You lead the foundation of one of the most prominent crypto platforms, but little is known about you. What is your background?
I'll try to make it short! When I finished my business studies at ESC Rennes, I quickly made the choice to travel by sailing across the Atlantic. It was the only vacation that allowed me to not know when I would come back (laughs). Then I started my professional life in Asia where I learned Mandarin. Then I went to Hong Kong where I co-created a company in electronics. Then I recreated another company which I sold after I took it public.
What about the link with cryptos?
After that, I moved into the world of finance by joining 8 Securities, an investment company with which we launched the first robot advisor in Asia. I then held the position of "Head of FinTech" at the Hong Kong Finance Department. I had followed Bitcoin and Ethereum quite a bit in their early days, but it was at this point, between 2016 and 2019, that I got very serious about blockchain.
I've worked with just about everybody. I helped Pascal Gauthier from Ledger, the Cardano team, Joseph Lubin from ConsenSys, etc. My business card allowed me to go anywhere I wanted and talk to anyone I wanted. That's one of the great advantages of working for a government!
How did you make the leap?
Joseph Lubin hired me at ConsenSys in 2019 to create the Hong Kong office. I then managed the entire Asia region for four years. We did a lot of work on central bank digital currencies with Australia, Singapore, Thailand, Dubai, China and South Korea. We really did some amazing things at ConsenSys.
How did the adventure end with ConsenSys, which is kind of "the" startup of the Ethereum ecosystem?
ConsenSys was an exceptional adventure and training. However, after the Covid I felt like doing something new. The opportunity to join the dYdX Foundation presented itself, I did not hesitate. But I remain very close to the ConsenSys alumni network.
What do you like about this new experience?
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Many things. First of all, DeFi and the fact that dYdX is a leader on the subject. Second, it allows me to work on the development of a DAO (decentralized autonomous organization).
A lot of people are interested in the subject, but few really build them. This is a real opportunity to get my hands dirty. Finally, it's great to be able to work on Cosmos and explore the theme of DAppChain, that is to say blockchains that take care of running a single application, as will soon be the case with dYdX.
What is the purpose of the dYdX foundation?
Its goal is to develop the ecosystem. What you need to understand is that dYdX was until now an application built on Ethereum, but it is in the process of becoming a full-fledged protocol on Cosmos, i.e. precisely a dAppChain.
The foundation is focusing on helping developers, building effective governance, establishing a DAO, etc. There is also a lot of discussion with validators to build a "healthy" blockchain, especially in the context of value redistribution and decentralization.
What differentiates you from an application like Uniswap, the historical player that allows token exchange without intermediary?
Uniswap is an Automated Market Maker (AMM) that works with liquidity pools. It is a very interesting tool, but it is less efficient in terms of the price of the assets exchanged, especially if large amounts are traded. On our side, we work with order books, a technique that has existed for decades in traditional finance. This allows us to handle much larger volumes and to have a more efficient final price.
If I had to summarize, Uniswap is aimed more at individuals, while dYdX is mainly aimed at institutions and professionals. But we have also been attracting a lot of individuals for the past few weeks...
Have you seen a spike in activity since the fall of FTX?
Very clearly! We have tripled our number of users and our volumes. There is a lot of interest from those who have burned their fingers or have come close to disaster. With a decentralized tool, you control everything yourself, unlike a centralized infrastructure that functions like a black box.
How is an order book built on blockchain? Until recently, this seemed impossible...
On the current version, the order book is not on the blockchain. It runs on a server managed by the start-up dYdx Trading. It is only once the orders are executed that the settlement is implemented on the blockchain.
Why do we use a server? Because it was the only way to support a correct number of transactions. Writing data into a blockchain takes time. You have to put them in a block, have it distributed to the whole network, validated and then read by the whole chain. Hence the need to rely on a server. On the other hand, this is not optimal for decentralization...
We had to find a way to decentralize without losing velocity because institutional investors, like market makers, need to place high frequency orders. If we put everything on a blockchain, it can't work. That's why we found another system.
With version 4, which will be on Cosmos, the order book will be housed in the RAM of the validators of the future dYdX blockchain. The RAM of the validators, which is as fast as that of computers, will have all the orders permanently and will be able to make them meet. This will allow progress on "pure" decentralization without losing speed of execution.
You couldn't develop this without going through Cosmos?
Our current tool is based on StarkWare technology, which is a secondary layer of Ethereum. The problem is that this layer is not fully decentralized. There is still a sequencer that has to bridge the network. From an engineering perspective, there are elements that decentralize, but there are still centralized links. It's the same problem with other secondary layers, like Arbitrum for example.
In version 4, we will have the order book and the sequencer which will be decentralized.
So Cosmos is the most appropriate to build the tool of your dreams?
Yes, this allows us to have a blockchain dedicated to our use case. Whether it's Ethereum or its secondary layers (L2), everything developed on it doesn't "own" the protocol. When you have a critical size, it's difficult to be satisfied with a global infrastructure...
We can do everything on Ethereum, on L2s too: smart contract, storage, etc., but when we want to process everything, we do everything "pretty well" but not "very well". By building our own blockchain, we remove everything that is not useful to us and optimize what is important.
What comes first at dYdX is the user experience and we don't put any affect on the choice of technology. If we need to change the database underneath, that's fine. This can be seen as Web2 thinking, but I think we need to get out of the tribal aspect of crypto which is sometimes too strong.
Why do we hear less about Cosmos than about other projects?
As it is decentralized, there is no leader, so it is a product that attracts big builders who fear the influence of certain entities. On the other hand, there is clearly a technological leadership.
Isn't it risky to leave Ethereum? Historically, that's where the innovation is...
It's ambitious, but it makes more sense for us. It's a decision for the users! I'm not sure the next wave of users will come for the technology. I'm sure they'll come for the quality of the experience.
Ethereum will certainly have some very nice products, but Cosmos will gradually make a nice place for itself.
What is the timeline for the release of version 4?
We are launching the private testnet at the end of March, before opening to the public at the end of July. We hope to be able to inaugurate the mainnet in September 2023. We will be able to absorb volumes of tens of thousands of orders per second.
And once the mainnet is launched, what is planned?
The community will have a growing role in the ecosystem, especially in governance. We should certainly see the arrival of new trading pairs, the addition of new products or better ways to connect to the Cosmos ecosystem.
Could the fact that revenues from trading fees are paid to the American start-up dYdX Trading change?
The community will decide
What role could the DYDX token play in this new organization?
This token is already used to exercise governance of the protocol, but potentially the community could choose to have it become a utility token, with a very different role.
Could there be a staking option to receive revenue from the protocol?
I can't answer it legally, the community will choose, but there are no multiple solutions...
What do you think of the competition, especially GMX?
I don't want to comment on the competition, but I do want to say that dYdX has been around since 2017 and on some days handles more volume than Coinbase. While some traders may go elsewhere at times, the majority of volume happens on dYdX. Beware of the noise on social networks and those who make news with financial incentives...