Altitude: Self-Repaying Loans and Hands-Free Borrowing

0:00 Ladies and gentlemen, welcome back to another episode of the Permissionless podcast. Of course, as always, brought to you by the team at Guardian. We're going deep with DeFi builders. We're getting to see what are the hardest problems that they face on a regular basis. What was their journey to even come into DeFi and start building with these tools and how do they discover the opportunity that they're currently working on?

0:22 And as well of course where do they see DeFi going from here with all of the changes that are going on in the marketplace right now. So of course today we've been joined by Tobias from Altitude and they've been building in the lending and borrowing space for quite some time at this point and they've been working on really an optimal solution to borrow and Altitude is really the hands-free DeFi borrowing application.

0:48 Folks can go and open a borrow on Altitude and it will automatically get rebalanced to find the best rate that is available and it will automatically refinance the loan. And on top of that, we covered a new feature they've been working on to allow the excess collateral from the user to be automatically reinvested into underlying D5 strategies automatically without having to be actively managed and really just all around get the best overall borrowing experience with the best rate, the best auto management possible, without having to touch and manage funds on chain.

1:20 But of course, but before we go deep with Tobias from Altitude, who's joined us. My name is Owen and almost four years ago at this point, I co-founded Guardian. And we set out originally on the premise that DeFi would house trillions of dollars of assets and really be the home of the world's global financial system on chain.

1:39 And we set out to build the security solution that would allow folks to ship in that environment where trillions or hundreds of billions of dollars were at risk. And today I'm happy to share that we have achieved the standard necessary at Guardian. We used multiple auditing teams. We use some of the most advanced fuzzing techniques in the industry and some of the best researchers on the planet to secure blockchain applications and give a grade of insurance that is acceptable by some of the largest companies in the world with some of the largest distributions and asset networks in the entire financial system.

2:14 Today, we're able to achieve a level of assurance that's so high that we're able to put up our own funds as a bounty on the smart contracts of our clients. And we take great pride in the level of assurance that we give. But with all of that out of the way, let us get into this conversation with Tobias from Altitude.

2:36 Well, first of all, dude, Tobias, thank you so much for taking the time to to hop on and and join us. I think really it'd be it'd be great to start first of all before we even get into anything with Altitude. I'd love to just hear more about your journey. How did you find your way into the world of blockchain and and DeFi?

2:53 First of all, thanks for having me having me on the show. I mean my background is more in in web two companies. So I started and and sold two web two technology companies

3:03 And then when I sold my second company I basically took the proceeds of that and jumped kind of full-time into into DeFi during DeFi summer.

3:11 So that was kind of my full-time full-time in crypto moment. A few years before that a friend of mine got me to buy some some ETH. So I I started to stack stack ETH which was then very helpful during DeFi summer borrowing against it deploying into the curve 200% APY pools. Those were the days.

3:29 Yeah. And what was the Okay. So, you mentioned two companies before you even got into crypto. So, I'll definitely be interested to see, you know, what kind of lessons and how that's changed your approach to DeFi. But what what was the first company that you started and sold?

3:44 They were both kind of technology companies. So, the first one was in in travel technology, so hotel booking engine. And the second company was a B2B software as a service company.

3:55 B2B software as a service. I see.

3:58 Curious how that from a high level how that experience has sort of affected your approach to building in DeFi. So you've built B2B and B TOC SAS outside of DeFi and then like what what kind of lessons how's this changed your approach to coming into DeFi?

4:15 Yeah, interesting. So I think maybe more than most other D5 founders, we from the start focused on kind of UX and UI and making things very easy for the user.

4:29 Because that's something that kind of I've been doing for a long time. Both of my co-founders have been doing for a long time. So that's always been kind of at the core of what we do. make try and make things try not try to not make the user think try and make it as easy and as simple as possible for the user to interact.

4:47 Yeah. And what did you see? So obviously you came in DeFi you know very early on during DeFi summer and probably a lot of the UX there was like you know extremely subpar.

4:57 Surprising. Yeah. Surprising to say the least. Yeah.

5:00 Yeah. I mean, a lot of the UX was mostly just like referring to the docs and like trying to figure out what is it that I'm even doing with this transaction or like what what do I need to click next? So, yeah, I mean, obviously all the approvals and everything like this and the entire transaction signing UX has been a huge bottleneck on crypto the past, you know, four or five years in terms of UX and adoption.

5:25 So, what is what do you think is the main bottleneck on UX and how have you guys addressed that? I think most of D5 applications have a really steep learning curve and they're fairly complex protocols, fairly complex beasts that you have to read through pages and pages of documentation to understand. I think in some ways that it's good because it makes people think and it makes people think twice before they put their deposits in.

5:52 But I do think it puts a lot of people off. Yeah.

5:55 And yes, so I think there's as the space matures, I think there's a real opportunity to to if you make things easier to understand, if you reduce friction, I think it's a lot easier to I think it makes it easier to onboard a lot of new users. It also puts a a bigger responsibility, I think, on on the builder.

6:15 Because if you force people to really understand your protocol or or kind of jump through hoops before they can deposit then kind of the onus is on the user. If you make it super simple and abstract everything away then the responsibility I think for the builder or for the for the defi for the for the app for the for the interface kind of gets bigger.

6:36 So you need to be you need to really explain to people what you're doing.

6:38 Yeah. And I think there's a very dis distinct difference between different audiences in crypto. There's, you know, the people who have already been in crypto since, like you said, DeFi summer and they're well familiar with the existing crypto apps and then there's people who are new entrance to the market and I almost feel like you could design your DeFi protocol in two ways to optimize for either of those.

7:00 So, in that sense, would you say that Altitude is leaning more towards one of those two parties? And how do you design for the one that you're choosing?

7:09 Well, I think just because we we kind of put up with difficult interfaces and put up with steep learning curves doesn't necessarily mean that users kind of want that or accept that. So I think

7:20 The way that we look at it we we've tried to make our interface as easy to use as possible and reduce like reduce the friction as much as possible

7:28 And we have a lot of crypto OGs that are using our protocol. So, I think even if you're a crypto OG, you're you still appreciate simplicity and and and something that just is quite easy to understand and quite easy to interact with instead of having to sign three, four, five messages and and kind of really understand the terminology that that the protocol kind of introduces by itself.

7:49 Yeah, I think that's a great point like being able to abstract away all of the complexity and the underlying but then also having that depth if people want to go and read the docs and and they want to go that deep and they have that experience and they're like interested hey what what are you using underlying for the lending protocol then they can go

8:06 Yeah for sure

8:07 But for you know a great deal of new entrance it's like they don't even have the constructs in their mind to understand like what is happening under the hood and you don't want that to be a barrier to them for them to have to dozens of hours of research just to start using the application right so

8:25 Yeah 100% and I I would add to that that at the same time I think transparency is is one of the beauties of DeFi

8:32 So I think abstracting it away is great but I think as you said also make the information still accessible for people that do want to dig deeper because I hope we don't lose that as DeFi grows

8:43 Absolutely yeah and I think with a lot of these proposed like methodologies for like you know using public chains as like approving network instead of like housing all the application code there will probably be some devian from that and I think we'll have to find the right sort of balance to to balance that out balance of scalability balance that kind of approach with the introspection like you're saying so we we we'll see how that sort of trends and interested to to get your thoughts on that later but you originally got into D5 started using curve and stuff DeFi summer around that time.

9:18 What kind of initial problem did you see that you guys wanted to solve with with Altitude or was that not even the first protocol that you started building?

9:25 Yeah, now Altitude is the first protocol that we started building. We have been building this for over four years. Awesome.

9:29 Yeah. And so, yeah, it was during DeFi summer that we kind of discovered this painoint, which is collateralized lending. it's kind of with collateralized lending, I think, is great because it's a it's a very seamless way to borrow and it's a great way to unlock kind of liquidity against assets you don't want to sell. But it's got this big trade-off, right, where either you lock up a lot of collateral and take a small loan to make sure you don't get liquidated so that the price of the collateral can can half or or can drop 60 70% and you're still you're still fine.

10:04 Or you borrow more which means you can do more with your capital so your capital is more productive but you have a higher risk of liquidation so that was one of the one of the issues we identified and the other issue is the the the variable interest rates

10:20 I mean the the I think they are they are a blessing and and a curse I mean they're a curse because they're hard to rely on like they can change at any moment but they are a blessing because they're a very efficient way to find out what the market is willing to to to pay for to to borrow, right?

10:37 And so, but as a user, it it can be frustrating that you take out a loan and then an hour later or a day later, the loan on the lending protocol that you're using skyrockets, whereas the other one that you considered there, the the rate is still very low. So then you're like, okay, now I'm stuck with my loan on one platform and I want to be on the other platform.

10:57 So those are the two things that we identified during DeFi summer. We're like, this is not great for as a user. so then initially we started building something for ourselves a bunch of automation and then eventually we realized okay we should probably turn this into a protocol because there are a lot of people that are that that kind of have this issue.

11:16 So that's when we started building Altitude which basically does exactly that. So the users take a loan through Altitude a collateralized loan and then they they can take a relatively low LTV and then Altitude activates the idle capital. So we we borrow more on behalf of the user, deposit that into yield farming and use those use the yield that we generate to kind of reduce the debt.

11:42 So ultimately get a self-repaying loan.

11:44 Right. And so you're going underlying to blue chip lending protocols like Aave and Morpho. maybe some others to borrow funds on behalf of the users and then so obviously there is a risk like okay you're borrowing up to you know within x percentage of the LTV on top of whatever the user is requesting to borrow is there any risk of like you guys getting liquidated like let's say if you're liquidate if your if your keeper didn't you know reduce funds fast enough what's the risk of liquidation in there.

12:20 How do you guys sort of address that?

12:21 Yeah, great question. I mean, that is the key risk. so that's what we've spent the last four years on making sure that we're kind of as protected as possible.

12:31 So I mean there's a bunch of different things that we do. So we've got we've got three kind of separate automations running to kind of rebalance at all times. So we have we we've set we have different parameters and at different parameters kind of the different automations kick in. So we use for example we use Gelato we use Chainlink and we use our internal automation our internal bots.

12:59 So kind of the three of them compete when when gas is high so that always one gets through. so yeah but that that is the main risk. So that's what we we spend a lot of time kind of perfecting. I like your approach of not trying to rebuild the wheel, not building your own lending protocol because I think a lot of teams in in DeFi would, you know, take this idea and kind of run with it and just go all the way and build literally their own lending protocol.

13:25 There are there are benefits to that, but there are, I think, massive trade-offs as well. Firstly, in that you could you could technically guarantee that they won't get liquidated because you're the one who's implemented the liquidation mechanism and you could delever people automatically within the actual, you know, liquidation flow or maybe you could even have like call backs and stuff that would automatically trigger that in the smart contract.

13:48 But on the other hand, it's like, well, you're going to have to bootstrap all the like this is not going to be the best lending venue because you're not going to have all the liquidity. so it just it it makes way more sense to to just go and build on top of the existing and then you know even if a competitor like Euler takes over and let's say even if they killed the underlying protocol that you're using well then you could just switch to to using that.

14:11 So I I think this approach definitely makes the most sense to me and I I like the way that you guys have I mean it sounds like you guys have stuck with that premise for for four years. Have you guys pivoted at all or has this always been the the vision?

14:26 No, this has been the the vision from the start. I mean, when we started building this, we were building it on top of Aave and Compound.

14:32 And and now we've got integrations with a Morpho.

14:35 Yeah. I mean, what's your perspective on on what really happened with with Compound over the years? It was obviously it was right up there with billions in in volume and in loans and then I don't know. I I haven't really been paying too much attention, but from your perspective, what happened there? to be honest, I only have a kind of an outsider perspective.

14:54 I don't I don't I I haven't really haven't really kind of dug deep into what happened there, but I think they kind of just got maybe maybe distracted or I mean Robert Leshner obviously kind of moved on. Maybe that had a big impact. I mean this space moves really quick, right? And there are a lot of people in this space that are super passionate about what they do and and and they run kind of protocols.

15:19 They they they're kind of thought leaders and what they do. If you don't give it everything then I think it's easy to fall behind in this space. so maybe that's what happened with Compound. maybe there are other forces at play that I don't know. but it seems to me that they've kind of just maybe dropped the ball a bit, maybe lost interest.

15:38 Don't know.

15:39 Yeah, definitely. In terms of staying relevant as a lending protocol, what have what has have you seen been like the biggest changes over the years between these lending protocols? Are they basically the same at their core or like what are the differentiators they're using to to get new users, you know, stay on top of the game?

15:55 Yeah, interesting. I think the biggest thing I've seen is obviously is is the kind of the the pool versus isolated markets progress where obviously Aave is a pool model which can be very very powerful because all the liquidity is is in the same pool but also it can be difficult to onboard kind of the more kind of cutting edge collateral types and then I think isolated markets is something that nobody really solved because the because markets are very tricky when it comes to liquidity.

16:26 So, if you have all these isolated markets, how do you make sure that liquidity is spread well over the markets? so I think when Morpho launched their version, I think that that made a lot of sense and I think that's also why they've been able to attract so much TVL in a short period of time. Now, obviously Euler with their with kind of their with a relatively similar model where it's kind of isolated markets with shared liquidity.

16:50 So I think that's I think that's that's the the biggest change I've seen. One thing that I haven't really seen taken off is fixed fixed rates for interestingly enough. but yeah, I would say the biggest the biggest change is that the isolated markets seem to kind of take have taken off.

17:06 Yeah, absolutely. I'm not sure if you saw this. I think the it was the Zapper founder had like a pretty viral tweet the other day because people were asking him, you know, why why they're not updating the platform or like is focused on portfolio management. and he was kind of saying, you know, the retail DeFi market is not really there anymore.

17:25 But from your perspective, where do you kind of see that from the user level right now? Who's kind of still participating in DeFi? Is it more on a fun level? Is there still that core user base of individual people? Like what are your thoughts on that?

17:36 Yeah, great question. So, we see mainly but that might be kind of skewed by our product, but we mainly see individuals using our protocol and it's mainly cryptonatives. Now, it's something that I'm also really keen to expand. So, we at at the moment we're really focused on DeFi natives. but with now the the Pectra upgrade I think it's it's now easier than ever to build in account abstraction.

18:02 And I think so I think we're at Altitude we're really keen to start to make it a bit easier for people to on board. So when you say kind of retail kind of where where is retail? I think first of all, I think I we still see them. but we're also keen to kind of like make the make the product more accessible for a broader group of retail.

18:23 Got it. Yeah, absolutely. And in terms of, you know, the lending protocols you're supporting. What's your philosophy there? Like, you know, onboarding new protocols. is there any permissionless aspect? Is it more of like, you know, teams coming to you? How does that work? Yeah, I mean with lending protocols for us the the the the the first rule is safety first because that's where all the collateral goes.

18:44 So that's that's what by far the biggest risk. so we we are we're very slow to integrate new lending protocols. So we've got we've got a we've got Morpho. we're keeping an eye on Euler. At some point we'll integrate them. we've also been tracking the rates from Spark, but they haven't been interesting enough yet to integrate. but that that's about it.

19:10 Like we we need to see kind of 6 to 12 months of history. We need to see at least a billion in deposits for a while for us to be comfortable with lending protocols. yield farming is a slightly different beast. there we can because with the launch of our new vaults, we can actually farm in multiple we can spread the the funds over multiple yield farms.

19:31 So there you can take a more kind of like a risk diversification approach where you say okay this this this farm might be slightly higher risk but we can put a small amount of the funds in there to kind of increase the overall yield but lending protocols we we can't take any chances.

19:49 Okay. Yeah, that's super cool. And and as far as the users on Altitude, are these people that are already on those lending protocols or yield farming and looking for ways to kind of you know keep their position safe or is it you know going to Altitude in the first place and seeing kind of what's available and where they can keep their funds like managed well in the first place?

20:08 Yeah. Yeah. So most of our users now or I think I think all of our users have experience with either Aave or Morpho and then come to us. so they they've used Aave, they use Morpho, they're familiar with collateralized lending, they're familiar with kind of the issues around it, and then they discover us, and they're like, "Oh, wow.

20:25 This is much better." so then they'll they'll move their position over to us. ultimately when we expand, we also hope to attract users that are completely new to collateralized borrowing.

20:36 Okay. Yeah, that's really cool. And I guess maybe getting more under the hood, like, you know, how does the core protocol work? what are some of the biggest like design decisions you've made to kind of you know keep Altitude working at the core?

20:50 So we've got a kind of a relatively modular approach because we have a lot of integrations with external partners. So kind of at at the core is a is kind of a vault where users deposit their their collateral in and then that that kind of vault core puts the funds into the the active lending strategy. so it it instantly puts the collateral in the lending strategy.

21:12 Then it pulls the USDC out that the user requested. Then and then it gives the US USDC back to the user. and then the rebalancing function of the vault will will then borrow up to our kind of configured loan to value of the vault. and then it will deploy that USDC into the different yield farms. and there we've got have kind of a waterfall approach where we've got multiple yield farms integrated and it will spread it out over those yield farms depending on the configuration.

21:40 That's a very cool approach. So you're basically batching up all the collateral. You'll loan the max or you know as close to the max as you want to get safely and then whatever the individual users requested from that you'll just give them from the vault and then whatever is left is it gets invested into DeFi strategies.

21:57 Yeah. Which which to us was the most from a user perspective the most intuitive approach but it also was was very complic complex to build

22:06 Because the accounting behind it was yeah turned out to be very very complex. so that's why it t took us about four years to to build this kind of in a safe and and then secure manner.

22:17 Yeah. And what what was some of the iteration of the architecture like what was your original approach and I imagine that's probably changed you know a great deal to what you guys have today. What what was that evolution like?

22:27 I wouldn't say it has changed a lot like what we what we basically did we had we in about like a within kind of a year or so we had kind of the structure of the of the architecture ready. Then we started to involve auditors and they helped us kind of find the balance between kind of user functionality and and and not not making it too complex.

22:52 So we had kind of a wish list of like this would be great to have for the user and then at the same time I mean the number one priority is safety and security. so then we worked together with them to see which features we could introduce without introducing too much complexity if that makes sense. so that was kind of an iterative iterative approach and then kind of the base system was ready and then it took us a while to kind of solve all the edge cases and the edge cases of the edge cases.

23:19 Yeah, that that process we're we're all familiar with and I guess when you are invested in let's say yield strategies is it a requirement that they're liquid? So like in case a user comes and they want to withdraw their collateral, they want to repay, does that have to withdraw funds from a yield strategy to be able to like repay a loan and then take your LTV back, take your collateral back?

23:41 Yeah, exactly. Yeah. I mean the because of our because we can spread the funds over multiple farms.

23:50 The the first farm needs to be 100% liquid. being able to to withdraw all funds instantly and then kind of as you go down the waterfall we it's possible that it takes 24 hours 48 hours for example for the funds to come back. but that's kind of that's a risk management that's that's always a trade-off between getting like being able to instantly withdraw versus getting slightly higher yield.

24:21 Yeah, that makes sense. have like these tanches of I mean you can also forecast like hey what's the expected volume that we're going to need and then allocate based on that. So

24:30 Yeah exactly exactly but we're always talking like 24 hours 48 hours we're not we're not talking kind of weeks or months we wouldn't that we we don't have a we don't lock funds up that long

24:40 Especially in DeFi it's pretty hard to forecast

24:43 Especially in DeFi.

24:45 Yeah 100%. and you mentioned fixed rates. I I also have wondered like the fixed rates there are. I think you know there's a handful of protocols kind of going after it and it was we actually I don't know if you're familiar with tenor which is a fixed rate protocol we actually were just finishing up working with them but yeah there's a lot of protocols going after it but like you said it hasn't really been a massive feature and I think a they had fixed rates early on and it was popular but then they you know ultimately did away with it I think you know just out of like efficiency But what is your take on that and how do you guys sort of address that for your users?

25:24 Yeah, it's a good question. So I remember with a we we we kept an eye on the fix rates. I mean I'm I'm I I use a a lot before Altitude.

25:36 And I think the issue with the fixed rates on Aave was very simple. they were too high. So if your variable rate is 3% and if your fixed rate is 7%.

25:47 Who's interested in the fixed rate? Right? I mean now if your variable rate is three and your fixed is four

25:53 Okay that starts to become interesting

25:54 Definitely

25:55 So I think I think on one hand it's kind of a market dynamics dynamics thing maybe it's also the the kind of the why people borrow in DeFi

26:05 I mean what we see we have a bunch of users that have borrowed funds to use in the real world so like borrow from us offboard and buy a car or use as a down payment for their house so that's using it in the real world and in that in that context a fixed rate makes a lot of sense

26:23 But I think a lot of collateralized lending in DeFi isn't necessarily to offer up

26:29 It's to use in leverage or to use across yield farming let's say you want to use it in yield farming and you can you can generate 14 15% somewhere then you're h then you're you're you'll you'll take a variable rate at four 5% and then you farm at 14 15% then you're happy. What you don't want to do is take a fixed fixed rate loan and then you see your def DeFi use collapse.

26:50 So I think it's it's a bit of a function of the market like how big is and I don't know the answer to this but how big is the pie how how big is the the the the the market for kind of real world borrowing and how big is the market for kind of funds that are being reused within DeFi.

27:07 I think in the real world lending I think fixed rates makes a lot more sense.

27:11 Absolutely. And then in terms of like have you guys tried to address it at all? Is it on your your road map to address it and expose that to your users?

27:19 Not yet. No, but we are keeping an eye on the the market. For us, what we look at is what do our current users want? How can we make their life better? So one of the things is building new yield farming strategies.

27:33 And the other thing is reducing friction. Just making it easier for easier for people to interact. and then after that we'll look at okay what what else can we build? What else can we add to make their life easier? but yeah fixed rate fixed rate borrowing is not yet kind of on the priority list.

27:49 Yeah I mean it definitely makes sense if that real world borrowing is just like a subset like a fraction of your use case. It's better than not because it it would be I mean that is like a lot of resources to go into and and solve that problem. I don't know if you're familiar with protocols like IOR.

28:04 I think IRO is one of the the most well-known. have you guys considered integrating that in any way? Like do you think it's just too risky smart contract risk? what are your thoughts on that

28:16 For the yield generation

28:17 For fixed rates?

28:18 Yeah. And we haven't really looked at fixed rates to to to implement them for the users. I mean unless we get demand from the users then we or or if we see a if we see it like if we see really big trend in DeFi that it's being adopted across the market then we'll then we'll go after it.

28:35 But until then, we, yeah, we've got too many other things to worry about.

28:41 Yeah, always. And I mean, what what are some of those things? Like what what are you seeing as the highest demand features of just higher yields on your yield farming? What kind of features?

28:50 The current users of Altitude, what they really appreciate is that it's kind of a set and forget system.

28:56 So they the users are really happy to take the loan and just they they know it's in the right place. they know if the borrow rates change that we will finance the the vault at the cheapest borrow rate and that we always stay on top of the farming opportunities.

29:11 So so that's kind of that's that's what we're doubling down on. So we're we're making progress there.

29:17 And then one of the key thing one of the things that we're looking at is kind of integrating payments more into the app.

29:26 And so we see a lot of crypto cards being launched. I think they're great. they're a great way for to to bridge the gap between DeFi and the traditional world. I I I also think that a card makes a lot of sense in a place where you already have your funds. so where we see a really big opportunity is kind of launched like a launch a a credit card where people have their collateral with Altitude and then they can use that card to instantly borrow against their position and spend it in the real world.

30:00 So that's something that we're really excited about.

30:02 Awesome. So they would like they would withdraw from the vault and then that would basically be what they they use and then it will obviously you know affect against your accounting system for each of those users.

30:13 Yeah. Exactly. Exactly. And then that loan depending on your loan to value will automatically be repaid.

30:19 Okay. Yeah. Okay. So you're going to actually repay well have to otherwise you're going to make your loan to value in general the vault worse. Yeah. And then that would be bad. Somebody would immediately just get you liquidated. but okay yes makes sense. And then in terms of like actually getting this into the hands of users is is something that I mean obviously just more and more utility that you can build on top of this.

30:46 I think what you guys are doing in the position you're at is we have this great underlying thing which is DeFi borrow lending and you're building on top of it. How do we actually bring the most utility to this and expose it to the users in such a way where they can do everything like everything that they wanted to do that they didn't know they could do with DeFi lending is essentially what Altitude is is going after.

31:13 So I guess I'm interested like how how did you come across this as something that you even could do? Like are users asking for that? Do they even know that they it's something that they could ask for or is it just something that you guys saw as an opportunity?

31:26 You mean like the the card or the like the the integrated approach?

31:29 Yeah. How did you guys come up with that?

31:31 So, basically by speaking to our users because what we've what we've learned is that a bunch of our users use their use their loans to to to to do stuff in DeFi. but a large group of users actually use their loans to pay for real for expenses in the real world. so they would offboard to buy a car or offboard for for a for to to to do a house deposit or even just kind of go on holiday.

31:59 And so we're what we're really keen on is reducing friction in the whole process. Just make it super easy. U just make make everything like one or two clicks away. and so in that process you can imagine like if you want to borrow and and and then spend that money in the real world then you have to deposit ETH borrow USDC offer to USDC.

32:22 So it's it's it's quite a big process whereas if you if you make that one kind of integrated approach with no barriers like that's what people love that's what people like when it's when when things are frictionless. Yeah, there's a lot of steps there and I think anytime you have to interact with like a centralized exchange it just I don't know my experiences have always been really bad trying to offboard and on board trying to get onto DeFi and off of is just not a good experience.

32:49 Yeah, it's always a bit scary.

32:52 Yeah, it's always a bit scary. You know, God forbid you've got to bridge. I always hated bridging in DeFi. It's never been fun. And then of course there's like fees. there's all these different fees that are going to happen on every step. Of course, you're going to pay, you know, gas fees, but then you're also going to pay whatever centralized exchange.

33:07 So, yeah, it definitely makes sense. And you guys can acrew more of the value and and capture more of the value of of that use case. I mean through that because I mean a credit card is that's not at least you know in in my observation it's it's not an easy thing to to build out and launch a a credit card and it's kind of orthogonal to just launching like a SAS or you know a DeFi protocol.

33:30 So that's a pretty big undertaking. Do you think this becomes one of the larger use cases for you guys? I think a card in itself not necessarily because I think the card is really powerful in combination with your collateral being on Altitude.

33:46 So I think it's it's it's will be it will be an add-on not necessarily the main reason why people come to Altitude. I think it will make it very easy for people to understand.

33:55 Like if I tell you okay you can put 02 Bitcoin on your on your card

34:01 And then you can buy yourself a coffee every day for the rest of your life. Yeah, that's pretty cool.

34:07 Like that's that that's a very easy to understand story and very attractive story. So I think I think from that sense it makes it easier to explain, but I think the cart in itself not necessarily. Now we've we've been speaking to a lot of card issuers over the last 6 months and they they are making a lot of progress.

34:28 So I think it's becoming easier and easier to kind of attach a card to a D5 product. So that's why I think like if we would have tried to do this 3 or 4 years ago, I think it would have been very hard.

34:38 But nowadays, it's it's a lot easier because the whole space is kind of maturing and growing.

34:42 Yeah. No, I I remember obviously unrelated to DeFi entirely, but I remember Dave Ramsey, I don't know if you're familiar with with Dave Ramsey, I remember he went and he tried to like make a credit card or some kind of a debit card or something for his audience base and he said it was like the biggest mistake he ever made cuz he ended up losing like millions and millions on it.

35:02 Chargebacks and stuff.

35:04 But obviously, yeah, I think today much easier to to pull that off. and you also have the benefit that there's a lot of DeFi teams going after it and building it. So, you know, a lot of these problems, this problem space has been explored and solved many times before or, you know, maybe not many times, but a few times at least, which is nice to know when you're venturing into this area.

35:26 And then I think I'm also interested how this how this kind of bakes into your marketing. So I think in general you guys have a very clear offer for people who are already borrow lending on on a Morpho and some of these blue chip blue chip lending protocols. So what is your approach to go and like how do you suck up the the demand from these protocols like obviously they should just be using Altitude unless they have a very specific use case.

35:52 It's better to just go through you guys. What's the the marketing approach there?

35:56 Yeah. So for so kind of for the last 6 7 8 months we've been in private beta. So we've been kind of relatively quiet on on what we do. and within the next kind of two weeks we're going to launch more publicly. So you'll you'll probably see a bit more from us because what we've learned we've got about 65 70 users at the moment.

36:17 And what we see is that when people start to try test it out they get hooked. So they put in like maybe one ETH or two ETH and then they're like, "Oh, okay."

36:27 First of all, like it was it was easy to interact. Second of all, it actually delivers what it says in the interface. Like that's also not always the case with D5 protocols.

36:39 And then people are like, "Okay, this actually just works and it really solves a need." So then they increase their position and then then then they kind of stick around forever. but our our core issue is like within crypto is just getting the attention because I think we're solving a real problem which kind of which and it and it it's a it's a benefit to the user.

37:02 Yeah.

37:02 But at the same time it's not like it's not going to 10x your portfolio in or your 10x your net worth next month.

37:09 That's true. So, it's I think it's hard in this space to get attention for something that's kind of incrementally better and that's that will be a lot better for you in the long run but is not going to kind of get you or make you rich quickly. so I think that's that's like within crypto that's a bit of a challenge I think getting getting the attention for products like this.

37:29 Yeah, the the meme coins have the best like product market fit in that sense. So it's like an unfair battleground for for attention on that front. Yeah. So I mean I I would say it's even better than incrementally. I mean the experience for well first of all if you want to manage and like start to do all these yield farming strategies and I don't know having all that stuff automated it might be incremental but I think it's really big in terms of like what the next step in in crypto UX is but so I think yeah I mean that's the challenge is is getting the attention but I think you guys have also solved already a huge problem for DeFi protocols which is retention like the fact that you guys already have you know a

38:16 Pipeline where somebody comes and they use the application once and it seems like it's pretty frictionless on their first use and then they will just I mean it's a very risk-free offer once you're aware of it and once you have used it then it's like well I would never lend any any way else. So I mean that's that's really exciting.

38:34 I appreciate the kind words.

38:35 Yeah of course. Well, I mean, I I think you guys have amazing fundamentals in that sense because a lot of teams, they do go out and they get the attention, but the thing is like their app either, like you said, it just doesn't work or maybe the opportunity is just not fulfilling the promise that they made and it like it's just a leaky bucket.

38:54 Like all the attention that they're doing and like however much they're spending on marketing is just kind of a waste in that sense. So yeah, I think like what modes have you guys tried? Have you guys tried just just content or like I'm interested in general like what is the what is the marketing approach for DeFi protocols and maybe have you have you brought in any experience from your past software ventures for user acquisition of this?

39:18 I think the the DeFi kind of marketing with DeFi is kind of a kind of a special beast. So, I think a lot of the stuff that kind of works in web kind of Facebook ads or Instagram ads unfortunately

39:34 Because that would be great, but so that doesn't really work in DeFi. so, yeah, at the moment it's it's it's more of a content content game. so, just produce content, send contact content out on X. and basically and finding people that are really excited about the product and kind of asking them to kind of amplify some of our some of our posts.

39:58 Getting people to write about you press I mean just yeah kind of those are kind of our our main pillars.

40:06 Yeah.

40:07 I'd say but the the biggest thing for us is referrals. so what we see a lot is that people they they use it and then they're like they they have a few friends that also have collateralized loans and then they'll they'll start to spread the word. So that's how we see that that's kind of the that's kind of the combination of our marketing at the moment.

40:23 Yeah. And I wouldn't be surprised if it looks like for you guys just you hit a critical mass and then from there I mean as is with most software applications in general you hit a critical mass and then from there it just starts to to hockey stick. So I I I can definitely imagine there's, you know, that kind of a moment in there in the in the near future for you guys.

40:43 I'm just interested, would it be valuable for you guys? Let's say there was some way to basically obviously this is against any kind of like DeFi ideas and ideals but what if you could like say okay I want to target all of the addresses who interacted with DeFi and and with a Morpho and just give them Twitter ads and serve them Twitter ads.

41:09 Is that something that you guys think would be like exactly what you need? Like what's the what do you think about something like that? I think I think advertising in this space is is is tough.

41:20 Because I think in the past it's been usually the the the scammers that have advertised.

41:26 Yeah.

41:27 And so I think a lot of people in DeFi associate ads with scams.

41:33 Yeah. So, I think that's that's the that's that that's what I found that's what I find kind of one of the most tricky bits in in DeFi marketing that like even if you have the money to to to to create this massive marketing campaign you'll you'll probably put people off put people off people yeah you'll put people off instead of actually getting them interested in in your product.

41:59 So, I think that's what makes it so difficult.

42:01 Yeah, it is very tricky. It's a tricky balance like with any kind of a financial product to to figure out. I think the messaging of course is like that's sometimes some of the hardest point to figure out. I feel like we actually just recently talked to like an RWA platform. They had been building in the RWA space for for 6 years now.

42:21 So they were building in RWAs before RWAS was even a thing that they were like one of the earliest to you know get on that and they kind of you know had a hand in in creating that but it's like they didn't have the right words to even use to like communicate what their platform did to users.

42:40 And nobody really understood like tokenizing you know they try to call it all

42:46 Yeah. Yeah. Yeah. But it's like the messaging is so important and then once you do get it like RWA now everybody knows what that is and now you can communicate that information packet to users and they immediately understand everything that your your your application is doing. So I mean have you guys gone through any kind of a similar process like with the messaging cuz obviously this is this is you've got to be able to communicate effectively all the value that you guys are bringing.

43:15 So what is like what what's the the offer? What's the headline for your product?

43:19 Yeah, it's a great question. I mean, we're still we're still kind of iterating on that to be honest.

43:23 Yeah.

43:24 So, kind of one of our key messaging is like it's the best place to borrow.

43:29 Yeah.

43:30 U best place to borrow against your crypto collateral. we've tried kind of loan optimizer or or kind of automated automated borrowing. I mean, it kind of depends which audience Yeah. the audience that you that you speak with. but yeah, those are those are some of the kind of yeah, some of the versions like sleep well knowing that your loan is in the best possible place or like a DeFi without headaches or like those kind of taglines, but yeah, it's still an iterative process.

44:02 Yeah, absolutely. Some it sometimes feels like, you know, like speaking of advertising not being effective that like narrative is the advertising in DeFi, like you know, finding that right narrative. But one thing that's been recurring that we've talked about is kind of like how DeFi has changed over the years from like what users want to also like you know what people are building.

44:19 Yeah. I guess outside of Altitude as someone who's been kind of playing around in the space since the beginning now where do you think things are at from a narrative perspective like what what is the narrative for DeFi and maybe even like crypto overall?

44:31 I think DeFi for narrative the narrative for DeFi I think or I think the biggest opportunity for DeFi let me rewind. So I think from both a supply and demand point of view, I think DeFi is in an is at an amazing place. I think there's a lot of institutions that want to play into DeFi to you to use DeFi and to make it more accessible for people to invest.

44:58 So if you look at BlackRock for example, right, they've got I think they've got about 100 million people that are using their products. their question is how do we get from 100 million to 200 million

45:09 And they see tokenization as a massive enabler and so I think from that perspective I think that's that's that's kind of a very interesting angle for growth I think DeFi is is is kind of maturing in in the sense that we haven't had kind of knock on wood but we haven't had a lot of big exploits recently and the ones we've and and the bigger ones we've seen were human error.

45:37 So I think that's good for the space because the worst thing for the space is to lose people's money. Then people just lose the trust. so I think that's a big thing. I think personally I'm most excited about on boarding kind of new people into DeFi because I think within DeFi, the people that are in DeFi, they know how to navigate it and they know how to get the most out of their capital.

45:59 But if you speak to someone that maybe has a little bit of crypto but has never done anything in DeFi, it's a completely new world. and so the yields we are able to generate in DeFi, they're they're they're incredible. And so I think opening that up to a larger audience, I think is a is is a massive opportunity.

46:17 And I think we've got the like I think I think that's where the space is headed. I think it's inevitable that we that we go into that direction because I think both the consumers the consumers want easy finance and they want they want kind of easy access to to kind of generate investment returns. and I think the institutions want more retail money.

46:40 So I think for both sides I think I think there's there's a big interest to make this happen.

46:46 Yeah, absolutely. I mean, I totally agree on the inevitability, but you know, for those of us that were here like four years ago, like everybody wanted this kind of stuff to happen, but it definitely didn't seem like a a given at that point. So, it's it I agree that it's like, you know, the best time ever to be in DeFi and the way things have progressed have been really amazing.

47:06 On the product level in the DeFi space, is there anything that you see right now, new stuff that you're maybe experimenting with or you think is, you know, is cool, is a good idea? It's really good to see kind of Pendle really take like getting kind of more mainstream and people really understanding Pendle. I think that's a really it's a really powerful way to kind of lock in fixed rates.

47:26 So I think that's great. I think in general I see more and more products and protocols understand that there's basically two types of users kind of the power user and the passive user. And the power user will use their application on a daily basis on a weekly basis and the passive user just wants to park capital and not do anything else.

47:48 And I think a lot of protocols in the past were a little bit in the middle where like you could kind of you could kind of do things passively, but you had to kind of go back to the protocol every like week or two weeks or 3 weeks to see if everything was still okay. and so that's what I'm really excited about to see protocols really saying okay we now understand there's two groups of people active and passive let's build products for those people.

48:12 Yeah.

48:13 I think I think that will enable that will open a lot of doors.

48:15 Yeah. I think it's also like a lot of DeFi is very manual. It doesn't really feel like

48:21 Programmable money. It feels like manual money. but obviously you guys are on the other side of that. You're very much automated. you know this is real programmable money in that sense. but I was also interested so you said obviously yeah there's a big pivot to institutions and I think a lot of the smartest people in the room are starting to structure their protocols in a way that institutions can come in and start using them.

48:47 You look at like a Uniswap v4 with v4 hooks and these isolated pools and you look at even like a LayerZero using like a DVN model. So institutions can come in like have their own DVNs with their own rules and checks on their like economic zones. Do you think in Altitude are you guys going to stick to specifically we just want to service end users or is there an opportunity to interface with any kind of a larger institutional player?

49:17 Is there any interest coming in? What's your take on your positioning there?

49:21 Yeah, I mean at the moment we're kind of doubling down on consumer high net worth maybe family office but like those kind of users. funds are also very welcome to use us. but the the the kind of our key proposition is that it's basically DeFi without without without the headache.

49:44 So you don't need to stay on top of DeFi to use us. Like you can just put in your collateral, borrow your your loan, and you can you can kind of just go away for months or and and you can kind of sleep well at night knowing that your position is taken care of. And I think that resonates with individuals.

50:01 And with funds that are actively managing LP's money, I I I don't think it resonates that much.

50:07 So I think, yeah, so that's our that's our kind of core market at the moment.

50:10 Yeah, I think that absolutely makes sense. I mean, the funds obviously they're going to want generally more customization. Their whole job is to manage it. So, you have people that are, you know, actively managing it day in and day out. So, you don't necessarily, you don't even want something that's going to like save you a ton of time.

50:28 Because it's like, what are you doing?

50:29 Yeah. Yeah, exactly.

50:30 You guys have this special sort of niche that I think is very clearly defined, which is individuals who, you know, want to have their portfolio managed and they want to have their their lending managed and optimized in this way and they want to have that overhead and all of that thought process handed off, but they also want to maintain custody of their assets.

50:54 They don't want to hand it over some fund and they want to also be liquid. So, was that did you guys do that purposefully and that is exactly what you're going for or is that just kind of, you know, what came out of the product that you're building?

51:06 Well, we always wanted it to be kind of fully DeFi.

51:09 Yeah.

51:11 And so everything on chain, everything transparent.

51:15 And initially we we were just trying to solve the collateralized lending issue. We didn't really kind of from the start focus on making this completely hands-off for the user.

51:25 Yeah. that wasn't that wasn't necessarily clear from the start. That was something that we got back from that that we kind of learned through speaking to our users that that's one of the things that they appreciate most.

51:35 But like in the beginning for example, we were also thinking like okay maybe we should give users more configuration to see if the to so that they can configure in which yield farm they want to farm for example.

51:45 So that was one of the early ideas. So we kind of ditched that because we realized that's not actually helpful for most people. What most people want is to just kind of just for someone for for for kind of a protocol to manage it. users that want to be more involved in the yield farming they can be.

52:02 So basically how our yield farming approach works is that any depositor can just propose yield farms that we farm in and then if there's a majority vote then the funds will be deployed there. I mean obviously it goes through kind of a risk committee as well. but so so if people want to get involved, they can, but in general kind of it's a it's a it's kind it's a completely hands-off approach for users.

52:24 Yeah. And I mean, building on that, we didn't really get to touch on the the Alti token. So I think is that a newer addition for you guys? What's the story there? I think some aspects of it pretty interesting non-ransferability. Interested to hear why you guys decided to go for that. What's what are the big levers there?

52:43 Well, so in general it's a it's a governance token.

52:47 Right. And so because we are pure DeFi, we think it's it makes sense to have a governance token. It kind of ultimately governs changes in the protocol. and ultimately the the the token should become more valuable as the as the protocol crews more value. I mean the exact implementation will depend on kind of legal possibilities, but that's kind of that's obviously the vision for the token.

53:11 More value the the more valuable the protocol gets the more valuable the token should be.

53:15 Yeah.

53:17 Non-transferable at the moment is so at the moment people are earning Altitude tokens if they are if they deposit. those tokens are kind of earned but they're non transferable. and that's simply because we believe we first need to kind of build more traction before the token should be transferable

53:35 Because as soon as a token becomes transferable then there's a price attached to it. there's a responsibility to kind of manage liquidity. it's almost like another product that you need to manage. and that would be too much distraction for for kind of our team at the moment. So that's why it's non transferable at the moment. I mean obviously the the the in the future it will be transferable.

53:58 It should be transferable.

54:00 Yeah. I mean actually I I've never seen a team maybe other teams have done this but I've never seen a team approach it in that way. I think it's that's a really cool way to still get like you know maybe kind of like the points side of things where you still get the incentive of being able to acrew the token and you want to use the platform and I think that is always like a really great flywheel for a protocol when the incentive is right but you you have it without you know having to deal with you know the market makers and

54:28 Yeah for sure

54:29 Monitoring this stuff which

54:31 For sure I I can't take full credit for this I mean we we looked at Morpho and we we thought they did that really well. so that's why that's why that's why we do it this way. and on on the points what you said, yeah, we we we think it's it's it's better to just kind of hand out tokens directly instead of kind of the points.

54:52 Makes a ton of sense. Yeah. And I actually I wasn't privy to the way that Morpho did that. So yeah, I think that's a really cool approach and I mean it seems to be to working out well for you guys especially because you don't have to worry about like a liquidity crunch and all this stuff. I mean, I feel like we see tokens every other day.

55:11 There's I mean, obviously there's the that old buckle, but it's funny enough, we actually had a conversation, I think, you know, last week or maybe two weeks ago with Daniel from tokenize. you may or may not be familiar, but they they actually have like a tracker where they like monitoring all these like the liquidity books. And I'm pretty excited.

55:32 He's going to put it up on like a Twitter bot that's going to like tweet this stuff, but he's saying like, "Dude, we we got we we got notified of the M thing before it even happened like 2 hours before." so yeah, I think they're building some really cool stuff there that will obviously help with a lot of the pain points, but yeah, I think I think we've we've covered I mean just about everything about Altitude.

55:54 Is there anything anything else that we didn't get to we should sort of touch on?

55:57 No, I think you did a great job getting getting all the information. And yeah, absolutely.

56:02 Awesome, dude. So folks can go and get access to the Altitude public launch. You can go ahead and start using the vault, play around with it. We'll put the links down in the description below to obviously Twitter website, stuff like this. but yeah, beyond that, is there anywhere else we should send folks? No,

56:18 I think our website, Twitter, Discord, I think those are the main channels.

56:23 Excellent. Well, Tobias,

56:25 Cool.

56:25 Appreciate you taking the time and and hopping on with us so much, dude.

56:29 Yeah. Thanks, man.

56:30 Yeah, thanks guys. Always nice to talk about DeFi. Great to go and great to chat with you guys.

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