EP.45 [EN] - JC: Unique Value Proposition of Qilin as a Permissionleess Decentralized Perpetual Swap / 无准入去中心化永续合约麒麟的独特价值
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Hello and welcome everyone. I'm Mabel Jiang, the host of 51%, a podcast series presented by Multicoin Capital. This show is the exploration of blockchain's rapid development across Asia with a particular focus on the perspectives, communities, and operators based in China. My goal is to bring Eastern perspective to West and Western perspective to East so you can better understand the crypto's unique market structure and how these distinct communities think and operate.

This podcast will feature a mix of English and Chinese discussions. The language you're hearing now will be the language I use for the rest of the podcast. Stay up to date with my latest episode by subscribing to this podcast. Thank you for listening.

Mabel Jang is a principal at Multicoin Capital. All opinions expressed by Mabel or other podcast guests are solely their opinion and do not represent the opinions of Multicoin Capital in any way. This podcast is for informational purposes only and should not be construed as an inducement to make an investment or relied upon as investment advice. Multicoin Capital may at times hold positions in some of the tokens or companies discussed on this show.

Welcome back to 51%. This is your host, Mabel Zhang. Today, I'm really excited to invite JC, who is one of the core contributors to Qilin Protocol, to come to 51%. Hi, JC. How are you? I'm doing great. How's it going, Mabel?

Good, good. Yeah, we'd love to chat with you about SheLand. I mean, derivatives protocols has been extremely popular over the past 12 months. But before that, let's talk about your background. How did you get into crypto? Yeah.

So yeah, so I guess I could dive into this first for myself and then for the team behind Chilling Protocol. So I started investing in cryptocurrency in mid 2017 when I was in the US and then I moved back to China to tap into some connections building on Ethereum and then

Back in the days, there were still a lot of actions going on around EOS, IO as well. So I was part of the team that, part of the building engineer team that built some applications on Ethereum, like wallets, as well as on EOS. We forked EOS.

into a chain with a slightly different governance model back in 2017. Because we saw a bit of a problem with the voting corruption going on within the EOS community of how the top block producers were always those from the exchange side. So we decided that was a bit of a problem and slightly remodeled

the governance. So we decided to fork EOS into a separate chain and then we got some momentum from the EOS community. Basically, part of the EOS community that was disenfranchised by the BP voting corruption then. So that was back in 2017 and starting in 2018, we

got into DeFi with both a market making team as well as our original building team. So the teams sort of just came together and decided to build in DeFi. We originally built some

something similar to synthetics a more of a liquidity aggregator application uh back in 18 and 19 but then synthetics was already taking off at that time so we decided to quickly move on to the next next stage because um the trading team um of chile really has a huge background in market making across centralized exchanges in both the spot market and the derivative market so we

So we have an expertise in the risk aspect of centralized exchanges and also the derivative part. So we decided that the derivative market is something that's going to see tremendous growth upside after this spot, after Uniswap and Synthetix. So we started building Qilin in early 2019. It was named in something else. And then we decided to change that to Qilin.

and later change the name. So the name actually has a bit of a story that we can delve into after this. But then most of the team have been building in crypto since 2017. So we have a market making, a trading team, and that's still doing, I think, 200 mil volume daily across centralized marketplaces. And then the building team

So the team adds up to about 40 members and we are distributed across North America, Europe and the greater China region. So yes, it's quite a bit of a background and then one of diversity as well.

That's awesome. I mean, I would love to dive into like the team background later as well, because I feel like that could be something quite relevant of why you're doing Qilin. But before that, let's talk about what Qilin does and also why the name Qilin.

Right, yeah, for sure. So Qilin protocol in short is a decentralized permissionless perpetual trading protocol. So anyone I introduce Qilin to, we always emphasize that we define permissionless

slightly differently compared to other protocols because there is a lot of derivative protocols that claim to be permissionless. And they are to a certain degree, but what we want to achieve with shielding is full permissionlessness

Basically, what that means is we want all three aspects of DeFi. So you have permissionless trading. I think that's with a Web3 wallet, any protocol can pull that off pretty easily. And then we also want permissionless market making.

such that liquidity provision is not done through centralized participants, rather through community and token holders. And then we also would like permissionless perpetual pool launches, so that users and traders and liquidity providers have the choice of which asset they want to launch the liquidity pool in,

so i think the third one you know permissionless launches liquidity pool launches is the part of permissionless design that's really not that's not something we've seen in the derivative marketplace yet um on a very large scale because um uniswap in the spot market has done it pretty well and we've seen tremendous growth on uniswap and similar

DEX exchanges where there's a lot of altcoin actions going on. That's why most of the communities choose to have a DEX launch liquidity first with Postrack. So we want to see something similar in the perpetual derivative market.

So on Chilling, what's really cool about achieving permissionless perpetual launches is that traders and users in general can launch the perpetual liquidity pool in any time.

in any asset that they want. So say you could have the traditional stable coin liquidity pools for the perpetual contracts. So the trading and then the liquidity provision are settled through the stable coin assets that you provide.

Whereas you can also choose to launch the liquidity pool in the token. And token native launch options are available there as well. So you can choose to launch in any DeFi assets, any altcoin asset that you hold. So that won't be excluded to stablecoins because there's a lot of stablecoin contracts on centralized exchanges. But if you're able to launch perpetuals in DeFi,

in altcoin, in tokens, then really that's going to serve a huge part of the underserved altcoin market in crypto. So you can really scale the perpetual derivative market pretty quickly if you enable that permissionless perpetual pull launch option. So that's what we want to achieve with Xilin. And we've actually pulled off some pretty nice stats with the v2 testnets, the permissionless version.

Yeah, should I continue to the question about the name? Yeah, I think the name, I mean, for a lot of people who doesn't speak Mandarin, they might not understand what it means. So I think it would be great for you to explain a little bit.

Right, so one inspiration for the name is that we're actually quite curious about the name of choice for DAI, DeFi stablecoin, because that was originally conceived on the Mandarin word for lending.

So they chose a name of Chinese origin. And so what we wanted to achieve is the Uniswap of perpetual derivative. And Uniswap, based off Unicorn. So we looked at what Unicorn is since most of the Qilin team, a lot of it is

is located in China. Although there is, the rest is across Europe and North America, but then some Chinese, the Chinese team, the Chinese members of the team were really passionate about sort of the name Unicorns. So we were, we,

we were trying to see what's unicorn in Chinese and it turns out it's chilling. So that matches our vision of achieving full permissionlessness for the DeFi derivative markets quite well. So we went for that name. So yeah, we definitely want to also raise awareness on

the eastern aspects of the eastern part of the building community in DeFi because there's a lot of actions going on.

Because of cultural and language differences, a lot of people aren't aware of it. So, yeah. So, chilling. And because of the pronunciation, like most people don't know how to pronounce Q in Chinese. So, that's become a... So, yeah. We sort of need to give them a heads up. Hey, this is how you actually pronounce it. But I guess we should also allow for just community creativity, whatever.

however they want to pronounce it, we're fine with. Permissionless pronunciation. That's funny. Yeah. Like I, it's funny that you mentioned MakerDAO. I heard about that story too. I mean, it's actually, it has double meaning. One is lending. That's like how we call it Dai in Chinese, but also I think Rune's wife's name last name is Dai too. So,

So somehow it just kind of got mixed up. So that was pretty funny. I want to touch upon a little bit what you talked about in terms of the permission this pool set up, because I think there are some kind of deep down concept that you didn't really touch upon, but for just for the ease of understanding, but I thought we should talk about, which is on a lot of the centralized exchanges, like you see two types of

perpetual swaps. One is the inverse one. The other one you call linear, I guess. Those are the ones that are based on stablecoins, right? So we've seen quite a few of these perpetual swaps, 50 centruized perpetual swaps based on the linear ones, like the stablecoin ones. But you don't really get to see a lot of the inverse ones.

And then also, even on decentralized exchanges, you have limited number of pairs that are inverse perp that they can support. So I guess this kind of drives to the question of what really inspired you to try to bring this permissionless inverse perps to on-chain? And then anything for that to do with the team's background? Yeah.

Yeah, so there's definitely a lot of relations between why we choose to design Chilling in a particular way and what we have in our background, what historically we've been doing, where we're coming from. So yeah, Chilling definitely has a...

So at the outset of building Qilin, we wanted to make it as altcoin friendly or the long tail friendly for the crypto market as possible. And the reason, I guess, is twofold. First is has to do with go to market and also how to fill in the market gap because centralized exchanges historically offer more linear pairs, that is perpetual contracts settled in stablecoins.

uh than inverse pairs you know coin margin or token native uh perpetual contracts if you will so and and the reason is actually the risk for both the exchange and the market makers and sometimes the market maker could be the exchange trading team the risk for them with stablecoin settled of perpetuals is way lower compared to

compared to the altcoin margined contracts. And that is because they can always, even without inventory, they can always hedge it in the spot market with stablecoin. Whereas if you have inverse perpetuals, token native perpetuals, you sort of need an inventory of the token

in order to hedge against the risk. So that's a challenge. So inventory accumulation is a challenge for both the exchange and the market makers or liquidity providers. So that is why we have not seen a big emphasis on inverse pairs on sex marketplace. But I think that's something we can pull off. This is actually where the DeFi market

could do better compared to centralized exchanges because SEX really does well in terms of providing liquidity and small spreads for

you know uh top tier assets like bitcoin and ethereum when it comes to derivative contracts um but with d5 if you can make it the marketplace permissionless then you can really tap into the tremendous outgoing market potential that is untapped on centralized exchanges um and this all this inside has much to do with uh the background of our trading team because we

The trading team is called Token Mania. So the trading team was launched in 2017 and Token Mania has since then served over 400 altcoins as their main market maker, as well as the main market making partner for three top tier exchanges.

So there's been historically a lot of insight into the altcoin market and the needs of these altcoin projects. So a constant question we get asked is how much, how do I get margin or perpetual listings for my token from these project teams? And usually they become quite expensive. After the listings, after the spot, after...

after the margin listings, the perpetual listings get quite high with this entry barrier for a lot of centralized marketplaces. So if you want to scale the derivative market,

token native inverse perpetual contracts are actually an excellent way to do it. You can pretty much, so for example, even in DeFi derivative right now, a lot of the existing protocols don't have more than 20, even some single digit perpetual marketplaces, right? But with token native market pairs, if you can do that with single-sided liquidity, then you can scale the derivative market

very quickly. You can easily scale it to supporting hundreds, if not thousands of trading pairs within a year if the community takes an interest in this. So I think there's tremendous potential in this as well. It's a huge gap in the market.

Right. I think what you said about centralized exchanges, I think another aspect of this was that, you know, the matching engine of centralized exchanges always has a limit. If they try to optimize for trading volume, which obviously, you know, the trading volume for linear pairs is going to be larger than they will.

not be able to support as many the inverse pairs. And they will only list the ones that are actually going to drive a lot of volume, which is like the larger one, Bitcoin, Ethereum, maybe some of the other larger market cap for the inverse. So I think here, to your point, DeFi really generates a unique kind of

It allows scalability. It allows a lot of these inverse pairs to list. As long as you have the liquidity in the pool, people can just generally set up without having the centralized exchange permission, which is pretty awesome. Yeah.

And I want to talk about one of the descriptions that you guys had. I noticed this the other day, so I thought it was pretty interesting. I mean, when you introduced Sheelan, you said it's a decentralized permissionless perpetual swap. But your Twitter, the one-liner actually says decentralized volatility protocol that provides the ability to long volatility of any crypto assets. So...

You kind of emphasized on the volatility part. Maybe you can expand on that a little bit. Yeah, so that is an ongoing debate within our protocol team as to how we actually name the protocol. Because volatility is something that's really been an engine for growth coming from our market making side of business.

Because what we've noticed, serving as the market maker for so many projects is that for those altcoin projects, volatility creates a lot of trading opportunities for the token holders in the community. So that is something that many altcoin projects actually want because it generates attention, it generates profit opportunities.

One problem for a lot of these projects is as they go through the build phase, as they actually settle down and start building, updates from the project don't come out as quickly as they did in the beginning, where there's a lot of excitement about this new path of vision that they are pursuing. So when a project starts,

token reaches a certain cap, there is a risk of dropping momentum from the community. So what Inverse Perpetual is really good and beneficial to this project is that it just provides an opportunity for the HODL community to

to long and short or short the price of the token. And then that kind of incentivizes participation in the spot market from the community as well.

So if you are able to do that for a project, it sort of smooths over the period where the project doesn't push out as many updates and to excite the community as possible.

So this is something that can be done on the marketplace level. Whereas if, say, the project consistently delivers to the community and generates a lot of reasons for fundamentals for price actions, then this

can be a tool for furthering volatility as well. If there is a marketplace where token holders can simply make profits from betting on the future price of a token, then likely the spot market participation will be higher as well.

So this and we see this as a specialty need within the altcoin market because there's already enough institutional participation and derivative traders for assets like Bitcoin and Ethereum, whereas there has not been a similar level of attention to the altcoins. So we see this as a sort of

um leveling the playing field between the between the top tier assets and the altcoin assets and this is why this is why so many projects have expressed interest in in launching on shilling's permissionless market when when our minute goes live yeah that's actually super interesting right like you you also mentioned earlier that um

you know, a lot of the projects would, obviously they would prefer having the inverse pairs instead of the, the linear pair, just because like people don't need the inventory of the token for linear and they can just long with stable coins, but then like, you know, for inverse, they actually need to hold a token. So I would assume the, although,

all the projects are incentivized to actually work with you and then try to create their own pool so that people can stake their tokens into the pool to provide liquidity.

Yeah, that's actually a great point. One, I guess, service or demand from the project is actually additional staking, staking design, staking products or yield opportunities for the token holders. Because if you are able to devise a yield product or a staking product for the community,

gives holders additional incentive to become long-term supporters, long-term holders of the token.

And then we have already seen that through the liquidity bootstraps done in the spot market, say liquidity mining bootstrap for Uniswap or other DEX exchanges. A lot of projects have done that, but really what the perpetual liquidity pool does is creating

an additional program, additional opportunity for projects to do so. Say now you can make profits from betting on the future price of the token, now you have more reasons to hold the token long term because there's additional marketplace opportunities here. So that's actually some, I guess, very beneficial convenience that we have benefited in addition

building, building, chilling for the projects. So now not only do projects have a derivative marketplace that they normally wouldn't have access to, but now they also created an additional reason for their community to stick with the projects in longer term.

Yeah, I definitely see, you know, it's matching two sides of the market, right? Like one side is like people who want to maximize for volatility and then they come trade here. And then people who want to support the project for long term, like they can put their inventory in the pool to generate additional yields. So that's definitely interesting. Yeah.

Since we are here, I probably would like you to walk us through the actual construction of Qilin. Yeah, maybe you can do that and then we can talk about some of the things that you just described.

Yeah, so there's quite a number of features that we can talk about when it comes to the technical design of the protocol. So on the highest level, we have the liquidity design of Qilin. So the liquidity design is done slightly differently compared to other

perpetual derivative protocols in DeFi. So Chilling actually chose to implement a peer-to-peer liquidity provision model rather than an AMM or VAMM as some protocols are doing it.

And the reason for this is that PewDiePool first, it doesn't really require a double side liquidity provision. So users only need to deposit one asset into the liquidity pool. And so that sort of increases the capital efficiency and then reduces liquidity.

risk exposure on both sides of the trading pair. And the other reason to do it is that peer-to-peer, contrary to conventional wisdom, actually provides high capital efficiency in many cases because since the longs and shorts positions match against each other first,

So LPs actually benefit from that counterparty matching

basically at leverage and then only need to provide liquidity for the outstanding positions that are not matched by between longs and shorts. So LPs essentially are providing liquidity at leverage, which creates capital efficiency, improves capital efficiency for liquidity.

liquidity providers and then uh so it's a pretty simple design and that uh that's easy to to understand so uh at this point we're simply left with okay so since we're not using amm there is no impermanent uh loss on the side of lp uh but there is a direct risk exposure uh for lps when there's you know a significant amount of outstanding margins between

long and short. So we simply have to address the LP risk exposure now. And the way we do this is through the funding rate and then through also a slippage mechanism.

So whenever, usually when we talk to people about a Chilean's funding rate, it's a little bit confusing because Chilean's funding rate is not necessarily used to offset the difference between market index. It's actually used to mitigate risk for incentivized liquidity providers during times of extreme volatility. And what that means is

LPs receive funding rate payments from the outstanding margins between longs and shorts. So we are not sending funding rates between longs and shorts. We are rather sending funding rates from the margin pool to the liquidity providers. So LPs receive

get protected when the market is volatile. So say there's way more longs than shorts on Chilling in the margin pool right now. So ILPs actually receive payments from the long traders and that reduces the risk exposure. So it basically achieves risk mitigation while not sacrificing the user experience of traders at all.

And the same way we are doing it for the slippage design. The slippage is also based on the LP risk exposure. So we reduced the liquidity and hence level up the slippage when the risk exposure is high. So basically we re-engineered both mechanisms just to suit the beautiful model better for LP risk exposure.

because the main reason, the main problem that we see, one of the reasons why derivative in default has not really scaled as well as the spot market is the LP risk remains high. If you will, you can think about it like this. So in the spot market, you have impermanent loss as a risk exposure source of risk for liquidity providers. But

But in DeFi derivative, on the derivative side, essentially LPs have permanent loss as a counterparty in AMM or peer-to-peer. So the risk profile of LP in derivative is much higher. And the same goes for centralized marketplace. So this risk profile is a serious issue in both CeFi and DeFi. So in DeFi, if you want to attract liquidity providers,

yields are very important. So you first need to mitigate the risk exposure for LPs first. So that's why Chilling has emphasized so much on LP risk mitigation. And then we have these couple of mechanisms to

to do so. Actually, a new feature that we've implemented for V2 Chilling is something called a liquidity debt slash bond.

So that is another layer of risk backstop that we seem necessary as we talk to more projects and see what their concerns about launching DeFi derivative pools. And liquidity debt essentially is a feature where traders, when they make a profit during, say, extreme volatility,

LPs are usually suffering a loss on the side of their LP shares in the liquidity pool.

So in order to prevent further loss on the part of LP, liquidity debt is kicked in as a feature. So traders actually receive liquidity debt tokens. It could be interest-bearing or simply non-interest-bearing. They receive liquidity debt tokens as promised future profit payments from LP.

So, it's pretty much, also, ILPs no longer need to pay for the traders when they've suffered a huge loss, whereas they only need to pay back the traders when the pool recovers in value and liquidity. So, that pretty much guarantees infinite liquidity on the part of the trading.

experience, whereas also protecting LP. So there is quite a lot of intricacies and delicacies depending on how you approach this risk profile issue in DeFi derivative. And sort of at this point, since we have so many features, we have gone down the risk profile rabbit hole so much, we are pretty much on the, we pretty much all have the consensus within the team that any DeFi derivative protocol without a

a significant emphasis on LP risk exposure is it's not gonna it's not gonna be able to pull it pull it off or survive in the long term so yeah it's pretty interesting and a long topic we can delve into right so when you say pool I think it's a

like from my understanding that peer-to-pool it's like a more nuanced version um i remember back in the days when we were talking about the design like you mentioned the tranching part um maybe you can kind of give a little bit of download on that as well um because i think that's like what's unique about your quote-unquote peer-to-pool design

Right. Yeah. So when it comes to liquidity pool, we actually offer an option for a tranche structured liquidity pool.

So the peer-to-peer pool part of liquidity provision stays the same. But what's different about a tranche structure liquidity pool is that LPs have the option of dividing their liquidity pool into two tranches. One is the primary liquidity tranche and the other being the reserve liquidity tranche. The primary liquidity tranche acts as the primary source of counterparty liquidity for the trading, for traders. And

Usually, this has a higher risk profile and hence the reward for this, the primary tranche, is higher. So LPs can conceivably generate higher APYs for their primary tranche asset.

Whereas if you are a risk-averse liquidity provider, you can deposit your asset into the reserve liquidity tranche. So the risk profile of this is lower since the liquidity is only used as reserve liquidity. But you get more lower yet stable APYs for being LP in this tranche.

Essentially, one big reason why we decided to have a trunk structured pool is that there is a lack of risk differentiation in DeFi in general, not to mention especially in the derivative market. So because a lot of community traders actually have different risk preferences, but the current construction, the current progress in DeFi has not really given the flexibility to do so.

So this is something that we see as potentially quite attractive to a lot of community and then token holders with different risk profiles. So say if you are someone with trading infrastructure and hedgerability, you can be the primary challenge liquidity provider because you can hedge against the risk exposure elsewhere in other markets or in other parts of Chile.

But if you are simply a token holder who wants a sustainable yield for your liquidity, then you can simply be a LP for the reserve tranche. So it depends on how you play with this.

What we hope to do is that as the DeFi market matures, liquidity providers have more options choosing what kind of yield products they can choose. Because right now there isn't really a whole lot of diversified real liquidity yield products in DeFi right now.

I think a lot of the construction design space that you guys are kind of wondering about, I mean, at the end, it's about the risk profiling. So from your perspective, I mean, you also talked about yield quite a bit. So what's the kind of special value proposition and some of the other derivatives protocol on the market that you see like Qilin provides, but the other ones don't?

Right, so do I need to be careful with this one, like with name dropping? Well, I guess, yeah, let me forget about the other ones. Let's just talk about the special Valor Pop edition that you feel like you guys are differentiated. Okay, yeah. I have been warned multiple times by

by our team, just even internally with name dropping. Because I think healthy competition is always good, but then we want to create as an open environment for every progress possible. But yeah, I think the unique proposition of Shibing mostly is that we have sort of enabled the first ever

yield product, yield liquidity pools based in the derivative market. Because usually when people think of yield generation in DeFi, they usually think of the, you know, lending markets with Aave, Compound, Wi-Fi, and then, you know, Curve. And not so much on the derivative side. So there's a gap in the derivative market for yield generation.

But if you do permissionless liquidity pool launches like you do in Chile, you can pretty much give 100% flexibility to crypto users, crypto holders into creating yield products settled in whichever asset that they choose.

So something we've seen very interesting is that from our testnet, the inverse pools, you know, the token margin pools actually had way much more volume. They constitute over 65% of the volume generated during the testnet period. Way more volume than the stablecoin-settled pools. So that gives you a sense of the community is very much interested in generating yield for their

for the token holdings, non-stablecoin token holdings. So I think what's going to happen eventually is that as DeFi derivatives evolve, there's going to be the emphasis on derivative-based yield market is going to be a major growth engine for scaling DeFi derivatives. And then we've just seen the beginning of it, yes.

And in fact, people are able to, the users will be able to generate far more competitive yield in derivative liquidity pools than in the lending market.

The testnet stats, what that tells us is that, say, usually the APY in the lending market doesn't go beyond 5%. Whereas because of volatility, so higher risk generally means higher reward, right? Because of the volatility,

LPs generally are able to average out an APY of, say, 50% to 60%. So for a lot of altcoin community holders, that's going to be highly, highly attractive.

And it's also going to be attractive to projects because they only have the means of giving out inflationary rewards, giving out token distribution to the community to bootstrap liquidity as a reason for users holding their token. But now they no longer need to, you know,

go through that inflationary unsustainable incentive program. They can simply choose to have a liquidity pool or chilling and then then generate, enable a yield generation opportunity for their token holders.

So there is quite a bit of an advantage in launching a perpetual liquidity pool than bootstrapping liquidity in the swap market with inflationary rewards. Right. You mentioned some of the traction in the public testnet. What are some of the other numbers that you feel like it's worthwhile pointing out? And I'm also curious, who are the traders right now on the testnet?

Right, so the traders are all on Cheating's testnet earlier this month. So we had a testnet testing competition going from the end of November to early December, early this month.

And then we had about 800 unique addresses participate in the testnet. So we were pretty satisfied with the number and they generated quite a bit of a trading volume. And then the stats coming out of the trading contest is actually some traders were able to generate more than 7,000% of ROI for

for the trade testnet assets. So that's something that's really interesting to us as well. Given that this is sort of a first ever derivative product of its class, that users are able to generate ROI and yield for the liquidity this high. So I think this is something

Definitely new to us and new to the general crypto community as well. So I think what it demonstrates is really the power of having a permissionless market. That is, you don't have centralized liquidity providers or market makers providing liquidity. You have community-based token holders being a liquidity provider earning yields. And you also give the community the freedom, empower them to launch perpetual pools in any asset that they want.

to enable a derivative market for their favorite altcoin tokens. So I think this really demonstrates that when you give that freedom, flexibility of choice to the community, the community traction comes naturally. And you certainly wouldn't need a whole lot of inflationary rewards as you do in other protocols to incentivize community participation.

Interesting. So like this kind of like, you know, gets to my question about your go to market strategy. You keep mentioning permissionlessness. I do think that's probably one of your important features. And then, you know, the permissionless meaning any community can set up a pool if they want to. So how do you think about go to market in terms of like how much you guys are, you know, the core contributors are involved? And then how do you motivate more people to come? Yeah.

So, yeah, a lot of the go-to-market advantage that we have, I would say, is rooted in our background as a market maker that's been in the industry for quite long. Really, because we're still doing, at this moment, market making for 40-plus project partners at this moment simultaneously.

So, and then we also have partnerships with a couple of DEXs and community IDO platforms that are willing to partner with us. So there's a lot of new projects that we can onboard to permissionless markets and they, even if we don't reach out to them, they can launch perpetual pairs for the tokens just permissionlessly on Tilling as well.

But a lot of connections and resources we have that we can boost up early adoption of Chilean is through these network partners that we have accumulated for a very long time.

So, so, sort of, we are at a crossroad of, you know, do we want to go full deep on this or, or we, we can do away with the early adoption bootstrap, you know, totally in its entirety. I think, I think, I think, I think, I think the conclusion we've come to is that we,

We want early adoption for the projects we are closest to first because they've been really good to us and then so we are long-term partners. So we want them to test out the product first so they can get the full benefit of early adoption and the network support that we can give them.

and then later when the market scales. Because what we imagine is that we should be able to scale the marketplace on Chile pretty quickly, starting in 2022.

So there should be no reason to suspect that we can't pull off the hundreds of marketplace perpetual markets until next year. So we're actually quite excited about this. And then

The early initiation, the early period of adoption is more going to be us educating projects about what perpetuals are, what are linear and then inverse pairs. Because not all projects are really familiar with DeFi derivative terms, because especially if you look at the metaverse track,

of crypto. They are really coming from an entertainment, gaming or design space of crypto. So derivatives and perpetuals are going to be something completely new to them. So I think there's going to be quite a period of education and onboarding there as well.

So what we eventually hope to achieve is to have as many people educated about perpetuals and the benefit for the tokens as possible, and then really connect the non-trading or the non-DeFi part of crypto with the DeFi part of crypto.

I mean, I think a lot of them, they could just treat this as a community engagement tool, right? Like I said, basically they're connecting two parts of the community. I mean, some of them, I mean, there's always some speculators and then those people can go after the volatility and then people who want to support long-term, like they can get the yields. I think that's like really a way to match the needs and then engage the community better.

which is great. I wonder where is Shilin being deployed at this point? I mean, I know from the past conversations that you guys have some pretty interesting views on multi-chain world. So how are you thinking about multi-chain strategy at this point? Or maybe you have some kind of newly developed thoughts?

I think early on, we were definitely layer two optimists. And then there's no question that... So even though, I guess a good angle getting into this is how much gas efficiency a protocol has when it comes to its code optimization. And Chilling has been able to do it reasonably well.

Stats from our past tests indicate that trading on Chilling in Layer 1 in the gas cards is between 1.5 to 2 times that of Unisoft B3. So that is still competitive if you consider it on-chain.

especially if the volume of the federal trader is quite high. But in general, the absolute gas efficiency of Chilling Protocol is highly competitive.

But in general, we do believe that L2 migration is inevitable. But we are more so coming from the angle of the assets available on various L2 solutions. For example, if we consider Binance BSC as a L2 ecosystem or a more efficient blockchain ecosystem, the number of unique assets

assets available on BSC and the perpetual markets that Chilling can support, can enable for those assets. There's a huge amount of opportunity there. I think we've seen a mutual willingness

from Chilling and the various ecosystem to support them. So, Oracle adaption for those L2 markets and ecosystems is definitely something we are working on at this very moment. And then also, whichever ecosystem has interesting unique assets that we can support, we're happy to enable Chilling for those blockchain, for those various ecosystems.

And as Arbitrum has seen more access migration available on there, I think being adapted to Arbitrum also means that a more accelerated adoption of permissions for petrols. I think that's something we're going to see there as well. So we're really coming from an asset diversity angle as well as a derivative adoption angle.

No, I think this is a very interesting perspective. I've never heard this before, but I think that's probably a right way to think about for a derivatives protocol. One last question before we close down this interesting conversation. Have you seen any other novice derivatives construction, maybe on Ethereum, maybe on other chains recently?

Yeah, I think primarily we have seen some interesting development with regard to

the sort of liquidity or type of derivative protocol built to specifically the DeFi environment that is not seen in the traditional financial space. For example, just speaking for the Chilean team myself, we are actually thinking a

a hybrid AMM model that's going to enable capital efficiency for LP through a spot and combined spot and derivative liquidity pool. So the liquidity pool will be able to support both spot trading and then the derivative trading.

So I think that's going to be some interesting development when we launch it in Chilling's next version. But then there's also some interesting protocols

in other ecosystem as well. I think last time we briefly mentioned hubble exchange on Avalanche. And then there is also, I think in general, so say in terms of the competition in the divided river space, we have DYDX as a

as a sort of established player with inflationary rewards, although they have, because they have a lot of backings from centralized market makers with pretty good reputations and then adoption potential. There's also Perpetual that uses Unisoft v3. So all of these different implementations of DeFi derivative, I think they are all very interesting and

I think one big reason, one really good thing, characteristic about Divided Rivalry is the players in this track are all, you know, you know, burying their hands in the sand and then really battling. So it's not as, you know,

So it's not as fast moving as, say, new tracks like Metaverse or Gamify or Socialfy. But then every player in DeFi derivative is really building hard fundamentals so that their projects can last long. And I think this is something unique to the DeFi derivative space because it is a track with very high entry barrier.

And then any innovation that happens in this space is going to happen at a very high level and a very deeply technical one. Got it. That's super interesting. Thanks for sharing. Well, thank you so much for spending the time with us today at 51%. It was a nice conversation. I hope to hear more interesting stats and traction from Chile. And good luck to you guys. Thank you so much. Thanks, Morgan.

Cool. Thanks.