for gas without having to have eat. So that's those, that's the second problem. And the third problem is, is on-boarding of funds is probably like aren't ranked or whatever. You probably need to do these in some order. That makes sense for the user, but like that on-boarding funds. And so I come to swapped out at work and I now have.
I need to get money into that wallet. Okay. So what I have to do right, right now, I have to go to like Coinbase where like back in or FTX or whatever, I have to go someplace in, by Ethereum with my credit card. And then while I'm there, why don't I just use that? Like, what's the point, right? Like sexist or like a hundred times faster.
They have, in some cases, better liquidity. They have professional market makers. I can transfer directly to my boot-camp. There's a lot of advantages just have that DEX is. And so those are the big ones, wallets on-boarding. Paying for gas in native currencies, economic abstraction. I mean, you really need those and somebody needs to develop those solutions.
That's kind of like old programmers, you say like, oh, wouldn't it be great. If I could search my computer for files, I'm looking for this specific file. They're like, oh, you can do that. Just go into the command line and type this and people like, no, I want to click a button and do that. I'm going to do it in my gooey.
And sure. There's a way to do it. But like for the average user, they're not going to know how to do that. They're not going to care how to do that. It's not like something they're interested in.
Crypto_Texan: How far out do you think we are on solving those UI/UX shortfalls that you just identified?
Joseph Delong: One person has to do it right one time and everybody else will follow.
I think that there has to be some white labeled service to do those three things. It'd be like 20% of what Coinbase is. Right. If you could like, and you could bundle that as like a white labeled, so. For adapts, like unit swap or curve, right. So that they can just integrate it into their front end. Any user could basically come to their, their UI and, and use it without having funds, on boarded, not having a wallet and not having the native token to pick asset.
Like that would be fantastic.
Crypto_Texan: Again, so many of these DeFi front ends are very, I guess, defined native friendly, but they're definitely not general retail friendly as well. So I can assume that. Once you have that type of integration, you're going to have to do a pretty big revamp of the entire front end or from a UX UI standpoint.
Would you agree to that?
Joseph Delong: Totally. I mean, curve is a good example that has like a really attractive front end. It does. Like, it depends on like what your like preference for is, but like, it's got a really beautiful for an end in terms of design, but like a really unfriendly UI in terms of user expects.
You know, you just want has a very good UI and a very solid user experience. And so I think if you added something like what I was just describing to you, the swamp front end right now, like people would be able to use it like
Crypto_Texan: today. And curve is who I was thinking of. So I'm glad you brought them back up.
That's who I was thinking of in that example. I understand
Joseph Delong: this stuff. I still barely can't like move the controls on Curve. I don't really, I look at it. And very slow to use it. Cause I don't always understand.
Crypto_Texan: Oh, interesting. I think another issue that people talk about in the space and this isn't really towards mass adoption or UX UI, but it's definitely like a community issue.
And that's like the token voting system just as it stands today. And there's obviously like different iterations with like locking and the VIII token model. But I don't know in your mind, like, what are some of the major shortfalls that you have seen on the governance side that we might not have a solution for yet, but definitely needs fine tuning.
And if you have any just general solutions, like feel free to throw those out as well, interested to hear. Well,
Joseph Delong: like how dumb is that? Like, like I have more tokens, therefore I know better that doesn't really make sense from a, if I have more tokens, I have more skin in the game. And so I'm less likely to make bad decisions is probably a good, good assumption, but I have more tokens.
Therefore, I more intelligent to voice my opinion about something is like probably not a good
Crypto_Texan: model. So what, what improvements do you think can be made on top of that?
Joseph Delong: Well, I think that you need kind of like a. Typical corporate structures is like with hierarchy and different stages of responsibility for each issue.
So a board of directors, a C-suite and then a hierarchy of like how you operate. Not saying that like, everything has to be exactly static and that someone who's a software developer, can't also be in the C-suite and nothing like that. But it's just, you need to have a clear design of hierarchy for decision-making because ultimately when you say that we're not going to have any hierarchy, it creates an opaque hierarchy of.
In the organization and what their capability is. So here's an easy example. Okay. We're a group of five people and we decide that we're going to form a DAO and we have one person who is like acting as the person, like the accounting. Right. And they're making determinations on whether we. The person like the accounting, right.
And they're making determinations on whether it be. Pay for something or don't pay for something the instant that they have that capability to control purse strings, there create some level of hierarchy, right? It's like hierarchies are not, do not have to be explicit. Hierarchies can be implicit.
Hierarchies are. And it's like, so tragically uncool to be of this like mindset, right? It's like we're all just going to work together and everything's going to be fine. That works great for teams that are like four or five people. And you start bringing in more people and you start scaling an organization, just the round trip, communication alone to make a decision literally impacted.
20 people imagine that you have to have 20 factorial conversations about something, hearing the voices of 20 people about it, a single decision you need to have kind of like areas of responsibility and a hierarchy to, um, move that up.
Crypto_Texan: I can see that. That makes sense. So that, that conversation is not just exhausting.
You feel like. It's impossible.
Joseph Delong: And it's like, it's tragically uncalled to be of this mindset. Right. It's just, I understand that. But my goal in the end is to have people do that and effectively coordinate in DAOs. I think that their people are lying to themselves, hoping that the last 20,000 years of human organization could be irrelevant because now we have a blockchain.
Crypto_Texan: I feel like I could stay on this conversation for pretty long time, but I also want to get to the protocol that you founded as well. So let's go ahead and transition over to that. Is it Austria? Is that how you pronounce this protocol? A-star. A-staria? Tell me about it.
What's going on with this project? What's it like to be a founder now? And just tell us a little bit about it.
Joseph Delong: So starry is econ capital efficient lending. And the way that we do that is by creating virtual tokens and lending those. So we have markets where people can cut down collateral and they're lending a virtual asset with their virtual asset.
It's then like kind of topically swapped for the real asset underlying. And we kind of came up with this idea as we were looking at isolated lending markets and thinking about isolated lending market has this real issue of illiquidity. So if every market has to have a permutation of every two pairs, which require, increases your capital requirements to say, oh, I need to lend on this, this and this market.
And that becomes really problematic. And the alternative to that is the, with the Aave Compound model, where you have to kind of white list to. And so I was like, okay, well, what happens if we lend the Canary token? Right? Like what if we lend a virtual currency? How does that change this design? And I think that helps us drive up liquidity in these isolated markets and allows us to lend to more.
Crypto_Texan:
And so how far along are y'all in the development of this project? I think you said your co-founders with Justin, is that correct?
Joseph Delong: Justin Bram. He's here by the way in the audience, we are, have been developing since, I guess, February we were working on our simulation. Of the protocol. So this is a simulation is an economic design where you can simulate real-world conditions.
So what we're doing is we're going and we're pulling old lending data from other protocols and feeding that into our simulator and seeing how our system would react and getting a determination on how capital efficient we think the system is in comparison to regular life.
Crypto_Texan: And how do you foresee this protocol being used from a comp composability aspect from, with other protocols?
Joseph Delong: I think for other protocols and users, they won't see any difference between this protocol and like, are, they are compound E real capital efficiency. Design is all under the hood and abstracted away from users and other protocols. So it would just say, okay, collateral borrow and get their underlying.
Crypto_Texan: Interesting, and so when I was kind of looking at the Twitter on this, I actually kind of thought this was a metaphors play at first, until I started digging a little deeper down. Do you have any projects that you, that you work on, like on the side, on the metaverse space, or do you have any favorite metaverse projects as
Joseph Delong: well?
My friend just launched this platform or this, um, this NFT series called based schools that I really like, it's actually my profile pictures. One of the basic. And I just think it's like really cool. And the developer did it for basically no payment and the artists did it for no payment. It's a free to mint thing.
If you've done anything in the base community over the last like year and a half. And you just get a base school and you meant it. And it's just neat. It's not like a sad money grab, like a lot of these, like PFP is on.
Crypto_Texan: So we're kind of running up on time. We've got about nine minutes left. is there anything that we haven't touched on that you want to touch on or address?
Joseph Delong: I dunno, like, as we were talking in the beginning, we were talking about polygon. I kind of wanted to talk about them and like what they're doing, I mean
Crypto_Texan: go for it. What are your thoughts on Polygon in general? I know you said they're great to work with, but what, I guess what's just your overall outlook and they're definitely spinning up like zk, roll-ups optimistic, Roll-ups like hybrid solutions. They've got the POS chain. They're doing Supernets now with polygon edge. What are your thoughts or are they spreading themselves too thin? Is this a good idea? Are they going to be the hub for all the scaling theories?
What are your thoughts?
Joseph Delong: I thought they started out as a meme like it was just like, MATIC right.
And I just thought, like, they have just such good business savvy on their end, but this just makes sense. And did just make sense there. They've kind of like when they had the opportunity to. Kind of like when they first started, it was nothing more than a meme, right. It's just like proof of stake, Ethereum with a high gas limit.
It's like, there's literally no design element. That's interesting in that, it's just like, okay, we have a high gas limit. Congratulations. Right? Like you can only scale that so far, but they let kind of meme that into existence by like their, I'd say like savvy use of their treasury by taking and incentivizing for dApps to come over.
Incentivizing their users on like, and then when they had this crazy treasury, they, I think they had like a $10 billion treasury at one point, they take that and they go, okay, we're going to buy it every zk team on the planet that isn't working on, something like that. We're going to make sure that we own every zk team, just like zk talent is like very hard to come by.
And like, it's just an extreme amount of business savvy that just like Ethereum can't operate on that kind of level because they're just not built that way. It's like Ethereum's operating a bizarre and, and polygons operating a cathedral. Very cool.
Crypto_Texan: I like that analogy too.. And there's not a lot of zk roll-ups that are being worked on right now.
Right. There's like, there's like Stark net, and then there's zk sync. And then you've got polygons, got a couple Hermes being one of them. I don't know, like what type of DeFi protocols do you feel like would want to utilize? The zk platform over like the POS chain or Ethereum main net, like what kind of projects do you feel like?
Just kind of gravitate towards that type of technology.
Joseph Delong: I think in the end optimistic roll-ups are a middle step towards zk optimistic. Roll-ups make zero sense if he can produce an EVM circuit. And so like the end game is for scaling is zk, right? Some coordinating chain with a. State machine that validates zk and submission of zk circuits to be like validated, like to finalize a state.
I think that's, that's the end game.
Crypto_Texan: Well, that's a hot take Joseph, especially right now with the, with the OP token airdropping to everybody.
Joseph Delong: I got some, I got some, like, I got like 3000.
Crypto_Texan: oh you beat me. I got like 2000, but that's okay. I'll take it's free money.
Joseph Delong: Did you get it for being like a multi-sig or something?
Crypto_Texan: I didn’t for that I'm actually not on any multi-sig. I don't think I want that responsibility, but DAO voting, I've bridged to optimism. I've bridged other chains on different wallets. I mean, it's just an accumulation of five or six wallets that I have for different purposes, which is a pain in the ass to manage, but it's fine.
Joseph Delong: I never went and used optimism. I got it for being a multi-center for sushi. And then what else did I get? I got it for giving to get coin grants, which I do like all the time, because I think like people are making dope stuff over.
Crypto_Texan: Absolutely. I mean, Once the ENS airdrop hit and I got those tokens.
I was like, man, I just need to go hop on and use every single protocol that does not have a token yet in hopes of getting one and it it's working.
Joseph Delong: So, and then a great, I like the ENS one, cause like ENS was such a sleeper. I mean, there was a time when I remember people. Tell me about ENS or people would talk about ENS and people would react like, oh, that's stupid.
Like, why would I want blah, blah, blah dot E right. It's doesn't even resolve to a domain then. Like, they're like, they have just taken in such a long-term vision on their protocol. And it's not like another side, like token drop money, grab kind of thing. They did it like after how many years? Like three, four years of development.
Crypto_Texan: totally. They were around for a long time and it's, I think it's very interesting to see. Every single retroactive airdrop that we're seeing, like you're seeing more and more sophisticated ways to incentivize the type of behavior that you want your token holders to have. Right. Optimism did a great job at it.
ENS did a great job of it. It's interesting to see like what's the, Arbitron one going to look like, you know what I guess behaviors are they going to incentivize their users through airdrops to do it's very,.
Joseph Delong: I'm so bearish on anything but retroactive airdrops I think like this, like yield farming is becoming broadly irrelevant because it's just like paying somebody to do something in the initial phases where you're kind of like spiking.
To attract liquidity to get like flywheel effects of the platform. That makes sense. But this like long-term emissions, like you see in sushi and with some other platforms, it's just like, you're paying somebody to do something and you might as well be like, but you're just paying them in your token instead.
And so like, people have made a business out of that like, oh, I'm LP for sushi because I'm getting this like these tokens or I'm LP for curved because I'm getting these tools. It's not really like how it was originally intended to kind of like create long-term alignment between the people who.
Providing services for the platform. It just kind of become this like farm and dump mechanism.
Crypto_Texan:. It really has. That's something the Index co-op has been pretty cognizant of is that we will utilize the yield farming for like, if we want to start up a uni V3. Cool. Well, it's kind of hard to do that, but you know, like if we want to get assets on polygon, we'll, it will incentivize that for a month or two.
Not for long, there's an un-incentivized TVL is metric that we track on our products. So that's something that we're kind of cognizant of as well. So in am I hearing,
Joseph Delong: I'm not sure if that metric is awesome on incentivized TVL. They're like needs to be a whole subcategory of like
Crypto_Texan: We focus on it.
DeFi Lama should totally do that. That's something we focus on for sure. Because we have people who are holding our products because they want that exposure to that token. Right. Or to that, to DeFi or to the metaverse specifically. So, or they think this is a good deal.
Joseph Delong: This is the most productive thing.
In my mind that I can do with my capital at this moment. Right. And like, there's something powerful in that, not like this idea of like, this is the most productive thing that I can do with my capital. So long as I'm getting a token, right? Like you can't wean them off of. Like over time. It's like, it just like habit for me.
. And it's like, I think the death spiral of a lot of projects.
Crypto_Texan: And just yield farming in general, when you have the, just yield, farming your token, it puts a lot of cell pressure, which hurts the investors in your protocol and the contributors in your protocol as well, which just seems like a net negative when you really long-term net negative when you really think about it.
Joseph Delong: you have to be, there has to be some sort of like ramp up on positions to like your rewards are some sort of log curve in starting up. So I am let's say I'm, I'm taking LPs and I'm staking those LPs. My rewards should be controlled on a log curve or an exponential curve over time.
There should be some incentive for me to stay longer rather than shorter.
Crypto_Texan: And it's hard to find that incentive structure right now, but I feel like kind of what you said earlier, it just takes one person to figure it out and do it.
Joseph Delong:
And then we've kind of unlocked that part of DeFi in crypto, I guess that's what AMM store man AMMs were like somebody. Like everybody was fooling around building like Xerox and like radar relay and like all these like early, no offense to them, by the way, amazing applications building those first like decentralized exchanges. And then they have like super thin liquidity and the markets crash all the time and they're highly interactive.
And somebody was like, Hey, what if we did this in the first design for AMMs like popped up there were just like an amazing and
Crypto_Texan: interesting. Like you said, props to those very early teams trying to build that. Cause they're building in the dark. Right. They had no idea what they were doing. I mean, they had an idea what they were doing.
They knew what they wanted to achieve. It's just, it's hard to write code on it's something so new and so innovative. But once it happened once. A million forks happen and then you just keep getting more and more improvement over time. So we're over time here. But one last question for you. What's next for Joseph Delong outside of your new protocol,
Joseph Delong: I'm building a house.
That's all. I've been building the house for a while now, but now in San Antonio be able to move in. We're going to be able to move in probably in like the next two, three months, which,
Crypto_Texan: oh man, I do love San Antonio. I think it's a very underrated city in Texas. I think a lot of people would disagree with me, but I love it out there.
I love the Pearl district. Love the Alamo and I just put in my two weeks notice at a traditional finance bank. That is headquartered in San Antonio. I don't want to say who it is, but you could probably guess so.
Joseph Delong: Oh man. I know exactly who it is.
Crypto_Texan: Well, Joseph, Thanks for coming on. This has been a real pleasure, always great to have a fellow Texan on the show.
So last word for you. Where can people go to find out more about you and I'm going to butcher this Astaria it's not actually. Astar-i-a. Sorry,
Joseph Delong: star a star. You get a lot of that. . . So on Joseph DeLong on Twitter and, Astaria XYZ also on Twitter, a S T a R I a
Crypto_Texan: Awesome. Joseph. Thanks for being on the show.
Those of y'all who are listening live and the discord. Thanks for listening. Live in the discord. This is being recorded, so we will get this mixed and edited and out to you in about a week. Joseph. Thanks again, sir. See you soon.
Host: @Crypto_Texan
Marketing Images: @crypto_diller_
Producer: @0xMitzy
Conversations with the Coop - Joseph Delong - Astaria