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GM, everyone, welcome to Flywheel, your number 1 source for fracs, DeFi, and everything in between. If you wanna know what's going on in the world on Chain, well, you've come to the right place. This is DeFi Dave, here with Capital K, and we're here to help you harness the power of the flywheel. And today we're levering up, we're going deep, and we're diving into Infinity Pools. We have on Matir, the CEO of Infinity Pools, and we go in depth, we go like literally infinitely deep about the structures and the mechanisms and the ramifications of such a new capital P primitive on chain.

Kit, what are your thoughts?

Actually I have words of warning. Or word of caution to the listeners, grab a notepad and a pen and literally listen and take screenshots and really understand this. Cause this could be a definitely new thing in the space and you've heard it here first.

Because

we went deep for you guys on this 1 because when I was doing my prep work for this podcast, I recognized the importance of what this primitive could be like. So you guys enjoy because I definitely, We definitely went deep.

And he reveals some things that haven't been revealed before in previous podcasts. Like we go deep.

The

true meat of this is like probably halfway through. So make sure you stick around for that. If you want to stick around and keep up with everything we're doing at Flywheel, hit that bell button. Give us a subscribe. Give us a like.

Let us know what you think in the comments below. You know, follow us on Flywheel on Twitter at Flywheel DeFi. You can also join our telegram group at Flywheel DeFi. Join our newsletter, flywheeldefi.com for all the latest updates. And you can follow me on Twitter at defi Dave 22.

You can follow me at 0xcapital underscore K.

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If you want to get started, go to app.frax.finance and turn your ETH into FraxETH today. Hello, hello everyone. Welcome to this edition of Flywheel. I'm your host, DeFi Dave, here with Capital K. And this week, We're taking a deep dive into Infinity Pools.

We have Mathieu, or Mathieu, who is the founder. And what's your title there?

CEO.

CEO. Mr. CEO of the Infinity Pool. It's funny because if you tell anybody outside of DeFi, I'm the CEO of Infinity Pools. They think of like literally like some like mansion with like, you know, with a pool overlooking some crazy view.

Landscaping company.

Landscaping company. I work on Infinity Pools. Yeah, I have a whole team. They're grinding ahead. But Mathieu, thank you so much for joining us.

Yeah, of course. Thank you for having me on. Real pleasure to be here.

So Yeah. Yeah. So let's right into it because Infinity Pools is quite the novel concept for the world on chain. And I'm just wondering from first principles, how did you come up with Infinity Pools? And what are they?

Sure. You know, so the way that we kind of like came up with InfiniPool, and like it was definitely a group effort, right? Like this is by no means like me on my own, just kind of like grinding at night. It was like, oh, wow. Like this has been very much like an iterative process over the course of months of research that like, you know, we eventually got to like the current, like, you know, state of Infinity Pools.

But really, like the reason that we started working on InfiniPools is because originally we had launched another protocol called Lemma Finance that was stablecoin, actually the first stablecoin ever built on top of like perp DEXs. We were the first ones to launch it. And, you know, there was like definitely like some appetite there. Like there's a lot of excitement around DeFi derivatives. But as we built on top of perp DEXs and perpetual futures, you know, we kind of like became intimately aware with all the problems that perpetual futures as an instrument, as well as, yeah, really just perpetual futures as an instrument had.

And the fact that with their current implementation, there would not be a Uniswap moment for DeFi derivatives, right? Because in the end, even if Perpdexes, you know, were terrible instruments and like hard to build on if you had like, you know, crazy growth on top of perpdexes, we would have still been able to build some interesting use cases and instruments on it. The problem is that Essentially what we saw was that most perpdexes were just a simple copy and paste of what was already existing off-chain and without any 10x improvement. The reason that Uniswap is so popular is not because it's trading on the chain. It's because it offered a 10x improvement over its incumbents.

It allowed people to trade 10x more assets via permissionless listing. But more importantly than that, it actually allowed traders to trade those assets 10x faster. Right. So like there was no like listing process that, that, you know, essentially reduced reduced the speed of trading. And so far we hadn't seen anything like that for infinity pools, for like, sorry, DeFi derivatives.

And so that's kind of like when we started like, you know, thinking through, you know, first principles, how could we offer leverage on the long tail of assets? And that's kind of like how, like the mindset that we first started, you know, think about, like not even like thinking about perps, right? Because we knew that like perps rely on oracles and oracles and long tail assets don't mix. There's simply no way around that, right? So like, how do you offer leverage without oracles?

And, you know, we kind of like came up with Infinity Pools then. And what we realized is that unlike Uniswap that, you know, offers 2 really, really nice 10X improvements, Infinity Pools offered like 5 different 10X improvements that were like pretty crazy.

What are those 5 10x improvements?

Yeah, for sure. So, as I mentioned, right, like it's 10x more assets, 10x faster lead of, 10x faster, like listing, right? So like, just because you, as soon as it's available and transferable, you can trade them on InfiniiPools. So very much like Uniswap. But the other free 10x improvements are, number 1, 10x more leverage, right?

So in our V1, we expect that we're going to be able to offer anywhere from 1000 to 5000X leverage.

Oh, 5000X. Oh, wow.

Yeah. Yeah. We actually managed to bump it up even more on high market cap assets. So like, you know, Ethereum, you know, basically the top 10 coins are like top 50 or something. And then, you know, 10 to 20, 000 X on Forex pairs and then potentially

100, 000

X or more on pegged assets. So we're talking USDC, USDT or, you know, STE, ETH.

Can you say that again? Did you say a hundred thousand?

Yeah.

I'm thinking ETH and SFRAX ETH right now.

Yeah. So exciting times ahead. You know, we've got some really, really cool stuff coming. And so this is actually way more than 10x, right? It's like a thousand x improvement, but yeah.

So that's, that's the third 1. The fourth 1 is no liquidations. That one's a little harder to like quantify, but really the way that we think about it is in terms of liquidation penalties. Right? So for perps, what happens, and this is actually super interesting, right?

And like something that I haven't talked enough about, but think about it this way, right? With perps, you've got traders, you've got market makers, and then you've got liquidators. And essentially, you've got $100 in the system. The $100 is gonna be split between these 3 parties, which means that liquidators, they get some significant amount of money through liquidations and liquidation penalties. Because there are no liquidation penalties on infinity pools, the money stays in between traders and market makers, right?

So essentially it's just like a much more, you've got to ask yourself, right? Like, well, if the money goes to liquidators, where does it come from? Well, the money comes from traders, which is why, like, usually expected returns for traders on perpetual futures are actually quite bad. But Yeah, we have an article talking about expected returns on everything. And for infimum pools, it's actually as you crank up the leverage beyond 15x, the expected returns on infimum pools for traders are 10x better, like, or even by several orders of magnitude.

So that's the fourth 10x improvement. And the fifth 1 is the fact that it's what we call counterparty risk. And once again, this is very hard to quantify, But basically the fact that we don't use oracles, the fact that all positions are always settled, you know, in a predetermined, like mathematically guaranteed way, means that there is no counterparty risk. And like all perpetual futures today, even the ones on DEXs have insane amounts of counterparty risk, right? That's why they have insurance funds.

That's why like, and like, even if you think about Mango, right? Like, It wasn't strictly like a perpetual futures hack, but like it might as well been. Right. It's like Oracle based. Like exact same system, right.

Just essentially manipulating the spot markets to like, you know, then like, you know, make money off of like the synthetic or like a loan. So yeah, so those are kind of like a high level of the 5, 5 different 10x improvements or 5 to 1000x improvements.

Yeah, I watched the Dan Elitzer interview on Bankless the other day about making DeFi more resilient. And, you know, the number 1, 1 of the number 1 things he said was that Oracles are such a big dependency in DeFi and we want to create protocols that don't have such big dependencies. And I feel like you guys are going along that path. Have you seen that? And where do you think Infinity Pools fits within that context?

Yeah, absolutely. Obviously, you know, like I'm a big fan of Dan Elitzer. I think he's 1 of the smartest investors in the space. So I totally agree with him, right? And like really the way you need to think about it is, okay, well, what is a primitive and what isn't a primitive, right?

Like a primitive needs to be something like Uniswap, right? Which is almost immutable, you know, governance like light or like less completely. And yeah, it can essentially survive no matter what happens. Unless you have essentially like 0 to like extremely low counterparty risk, I don't think you should be able to call yourself primitive. Because they are really like the building block of everything else.

And when you have oracles, you're really creating vulnerabilities on 2 different axes. The first axis is time, right? So, you know, an asset that might be liquid today is not always going to be liquid tomorrow, right? Which means that, you know, if you're trying to liquidate an asset today and it goes really well, well, liquidating that same asset tomorrow using an Oracle actually might not work at all. So that's the first axis.

And then the second axis is also TVL. So essentially protocols that use Oracles, as their TVL grows and you can borrow and borrow more assets or like, you know put on bigger size that actually is also like a exploitable surface or like a attack area, right? Because what it means is that you've got more gunpowder to manipulate markets, et cetera, et cetera. So, as soon as we're talking about using oracles, you've got plenty of surface attack area and any decks or any protocol that uses them should not really be able to like call themselves a primitive, just because there are simply too many exploits and vulnerabilities introduced when you start, you know, messing around with oracles.

Yeah, I like what you said earlier about if there are dependencies, if there's oracles, if there is counterparty risk of any sort, then you can't call yourself a primitive. And these primitives are the building blocks of DeFi and this economy on chain.

Yeah, Yeah, completely. I mean, you know, we're trying to build a resilient financial system, you know, that will last and, you know, that's 10x better than like the traditional finance system. And I think that like, the only way we can do that is by making sure that we build extremely robust, strong and efficient, scalable primitives. And yeah.

Yeah, I concur. Uh, let's get it. Let's get right into, uh, how the whole process works. Uh, can you walk us through step-by-step what it's like to be an LP and then what it's like to be a trader and how that flow works?

Yeah, for sure. Um, so maybe I can start with LP, right? The experience for LPs is actually extremely simple Also, can I share videos here?

Yeah, you can. Yeah.

Yeah, so this can maybe be like a bit of an exclusive for-

Ooh, it's Flywheel exclusive everyone.

We like it, we like it.

Yeah. Actually, yeah. We like recently filmed like a demo on Loom.

Oh, that's awesome. Yeah. Yes. I mean, I've watched, you know, I've read 2 articles, watched 3 videos preparing for this. So I'm very familiar with how it works and your example of always using the

900

USDC. I'd love to see how it looks like in the UI form. So I'm stoked for this.

Yeah, cool. Can you guys see the... Yep. So this is like specifically for like the, the LPA, but, okay. So basically it's pretty simple.

You're going to have like, you know, like a supply like dashboard where you can like go in, see your active positions with like a WEF USDC, you know, you've got like some liquidity deployed. There are still like some changes that are going to happen, but essentially when you have, actually, let me show you how to like provide liquidity first. So let me, There you go. Basically, when you get to a website and you click on whatever, like lend out or start earning yield, you get 2 options. The first 1 is lending out your Uniswap LP.

And the second 1 will be providing liquidity directly. So if we click on lend out your Uniswap LP, and you have your wallet connected, it'll directly or automatically detect all the NFTs that you actually have in your wallets. And based on that, you can just scroll through, select which 1 you want to lend out, click continue. And then it kind of gives you some details. You confirm that this is in fact the 1 that you want to lend out and then boom, it's done.

It's literally a one-click process and this is how you get some initial liquidity. Of course, you can also provide liquidity directly through the protocol. And this is also extremely straightforward. This is the exact same UX as Uniswap. The only difference is that you don't have a fee tier, right?

So when you're depositing liquidity in a pool, this is a few tier less, which makes it a little simpler. But overall, yeah, it's the exact same. You know, you prove your deposits, start earning, Boom, there you're done. And then, you know, coming back to this, like you can see your active positions here. You can click in it and then you can kind of see, you know, how much liquidity you have, like your unclaimed fees.

And then, you know, you can, let's say you want to close your position, right, you can choose like how much of it you can close, you can withdraw now and we're going to change some of this stuff. But like, basically, like, there are free main perks, or there are actually a bunch of different perks, like providing liquidity on infinity pools. But there is also 1 drawback. So what are the 3 main perks? The first 1 is essentially that you're getting higher yields simply because on top of spot fees, your liquidity is being lent out to leverage traders.

And what that means is that there's also volatility arbitrage that you can do to get the pool yield to be at a certain level. Essentially you're almost always going to be making higher yields. The second thing is that you're making yields, right? Like even when your liquidity is not in range, right? What that means is that like if you've got liquidity between 800 and $900 and the market price of the asset in the pool is $1, 000, you're actually still making money, right?

Because your liquidity is being lent out, right? Like, it doesn't matter that like, it's not near the market price, it's still being lent out, and therefore you are getting paid for it. And number 3, it's JIT resistant, right? So basically, there's no, and this is like, also part of like the the drawback, which is that when you deposit your assets, you're essentially lending out a part of your assets. You're, and the way you can think about it is that you're lending them out for 1 day.

And what that means, right, is that if I lend you out a hundred dollars, right, for 24 hours, right. And you pay me $10, right, in interest up front to have lent you that $100. And then I go like, hey, actually, I want to, like, you know, take my assets out of this loan 12 hours in, right? So like 12 hours in, I'm like, hey, actually, I don't want to make this loan, which is, you know, what withdrawing liquidity from the pool is like, right? You're essentially taking back your assets.

Well, you can do that, but you need to pay to essentially borrow back your assets for the remaining 12 hours, right? So like in this case, If the interest rate stays the same, then I would pay $5. Right. So I got paid

$10. That's basically a penalty if you withdraw early as a liquidity provider?

Exactly.

Okay.

Um, and, and, and once again, this is just like, in case, like you think that like things are going to go to shit in the complete immediate future. And you just want to pay a fee to take out your assets. And so once again, if I got paid $10 for a 24-hour loan, there's 12 hours remaining on that loan. I want to take them back. Essentially, what I do is that I just borrow from anyone else.

And you know, I pay $5. And so that's what the withdraw now thing is. And like, obviously, there's like an outrageous price here. Like it's just, like not actually true, but like, you know, we're just kind of like operating with fake data. And then the other option, right, which is the free option, which is just you can withdraw your assets gradually, right?

So like essentially you get 50% of your assets back the first day,

75%

of your assets back the second day. And actually, like it's even more than that, because you get, you know, if the utilization ratio is like, I won't get into it, but you get a lot of your assets back, like essentially like immediately, and then you get an exponential unlock. So by the time it's like the sixth day, you only have like 2% maybe, or less assets left in the pool.

Got it.

So yeah, basically it's a pretty fast withdrawal, right? It's just that it unlocks over the course of a couple days.

So, Matthew, quick question. When you first lend your LP position into the protocol, do you get to select a duration or a term, or is it just

kind of automatic? It's kind of like you lend once and then it like does it automatically for you. It's infinite.

Okay, I understand. Okay, so you guys just drop it in there and then whatever, then this gradual withdrawing thing, is it always going to be fixed that like by the sixth day, pretty much everybody, pretty much you're fully out? Or can that be dragged on if like, say, there aren't enough liquidity for me to borrow that liquidity to pull it back out?

Yeah, yeah. So that's, that's a great question. So think about it this way, right? So you've got the utilization rate that's at 30% in a pool, right? So that means that like 30% of the assets are currently being loaned out.

As a liquidity provider, if I've got $100 in this pool and I click on withdraw gradually, so, you know, just kind of like over a period of time, what that means is that I get back $70 immediately. So I get back $70 immediately and the remaining $30 that are on loan essentially get unlocked exponentially. And so for the remaining $40, then yes, it's because all loans are the exact same in terms of maturity, they will all like, you know, Like it always takes essentially like 4 to 7 days till I get to like

98%.

Got it. But got it. Let's say, cause you know, you mentioned earlier that you want this to be that any tail asset, just like how Uniswap, The moment is transferable, you can have this market. Let's say it's super early and it's just us 3 in this pool. And let's say, you know, we all own a third evenly pro rata.

So now let's say the utilization rate is like you said,

30%.

All 3 of us decides to hit withdraw gradually, then we'll each obviously get the pro rata of our 70. But then if the traders who borrowed it didn't close their position, how do we get the remaining balance out?

Right. So basically, the way you can think about it, right, is that these loans are negotiated up front, right? So essentially, if there is no liquidity left in the pool, then the interest rate, which is based on the utilization ratio, shoots up to infinity, and then the trader can no longer afford it, right? So if the utilization rate is

100%,

interest rate shoots to infinity, trader can no longer afford it. So Obviously their position gets closed

Right, but by themselves right they they have to pay it on their I thought the interest rate was paid up front So what what happens when the utilization rate, you know maxes out after the interest is paid? Does more interest get add on?

Nope. No, no. So once again, all this stuff is pre-negotiated. So in this case, the trader would pay the same rate that they would have always paid with free LPs in the pool. And then when free LPs simultaneously withdraw, then the next interest rate is essentially infinity.

They can't pay that. So when

the current loan is over...

Oh, they can't borrow more.

Yeah,

exactly. But the current loan won't be over, right? Because I could technically just hold this position and never pay back the loan.

Sorry, what? Could I? All these loans like stay locked into protocol, right? So like, they can't just like decide not to pay it back.

Right, but that's the trader. Maybe it's helpful now to go through the trader's

track, you know,

because then I was before we get way too deep in this, because I this here's Here's the thing with Flywheel Pod, it's like I've watched all of your other pods and I would love for us to get to that deeper level because our audience is that intermediate to expert level DGEN. So I'm sure 90% of them have already watched your pod on Blockmates or Blockworks already. So like here's where I wanna get into the meat and gritty. And plus it was like 3 months ago that you spoke with those guys. So I'd love to hear like your thinking, how that has evolved, how the product has evolved.

So let's get deep on this call.

Yeah, yeah, no, would love that. So yeah, once again, I mean, pretty much like, you know, let me actually just like show here. Yeah. So this is this is what like the homepage is going to look like. Or, you know, once again, we actually filmed this like 2 months ago.

So like, you know, our front end has actually been, like, very close to ready for a while. But unlimited leverage, no liquidations, any asset, you know, and you'll be able to trade any tokens, you know, we'll show you the most traded, highest leverage, some of our investors with, like, some other stuff. And then, you know, you can just choose like, you know, your token here with like popular markets. And so let's say that we're trading Chainlink, which is kind of hilarious given.

Nick Moran's, Oracle's baby.

Yeah, yeah. I think our front end, you know, web pre-engineer, John Johnson, who's an absolute beast, filmed this. And yeah, I wonder, I wonder...

He has

a sense of humor.

So, I mean, it's super simple, right? It's, and by the way, like this guy, This guy was the guy that essentially developed Matcha.xyz.

Oh, really? That's 1 of my favorite products.

Yeah. Very clean UI. Yeah, he was an engineering manager at ZeroX And together with our designer, actually, like they built the first version of Matcha.

Yeah, that's my go-to aggregator, honestly.

Nice trivia.

Yeah. Nice trivia. Nice.

Do you

guys see like some similarities or like some stuff

like that?

I do.

A little bit, yeah. Oh, for sure.

Yeah, you know, like actually 1 of the things is like, you know, like the stuff below. I don't know if you can see it.

I definitely like this graph better than the matcha graph though.

Yeah, yeah. I mean, it's a little more technical, a little more like detailed, which is nice. Yeah. But yeah, like, you know, it's super simple. Once again, you can deposit, you know, so like we're in a chain link, a USDC pool, right?

So when you come in, you select long or short, you can decide to deposit either LINK or USDC. So we're actually going to be multi-collateral on every single pool, which is actually pretty nice for a lot of traders. You select your leverage, your position size. And once again, we'll tell you based on the utilization rate, what is the highest leverage you can like get for like link and Then on the back end and this is actually like a really really cool feature of infinity pools on the back end we are using 1 inch to execute all orders. So what that means is that from day 0 on infinity pools, when traders enter or exit any position, they will get the best slippage in the entire spot market.

Which means that from day 0, slippage will be a slippage, fees, market impact, all of that will be extremely, extremely good. So if we're thinking about Arbitrum, then on Arbitrum, we would have access to GMS and GMX. We would have access to all of the spot liquidity on like RFQs, we would have access to like, like pretty much everything.

Right.

Which is pretty, pretty cool feature that, you know, is pretty cool. So actually, like the only thing that the liquidity and the infinity pools, native pools, like really affects is the interest rate that the traders pay. Right. So like if there's like more liquidity in the pools, then like traders pay like a small rate and vice versa. But the slippage is always the best and the spot market no matter what.

And is the reason you chose 1inch because they've already deployed on multiple chains rather than say like Cowswap or something else like that or Matcha?

Oh, I mean, to be completely honest, like it's just because we had already like worked with like a 1inch integration, like back in the day and it was just kind of easy for our heads to like.

Yeah, so with 1 inch, are you using their router or are you using 1 inch, is it for execution or are you using their liquidity or like not liquid or aggregation? Like how are you guys exactly using 1 inch?

Um, we are just using it, uh, just, you know, trading, trading on it. So like, you know, like, Hey, you know, we've got a person that's just borrowed a thousand USDC and they want to convert it to, you know, Ethereum. Like let's just 1 inch swap this. Like, you

know, that makes sense.

Because once again, the way that Infinity Pools works, right, is that like you use like the Infinity Pools pool to borrow assets and then you know, you do an atomic swap to like enter into like a longer short position.

Got it.

So once again, you know, you choose your like collateral, you choose your leverage, choose your position size, you can see at what price you're gonna get executed or estimated execution price, the interest rate that you're gonna pay, the estimated time to close, right? So like given like the collateral that you put down, like how long would this like position potentially, if it were to lose money, and this is like simply in the case like that it were to lose money, this is like how long it would last. And then the fees and slippage or like market impact. Once again, 2 months ago. So it's a little,

and by lose money, Did you mean by the interest rate that is kind of like, you know deducted from the collateral or lose money as in?

Lose money as in you go thousand X long and like the price crash is

50%

Yeah, so like and by the way, like when that happens right like your losses are obviously limited, but that's what I feel like. When the price moves against you, you essentially don't have any additional, you can't sell some of your position to essentially like pay funding rates, right? Because your position is already underwater. But if you go 1000X long and the price goes up like 10%, then you all of a sudden have like huge unrealized P&L And you can actually use that unrealized P&L to keep your position going. So that means that the estimated time to close is not actually accurate.

Right? Because you

can keep your position going

with unrealized P&L.

So the interest rate is 1 thing, but the funding rate is on top of that?

Um, they're, they're the same thing, right? Like it's, sorry, it was that not clear.

Yeah. No, I was just trying to understand like if The interest rate is already all paid up front and it's taken out of the collateral, right? Because even though this has 5x here,

even though I'm like... Yeah, and this is done every day, right? So it's like you can think of it as like a funding rate, right? So like every day you pay this interest rate up front.

Oh, it's basically a funding rate with 24 hours funding collection instead. So it's like a 24 hour loan each day and that's the funding rate. Understood. Okay. Got it.

And that is taken out of the collateral every single 24 hour period. Got

it. Yeah. And this is, it's actually not like 24 hours. It's actually taken out every single block. Oh, OK.

Right. Yes. Got

it. But the actual index rate is. Oh, so the rate changes on a per block basis, too. Yeah. Oh, I see.

OK. And that's how you got the time because obviously you can kind of factor in if this exchange rate or if this funding rate stays the same for however many days you'll be done in 5 days, 12 hours and 30 minutes. Or however many equivalent blocks.

I understand. Okay. And then once again, this is an estimation given the current.

Sure, sure, sure, sure, sure. Understood. Okay. That's what you got. Because I was just thinking like, how can you get a time and date stamp on market price movements?

I'm like, what? I'm like, So in 5 days, we definitely got a short in everybody. And we can just follow that.

Yeah, this is obviously on a per trader basis. And actually 1 of the interesting things is that for traders, we're also gonna have what's called interest rate tolerance, which basically means that if the interest rate for a position goes above a certain threshold, essentially your position starts to unwind. So basically it allows traders to protect against like, you know, and by the way, like it unwinds with no slippage. And so what that means is that it protects traders against extremely volatile interest rates. Right?

So for example, with like funding rates currently on perps, right, like it can be so volatile that like, and people don't really realize it, right? Like, like they can jump from like minus to like, plus 150% APY, right? And that can like really wreck your position if you're not careful. And so like, that's definitely something that we wanted to like, you know, think about and like offer a solution to here. And like, this is definitely for much more advanced types of traders, but still good to mention it just in case, right?

No, I definitely appreciate that you guys are looking out for that stuff because it could dynamically do that for me. I mean, frankly, whenever you're paying the funding rate, you're probably, the market's probably going in your direction most of the time. So it's kind of when you do have to wind down because the interest rate shot up so high, you're probably in the green. So you're probably not closing it at a loss per se. Sometimes, sometimes.

But I actually have a question for you, Matiu, regarding the asset type here. I can only provide LINK as collateral in this LINK USDC pair, right? I can't do cross coin margin?

No, you can provide the USDC as collateral here.

But I can provide ETH?

Oh, no, you can't provide ETH. No. But if you wanted to provide ETH, what you could do is you could go to a Link ETH pool and then in that case you could provide ETH as collateral for Link ETH. Like, yeah, stuff. But currently, no, you cannot provide a third

cross margin. Yeah. Dave, any question on your end?

Yeah. Um, I had a question. So how I understand it for LPs, at a wide range, you guys, LPs are in lending fees and at a small concentrated range, that is when the trading fees are earned. And so I'm wondering, what is like the expected, you know, like APR for the, you know, lending markets and then expected APR for trading fees? And can you explain just like the difference a bit further for the audience?

Yeah, okay, So the expected APR for lending markets and for trading fees. Okay. So number 1, I think that like really like separating the 2, That doesn't make a lot of sense, right? Because essentially what happens is that, you know, like LPs only really get paid 1 rate, right? And that rate is essentially going to be affected by the lending market.

So what do I mean by that? The correct way to look at what LPs should be compensated is in terms of what we call volatility, right? So you know, you've got asset volatility, right? And what LPs are really doing usually is that they're selling volatility. And so what you want to do as an LP is that you want to be compensated fairly for the volatility that you are selling.

And there are different levels of volatility that you should really be compensated at. So really, it's realized volatility, which is historical volatility. And then you've got what is called implied volatility, which is what the markets actually believe the volatility should be priced at. So LPs here should be compensated at implied volatility levels. So what does that mean?

That means that if the yield that LPs are getting paid is below realized volatility or even implied volatility, then somebody can go on Infinity Pools and essentially buy volatility. The way they can do that is by essentially going both long and short at the same time. And by doing that, essentially what's happening is that you essentially are betting on the fact that the price that you're paying for volatility is smaller than the probability of the price moving. Right? And yes.

So when you buy volatility, what you're doing is that you're betting that the premium that you're paying up front, right, that the interest rate that you're paying up front to borrow assets is going to be smaller than the probability of the price of the asset moving in either direction. Right, so essentially you're betting on the asset being volatile. And so basically, like what this all kind of like comes down to is that Traders and LPs, so LPs specifically, will always get paid at least realized volatility, if not implied volatility, because there is this arbitrage that exists, right, where you can essentially just bid up the volatility, right. And so that's why I say that, like, you know, lending and like the trading fees are intrinsically linked, right? Because essentially, like, there's always like this arbitrage that like uses the lending

to get

more on the yields that they make, right. So there's a floor for the yields for LPS and This is actually really really good right because You look at most Uniswap pools right now, and they're net they're getting compensated below realized volatility levels, which is actually quite bad.

Yeah, like once you're out of the range and in permanent loss, you're wrecked.

Yeah, yeah. And so here there's like a floor and like there's no real ceiling, right? So like you can get compensated essentially like extremely, extremely high amounts depending on like, you know, what the utilization rate is in a pool. Um, and like, you know, how much demand for leverage there is in that pool. Um, so yeah.

Um,

and just to, to finish the, the, the traders bit here, like after I leveraged and got this 500 link, you said earlier in the call that it would stay in the protocol. Now Do I then turn around and re-LP those 500 link into this link USDC pair? Or I would put it like super far out of the range just so that it's obviously not going to get touched? Or does it just kind of stay in my wallet?

Sorry, can you repeat that question?

Sure. So after I leveraged long here with 500 link, right? Yep. And where does that 500 link go? Because it just, does it just stay in my wallet?

Or can I take that 500 link and say LP it into this link USDC pair? So I get to earn, you know, my leverage long, plus some lending interest rate that we just talked about right now.

Yeah, so if you go leverage link, you know, 500 link, it stays stuck like in there, right? Like you can't really move it anywhere else. Like, I mean, eventually like maybe we'll be able to do stuff, but like, yeah, here it just like stays there, right? Like this is like money that you borrowed. Like you can't loan out money that you borrowed.

So... Got it. Okay.

Yeah, that's the next thing. No, no loop.

Okay. Yeah. Okay.

I mean,

there's no

need for looping. You can leverage.

You can

leverage as much as you want. Yeah.

Yeah. And just to finish my thought here is like that 500 link that I effectively, rather that 400 link that I effectively took from the LPRs, are those 400 links still in the liquidity pool so that other people could use it for liquidity purposes, just like trading in and out? Or is that 400 link kind of like taken out completely from the liquidity pool?

So, yeah, It's taken out of the liquidity pool. Yes. Basically, what's happening, right, is that, you know, like if you've got 500 link, right, and you borrow, well, like really what you're doing here, if you're going long link, what you're actually doing is that you're borrowing USDC and then you're convert. And so like you're taking out the USDC out of the pool and then you're swapping that USDC for link. But yes, you're essentially taking it out of the pool.

Also, my computer is about to die. I'm sorry. Give me a second. Can you guys,

yeah, we can pause. Yeah.

Yeah. Yeah. Yeah. Yeah. Yeah.

Go, go, go and find a charger that we're getting to the meat

of this. A few moments later. Hey guys, got a charger.

We're so back.

Okay. So the 500 link here that you just borrowed, that is effectively taken out of the liquidity pool because I borrowed the USDC and then I swapped that USDC for 500 link. Now that 500 link sits in my wallet that is in the protocol still, but it's out of the liquidity pool. So now there is more USDC in this pool than before my trade.

So you've got a pool, right? Like below the market price, it's all USDC. Above the market price, it's all LINK, right? So let's say you've got a thousand USDC below the market price. When you borrow, you know, whatever, let's say like $1, 000 worth of USDC, then you take out the USDC out of the pool, right?

So there's only like, you know, like a smaller amount of USDC left in the pool, right? And then you take the USDC and you swap it for link using 1 inch on the backend. Right, so like, and then that link is locked onto like the exchange, yes. But there isn't more or less USDC or link in the pool, right? So it's all about like proportions.

Okay. Okay. Maybe let's, let's Eli 5 for that for a second. Let's let's, let's do simple numbers. Let's say link is a dollar.

And then I borrowed a hundred link or rather I borrowed a hundred USDC from this pool. So now this pool just have minus 100 USDC because I had to withdraw that liquidity, then I took it, went to 1 inch and bought a hundred link worth across of DeFi, which it could hit that same Univ3 pool that I borrowed from. So a little bit of that USDC could potentially flow back into this origination pool. Yeah, absolutely. And then, you know, I've got it.

Okay. So. Wait, How could it

flow back into the origination pool?

Because essentially, well, what's happening, right, is that the lending, it like right, like where you're borrowing liquidity from also doubles as the spot decks. Yeah, like 1 inch eventually will also feed into the Infinity Pool's spot decks.

Oh, okay. So you guys will have a spot decks eventually and we'll be routed through.

Yeah, I mean, once again, I don't think that's our main appeal, right? Like, yeah, a lot more about like leverage. Yeah. So I don't know if we're going to expose it, but yes, it is a possibility.

I mean, it's just the Univ3, Like 1 inch will find the best liquidity. And if this is a tail asset, most likely they will only have very few pools. And most likely the same pool in which you are leveraging from is the same pool in which you're going to hit.

Yep.

Very likely. So, you know, that's, that's why for me, I'm just thinking like, is there edges or kind of limits to this thing where how much leverage I can kind of take out because I can only borrow so much USDC out of this pool and then swap it for this asset. And if the Uni V3 pair is the only pair in the game, then sooner or later, like all of the link, for lack of a better example, is going to be completely out of the liquidity pool and it's going to be USDC and like, you know, 1.

So actually the interesting thing here, right, is that the liquidity that you're taking out is not the same liquidity that you're using for swapping. What do I mean?

That's what I thought.

Yeah. Right. So think about it this way. You're borrowing USDC, right, to buy link, right? So like, this is all USDC that's below the market price.

Right? And then you're taking that USDC, right? And you're essentially buying link with it, right? So what you're doing is they are pushing up the market price. So essentially, as you push up the market price, what you're doing is that you're actually, like when you're doing the swap, you're not using like liquidity below the market price, you're using liquidity above the market price.

So You can see how the liquidity that you borrowed is completely different from the 1 that you like used to swap. You're borrowing using liquidity below the market price, but you're swapping using liquidity above the

market price.

I get that. I get that. But let's say you keep on borrowing so much USDC that you keep on driving the price up so high that effectively you run out of quantity of token B when you have used all of the USDC. Assuming there's only this 1 pool, this 1 Uni-V3 pair, and you keep on smashing it like that, and you just keep on riding it up, more USDC will flow back into this, or rather the USDC that you took out will flow back in, and then just more of a token A would just come out of this pool.

Yeah. So the interesting thing about infinity pools, right, is that unlike perpetual futures, it's margin trading. So what you're actually trading here is spot and spot is like a real tangible asset. What that means is that if you push up the price of an asset and specifically a spot asset in a very real way across all of DeFi, what you're actually doing is that you are like pushing the real value of this asset, right? So like it's what we call positive slippage, right?

It's like, you know, you're going long link and you push up the asset price. That's actually a good thing for you. Was that not your question? Sorry, I might've misunderstood.

No, no, I understand. It's The collateral and the asset value I totally get. My point was that the actual quantity of link in this pool is going to keep on going down and down and down. Because the link that you just told me, this 400 link from this demo or 500 link, is actually taken out of the liquidity pool. It's not going to be put back in.

And if this is the only pool in the game, like this is the only pool where I can buy a link, then I just took 500 link out of the liquidity pool. And over time, there's going to be fewer link in the liquidity pool, even though my position is up bigly, right? But there will be fewer link in this pool.

Well, you can also think of it as like, you know, in terms of utilization rate, right? Like the more you use like liquidity, the higher the yields are going to be paid and the pool. And then more people will come in and want to LP. Right? So it's very much like a lending market.

Right? If you've got a lending market where the yields for Link are super, super high, like we're talking triple digits, well, people are going to be like, OK, yeah, I should definitely put some of my link in here. Right. So like, yes.

Absolutely. Absolutely. So yeah, so people would definitely come in and ape in. Cause I'm just thinking of like what it would look like for these super long tailed assets, right? And you see some very weird behavior with these longer tailed assets rather than the usual blue chip.

The blue chip stuff, this will never happen with even NWBTC, like never, right? So I'm just trying to

play it out.

Yeah, like these low liquidity meme coins, I wonder what would happen with them.

Yeah, for sure. I mean, I think that there's going to be like some super interesting things, but happening there. Right. Like it's, it's, uh, yeah, I guess, you know, we'll see. But, um, so far, like in terms of like, you know, trying to get leverage like on these coins, like this is definitely by far the safest option, right?

This is like even safer than, you know, going on like some like market and like borrowing and then like looping that borrowing, right? So.

And so now let's, we can go back to the original question of like, what happens now when a LPR decides to withdraw, right? Let's say everybody decides to withdraw at the same moment. And obviously, if that happens, you can't hit the withdraw now, you would have to hit the withdraw gradually, or everyone would just automatically be put into the withdraw gradually.

Well, actually, what you would see is that like the price for the withdraw now would like shoot up to like essentially unfathomable Or like like would shoot up like crazy right because that's the interest rate that you have to pay to

like borrow

your assets

Because there's no asset to borrow. Yeah.

Yeah, if there's no assets to borrow then it's infinity

Yeah, so everybody hits gradual so no one's gonna hit that withdrawal It's gonna be

a factor of mistakes. Unless you

really need that money for some reason. Yeah. Unless you need that,

bro. But you would get pennies on a dollar back. Like there's no 1 logically enough to like would do that. So you everyone would hit the gradual withdrawal.

The market is a rational kit.

That's fair. That's fair. That's fair. That's fair. That's fair.

But in this situation, let's say everybody smashed that gradual withdrawal. Like Matiu, can you walk me through what happens if all of the unborrowed liquidity is kind of like given back out to all the LPers? Like, what happens to those assets that are still borrowed?

What happens to those assets that are still borrowed. So they get unlocked gradually, right? In the same, like, you know, period as, you know, people like essentially withdrawing gradually, right?

Right, because the collateral would because the funding rate, you have to pay it on a per block basis and your collateral is going to get chipped, chipped, chipped, chipped away. Right. And the funding is probably

going to be... You're negotiating all this stuff up front. So it's actually not like the way that you renegotiate, the way that you renegotiate like your rates is probably like every like few hours. It's actually gas dependent. So essentially, if you spend more gas or like, we're still like, this is like actually 1 of the things that we're still like figuring it out like in the last like couple of weeks.

But yeah, essentially like the more gas you spend like the higher the rate of renegotiation but then the less like gas you spend like the less you renegotiate your rate.

Oh, I see. I mean, no matter what, this prepayment is only in a 24 hour period, right? Like,

yeah, yeah. It's definitely happening. Like, yeah, yeah. So basically, like, you know, you're like, hey, you know what, I'm just going to like, I want to pay like $5 to borrow these $100. And then the guy's like, yeah, okay, I'll take that deal.

And then the loan happens, right? And then like next time, hey, you know, like, I actually want to borrow more. Or like, hey, you know what, like, you know, my current loans like expired. Like hey, you know, so basically, like you wait for a loan to expire and then you renegotiate. Right.

Um, got it. So this, this loan expiring, this, this loan expiring is every, like you said, like, you know, every 24 hours, effectively on a per block basis.

So like every 7 days, the loan expires, right? So like essentially, but you're like gradually renegotiating the rate, right? Because you don't need to like re-borrow everything at once.

Okay, I see. I think I missed that key bit is that every loan starts with a 7 day kind of lock on it. Okay, Understood. Now that's why you said the gradual withdrawals also on a 7 day. Okay.

I think that 7 day bit was totally missing communication or if you had said that I totally missed it, but now I get it. Yeah. I tried to back away

a little bit just because it doesn't, from a trader perspective, it doesn't look like a loan at all. Right. Because they can like, like get in and out of like the trading position immediately. Right. Because in the end, like, the only thing that matters is like, you know, the liquidity to be

able to hop in and out. Yeah. I get it. I get it. I see.

So then now, across this 7 day, I'm just thinking about what the part where at the end of these 7 days, I would have to repay the loan, right? If I cannot repay the loan, then, well, it would just be taken from me because the loan is over and I didn't renegotiate and the LPR is like, no, no, no, I don't want to do another loan. So your trade would effectively be closed for you by the protocol at the end of 7 days.

Yeah. Yeah. That's, that's a good way to like think about it. But once again, the renegotiating, it doesn't happen every 7 days, right? It happens essentially like you're alone, right?

If it starts here, it expires like this, right? It's like a curve, right? And so Basically, what you're trying to do is like, as soon as it expires a little bit, you borrow more so that like, essentially, like, you're borrowing more every time it expires a little bit. And that's how you, like, that's how you keep your constant, like your notional constant.

I see. When you say expire.

Right. So like, you're borrowing $100. Right. And so like, let's say like an hour in, then like your loan expired. And so you only have $99 left on your loan.

You borrowed that

$1.

And when you borrow that $1, you're actually renegotiating the rate at which you borrowed that $1. And you know, essentially what you're doing is you're borrowing $1, borrowing $1, borrowing $1. And every time you borrow that 1 dollar, it's at a different rate. And so that's how the rates are negotiated.

I see. I see. OK, because this is very different because I'm thinking when I put on a purpose position, the funding rate just does it for me and I kind of just keep it on. Right. It'll be effectively the same if I was like, right in that 8 hour window, like that's 7 hour and 59 minute, I decide to go back and be like, no, no, no, let's negotiate, I'm gonna reduce my size or I'm going to increase my size to maintain whatever interest I want to pay or don't want to pay.

So the interesting thing about perps, right? And like, this is something that like most people don't really realize is that perps are actually 1 day futures that are continuously cash settled through the funding rate. Right? So what that means is that essentially perps are 1 day futures that are like this, And then bloop, bloop.

Exactly, exactly, exactly. Yeah, I said your position doesn't close. Right. That's the only difference because you kind of renegotiate while the position is already live and you just agree on this next funding rate and like, OK, keep it.

And the fact that you can't. And right. And so basically, right. Like the fact that you can't, you know, when you get a shitty funding rates on purpose, you can't be like, hey, actually, I don't want to pay this funding rate, right? Like, there is no renegotiation, right?

It's like, the purpose is telling you, like, this

is the fucking funding rate you're paying.

And the only way you're not going to pay this is if you exit your entire position with slippage. So, you know, it's kind of like a loss, loss kind of scenario with infinity pools. And like, this is kind of like what I was talking about with like the interest rate tolerance, right? Is that like, like somebody goes like, hey, like this is the funding rate we'd like you to pay. And you're like, hmm, let me think about it.

And you can say like, well, you know what, that interest rate is actually kind of a little high for me. So you know what, I'm not going to do it. And your position actually starts like slowly expire. Right. But there's no slippage.

There's no like whatever. Right. Like there's no like you don't actually.

How does that work, Mateo? Because I'm trying to understand how can my position decay with time and I have to pay it back, but I'm not getting liquidated. But my assets are in link. Yeah, but then my assets are in LINK. I had to pay you back in USDC.

Like is

that somebody got to eat that swap, right? Or

right, right. But like this is because this is like basically it's very particular to Infinipools because once again, and this is like, this is all back like this is all taken back to like, and this is something that only Infinipools does, right? Like there is like no other protocol in crypto that does this, which is the loan with the exponential expiry. And like, there's a bunch of different reasons why we went with like this particular model, right? And like, I know you had like a question about like how we compare it to like other, you know, what we call like borrow AMMs, like in this space.

Like this is this is 1 of like the core fundamental mechanism differences, which is that like all of our loans are have like exponential expiry. And so basically what it means and like why there's no slippage is because you're essentially doing between block swaps. And when you're essentially swapping between blocks, there's, yeah, essentially no slippage. It's like a, think of it as like a TWAP, like between, even between blocks.

Yeah. Got it. So, So your position is effectively getting closed on a 7 day TWAP based on Oh, at that same price because it's a TWAP. Based on whatever price that current kind of moment is. And if you don't want to close, well then buddy, you got to borrow again.

Right? Effectively, that's pretty much the way to avoid yourself from getting TWOP out of your position.

Exactly, yeah.

Got

it. And like, once again, like you can, like as a trader, and this is like 1 option, right? Like, and so this specifically happens with, this specifically happens with lower leverage loans. With like higher leverage, you can essentially just be like, just like give back everything at once, right? So like, hey, I borrowed $100.

I can just like give back, I'm just going to give back everything right now. So it's a little different. But yeah, like the entire loan, right. But in both cases, right, you can like enter and exit your position immediately, right? Like, if I go long, you know, 500 link at any point immediately, I can be like, Hey, I don't want to be like long, a hundred, like 500 link.

And just like get your exposure back to USDC and, and a simple, single, like a 1 inch swap.

Got it. And I just pay back the debt and this be done and clean with that. Exactly. I see. Can I have

a little complicated, but you know, we've tried

to this as much as much super complicated, but we're here for it, you know?

Yeah. I'm gonna let

this all marinate. This is

definitely new. Yeah, this is definitely new. But Dave, any question on your end? I feel like I just hopped

the mic this whole time. Yeah, I do. No, no,

no, no.

This is your time to shine. But I do have a question. You mentioned before there is like no JIT risk. And I have 2, how is that possible? Why is there no JIT risk?

Great

question. Because once again, like you have loans, right? So like, when you put in your asset, you can't just put it in and then withdraw it, right? Because you've got that unlock, right? That's like how.

I guess my other question is, how do you protect yourself against manipulation and any type of attack vectors? Have you guys modeled out of attack factors? And how do you, you know, what is your plan to, you know, lessen that attack surface?

So once again, there's 0 counterparty risk. Okay. And that means that there's no need to like, essentially, like, it doesn't matter what like, what pool you're in, like, there is. Yeah, I mean, the protocol is completely. Yeah, like, yeah, beyond like, you know,

it's beyond it's a, well, it's a primitive.

Yeah, exactly. Okay.

Is it because everybody signed up for, everyone knows what they're signing up for and they're locked in for the 7 days, the interest is settled. Like you know exactly the assets you're gonna get back and there's no liquidation because well, you provided the collateral in the asset that I need to get it back in anyways. If things were to go South, you're gonna hold onto the assets already and you're to put up the collateral in that same asset type. So you just give me all your whole position and we're good to go.

Oh, cause it's already taken care of. Do you see

a world? Yeah. All of this stuff is because it's the, this is essentially a deal between 2 parties, right? And like people know what they're signing up for before like the deal happens, right? When like the trader pays the liquidity provider the interest rates, like they're going to get the best of like 2 assets.

The liquidity provider is going to get the worst of 2 assets. Yeah.

Yeah. I mean, you signed up for it, effectively. You signed up for it and you're going to get paid the extra yield for it. But what's unique, though, is like Infinity Pools allow you to do multiple. It's not a peer-to-peer model.

It's still a peer-to-pool model. And they kind of have liquidity all in the pool to make up what your position you want.

It's a leverage layer.

Yeah. And this is really important, right? Like for, for DeFi, I think that like, right, the perpetual, the success of perpetual futures can really be attributed to the fact that it was a futures instrument that really helped with fragmentation of liquidity for low liquidity assets, right? And I think that's also like the main reason that like options never really took off in crypto. They have this fragmentation of liquidity across strikes and expiry.

Yeah, I have a question. Could you, is it possible? I feel like the answer is no, but I just want to ask, is it possible to put up, for example, an LSD as collateral and the interest from the LSD can pay back the loan?

And use the interest from the LSD to pay back the loan. So can you give me like an example of the pool?

Or like any interest sparing asset.

Yeah, I could, I could. Dave, thank you for that genius idea. Let me take it home right here. So let's say this pair is the S-Frax ETH USDC pair, right? And let's say I borrowed to leverage long S-Frax ETH and I borrowed USDC.

Obviously S-Frax ETH is yield bearing. So is it possible for me to effectively earn that yield? Granted, this is only 7 days.

I guess it

is because it's like always, it's interest bearing, so the price is always rising of the token. So the answer

is yes.

Yeah, The answer is yes, but there's only 7 days. So like effectively for it to really close out your whole position, you'd have to keep on, you know, really leveraging long. And everybody needs to kind of accept the renegotiation for you to kind of get there. But yeah, effectively, you totally could have that 7 percent native ETH be converted to USDC and slowly pay back the USDC that you borrowed over time.

Yeah. Once again, I definitely expect that, like, yeah, we're definitely going to see people leveraging up on LSDs like crazy on Infinipools, right? Like people people do it right now with like lending protocols. Right. And I think that they get probably like, you know, like.

I don't know, 56X leverage, like you get a hundred thousand X leverage, Like, you know, we're cooking. I mean, obviously we're cooking.

The borrowing cost is going to match, right? Like the borrowing cost for this S-Frax ETH USDC is going to match. So arguably people who are like, well, shit, I don't want to get leverage long S-Frax ETH and take the ETH price volatility. I'll just get leverage long USDC. You just put as much USDC in this pool as I can and let people borrow against it.

I'm just like farming USDC. Yeah. I mean, it

makes the markets more efficient, right? Like in the end, it's just about making the markets more efficient, like letting people set the interest rates at fair levels, essentially, right? Because even right now, I'm sure that people are paying the interest rate that makes the most sense. But people are limited by size on both sides, right? So people are limited by size on both the borrow and lending sides.

And what that means is that it like usually comes with like inefficiencies because people are trading on capital and not on insight. And actually like 1 of the like big philosophies behind InfiniPools, right, is that what we want to do is that we want to democratize access to capital. So what that means is, and this is kind of a much higher level philosophical question, right? But investing and specifically doing research for investments, it's only worth your time as an investor if The eventual return that you get from this investment essentially is worth enough money to you, right? Like if the return on investment is high enough that it justifies the time spent, right?

If I've got $100 in savings and I invest that in some shit coin and I put in 3 hours worth of research and the return is $10, then I just got compensated $10 for essentially 3 hours worth of research. And that's just not something that's worth much to anyone. On the other hand, if I have like, you know, high amounts of leverage and, you know, like my expected returns as a traders don't actually drop that much, right? So like there's a big difference here between good leverage and bad leverage, right? Where like bad leverage actually and by bad leverage, I mean perpetual futures beyond like a certain, you know, like leverage level.

Because of liquidation.

Yeah, because of liquidations. If I have access to capital, right, and I can turn that $100 that I have in, you know, whatever, like, like, like, yeah, not gambling money, but like investment money, right? Like if I have $100 in investment

money, I can turn

that into like

$10, 000

and the return goes from $20 to

$2, 000,

then all of a sudden, the free hours worth of research that I put in are completely worth it. So the high level of like philosophy for Infame pools is trade on insight rather than capital, which is.

This actually leads very well into my next question is with the Forex markets. Cause this is where it can like, really like where insight really matters. So what is your plan with Forex markets? Like, do you plan to integrate that in the future? And if so, how?

Yeah, not even in the future, in our V1. And it's 1 of the things that I'm most excited about. Yeah.

I can tell. Yeah.

Yeah. I mean, we're going to be able to offer like

10

to 20, 000 X leverage easily on those markets. And the way that we're going to be doing it is by partnering with like really, really great stablecoin teams. So specifically, you know, we're very excited. We've talked to like Angle, Angle Euro, you know, AG Euro. We've talked to like

a

couple of different USD stablecoins, like also this company called GMO that has a Yen stablecoin. Right. Like these are all people that are going to be essentially, you know, providing our pools, like the Infinii pools with their stable coins and like, you know, like some other like USD based stable coins. So like USD 80 euro or like USDC like yen, like or like, you know, like a synthetic yen. And, um, yeah, essentially you can start trading Forex, like using like from day 1, essentially by doing that.

That's huge. Cause like Forex has always been something that's been talked about in DeFi, but hasn't really scaled yet. And this is really the time for it to scale. Especially 10, 000, 20X. Yeah.

Yeah. Go ahead.

Yeah. The appetite for leverage in Forex is humongous. Even in traditional finance, there's only 1 place you can get 100x leverage in traditional finance and that's on Forex, right? So that tells you really something about what people want. And yeah, I mean, we offer 100x that.

So

yeah. Yeah. No, I mean, you're definitely giving the people more of what they want. And, um, you mentioned this on the previous part about like how the tick size effectively dictate the leverage and the, the, the closer you get to the money, the kind of higher leverage you can get. Like I didn't really quite grok that.

Do you do you mind kind of explaining that to us a bit? Like how like 1 can go from 5 X leverage to 5000 X leverage?

Yeah, for sure. So basically, the way that you can think about it is that the closer you borrow liquidity to the market price, the more it limits your max loss, right? Because really what the liquidity is doing, right, is that it's a backstop for your losses, right? So like when the price moves against you, that liquidity is there to like essentially backstop, or like it's like a no-slip stop loss essentially, right? And so the closer this no-slip stop loss is to the market price, the smaller the losses.

And the smaller the losses, the smaller, essentially, the initial collateral you have to put up.

And the smaller the initial collateral

you have to put up and the smaller the initial collateral you have to put up if you can borrow the same amount then it means that Yeah, you can just you know have higher leverage

I see I see So the more the liquidity is like grouped into the 1, let's say every, all the liquidity in the world is grouped within this 1 tick right at the market price, then you could effectively have as high leverage as you effectively want because well, your downside is capped. Like the way I first kind of understood about the no loss liquidation was it is effectively like having a, it's like a put, right? It's effectively like a put. The moment it kind of passes that threshold of that strike price, You just got to give back this number of assets. And no matter what, you're going to 1000% have that number of assets in your holdings because it was locked.

And also you put in the collateral to make it so. So depending on how far you borrow from the strike price, how far the strike price is from the market price is how much collateral you have to put up. Right? That's, that's kind of the way I think about it. But then you don't get to choose which liquidity you borrow.

Right? Like when I want to borrow, say 2x leverage, and then you could effectively take the liquidity that is like super far out of the money. So that because there's no way you're going to get liquidated because so far out of money. And then but for someone who's like, hey, I want to go super high leverage. Then do you take more of the at the money liquidity for this degenerate user?

Like, is that how you prioritize the, at the money liquidity?

So, okay. So this, this is like where things get really interesting. All right. So if you use infinity pools protocol, smart contracts directly, you can choose which liquidity you borrow. Right.

You can choose like, Hey, like I want like this liquidity. Now what, um, Infinity Pools, the company, right. Like the, the equity company, like, you know, like, uh,

uh,

does is kind of like a Uniswap router for interest rates. So essentially, you tell us, hey, I want 2x leverage. And what we do is that we look at the liquidity spread across, you know, like the entire pool and we go, okay, if you borrow, you know, some liquidity here, some liquidity here, some liquidity here, and you combine that liquidity, then it actually gives you the best interest rate as a trader. It gives you the best interest rate as a trader. And so it really acts like a Uniswap router for interest rates.

And also- I see, I see.

Yeah, interest rate swaps is like another thing where there's a thousand different protocols, but like, like the more protocols and users. So it's interesting to see you guys like you guys are building so many like different primitive, I mean, different actions by accidents, like, oh, here's the interest rate swap. Oh, here you can buy and sell volatility. Oh, like this, like, it's really cool what you guys built.

And yeah, for sure.

And each liquidity band effectively has its own utilization rate. That's why each liquidity band has its own interest rate. And that's why the Infinity Pool Labs company with the interest rate routers, it would kind of group it up for you and just kind of shake and bake.

Shake and bake.

Yeah. And also, dude, let's not mention about structure products that you can build on top of this, right?

Wait, let's do mention it. What structured products can we build on top of this?

Yeah, so actually, like this, there is an idea that I've been super excited about, about Infinity Pools. And I'm not sure whether we should build it, someone else should build it, just because like, it's something that's like, very exciting to me. Basically, right. You can build structured products on top of InfiniPools as a liquidity provider. Right.

So like what liquidity providing is on InfiniPools, right, as Capital K mentioned, is you're essentially selling options, right? You are selling options at different strikes, different expiries, et cetera, et cetera. You just don't know it, right? It's all abstracted away. But, and by the way, like, In this case, it's much more like selling options than Uniswap, right?

Like saying that like you sell options on Uniswap is not true, right? Because it's incredibly path dependent, right? Like if you're selling an option on Uniswap out of the money, right? And the market price never hits that, then like you're essentially like, yeah, just like a free option. It's just, yeah.

So, on Infinity Pools, because you're getting paid up front, right, you're essentially, it's much more like an option. It's still like path dependent, but it's much less path dependent than something like Uniswap. So much more like options than Uniswap on the back end. So what does that mean? That means that you can essentially sell options in a certain way such that it matches a given payoff.

What does that mean? Well, that is what we call structured payoffs. Structured products, Sorry. So what is the idea? Well, structured products built on top of infinity pools have 3 to 4 advantages over traditional finance And even just kind of like your classic DOVs today.

And yeah, like, you know, it's, there's still like some debate there, but like, I think that the main ones are, you can have structured products on any asset immediately and permissionlessly, right? So no need to interact or strike up a deal with market makers or anything like that. Any asset, any payoff on any asset. And this 1 is very important too. Number 3, because you don't interact with market makers and you don't have to pay market makers to spread every week to roll over your position, you actually have higher yield.

Number 4, because you're deploying 100% of your assets, right? And what that means is that you essentially, so for example, like every like DOVs that I'm aware of in the space got around, like, you know, early withdrawals by only deploying 80% of the assets, right, and the structure products, right. So like, you only get 80% of the yields. Here, you can deploy 100% of the capital, and then you can like, withdraw gradually or like withdraw immediately and pay a small fee, right. So it's there, there is also like very much like much more flexibility on the withdrawal terms.

So you've got these 4 really, really cool advantages. Well, what's the best way to utilize them? Well, I had an idea, which was that you could create a marketplace. And in this marketplace, have quants or traders that come in and build their own structured products, right? So this would be structured products on assets with a given payoff, right?

And they can create the payoff, they can choose the assets, et cetera, et cetera. And then those traders would then go on and sell those structured products to other people, right? When you have in traditional finance, the people that are distributing the structured products, the people that are selling the structured products are not the originators. It's not CME, it's not NASDAQ. It's like Goldman.

Goldman creates those structured products.

Yeah. I'm thinking about the movie, the big short. Have you guys seen it? Yeah, you know how like at the beginning like Michael Burry's like I have an idea I want to like buy this product and Goldman Sachs, this doesn't exist. Like you make it.

So is it like that?

Yeah, it's only that. Only that you don't need to go to anyone, right? You can create that product yourself.

Oh, you can create it. So Michael Burry can go can go create the product himself.

Yeah, exactly. And then Michael Burry can also go sell it to other people, right? Like, so there's like, not only like, the like, it's not only like, you know, tearing down the barrier to access for like structured products and and it's also essentially like solving this, like an important distribution problem where like you can essentially have like other people sell like your structure products, which is, yeah.

Which is like another instant. Others are

always thinking about distribution, right? It's like distribution, distribution, distribution.

Yeah.

Which is why, like, I'd be really excited to like see like a cool team build this on top of Infineon Pools. I think we're still trying to stay pretty laser focused.

Speaking of being laser focused in distribution, how are you guys planning on getting your first 10 million in TVL?

Yeah. And what's the roadmap for you guys?

Yeah. Yeah. When you

get to the question.

Well, fantastic questions. Okay. So, um, the first 1 is, um, I am a believer that, um, demand drives supply, right. Especially for what we call asset as a service companies. Right.

And like, yeah, you definitely have like some cold start problem, right. Where like you need to have like, you know, some some like existing liquidity before like people start trading. But in the end, right, if people want to trade on your platform demand, supply will eventually come. And in our case, it's like it's. And in 2 shapes, 2 different shapes, right, so like let's say that there is a lot more training demand than there is supply.

Then Delta Neutral market maker can essentially come in, provide liquidity to InfiniPools and then hedge their position with options on other exchanges. And essentially what that means is that they deposit TBL on InfiniPools and then like hedge that, and they're basically completely delta neutral while providing liquidity and making money on InfiniPools. So number 1, you know, if there is like, you know, too much trading activity compared to like the demand, there are some really, really good ways to like hedge that out or like to like, you know, kind of like bring the rates down and like bring the rates reasonable levels for traders. If the rates are not like high enough, as I said before, you can just go in as a trader and like buy up the volatility. We already went over that, right, with like the strangle.

So, but beyond that, right, like what I'm particularly or like what I particularly want to do, and by the way, that's 1 type of LP that we've talked to. There are many other different types of LPs that we've actually got a lot of interest from. We've also got an interest from people that just want to LP, like EFUSDC. Their portfolio is like EFUSDC and they think that it's a fantastic opportunity to like, you know, essentially get like a nice like risk adjusted payoff on those 2 assets. Especially since like there's a very high possibility that in the first couple of months, especially in the first month of InfiniPools, we will see the rates being paid by 2 liquidity providers be quite high just because of high trading volumes.

And okay, so that's the second type. And then I specifically really want to do a lot of like, you know, like B2B stuff, right? So like, I really want to like have like protocols on the long tail of assets provide liquidity to. The reason for that, right, is that today, the pitch for market makers, right? Like when a market maker goes to like protocol, what they tell them is like, hey, pay us like this absurd amount of money.

And what we do is that we provide liquidity, reduce volatility for a token, and tokens that have lower levels of volatility and higher liquidity tend to outperform all of our tokens. That's literally their pitch. But, you know, like projects then like need to like pay insane amounts of money and like give like loans with like crazy terms to these market makers for this to happen. Well, you know, instead of doing that, why don't you just provide liquidity to infinite pools? You still get all of the upside, right?

Like all the stuff that I just mentioned, higher liquidity, like lower volatility because people can both long and short it. And so you still get that like potential outperformance of your token, but you don't need to like, you know, do any shitty loans to like centralized parties and you don't need to pay absurd fees to like anyone else, right? So for me, like this is kind of like a match made in heaven for like the long tail of like protocols too, that are, that are trying to like, you know have, have some liquid markets.

Yeah. Who do you guys see being the power users? Like when I think of like power users, I think of like Arrakis of like would be all over this.

Oh yeah. Oh yeah. Yeah. Yeah.

I mean, I'm sure. Are you talking

to them? Yeah. Yeah. I'm talking to a racket. It's gamma strategies.

Like, yeah. I mean like a steer protocol, all those guys, you know, like, like

probably looking their chops right now at this.

Yeah. I mean, you know, like I think it's kind of like a real match made in heaven because like automated liquidity management, like protocols like that, that are kind of like medium, medium, like medium frequency rebalances. They're fantastic. Right. Because what you can do is you can look at, oh, where's the utilization rate the highest?

Let's put our assets on the text of the highest utilization, right? And so you can kind of have this. And because loans have medium frequency, right? Because they essentially expire every 7 days, right? Exponentially.

And once again, I say 7 days, but you can actually calculate, right? So, you know, you do 0.5 to the power of 2. Sorry. So, yeah.

0.5

to the power of 2, that's so you get like 25%. You have 25% of your assets left after 2 days, you have

12%

after 3 days, you have

6%

left after 4 days, you have...

Where did you get 0.5 from?

So it's loans have a half-life of 1 day, right? So essentially every day you have half of your loan that expires. And so that's where the 0.5 comes from, right? So already after 5 days or after like, you know, after 4 days, you only have like 6% of the assets left in the pool. Right.

That's already like pre-Nikolausen pool. So it's like 7 days, but it's like literally like most

of the

assets get returned to you immediately anyways.

I see. Because if you have a hundred dollar loan after day 1, you only have a $50 loan. After day 2, you'll have a $25 loan. So you had to pretty much re-up pretty quickly. Oh, the yields are going to be so juicy because the LPR is going to get 50% of their capital back after 1 day, effectively, to be borrowed again.

Right.

We automate that process, that thing. Right.

We're sure. Yeah, but yeah, but under the hood, effectively, now that frees up again. And then you as the trader, like, yo, yo, yo, I still want that. But now there's a new exchange rate that or a new interest rate that you have to pay for, you know, to kind of keep the position going.

Yeah. By the way, this is like the like deepest left dove into Infinii Pool on any podcast. Like you will not find this. Yeah. Ever podcast.

Yeah. Like, like it was the first time I get to like going to like the exponential expiry of loans for infinity pools, which is an incredibly important property because, yes, this is actually like, super great. I mean, this is like very technical for like, you know, options nerds. But basically the rate that is paid from traders to from traders to liquidity providers. Right.

It's composed of 2 parts. Right. The first 1 is what we call like the floor rate or like the fair interest rate, which is kind of like similar to Black-Scholes. And then the second part is utilization rate, right? So it's like when you combine the utilization rate with this like floor interest rate that you get the overall rate.

Now the first part, right, like the utilization rate and the Black-Scholes rate. A lot of people have had a lot of problems in crypto because computing Black-Scholes on chain is really fucking hard. There is some math around having loans with exponential expiry that make it so that the rate and the equation that we use is simpler than black holes. So that means much more gas efficient and it's more accurate. So that means, yeah.

And, and so basically like a better pricing. So it's simpler and more accurate. And like, this is like, once again, very kind of like nerdy, but it means that like, yeah, it's just that the bath like

no, we encourage it.

Yeah. Yeah.

Yeah. Who makes up the infinity pools team? Like, sounds like you guys are really doing some cutting edge stuff. And like, I'm like, you said at the beginning, it's not just you. So, you know, love to have you shout them out.

Yeah, so this is actually, let me, I can show you something that's like really fucking crazy. So, by the way, the guy that like came out, that came up with these like equations, think easily twice my IQ. He's like our head of quant. This guy got his PhD in math from Cambridge and the UK was like quant at like, you know, like all the big like quant shops, like Goldman, Tudor, like et cetera, et cetera. But let me share like some of the material.

And like, this is like, yeah, it's literally, I mean, like, now it's like much higher, but it's literally like, It's fucking crazy. There's 50 pages, 56 pages now. And it's, yeah, it's fucking crazy. It's like all math. There's like basically no English and, and all of this for like 2 equations essentially that are super simple.

They're like this long. And, but yeah, it's a lot of work essentially has gone into this. We haven't been working on this for a year for no reason. Let's put it out.

Wow. I just want to copy all of that math, put it into chat GPT-4 and be like, explain it to me.

Explain it to me like I'm 5. In English. Yes.

It's a real fun experience.

When do we see a launch of Infinity Pools? When's the V1 coming out?

So our testnet, hopefully in less than 30 days.

Oh shit.

Ooh, ooh, okay.

You know how software engineering stuff is. That is my optimum. Like, currently the way

that the partners

have like their schedule is that this is the goal, but we shall see. But like, regardless...

It's totally going to ship.

Yeah, This is either going to be released on the 14th or the 21st. So this could very well, you know, be released the day of launch.

Or close

to.

Close to. Close to. No, no, no, no. Of June.

Okay. We're definitely looking at a late June. Late June release.

Late June. Yeah. Yeah. Late June. Okay.

Yeah. So it may be just before the testnet. So for folks out there, definitely play with this product when the testnet comes out. I think this is literally a new capital P primitive

that can be

played here. Yeah. I assume this work with all concentrated liquidity, Univ3, Trader Joe.

Oh no, it's new. It's like, it's a whole new primitive. It's just like, it takes the LPs and just like

in its own. But this is not just Uniswap, right?

Yeah, I mean, yeah. It could be

Joe, like anybody, right? As long as it has a concentrated liquidity element to it.

Yeah, yeah. I mean, so that's, yeah, like as you said, NFT pools, like it can take like liquidity from like any other AMM. But yeah, it's like its own deck, so. Yeah. Yeah.

Oh, any AMM, could it be a curve pool or no?

Yeah, once again, when you take liquidity, and you transport it over to like InfiniPool, it becomes like native InfiniPool's liquidity. So yeah, we could probably recreate like curve type payoffs, right? Like it'd take a little more work, But like, yeah, 100% I can see like a future where you can do like a 1 click import of like curve positions.

Oh, dude, you could keep it on the curve pool, then you add gauges, like APR on top.

Is that necessary, though? It's like the like,

really overkill now. It would take the equity out of curve though. Like, yeah, so this is what I thought.

Yeah, I thought it's gonna be his own AMM. Cool.

Yeah. Did you have any more questions? Could I, do you want to roll into the, uh, lightning? Yeah. The lightning round.

Let's Let's roll into the lightning round. My mind is still boggling, so I think I need some time to digest this. But first of all, Matthew, thank you so much for hopping on with us. I thoroughly enjoyed this conversation. And at the end of the pods, we normally run through a series of quick lightning questions just to get to know the founder, the person behind the founder.

And the first question is, when did you first touch the blockchain? And sexist doesn't count. What was your virgin crypto experience?

So this was actually my freshman year at Columbia. I was studying computer science. My neighbor had 1 of the very first Coinbase's account. And he actually told me about Bitcoin mining. This was like

2014.

And he was like, hey man, yeah, if you run this like program on your computer when you sleep, it makes you 30 bucks a month. I was like, you know, sign me up. You know, like, yeah, for me, it was just kind of like easy way to like make make some like, you know, monthly and monthly money. And yeah, it actually got me into Bitcoin. So probably 1 of the only people that like didn't get into Bitcoin for drugs.

Sam Kaz mine Dogecoin in his dorm room too.

Oh shit.

Oh yeah. Yeah.

That's pretty cool.

What did you spend that 30 bucks on Matiu? That's the real question. I'm sweating. The second question, the second question is what is your favorite off chain touch grass activity, hobbies and interests?

Yeah, we're really going out there. This is gonna be really nerdy, but I love mangos.

So mangos.

Yeah, I love mangos. Yeah, only saying this because this is a crypto podcast. So like, you know, I know that like some, you know, I'm going to have like fellow nerds listening to this. But yeah, and actually, it's super interesting. So I'm half French, half Italian, but like, you know, definitely like went to French high school, first language is French, all that stuff.

France is the second biggest country. Um, uh, is outside of Japan. France is the biggest consumer of mangas in the world. Um, yeah. Yeah.

Pretty, pretty interesting, uh, data point for you.

Um, Did you know that if you like consume mangoes before you smoke weed, you get more high?

Fun fact.

Yeah. That's like the 1 mango fact I know.

Cool. I mean, mangas. Like a

mango, mango. I thought you said mangoes. Oh, you said mango. Yeah. No, I

heard mango too. I mean, mangas like manga manga. I said mangos. Oh, he said,

yeah, I heard mango too. I heard mango too. So I was like, do you plant the mangoes or do you

just like, oh, 0,

manga, manga, manga, manga. I was like, oh, Japan consumes that many mangos. I don't remember seeing too many.

I didn't know.

Yeah, yeah.

Okay, okay. Okay, then,

then, then, then, then, then, then, then,

then, quick follow up. What is your favorite manga?

Oh, favorite manga? I mean, it's technically a manhwa, which is like the Korean version of a manga.

Oh, yeah, yeah.

But Tower of God is probably up there. Okay.

I recently just started reading the Demon Slayer manga, so vibe, vibes. Okay, but that's it on my end. Dave, what's on yours?

What is some advice you would give to your younger self?

Man, pay more attention in math class.

Same.

Did we lose Captain?

Did we

lose Kate?

I'm here. I'm here. Okay.

Cool. Cool. Cool.

Yes. And then the last question on my end,

Oh, second.

Who closes out after, is if you weren't in tech, weren't in math, what would you be doing with your career right now?

DJ, electro.

Hell yeah.

Once again, French spirit coming out.

French through and through.

And then we have 0 musical talent. This is just purely because I feel like it'd be really fucking fun. And I have like, you know, yeah, but I love music. And that's like my ever big, you know, like touch grass hobby, I guess.

Hallie, I'm me too. Um, last question. Uh, who do you think should be the next guest on Flywheel?

Oh, that's a really good 1. What protocol am I excited about? Look at my conversation.

We go deep. So don't, you know, don't be shy. Don't be shy to bring on the tough cookie.

Yeah. Yeah. Yeah. Okay. Yeah.

So this is actually 1 of my friends, but Yi Sun at Axiom. Axiom is a...

I think I met him. Yeah, They're doing ZK. Yeah, I think I met him at Zuzu.

Yeah, ZK coprocessor.

He's the founder, right?

Yeah.

Yeah, the coprocessor. Yeah, that's Really cool. That's a really good suggestion.

Yeah, really, really cool guy. Super nice, incredibly smart. Definitely like top 10, top 20 people I know in terms of like raw IQ. So. Yeah.

Yeah. Well, thanks for that. And on that note, Mathieu, thank you so much for coming on, for diving deep into the Infinity Pools. I think our listeners and viewers have gotten a lot out of this episode, and I feel like we're going to look back on this 1 and be like, damn, this was the start of something big.

Thanks guys, I really appreciate it. And thanks again for taking the time, for asking all those wonderful, very in-depth questions. Yeah, man, definitely 1 of my best podcast experiences so far. So

we love to see it. We love to hear it.

We're here to please. Yes. Thank you so much, brother. Appreciate you.

Thanks.

Thanks, guys.

Welcome, everyone, to the Post Game Show. I'm your host, DeFi Dave here with Capital K and we dove deep, deep, deep, deep, deep, deep into Infinity Pools. Kit, what I loved about this interview, it was your interview. It was your time to shine. This is like you like taking the wheel because this is not my specialty, honestly.

And this is clearly yours and you really took the reins of this. So thank you. And I think this is what makes Flywheel such a great podcast is we like compliment each other so well in these regards. And so, um, yeah, I'm just right off the bat, like final, like any like thoughts on the interview, like what, what comes to your mind?

Dude. I mean, I was definitely in my groove for this 1. This is definitely my lane. And like, you know, I loved it that, you know, you kind of recognize that and you can just let me play in my playground. So that was awesome.

And then the first thing that came out is I really think if the math checks out, if the math really checks out, this is very interesting. This is this is going to be like coming out of the box. Like, hey, you got to have a liquidity pool, but you also got to have this leverage layer on top of your liquidity pool. Right. This is the way liquidity pools will be done in the future.

Right. It kind of leads me to think about like how, like what Sam K. Said, like the stablecoin maximalism, right? Everything kind of like honed towards the stablecoin with the swap facility. Like I think this is a similar type of maximum that, you know, you take a liquidity pool and every liquidity pool is going to have this layer on top of it.

It just comes pre-packaged as 1 now. I think this, we're at a dawn of something very, very exciting. Yeah.

Yeah, like the fact that we can get 10, 000 to 20, 000X leverage on Forex on chain is, and basically like have things that aren't even offered in traditional finance is huge. I just like wonder about the gas optimizations, but it sounds like they really took that into account.

Yeah. I mean, that that's fair because like I said like he said, the position decays at a half-life per day. So that's pretty rough because you had to like re-up on that position all the time. He's probably going to be developing an L2 or some kind of more gas efficient way. But barring all of that, like this is truly a new way of providing liquidity and also leveraging on your preferred stablecoin.

Like the key unlock is actually the no liquidation, right? Like the low liquidation with an extremely small amount of collateral. Like that is very key. No loss to the LP or no such thing as bad death.

Like there's no counter.

That is

truly a capital P primitive. Yeah.

Yeah. Capital P primitive.

What was your favorite part of the interview?

I think my favorite part was how he initially was trying to keep us on the very surface level, but like kind of like a little bit halfway through, he kind of recognized that, you know, flywheels feel different. And then he started going a little bit more nerdy and he started getting deep into it. And I was like, okay, this is when we get the good juice for our listeners. And that's what they

come for. You have to stick around for that. It's slow and gradual, but if you're patient, That's when you get the real gold. For me, yeah, I think that was 1 of my favorite parts. He was like, yeah, this is like the best podcast I've ever been on.

Like, that means a lot, especially like with all the previous podcasts we watched of this interview. So setting a standard there. But my personal favorite part was when he was talking about the structured products and I want to see a team build this. And then I went and said like the Michael Burry comparison. It's my favorite part because for me, this interview was not the easiest to understand.

But when we got to that point, I was able to be like, oh, like, this is like the Michael like, and then he was like, yeah, you don't even have to go to Goldman Sachs for that. You can just create it yourself and then we'll have distribution.

It's like a build a bear workshop. Like, you know,

yeah. Build a structured product workshop. Yeah. Build a bowl workshop.

Yeah. Yeah. I'm glad that that was your favorite part because that was, you know, I'm always tied to the hey, where does the rubber meets the road? Right. Like, I wanted to ask him about, like, what was his way to get the first 10 million TVL into it?

Because it's, you know, like you said, a hard product to do and a hard product to explain. So I'm very curious on how the onboarding user experience is going to be like. The UI looks nice.

UI does look nice. It looks pretty, I mean, they have the mantra people.

Yeah. Oh yeah. Let's talk about stack team too. Like what'd you think about their team?

Yeah. That bro, that 56 pages of just straight math, that's terrifying. Terrifying. Terrifying. But like what's beautiful about it is like, yeah, it's like really intimidating, those 56 pages.

But at the end of it, you get like 2 little equations that are like this long. They're like the size of my mustache.

And then like, boom. That's what you want to see. That's what you want. I definitely want to see DAOs actually use this as like, if the DAO has, you know, any type of PLL or any kind of assets on their treasury, obviously they have their native token. Like they should be like the largest LPL of this pool.

Yeah. I mean, 1 thing we

didn't really even talk. Yeah, go ahead. 1 thing we didn't really talk about was how, like, what he thinks of BAM and Frax's, you know, implementation of this. I think we were just like so interested in like figuring that out. And I think the main reason why I asked for, wanted to do this interview because when I interviewed Sam at ETH Denver, Tim, I feel like I like mentioned that interview over and over again, because he sells like so many things from the future.

But he mentions Infinity Pools by name. And that was like the main motivation. I was like, oh, like

this is

what BAM is going to be built on top of. And like, but the thing is like, there isn't too much information about BAM, so I'm not sure how much you could even comment on it. Yeah. But I hope that like, I hope like the Frax team can take this interview and, you know, because we go deep. I wonder if like they can like learn a few things from this.

And I'm sure they've had, I wonder if they have conversations before, but like, damn, it's just like some, what I love about doing these interviews and just like podcasting in general is, I know I don't know everything. And this was like a clear interview where I didn't know, but just like being able to steer the conversation into the point where he feels comfortable to go deep enough, and then he gets to like the real meat of the product and what he's building and the ramifications and the mechanics. Like that's what makes podcasting dope. So Kit, any closing thoughts on Infinity Pools? You're gonna get your swimsuit and dive in when the test net launches?

Dude, a hundred percent. I think we're definitely on a cusp of something new. I definitely wanna play with this thing and see if it lives up to what he's kind of purporting. But if it does, I'm very excited about this.

Yeah, me too.

Thoughts on your end?

I'm not going to play with the test. Thoughts on my end? I can't wait for the threaders to come out and explain this. I feel like this is the next wave of like threading content. And so, you know, really looking forward to that.

Yeah, and I'm excited to see like how much this grows DeFi on chain because derivatives in the real world are so much bigger than the spot markets. And like he's talking about 35000, a hundred thousand for stablecoins leverage. And so like I think, you know, if all goes well, then this will truly take DeFi to the next level. This will truly, this could be the thing that takes DeFi to a trillion TVL or more. And so that's what I'm really excited about.

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