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Jose Maria Macedo sits down with Jonathan Caras, Head of Communications at Levana, a protocol on the Terra blockchain that allows any asset to be leveraged.

Episode Highlights

Jose Maria Macedo sits down with Jonathan Caras, Head of Communications at Levana, a protocol on the Terra blockchain that allows any asset to be leveraged. The two discuss decentralizing perpetual swaps, leveraged tokens versus margin trading, the Levana Lore and much more!

We would like to thank our sponsors for making this podcast possible.

Kava: Kava connects the world’s largest cryptocurrencies on DeFi’s most trusted platform. Mint stablecoins, lend, borrow, earn and swap safely across the top crypto assets with a simple user experience and the confidence of institutional-grade security. To learn more visit kava.io

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Every Delphi Podcast is dropped first as a video interview for Delphi Digital Subscribers. Our members also have access to full interview transcripts. Join today to get our interviews, first.

Show Notes:

(00:00:00) – Introduction.

(00:00:35) – Jonathan’s background.

(00:07:46) – Why Jonathan took the leap to build Levana.

(00:11:16) – Why Jonathan chose to build on Terra. 

(00:18:24) – What is Levana?

(00:23:00) – The possibilities on Levana.   

(00:26:50) – How the leveraged tokens work. 

(00:31:59) – Liquidation risk of leveraged tokens.

(00:36:16) – Choosing leveraged tokens over margin trading infrastructure.

(00:42:14) – Differences between perps and leverage trading.

(00:48:30) – Approaching perp decentralization. 

(00:57:55) – Role of the Levana token.

(01:02:01) – The story behind Levana’s lore. 

(01:08:09) – Easter eggs in Levana’s lore / Levana NFTs. 

(01:12:51) – How NFTs will be incorporated on Levana. 

(01:19:00) – Closing thoughts on Levana.

Resources:


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Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host and members at Delphi Digital may personally own tokens or art that are mentioned on the podcast. Our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token. Delphi’s transparency page can be viewed here.

 Music Attribution:



Interview Transcript:

Jose (00:00:00):

All right. Today, I’m thrilled to be hosting Jonathan from Levana on the Delphi podcast. Jonathan has a storied career in the space being the former head of biz dev at StarkWare and CTO at Lionschain Capital. Recently, he left StarkWare to start Levana, a leverage protocol in Terra. In this podcast, we’ll dig into Jonathan’s background, why he decided to start Levana, as well as go into the weeds on what Levana aims to do. Jonathan. Thanks very much for being here.

Jonathan (00:00:25):

Yeah. Thanks for having me. It’s very exciting. And yeah, I’d love to tell a little bit more about my background and what we’re building.

Jose (00:00:35):

Awesome. Yeah. To start with, could you give us a quick description of your background and kind of how you got into crypto?

Jonathan (00:00:41):

Sure. I was involved in technology really my whole life since I was a child. We grew up, we were called script kiddies in the ’90s. I started a software house back in 2007, and that was mobile focused, obviously not cryptos, before crypto existed. And that’s what gave me kind of the glimpse into being able to build something from scratch all the way through to production. And so I was in the startup world for many years until I discovered crypto. Really, I dove in, fell down the rabbit hole, so to speak, in 2016. At that time, I got initially introduced to Bitcoin and I fell in love with it from an economic perspective.

Jonathan (00:01:35):

And then over time, I also discovered and really fell in love with Ethereum and the concept that you could build financial application that would allow for anybody to come and build new features and functionality without the fear that the underlying technology would either be censored or be removed in some type of way. So the idea of interoperability with open source software and economic or financial incentives, all of that coming together just made me decide that this was really my calling in life was to help promote this and to help create this as a standard for the future of financial technology in the world.

Jose (00:02:24):

Awesome. How did you get started in crypto? Was that CTO at Lionchain first, and then you joined StarkWare? How did all that happen?

Jonathan (00:02:33):

No. It really happened, I was CTO of a video streaming company, and one of the guys kept coming in and just talking about the price of Bitcoin. It first started as, oh, that’ll never work. Oh, that’s a scam. That’s ridiculous. Why would anybody ever need that? And then I actually read the white paper and from there, there was no turning back. And then I started to just even doing thought experiments about what could be created on Ethereum and I fell in love with it. I had an exit from a traditional startup that I had founded, and I sent half a Bitcoin to one of my investors, and we had a long heart to heart, and I explained to him how it worked and why I thought that he should be aware of this and it should be part of his portfolio.

Jonathan (00:03:31):

And then the 2017 bull run happened and that was just eye-opening, and the real potential for what could be built in this space became so obvious that I ended up creating Lionchain, which is a long short crypto hedge fund along with some buddies of mine. Then at that point, I had the ability to really spend my full time and full focus on the cryptocurrency industry and just watch it grow. And so that was back… We founded that in late 2017, early 2018. And then about a year and a half later, I was at this scaling Bitcoin conference in Tel Aviv University and I was on lunch break with Vitalik Buterin and we were sitting on a park bench kind of arguing about some of the game theory mechanics of the Bitcoin chain and Ethereum scaling future. At the end of the 40-minute, I guess, discussion or argument, if you wanted to be more cynical, a gentleman came over to me and said, “Hi, I’m Professor Eli Ben-Sasson. I really liked what you were talking about with Vitalik. I’d love to tell you I was the co-inventor of Zcash, and I founded a company called StarkWare, which builds ZK-rollups.” I don’t think they were yet called ZK-rollups, but he described the technology at the time.

Jonathan (00:05:14):

And then we ended up becoming friends, and I listened to some of his lectures and realized he was clearly the smartest person that I’ve ever met. I went into the office and it was just an unbelievable vibe, just crazy talented cryptographers and developers building stuff. I like to say when I was in that office, it was me and the cleaning lady were the only ones without PhDs. I saw that there was a real opportunity that StarkWare had that I didn’t think anything else that I’d seen in the space had. And so I kind of put down on paper a two-pager as to kind of here’s how I would present the technology and how it could impact Ethereum to developers and to traders and to anyone that was interested in decentralized applications or Dexus. About three weeks later, he called me up and said, we’d be interested in having you do business development.

Jonathan (00:06:19):

I spent about 20 months. I interviewed about 340 different DAP development teams, so everything from the front page of DeFi Pulse to all the guys that raised money in 2017, to the two crazy Ukrainian hackers in Kiev that are in a basement somewhere that nobody’s ever heard of. I just talked to everybody and it was through that process that I got really familiar with what it’s going to look like over the next couple of years in terms of Ethereum scaling. I got really familiar with Tether and USDC. And then I was also introduced to dYdX and perpetual finance and MCDX. And that’s how I fell in love with perpetual swaps. Now I’m getting ahead of myself here, but it kind of, I owe a lot of the education that I have in the crypto space directly to StarkWare, and I just think they did a great job at what they’re doing and it really directly led to the building of Levana.

Jose (00:07:26):

That’s awesome. What an origin story from the park bench with Vitalik and meeting, yeah, that’s really cool. I didn’t know any of this. On StarkWare obviously, you guys were crushing on both the technology side and on the business development side. Obviously there’s dYdX imutable, all of that. I guess you were pretty instrumental to that. What made you want to sort of leave StarkWare and start your own thing? What was it about this time that kind of got you excited and made you want to take that leap?

Jonathan (00:07:55):

Well, I really felt that it was kind of a now or never. I knew that there was a lot of interest in building a product like Levana. I kept hearing similar narratives and similar pain points around creating a Dow for perpetuals, for synthetic markets. There was a clear pain in the marketplace. So I knew that if somebody was just going to jump in and put all of the right people together or help coordinate it, then that would have huge repercussions for the entire crypto ecosystem. That was kind of from the positive standpoint as to why I was so compelled to do this.

Jonathan (00:08:46):

And so even though I put a lot of these core people together in a room and really rallied them around this concept, I can’t take credit for it. At this point, it’s amazing. There’s probably about 30, maybe 35 people that are working on the project altogether, and it’s people all over the world. I just never expected it to grow so quickly and to really resonate with such a large audience. To answer your question about leaving StarkWare, leaving StarkWare was really painful for me, to be honest. It’s really, I think, only once in a lifetime that you get an opportunity to work with a team like that with the vision and the potential.

Jonathan (00:09:34):

What I said to the founders on the last day that I was there is that it was just such an honor to be a part of the team and what they were doing is so amazing. The only thing that was wrong with it was that I really came about two years too late in order to be able have the kind of influence and kind of the leadership, or not even leadership, that’s not even the right word, but the product vision had already been defined for what they were going to build or what they are building, and it’ll take them probably a few years to build that out.

Jonathan (00:10:16):

And so I’ve always been attracted to earlier stage projects and projects where it starts out with a few people, and then you rally at a high level concept, and then bring a bunch of people together and then mature it. I realized that that is really where my heart was. And so that as the market was maturing, as the core technology was maturing, as DeFi outside of the Ethereum ecosystem was maturing, It was time to make the jump and kind of jump out of the airplane without a parachute. And then luckily, there’s been an amazing community that’s rallied around Levana that’s kind of caught me for… We’re not at a soft landing, obviously. We haven’t even launched the product yet. But it at least helped us, it slowed down the dissent for analogy’s sake.

Jose (00:11:14):

Makes sense. And so for a lot of people, they sort of get excited about Terra, and then they think what is Terra missing? And that’s kind of how they arrive at their idea. But it sounds like you were excited about perpetuals and leverage as a space. And then you looked around for the right place to launch it and you chose Terra. Is that the case? If so, why did you choose Terra?

Jonathan (00:11:40):

100%. It is I did not want to build on Terra. I did not want to build anywhere besides Ethereum. I just started really looking into all the perps that existed on Ethereum, and then also just all of the whole Ethereum space. That’s where I feel like I discovered almost a dirty secret that nobody wants to talk about, that Ethereum to a greater extent has been overtaken by two very centralized companies, which is Tether and Circle. I think they’re both great companies. I think they’ve been a net positive for the space and they’ve enabled a lot of utility, but neither one of them really reflects the value drivers in terms of permissionlessness and decentralization and censorship resistance that really attracted me to crypto in the first place.

Jonathan (00:12:38):

I mean, imagine, for example, that ProPoW had passed, and that the miners had decided to fork, it’s not up to the miners, it’s not up to the Ethereum foundation, it’s not even up to some of the influencers in the Ethereum space as to which chain would be de facto Ethereum. It really is just up to Circle and Tether, because they possess so much economic value within the Ethereum ecosystem that whatever they’re going to support, that’s going to be the de facto chain that all of DeFi would just, the dominoes would fall over one after the other and have to support. That kind of got me very concerned about the future of DeFi and questioning whether or not DeFi kind of really needed a reset or a fresh start. I realized that you can’t build it on banker coins, which Circle and Tether, I tend to call them banker coins.

Jonathan (00:13:43):

And then it’s also, you can’t build them on reverse mortgage coins like Dai, or Rai, or Fiii, or some of the other under collateralized, but really backed, either backed substantially by things like USDC like MakerDAO is today. I don’t know the numbers exactly right now, but last time I checked, it was about 30% of what’s backing MakerDAO’s centralized coins. And then the other issue is the capital efficiency, that there’s just very little capital efficiency when you have to… I don’t believe that the future of France is going to be locking up $10 billion of Ethereum and other assets so that you can have $5 billion of liquid capital for Stablecoins. It’s just so capital inefficient, and the cost there for the liquidity providers is so high that I just believe another solution will come to market.

Jonathan (00:14:41):

And that’s really what led me to algorithmic Stablecoins, and I spent a lot of time on Ampleforth and on Empty Set, and the forks of Empty Set, and on Frax, spent some time with the founders of these various platforms. I didn’t see Ethereum as being the home to an effective, scalable algorithm Stablecoin essentially because it’s a leaky bucket. That Ethereum is always going to have miners that their primary interest is the ETH token and that they are not going to… it’s not in their interest. They don’t care whether or not a secondary citizen, like an algorithm Stablecoin living on top of Ethereum lives or dies. They have no economic incentive to sustain it. And so I theorized… I didn’t even know what the mechanics of… I knew about Cosmos. I had owned some LUNA just because from Chi and was familiar with the product and some of the product vision, but I didn’t really know the mechanics.

Jonathan (00:15:59):

So I just started theorizing, if I had a blank slate, how would I build Stablecoin so it would be algorithmic, it would use two coins, one would suck up the volatility, and then the other would retain the stability from it so there’d be a minting and burning aspect with the speculative token. It’d probably be built on Cosmos, so then that way it would have high compatibility with the next generation or what I anticipate will be the next generation of a multi-chain DeFi ecosystem. And then the validators, it would have to be on proof of stake because you can’t just have the overhead of the cost that’s involved with proof of work, which lends itself also nicely to the Cosmos SDK. And then it would need to have the validators rewarded in the Stablecoin so that they have skin in the game for helping to maintain the stability of the network.

Jonathan (00:17:03):

And then in order to make sure that the operational costs were being met, there probably would need to be some type of a tax system on top of it that would be variable so that if transaction volume dropped, so that you could make sure that fees were sufficient to maintain the security of the network. So that, I’d whiteboarded all of that in just over the course of a couple of days. And then I went out actually just trying to think, like, what would it take to actually build this? And then I realized that Do Kwon built it three years before I had just spent a weekend working on this. And then it was like everything fell into place, and it was like, okay, that’s it. I am a lunatic at this point. This is where the future of DeFi is going to be.

Jose (00:17:54):

Very cool. Yeah. We had a very similar path to LUNA actually on our side. I think it’ll be one of the most obvious things in hindsight that DeFi cannot be built on something like USDC or Tether, not just for the influence reasons you mentioned, but just because it’s the lowest hanging fruit for a regulator to go after, right, and seize a bank account. They can freeze accounts. We’ve seen it before. It’s a lot of arbitrary power in the hands of centralized entities with bank accounts, so totally agree there. And so coming back to Levana then, at the high level, what is Levana?

Jonathan (00:18:32):

Levana is an acronym. It stands for leverage any asset, and it’s solving what I believe is the most important challenge for the crypto space and specifically the DeFi space, that there doesn’t yet exist a way to be able to efficiently and cost effectively gain exposure in either a long or short position to generalized assets. What do I mean by generalized assets? An asset that doesn’t necessarily involve custody. And so it’s a very interesting financial vehicle that exists within traditional finance, which is the derivative market or the synthetic exposure market. These are things that predate electricity. If you read the, what’s it called, the Reminiscence of a Stock Operator, he learned everything that he learned from bucket shops, which was essentially derivatives markets. This goes back to… I mean, they had electricity at that time. It was in the 1930s, but the idea of two people being able to speculate independently on the price discovery of an independent asset without the overhead requirement of custody, that this is a primitive, this is a financial primitive that’s been the basis for the evolution of financial markets probably going back at least 300 years if not to time in memorial.

Jonathan (00:20:33):

It was almost shocking to me that nobody really tried to address this at a high level. Again, what I said is that people had kind of piecemealed this vision together from a few different angles, but when I actually sat down to put it into paper, put it in writing, and then started distributing that writing to my contemporaries, the guys at Delphi and a number of other people that I’ve been working with in the industry, everybody that I showed it to said, yes, this must exist. The industry needs this. So then at that point, it was just kind of obvious, and I really felt that taking the responsibility of just ensuring that this happens. I know that I personally, I lack so many of the skills that are required to make this happen. And so what I’ve been just so thankful for is that the vision has resonated with so many smart people, so many people much more talented than myself, and that they’ve all been willing to kind of come together and make sure that this project happens and is successful.

Jonathan (00:21:52):

How big this is in the real world, I mean, it’s huge. It’s argued as to whether or not the derivative markets, if you put it at like, let’s say the spot market is about 80, 90 trillion, so the derivatives market is over 1,000 trillion. So it’s like the spot market is less than 1% of the derivatives market. There’s a lot of different ways to cut those numbers. The low end is that it’s 40X, not 100X or 200X. But regardless of how cynical that you want it to be, or how conservative that you want it to be, we just see in the traditional finance world that most market participants benefit from having access to the ability to speculate on price movements of assets without the need for custody.

Jose (00:22:59):

Absolutely. And so what will users be able to do with Levana? I guess, what will they be able to do that isn’t possible on other similar platforms that people might have heard about whether it’s Synthetix or even sort of Mirror to make it very simple for people?

Jonathan (00:23:17):

Sure. Like Synthetix and Mirror, you’ll be able to participate. It’s fully community controlled, so every aspect of the platform, what assets are listed, what are the fees are collected, that’s where the similarities are. The main difference is in the, and then this is really the beauty of futures and leverage in general is that in the spot markets, which are exposed by Synthetix and by Mirror, you are limited to your upside by how much capital that you bring to the table, not by your knowledge, not by your understanding of the market, not by any type of edge that you have that’s either intellectual based or insight based.

Jonathan (00:24:07):

With leverage markets, that’s not the case at all. If you wanted to take a 10X short position because you knew that something was a house of cards and it was going to fall apart, you don’t need a million dollars in order to have life changing benefit from that. You could have a few thousand dollars and then use leverage to offset the… It increases risk if the market moves against you, but it drastically increases the upside if you are correct. So you’re no longer simply exposed to the markets based on your current financial standing. Your only limitation to how successful you can be in a trading market is just by your level of confidence, and that’s really a game changer, and that’s how some of the most wealthy individuals and organizations that we know of from going back hundreds of years have become successful. It wasn’t because they had an access to initially the most capital. It’s because they had access to the most confidence, and that confidence was well placed.

Jonathan (00:25:25):

In short, and maybe I’m a little poetic because I’m kind of emotional about the whole concept, but in short, you will be able to take long or short positions with multiple exposure than the capital that you lay out. For $10, I could have $100 or even potentially $1,000 worth of exposure to the price of soybeans or platinum, or the amount of rain in Paris next week. It really, because it’s leverage on any asset, so then it’s purely up to the community and up to liquidity providers to determine which markets that they feel are valuable, which markets that they feel are helpful, and then to just create those markets.

Jonathan (00:26:13):

We’re just excited to create a tool that will be used for use cases that I believe we haven’t even thought of. Obviously there’s the low hanging fruit, take what’s on Synthetix, take what’s on Mirror, add long, short leverage to it. But I think that that’s just where people are just getting started. I think that the community that we’re building will be inspired to find many use cases beyond just what we’ve seen in the perps markets or the synthetic markets in DeFi today.

Jose (00:26:48):

Yeah. That’s awesome. Great answer. I guess moving on to the details and nitty gritty of how you achieve this, your high level goal is to enable leverage, and you have sort of two phases, right, that you’re going about that in. In the first phase, you’re going to use the leverage token architecture leveraging Mars protocol underlying it. And then later, the goal is to become a perp next. We’ll go through each one in turn. Focusing on the first, how do the leverage tokens work for people that aren’t familiar with that design?

Jonathan (00:27:18):

Sure. I’ve had the opportunity to explain this plenty of times. Well, we’ll explain it simply. Imagine that, again, let’s go back in time. It’s the middle ages and there’s a bank, there’s always been banks, and I’ve got a bar of gold, and gold is worth 100 barrels of wheat. So I put the gold, I’ll just say 100 paper monies. It makes it simpler to imagine. So I put the gold in the bank and I ask the banker, “Can I borrow 100 pieces of paper money for the gold?” And he says, “Sure.” You put the collateral in. And so now I go out and I buy a second bar of gold with that, and I also put it back into the bank. So now what’s my position? I have two bars of gold and I have debt of 100 pieces of paper money.

Jonathan (00:28:10):

Now imagine that the price of a bar of gold doubles. So now what do I own? I own two bars of gold, which each one is now worth 200 pieces of paper money, so my total gold assets under management is 400 pieces of paper money, $400, let’s say, and then my debt is still only $100. If I go to cash, now I’ve got $300. So magically, gold just doubled, but yet my assets tripled. How did that happen? Because I actually converted my assets into a leverage basket. That process is exactly what we do, and the bank that we work with is Mars, and Mars is a very exciting, innovative lending platform that’s being built by a very talented team on Terra, and we’re super excited to be working with them. We are initially creating LUNA 2X which I think that there’s a lot of demand for.

Jonathan (00:29:13):

And then we’ve already had requests for state LUNA 2X and then LUNA 2X shorts. And then it could expand assuming that the Dow votes it in to Mirror 2X and Anchor 2X and even Mars 2X, and then even the assets that are found within the Mirror ecosystem. And so there’s a lot of advantages to the tokenized 2X token, and we see it that it’s popular on places like Binance, Huobi, and FTX, if I recall correctly. I think traders like it for the simplicity, that it’s really easy conceptually to just say, oh, I was hodling my LUNA, and now there was this dip, and I think that we bottomed, and I think that the market’s going to just fly back up, so I’m going to get some leverage, I’ll swap my LUNA for LUNA 2X. And then now I’ll ride that leverage up. And then when I feel that we’ve hit at the end of the run, I’m just going to swap back to regular LUNA. That’s one example of a trading strategy that can be enabled through 2X tokens.

Jonathan (00:30:32):

I think that that’s why they’re so popular in the market in general. There’s E2X, there’s BTC 2X, and then within centralized systems, there’s plenty of other name brand cryptocurrencies that have 2X versions of themselves.So I think, again, we’re bringing to the Terra ecosystem just a base tool that should exist and just somebody has to build it. And so we are… our focus is to make leverage really easy and really accessible and really just controlled by the community. And so this was a great way to introduce the concept to the Terra ecosystem and then also allow us to at the same time have a parallel track of the more ambitious project, which is actually full blown perpetual swaps. There’s a lot of different ways to implement a perpetual swap. There’s a lot of researchers that we’ve been working with, Delphi included, that have weighed out some of the pros and cons of the various different approaches. And so I don’t want to say anything negative about one approach versus the other, but I think that all the approaches in the market have some pros and some cons.

Jose (00:31:51):

I think we can get into… Yeah. We’ll get into preps in a bit just to finish up on the leverage tokens example. In your bank example, is there a risk of liquidation? When people think of-

Jonathan (00:32:04):

Oh yes.

Jose (00:32:04):

… leverage, they almost think of liquidation, and obviously liquidations are sad, but is there a risk of liquidation with this 2X product? I guess, could you go through the sort of rebalancing flow for people?

Jonathan (00:32:16):

Yes. Absolutely. Again, let’s come back to just the manual, if you were to just do this over and over again. There’s a few things that I just skipped over in my gold narrative. One is, is that no bank is ever going to give you 100% collateral. As long as they give you 50% collateral, so then you can now take that 50%, you buy half a bar of gold, you put it in the bank again. Now you buy a quarter bar of gold, now you buy eighth of a bar of gold, a 16th of a bar gold. You do that 11 times and you end up with about two bars of gold. That’s exactly what we do.

Jonathan (00:32:54):

Now, the problem is, is that if the price of the bar of gold old drops below what you borrowed or even gets close to it, the bank might just shut your account down. And so they’ll just say, you know what, the amount of debt that you owe us is higher or is so close to the collateral that you deposited in our bank, so we don’t think that a rational actor would actually repay this loan. So we’re just going to wipe it off of our books, and we’re going to close the position, and we’ll just take your collateral and we will liquidate in the market. That’s getting wiped out and getting liquidated. Anytime that you take on a leverage position, which is a debt position, you run the risk of being liquidated and being wiped out. That’s true with Levana, and that’s true with any leverage position.

Jonathan (00:33:45):

Now, in order to prevent that is that we have an automated rebalancing mechanism, which means that as you get closer to that red line where you would get wiped out, we automatically unwind the position. That means we go back to the bank, we ask for a little sliver of gold. We sell it back for dollars. We come back to the bank. We repay some of our debt. Then we take another piece of gold. We repeat that to lower the leverage exposure. As long as there isn’t an aggressive black swan event, we please God, we’ll not be wiped out. That’s one of the advantages over trying to do this manually, because it’s 11 steps going in one direction, 11 steps going back in the other direction, waiting for transactions to settle, paying transaction fees, making sure that you’re at the right time.

Jonathan (00:34:44):

When I was doing this manually on Aave or on Compound, because I was doing exactly this, I think I actually started it with MakerDAO back maybe in 2018 or early 2019, I did, I lost a couple of baskets, and it was very painful. I would let it go under and then you have to pay the 13% liquidation penalty, and you just feel like a jerk, at least I did. And so going through that experience and feeling that pain, I thought to myself like, man, I wish that somebody automated that process. And so here we are. The Levana community is going to do it. We’re excited to be able to offer the upside of a leverage 2X product, which is generalized enough that the community can use it for multiple 2X tokens, multiple types of 2X tokens, while at the same time having a generalized rebalancer to leverage up and leverage down to hopefully minimize the baskets from being liquidated.

Jose (00:36:02):

Yeah. That’s a great explanation. You could have just done a traditional margin trading platform, right, where someone can select arbitrary leverage, and when they don’t, most importantly, they kind of don’t get this leverage token receipt token. I guess, why did you choose the leverage token architecture? What can be done with these leverage tokens? Yeah. Why did you choose this over just an sort of fully flexible margin trading platform?

Jonathan (00:36:28):

I guess it was from my experience of kind of I was a BitMEX user for a while until I promised my wife I wouldn’t be a BitMEX user anymore, and that’s a joke, that’s not really a joke.

Jose (00:36:43):

BitMEX is ending many marriages, I think.

Jonathan (00:36:47):

Yeah. Yeah. Yeah. It is. Because you can’t sleep. You can’t sleep when you have some positions open. And so then, I started trading on some of the decentralized margin trading platforms, and I always felt like they were missing the point, like they didn’t really utilize the value drivers of DeFi, which I find are permissionless platforms, censorship resistance. I would say even though I mentioned it last, first and foremost is the interoperability. The fact that future entrepreneurs can come and improve the value offering of the products that previous entrepreneurs created. And that’s how you get these Cambrian explosions of innovation. That’s what was amazing about Ethereum in the first place. That’s what was amazing about MakerDAO. MakerDAO created Dai, and then you could create Compound, and then Compound could create pull together.

Jonathan (00:37:56):

So that was a narrative, the money Lego thesis was something that just even to this day, it’s like people get it. People are like, what are you doing with all this stuff? And I just that narrative and they’re like, oh, I get it. This is how we beat FinTech, because traditional FinTech is so siloed and it’s so bureaucratic that it’s just impossible for any new entrepreneur to build on top of another entrepreneur.

Jonathan (00:38:20):

I actually have a tangent that I think demonstrates this so well. I was at a presentation, a startup event. This was maybe a month ago, and the head of innovation from the Central Bank was there. This is a big wig guy. He got up and he gave a speech about how innovative that they are and all the cool things that they’re building, and they’re even playing with an enterprise blockchain, whatever that word means. He was saying that, “Look, if there’s any entrepreneurs out in the audience that want to build on top of the digital currency that we are pioneering here at the Central Bank, please come to me, but make sure that you’ve received $5 million of funding, that your product is live in the market, and that you’ve received over half a million dollars of revenue.” And I just laughed at him.

Jonathan (00:39:21):

I went up to him afterwards and I was like, “Do you realize this is why crypto is going to kill you?” I mean, obviously it’s not going to kill him. I hope he lives a long and healthy life, but this is why it’s going to kill the traditional finance world is that you need to make something that future entrepreneurs can build on top of. The people that we’re building margin trading with, or the teams that were building margin trading within the crypto ecosystem, they were not creating tokenized assets. I felt like I was nuts.

Jonathan (00:39:57):

So that’s why I wanted to start where that, that I knew it was important that the first product that Levana would bring to market had to be tokenized. It had to be a tokenized, leveraged product because I want other entrepreneurs to be able to take those assets and then build cool stuff with it, stuff that I may have never even thought of. That’s going to be a value driver at least as long as anybody within the community will listen to me. I don’t know why they should listen to me over other people, but as long as I can bang on the table, interoperability will always be a major value driver.

Jose (00:40:43):

100%. Yeah. I think we already have some pretty cool ideas for how to use leveraged assets in some of the fields of our strategies and stuff like that, so there’s a lot of potential interoperability there. I also think if UST sort of does what we think it’s going to do and plays out the way we think it’s going to, then I think these leveraged tokens with UST backed leverage tokens are going to be sort of prime cross chain collateral as well as sort of Terra integrates with Wormhole and then IBC, I really think that’s going to be a big story here.

Jonathan (00:41:14):

Yeah. Exactly. I didn’t get to mention that, but the interoperability between chains, I mean, is a huge factor as well. If I’ve got collateral stuck on, let’s say dYdX or one of the other similar margin trading platforms, I can’t bring that to another scaling solution, I can’t bring that to another chain, it can’t become collateral on another platform, so it’s just incredibly limited. And so the fact that we could create, that anybody can create a 2X asset and then pipe that over to Solana or pipe that over to Polygon or to StarkNet or to any other place, it’s just really interesting, and I don’t think it’s ever been done before.

Jose (00:42:12):

100%. Okay. Let’s move on to the perpetuals exchange, because that’s also a super interesting product and a massive market, especially in crypto. Could you talk a little bit about what a perp is, and maybe the difference between perps and leverage trading? I think that could be interesting, especially given how well you explained kind of the leverage tokens. Leverage is kind of an abstraction in itself and it enables this amplification. I think perps are the next level of that, where you kind of don’t even need the asset itself, right? It’s like some magic that goes on. So yeah, would love to have your explanation of that.

Jonathan (00:42:48):

My daughter, she’s 12, and she was really interested in understanding how it works. So I thought, and we talked it out, and we came up with an analogy that isn’t 100%, but I think that it works really well, is that imagine that I had 100 $1 bills and you had 100 $1 bills. And that I laid all of my 100 $1 bills kind of in a line on the floor in front of me, and then you laid yours out. And then we took a flag on a stand and we put it right in the middle between the two of ours. Now, we could decide as long as we were in agreement that if there was a price movement of the price of Bitcoin or the, as I said before, the amount of rain in Paris, or the floor of punks on open sea.

Jonathan (00:43:50):

If there was a 5% move, let’s say I was going to say, I think that there’s going to be less rain in Paris, and you or my daughter in this example thought that there was going to be more rain in Paris. So then what we could say is that if the amount of rain decreased by 5%, so then we’re going to move the flag away from me to 5% more dollars on my side of the flag. And then if the price changed again in her favor, we’d move the flag closer to my side. And so now what’s happened here is that neither one of us can own rain in Paris.

Jonathan (00:44:34):

I picked that example because I think it really emphasizes how you can use this for anything and an asset that really can’t be custodied, but obviously this could be something like a traditional equity, or it could be a commodity, it could be soybeans, it could be Bitcoin, whatever it is. It really doesn’t matter. Anything that there’s a price feed on, that’s a price feed that we agree to. Now you see that because of our agreement, and it can be open. This agreement that we have, really it doesn’t have necessarily an end date to it, but at any point, we are both exposed to the volatility of this underlying asset without needing to really involve the underlying asset at all. This could be applied to direct price movement or an amplification of price movement. It works the exact same way. This is a very dumb down model and there’s a lot of inaccuracies in it, but I think what it illustrates is that you can have exposure to something without touching that thing. You can have leverage to it. You can have long or short exposure to it.

Jonathan (00:45:54):

It’s fundamentally different than leverage in of itself as we explained before, because leverage in the gold example, I needed to actually go out and by gold. The bank needed to accept holding gold and using it as collateral. There’s a lot more flexibility and a lot more… There’s a lot more features and just bells and whistles that can be applied to perpetuals that can’t be applied to traditional leverage.

Jose (00:46:25):

Yeah. I really like that example. I actually, yeah, really like that. I guess to bring in the funding rate or price movements in an exchange, it would be, I guess, if it rains a lot, there’s a flood in Paris or something, the flag could move so quickly that it kind of goes over the $100 that your daughters has, right? She’s fully liquidated, needs to go sell her teddy bears, whatever, to make the payments. And so that’s why exchanges have this insurance fund, right, to prevent people from being on the winning side like you are and not being able to be paid out.

Jose (00:46:59):

They also have, I guess, because the exchange has more risk if there… because in this example, there’s just you and your daughter, but if we imagine there’s a lot of sort of parents playing this with their kids on this exchange, the more sort of exposure there is on one side, if there’s a lot of dollars on one side and less on the other, that’s more risk for the exchange, right, which is where kind of the funding rate comes in. I don’t know if you’ve found a way to [crosstalk 00:47:22] funding rate into this. Yeah.

Jonathan (00:47:24):

We did talk about the funding rates. Now imagine that it’s not a flag, but it’s actually kind of a ball, and again, we do this kind of on a lifted platform. The funding rate is actually just tilting the floor slightly in one direction or the other. If you see that there’s a lot of parents on one side that are taking the short position, but there’s not a lot of kids that are taking the other side, so now if you just shift the floor to give the kids an advantage, an unfair advantage, so that can attract a lot of kids to come and to lay their dollars out, because they see, oh, even if the price doesn’t move, the ball’s just slowly going to roll in my favor towards my parents. And so that’s kind of, I see that tilt is a good analogy for the funding rate.

Jose (00:48:14):

Yeah. This is really cool. If Levana doesn’t work out, you should write sort of children’s books on financial products [crosstalk 00:48:20].

Jonathan (00:48:20):

My brother actually wrote… Yeah. My brother is… I give him the credit for that. He wrote a children’s book on Bitcoin.

Jose (00:48:28):

Oh, very cool. Okay. And so on the centralized exchange model, this is done obviously with the centralized order book and with a centralized sort of settlement. How do decentralized perps work? What are the different approaches, the different designs? Could you talk at the high level about the main problems that they face, and kind of the design tradeoffs? I know it’s a broad question. Maybe just take it wherever you want.

Jonathan (00:48:54):

Yeah. Let’s kind of break it down. The first thing is many centralized exchanges work on order books, which are resource intensive and liquidity intensive. That is very hard to bootstrap and it’s laborious to run on a distributed ledger or the distributed system where there’s a lot of redundancy by design from a computational perspective. That’s why we’ve seen things like the automated market maker model of Uniswap and all the derivative AMMs that have come out. Not derivative AMMs, but similar products that have come out to market since Uniswap launched, or even Bancor before them, where there’s this scale and it keeps balancing itself kind of through a push and pop model on one side of the scale.

Jonathan (00:50:05):

Without kind of going through all the different names of the different perp implementations, we can look at one problem, which is just the order book. Now, if you look at, okay, so we’re not going to have an order book, and I’m not in interested in having an order book, even though I think that Terra creates an environment where an order book is more feasible than in other blockchains, I still think it’s a good idea for the long term future of Levana to be built around an AMM model, and I think that the DeFi community has really adopted that as its preferred method of trading from a stylistic perspective as well. So now, still even within the XYK model, there’s still liquidity issues and liquidity choking and price manipulation by whales, and there’s the dispersing of liquidity depending upon how many markets that you want to have on the AMM. So that’s-

Jose (00:51:17):

Which actually shares for perps, right, [crosstalk 00:51:17] that special [inaudible 00:51:17] because of the liquidations, right?

Jonathan (00:51:16):

I think that’s fair… Well, yeah, because… No [inaudible 00:51:20].

Jose (00:51:22):

Like the kind of manipulation that you can have with an XYK and the liquidity that you need is way more of a big deal with perps because people are getting liquidated, right, so the manipulation [crosstalk 00:51:31] bigger.

Jonathan (00:51:33):

Yeah. That’s really the problem. Yeah. If you’re not familiar with that concept, I mean, think about it like this, if I own one Bitcoin and the price of Bitcoin drops by 90%, it drops from, I don’t even know what is the price of Bitcoin right now. It’s like 45K. But let’s say it drops to four and a half K, I mean, we’ve been there for that, then I still have my one Bitcoin. I’m good. I’m a hodler. It’s in cold storage. I don’t need to worry about it. And someday when Bitcoin goes to a million dollars, I’ll know I still have one Bitcoin and now it’s worth a million dollars.

Jonathan (00:52:07):

With perps, that’s not the case at all. If the price drops because some guy screwed with the math because he could throw his weight around or she could throw her weight around with either buying or quickly adding liquidity, removing liquidity, making a bunch of orders, flash loans, there’s a number of different approaches, but then you can actually empty people’s wallets out. And now, it’s not that, oh, I just have a Bitcoin and it’s worth a little bit and then it’ll just bounce back up because this was a short-term dip, it’s that, no, when it bounce back up, that train left and you’re not on the train anymore. That’s why you just can’t have perps run at scale with that kind of a risk, that manipulation risk. That’s kind of where Perpetual Finance, maybe it was Future Swap was the first one to do it, I think it was one of those two with the virtual AMM that had virtual balances so that it’s not limited to a specific amount of liquidity and that the pool itself can define a curve, K factor.

Jonathan (00:53:18):

And so that model has shown, while it’s not perfect and there’s been struggles with the, at least historically, I remember a case, I think it was in February and maybe another in March, maybe even going back again in December of where there was massive price disparity within a virtual AMM running perps on, let’s say specifically [inaudible 00:53:44] markets. Then what you would find on the spot markets either through to malicious actors or just natural market movements, it still is a massive improvement. That kind of creates the challenge of how do you actually set K if it’s… It can be too high and then it’s vulnerable, or it can be too low and then it just doesn’t move in line with the expectation of the speculators in the…

Jonathan (00:54:19):

I mean, sorry, if it’s too high, then it’s going to be slow, and if it’s too low, then it can be gamed. There’s still challenges around the exact implementation, and that’s something that means a lot to us to really kind of figure out and to test and to take a methodical approach to it. Now there’s other implementations where you change K over time, and then, again, you add another level of complexity, and then you also add a level of authority as to who has the rights to change K over time, and what impact do you have on slippage, and how do you make sure that you have a fair market?

Jonathan (00:55:07):

Those, I think are some of the challenges of the existing approaches. I think that what we’ve seen in 2021 is some great novel approaches come to market, and those are what we’re looking at and what we’ve got, mind and talent much greater than myself that are really diving into to try and identify what variables, which implementation is the winning implementation that really should be brought to market for the Terra ecosystem,

Jose (00:55:41):

For sure. Now, those are great explanation. Yeah. The real problem for me is sort of the price discovery, right, for this stuff, because with perp, for instance, with the VIMM, it’s like you put in your collateral and then the AMM really is virtual. It’s kind of an abstraction on top of an abstraction. It’s like, there’s actually no liquidity there either. It’s like a perps or an abstraction, and there’s no liquidity there. You’re just trading against this virtual AMM, so someone has to set that initial K. When you set that initial K, it’s really hard to set it right. That’s what the market price does so well.

Jonathan (00:56:13):

We split it. If E does a 10X or does a 20X, it needs to be reset. And how does that happen? Who has the authority to do that? When does that happen? Do we empty the pools? Do we just launch a new one? Do we ask people to migrate over? There’s a lot of good questions that need to be asked for the long term sustainability of that implementation.

Jose (00:56:37):

Absolutely. I think it’s sort of a testament to the demand for decentralized perps, how well and how much volume perpetual protocol is done with this product. I mean, they’re an incredibly smart team, perfect too, super exciting, and I think solves a lot of these issues. But do you want to talk a little bit about what architecture you kind of decided on and why, maybe just at a high level? Yeah.

Jonathan (00:57:01):

I’ll tell you who my favorites are. I think the most recent model by Perpetual Finance, they call it Curi, and the MCDX model, which is the Maya V3, if I’m pronouncing it correctly. I think those are the most compelling models in the market, and that’s where we draw a lot of inspiration from. They have some pros and cons, whether dependencies on Uni V3 or dependencies on decentralized Oracles, but I think that they’ve shown to be the most well thought out and just most successful models.

Jose (00:57:49):

Makes sense. Yeah. Those are surprisingly our favorites as well. What does the Levana token do? What’s the role of the Levana token in the ecosystem?

Jonathan (00:58:02):

Yeah. The Levana token is a governance token and it’s designed to ensure that the protocol is truly controlled by the community. I don’t believe that you can really have a… You kind of have to start with the mentality that this is going to be a community controlled project, and then that really influences and defines every decision that you make. That’s been a rallying cry around basically everybody that’s come to the table to participate in building this. And so that means that there needs to be a strong governance token. That means that the governance token gets to decide what’s the future roadmap? What are the assets that are listed? What are the fees that are taken? What are the rewards to the liquidity providers? What are the risks that the platform is willing to take? Once the fees are collected, in what forms should they be stored? What’s the amount of risk that is governed by the Levana token going to be exposed to? What happens with the fees? Do the fees get distributed in some form? Are they used for grant programs? Are they used for buy and burn models?

Jonathan (00:59:31):

These are the types of things that really, again, emphasize the value drivers DeFi and just decentralization in general that make it zero to one over the existing financial system. That it’s not my decision, it’s not anybody else on the… any of the other people that were early involved in the project as to what happens with the future of the project or the protocol. It’s up to the community to decide that. The community will have the products that they want on it. They’ll have the implementation that they want to be implemented. They’ll have the fees collected as they see fit. And then they will manage the treasury that’s collected by the Dow as they see fit. What I see right now is my real responsibility is not necessarily to kind of be a leader in the sense as like what you would have in a centralized CEO, but rather to just kind of be a cheerleader and to just remind people why they got involved in the project to make sure that the mission and the vision are a constant narrator, and that the protocol, especially when it’s in a young and vulnerable stage is protected from bad actors.

Jonathan (01:01:00):

But I’m very excited to see this thing kind of grow way beyond my wildest dreams. I’ve already kind of seen the people from the community that I’ve never even met in real life before, anonymous degens as they like to call themselves, really take a real seat at the table or take the reins and help propel this thing forward at a speed which I don’t think would have been possible without this type of community involvement.

Jose (01:01:32):

Yeah. You’ve done an incredible job, to be honest, bringing different people together on this mission. I think it’s cool, it’s sort of Dow the mission is leverage any asset, right, and the Dow decides how that’s done, and sort of pools risk as well in sort of taking the responsibility and the downside of decisions that these governors make. So yeah, I think that the token makes a lot of sense here.

Jonathan (01:01:56):

Yep. Absolutely.

Jose (01:01:58):

Cool.I mean, switching gears a little bit, Levana, it’s a leverage trading platform, but you’ve also crafted quite a storyline around it, and you’re releasing the Levana lore, I believe part two might be out by the time this podcast goes out, maybe even part three. Could you talk a little bit about the lore, maybe even the metaphor of dragon riding and some of that stuff, because I think it’s super interesting.

Jonathan (01:02:24):

Sure. I’m an avid gamer. I grew up on green of time and in GoldenEye and Final Fantasy VII. I didn’t want a project that was just a plain financial tool. I feel like to really attract the type of fever and the type of people that we need to attract in order to be successful. There needs to be something more. There needs to be something that you can emotionally connect with. And so I went out looking for a mascot, and I started thinking like, okay, what does leverage really mean? Leverage is the most powerful financial tool, but it’s also the most dangerous. So what is a mascot that is incredibly powerful and also incredibly dangerous.

Jonathan (01:03:31):

And so then I started looking at a wolf, and this was actually inspired by my neighbor has a half wolf dog that is probably about, he’s probably 65 kilo. The dog’s bigger than I am. And I see how this dog loves his master. Becomes like a little puppy when his master comes home, but then I walk up to the house and this thing is going to eat me alive. That just really kind of reflected. I saw like the wolf is a good metaphor. And then I kind of just started going bigger and more mythical. We talked about werewolves and we talked about other things. It kind of came through just like a jam session with illustrators. I made the realization, I do some watercolor painting, and so I was working on some Chinese brushstroke tutorials.

Jonathan (01:04:42):

And so I happened to be doing a tutorial on a Chinese dragon. One of the icons looked like a dragon. I was like, that’s it. The dragon is the ultimate leverage, because if you can ride a dragon, you can do anything. You can travel between planets. Nobody’s going to mess with you. A dragon could, in theory, defeat armies. It just plays such a strong role in every culture. As a reasonably intelligent adult, I believe that it’s more likely than not that humans and giant beasts coexisted at some point in human history, giant reptilian beasts, and that’s why it’s a part of the mythos of every single nation. There’s dragons in Japan, in China. There’s dragons or similar things you find in South America. There’s dragons in Europe. Definitely in ancient, semitic lore, there’s dragons. And so it’s just something that permeates all of human history.

Jonathan (01:06:05):

I looked at the crypto ecosystem and I was like, wow, nobody else really leaned into the dragon. It’s just such an obvious play. And so I felt like the Levana has to be a dragon. And so now if you look at Eastern cultures, the dragon is this badass thing that grants wishes like in Dragon Ball Z. And then you look at Western cultures, like Lord of the Rings and a dragon is this evil, mean talking smog that just burns down villages and steals everybody’s gold and likes princesses and whatever. The dragon in and of itself has this dualistic nature. And so it just kind of all fell into place that Levana is a dragon.

Jonathan (01:06:48):

And then being a big sci-fi and fantasy buff myself, the lore just kind of fell into place that what is Levana? Levana is the story of the first dragon rider and how the dragon riders became a superior class of human beings that were able to accomplish things that nobody else could accomplish. And so I wanted the Levana community to feel like they are the dragon riders. That’s why we’ve released the lore. And so then when it came time to think of things like, okay, how do we want to reward the early participants in the community? We want them… The early participants in the community, how are we going to know it? First of all, they’re not going to get a membership card. They’re going to become dragon riders, and we’ve got great ways of gamification as to how they will become the dragon riders.

Jose (01:07:50):

Yeah. That’s awesome. I love that. Can’t wait to be a dragon rider. It’s been a lifelong dream. I think it is a really good metaphor with kind of… I mean, I’ve never ridden a dragon personally, but I guess it would inspire feelings of great excitement and fear similar to leverage training. I love it. I know you may have some Easter eggs dropping soon. Could you give us any intel on this, or do people have to wait and see?

Jonathan (01:08:17):

I can’t tell too much. I mean, we are… First of all, if you’re not following us on Twitter, we’re levana_protocol, and there’s the link to our telegram there, watch out, there are some knockoff telegrams, you always have that. To date, we don’t have a Discord. We probably will have one. So we’re going to be kind of dropping some Easter eggs throughout our social media. You definitely should be reading the lore, because there’s going to be alpha that is revealed. We’ve been very meticulous both about the language in the content of the lore and in the images in the lore. I’m a big Dan Brown fan, like Angels and Demons and Da Vinci Code and whatnot. I even got to spend some time with him at a conference in Dublin a few years back and said, there’s been ideas that I’ve been kind of playing around with, that you plant things way early to be able to use them later.

Jonathan (01:09:34):

So there’s stuff that is being hidden in the lore today that is going to cause alpha like a year from now. It’s just good to have those bookmarked and make sure that you’ve read it at least once through. In the near term, we… There’s no public sale for Levana tokens. I don’t believe in that. I think that there’s a bigger opportunity there to distribute your tokens to the core audience that actively participates and actively makes your product great, that takes the risk to make sure that our protocol, it’s everyone who participates protocols, is effective and has a strong launch and strong liquidity. What we’re excited about is an NFT drop. The NFT drop is a way it’s going to be gamified, it’s going to be incorporated into every product that we come out with in the future, again, as long as people keep caring what I have to say.

Jonathan (01:11:00):

I believe that this is a great way to unify a community by giving them essentially a membership card that can be actively incorporated into farming, into things like token distribution models, or into reward bonuses, or into early access platforms. It’s going to be up to the community a lot to decide how to incorporate these Easter eggs. So definitely follow us to get the alpha that we’ll be leaking, and it’s going to be a lot of fun. We’ve been talking with some of the other… I believe a lot in collaboration, I’ve mentioned that many times in this podcast here that…

Jonathan (01:11:57):

I made a list of 160 or so different projects that are building on Terra that I’ve been able to identify. I’ve just been hitting them up one by one and kind of giving them the rally cry of we’ve got to work together, we’ve got to build things that interact with each other. NFTs are just a great way to allow for protocols to be able to interact with. I even believe that the Levana NFT series will find usage definitely within our platform, and then even more so within other platforms that are building within the Ethereum ecosystem.

Jose (01:12:38):

Absolutely. I think what you’re doing with the Levana NFT series has already inspired a lot of the projects we incubate to kind of experiment with similar things. I can’t wait to see how these storylines sort of evolve. At a high level, just last question on this, how do you see NFTs playing a role in these platforms? Because it sounds like you’re talking about really gamifying the experience of DeFi in a cool way, and kind of embedding NFTs into the platform, into the storyline, into the storyline of the actual sort of financial products that exist. What’s your vision for this? I think it’s a really cool one.

Jonathan (01:13:16):

I think number one is that it can allow for experimentation of the NFT holder. I’m a big crafting fan. I don’t know if you’ve ever played Breath of the Wild, the Zelda game, but you go out and you collect all this foliage, maybe you’ve got a fish bone, you’ve got sweet grass. You’ve got all kinds of different materials that you found over time. And then you come to this cooking pot and you just sit there and you just kind of throw stuff together and you experiment. And then over time, you start developing patterns, you start recognizing, oh, the designers of this actually put some thought into it.

Jonathan (01:14:04):

That’s exactly the type of discovery experience that we want the participants of our liquidity pools to feel, that we want to offer bonuses and rewards around providing liquidity, which is fundamentally being part of the community. If you’ve got one of our NFTs and then you go out and you become a liquidity provider, there’s going to be a whole gamified experience where you can try to interact with the contractor, interact with the DAP, with various different NFTs just to kind of see what happens. We think that the community is going to have a lot of fun with this. And again, I don’t want to spoil too much, but I see that, just like how you said, some of the other Delphi incubated teams, this has really resonated with them.

Jonathan (01:15:05):

I’ve been pitching this to everybody that’s building on Terra, and saying, we have an opportunity here to do something with NFTs that was impossible to do on Ethereum. Don’t just copy them. It’s awesome. I love the fact that we’ve got our own loot now. We’re going to have our own punks, we’re going to have other things that are similar to what exists on Ethereum. But I think that we really need to constantly be pushing and saying, well, what if I did this? And just try. I want there to constantly be a sense of wonder and experimentation within the Levana protocol and the products that we release.

Jonathan (01:15:47):

The NFTs are going to play two roles, is that they’re going to identify that you are a core member of the community, and then you will see the benefit from that. And then two is they will enable a level of bonuses and early access and gamification around the products that wouldn’t be possible without NFT integration.

Jose (01:16:19):

Yeah. I totally agree. I’m really excited for these NFTs. These are the kind of NFTs that we really like. I think another thing that’s interesting is that they can also serve as… because if you do manage to create sort of a really compelling storyline around Levana where there’s these dragon riders and you’re kind of leveling up and stuff like that, and these characters start to become real characters that people care about, that IP can also accrue to the Dow, right? There can be sort of royalties on these NFTs and on the secondary market that are actually occurring to the Dow. And you can end up having a Dow that has both sort of financial products and sort of this IP of these characters that can be monetized in all sorts of ways like we’re seeing happening with crypto punks and stuff.

Jose (01:17:00):

I think for me, I’m a bit boomer when it comes to NFTs, but I’m way more bullish on sort of these NFTs that start with a real use case, whether it’s in the video game or in adapt. I do think sort of the characters of tomorrow that the kids are following, the people are interested in, are going to originate originally, I thought in video games, but potentially, in the most successful DAPs and apps of the future. So yeah, I think it’s really cool.

Jonathan (01:17:31):

Yeah. Absolutely. I’m looking very closely at what’s being experimented with just in the crypto gaming sphere in general, and I do see that as that. I see that financial services even within games, and this is why I think that many games have markets within the game. There’s always challenges around liquidity. There’s always challenges around nefarious actors within these markets. When we say leverage any asset, we don’t even mean just going as far as platinum gold, whatever rain in Paris. We also mean rain in the metaverse, and so opening that up, saying that there will be financial services in video games, and Levana is going to be there. And so I want us to have a foothold in the gaming sector of the evolution of blockchain applications from really our first product. That’s why I’m excited to kind of create this… I mean, it’s all super novel, I don’t think anybody’s done this before, to create these hybrid DeFi NFT products.

Jose (01:18:57):

Absolutely. Yeah. You’ve got me super excited. I think we’re coming to the end here. Is there anything else that I didn’t cover that you want to go over, or maybe a message to listeners who want to find out more, who are interested after reading this?

Jonathan (01:19:13):

I just want to emphasize the fact that this is your protocol. The future of Levana is dependent on how much you care about the future of DeFi, the future of decentralization, the future of financial service equality on a global playing field. And so I really encourage anybody who these types of values are the values that make you excited about what’s happening in the crypto space to join us. Like I said before, there’s about three dozen people that are showing up every day to help push this forward. And I look forward to when it’s 300 or 3,000, or even more than that. There’s plenty of opportunities for everybody that’s listening to get involved. It doesn’t matter if you know how to code, it doesn’t matter if… like our degen or you’re a math wiz or whatever it is, whatever skill set that you can bring to the table, as long as you share our vision, you can help move this forward and bring this to reality. I encourage you to follow us on Twitter, to join us in telegram, to join us on Discord, to become an active community member, and look, my DMs are open.

Jose (01:20:50):

Yep. . This was awesome. It was great having you here. Obviously I’ll put the disclaimers at the top that Delphi Ventures are proud investors and Delphi Labs are sort of proud advisors and incubators, and very excited to be participating in this, and really stoked to see what you build. Thanks very much for coming on.

Jonathan (01:21:07):

Thanks for having me. Have a great day.

Oct 8, 2021 | 81 minutes | Chain Reaction

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