DeFiTuna: Leveraged Concentrated Liquidity on Solana

0:00 Welcome back to the permissionless podcast brought to you by the team at Guardian. And today, as always, we are going deep with DeFi teams who are building really something exciting on the edge and stretching the boundaries of what's possible in DeFi, in web 3, and dealing every day with the problems that are holding DeFi back. And of course, we're living up to that promise today and then some with really a wonderful conversation with Moty from DeFiTuna.

0:31 And today, DeFiTuna has a leveraged concentrated liquidity farming product on Solana that, as you'll see, really gives users the introspectability and the manageability of concentrated liquidity positions along with, of course, leverage to increase the amount that they're able to farm in a way that really not many protocols have been able to grasp and solve on the UX side.

0:56 And as you'll discover, we're discussing some alpha, some new releases by the team at DeFiTuna. That is quite exciting to say the least. So, we'll get into what exactly that is in the discussion that follows. But of course, before we can dive into that, my name is Owen and over three and a half years ago, I founded Guardian based on the premise that DeFi would house trillions of dollars of assets and we would need an extraordinary increase in the level of security that we could provide to be able to ship confidently in that environment.

1:29 And today, I'm happy to say that we have achieved the level of security necessary at Guardian. We use not one but two dedicated auditing teams led by a world-renowned lead researcher and accompanied by a full-time fuzzing engineer to fuzz the scope entirely. And with all these things wrapped in our complete methodology, we are able to put up our own funds as a bounty on the scope in order to prove our confidence in the contracts and the effectiveness of our model.

1:58 And so really today, it's just a matter of time for DeFi to catch up. And now of course without further ado, let us get into this conversation with Moty from DeFiTuna. Well, I mean, first of all, dude, thank you so much for for taking the time to to join us today. And I mean before we even get into everything you guys are building today, I think I'd love to start and just hear a little bit about like how did you find your way into this phase building with DeFi and and into the Solana ecosystem.

2:34 Yeah, first of all, thank you for having me. always a pleasure. I was personally a full-time trader since 2017 on BitMEX using a lot of leverage. Bitfinex, all the good stuff. 2018 and 19 died a lot with the volume. Yeah, I was going through a lot of layer ones. back in the day, Ethereum just looked to have no future.

2:57 My brother owns a a software company. He's been a programmer for 30 years plus and never able to convert him to crypto until I found the Solana white paper. I sent it to him. he read it and yeah, he just said this makes perfect sense. We started building together. is your brother your your co-founder? He's our partial CTO.

3:20 You know, we we try to divide things because family is is family at the end of the day. It's difficult to build a business together. So, Sure. Yeah. That No, it's really cool though. Well, yeah, I'll say first of all, yeah, that's that's going to be an interesting dynamic to to be building alongside your brother. I mean, definitely pros and probably some cons as well, but what was it about the Solana white paper that made him say like this just makes sense?

3:44 If you know from what I remember it's to do with the scalability and like the way radio works as well like he's built a lot of tooling for municipalities to do with you know how can you tell what time it is you know locally or between radio towers like how do they know that signal came or or the communications how they work for him it just clicked that you know it works it works for blockchain systems these same key core concepts as it would for our everyday radio towers you know and the way they operate and communicate with each other.

4:14 That's pretty interesting. And of course that translates to Solana's like transaction model. So got in and did he immediately dive into like building Solana contracts like what was the approach there? Do you know the candy machine that is used by Metaplex on on the Solana space? I don't actually. So, anytime anyone mints an NFT, most likely they're interacting with the Metaplex's stack.

4:37 And we actually we were the first ones to launch this back in the day in 2021, I believe, when NFTTS just became a thing, you know, like within 48 hours, some of the core engineers backed by Tori Anatoli pushed the NFT standard and we built a candy machine. It's it's a way to mint a collection. You know, it really back then it really didn't exist.

5:00 You needed to do it either manually or write your own script and we made sort of like a standardized model and then we sort of paved into the game studio realm. We built a game out of the NFT collection. Unfortunately, we only raised exactly how much we needed. So, you know, when the bare market hit, we ran dry on funding and had to move on.

5:21 What kind of games were you guys building with the game studio? Like what was the vision there? The vision was to integrate the NFT system into the game. Actually, funnily enough, he did Danny, my brother, did end up making an SDK for Salanophone that you know, Unreal Engine 5. So, like you can actually connect the blueprints. Have you ever interacted with Unreal Engine?

5:43 I haven't used it. No. No. Yeah. There's just like anyone can it's kind of like a plugandplay design. Like you have these things called blueprints and they like you can program interactions. and one of the things that he did is like he programmed it so you can actually communicate with blockchain within the game. He was the first one to do it ended up receiving a large offer from Star Atlas.

6:04 You know Star Atlas the game. Yeah, I've heard it there. So now he's one of the directors there and actually giving like partial CTO services to DeFiTuna. But that's just kind of like a large time skip there. A lot of happened in between. I see. So okay. So then I mean how do we ultimately connect to from Okay, we're working on game design.

6:22 You guys have done a lot of work in the NFT space. He's built an SDK for Unreal Engine to actually like interface with blockchain. What what is it that ultimately got you guys to this space of concentrated liquidity and and lending? Yeah, sure. I've been always a full-time trader and when DeFi came around, we also launched NFT collection, but also we did like an airdrop for for the coins.

6:47 And we spoke with Raydium back in the day. and Raydium. What they launched was a cost constant product formula MM which basically spreads the liquidity to infinity. So impermanent loss all over the place. And they had like this whole thing around like heavy heavy incentives because it really didn't make sense to provide liquidity. And there just fascination around how cool this is.

7:11 You no longer had to go to a centralized exchange. You could just launch it. Yeah, it was not perfect. Far from perfect. It was horrific at times, but it was magical internet money and it was great. And just watching how it morphed to concentrated liquidity market maker and then invasion died down there and from our perspective we always thought wow like this is such a big problem and like we kept an eye on it and you know one year two years almost 3 years down the line no change and we said well let's get our hands dirty.

7:45 We can definitely revolutionize this space. Yeah. And I mean, so I guess digging into that, like what is the core problem that you guys are really addressing with with DeFiTuna? Is it basically just leverage on LPS? Are you I mean obviously impermanent loss is still a thing, but are you guys trying to address it in some way?

8:04 What's the core issue? I'm really glad you asked actually. on have you actually provided liquidity anywhere in the space on a CM model? Yeah. Wonderful. Well, so I think you would agree with me then that you know open up a position anywhere you provide liquidity. You go to sleep how do you set stops? that's just problem number one and it only starts there.

8:26 Second problem is like you know how profitable are you? Yield does not mean you're profitable. That's the second problem. There's just you know napkin math. Do I need to go to another website to calculate my profitability? Number three is if price goes down you always lose money. This is like the law of gravity. it shouldn't be the case.

8:46 There should be ways to hedge. So these three core fundamental issues and there's a fourth one which I'll get to later on is something that we're addressing with our stealth product. Actually we haven't talked about it anywhere but those core issues is what led us to build DeFiTuna. We go to DeFiTuna and we'd like to list eventually all of Orca's pairs and like we have a live P&L at live PNL that will tell you in dollar value just as any exchange would if you're profitable and how much if you're net negative how much we have auto compound we have limit orders for take profit stop loss the whole suit and you know it's practically free the way we monetize it primarily is leverage right we take five basis points on leverage taken I

9:33 See. And so, okay, so we're addressing all of these core problems. I mean, obviously, yeah, I'll definitely agree. There's a the UX issue. I mean, there's even just like an introspectability issue to understand like all this stuff like to calculate your P&L, you have to do some like napkin math. which you guys are seems like you're already handling all that, you know, looking at, okay, what tokens are sitting underlying in the position at this moment compared to what you had when you started, etc.

10:00 And so you mentioned limit orders as well. So I'm not as familiar with Orca, but I could see this obviously you can do this with something like a Uniswap V4 and definitely interested to pick your brain on your thoughts on the V4 model, but how do you guys achieve this technically? Does Orca have hooks? how does that work under the hood?

10:20 Yeah, hooks don't exist in the Solana on Solana. It's just a technical limitation. By the way, one more thing that like I think is worthy to address when you set up your position, you have a beautiful calculator that you're met with in the entire space. All of it Ethereum, you know, Ethereum layer 310. there is nothing that is comparable to our calculator that we came up with.

10:46 And I'm pretty, you know, happy to say that we put in so much effort. It shows you clearly if price goes to you know $150 or drops to 130 how much dollar value you'll be profit or loss and then we have this thing where you can time in range which is you know also beautiful regarding limit orders.

11:05 So what we have is a we have a liquidator bot that constantly monitors the position and if your price is reached where you want to get stopped out immediately we close your position through our liquidations engine. It's you know a little bit of a hack if you would like to call that but our latest product actually solves it on a fundamental level.

11:31 Version four I think on the Ethereum space is amazing product. Yeah. On the Solana space it's just different architecture. So limit orders is incredibly hard to achieve. You use all sorts of cranks but actually our latest product we we've been working on our own AM your own AMM. Okay. So is that going to be concentrated as well?

11:52 So it's we call it fusion AMM. If you go on X there's actually no posts, no follows. We actually haven't talked to anyone about Fusion Amm. You might need to cut this out as well. It's pure for you guys. If possible, because this will only become public knowledge in a month, month and a half. Even some of our investors don't know don't know about this one.

12:16 So, if possible, you know, if the editor cuts this out a little bit, that we could also just release it in around that time so it comes out. Yeah, sure. You know, fusion AMM what it is is basically our own take on what an AMM would look like. You know, the way right now limit orders work is that if you put on Jupiter, have you ever interacted with Jupiter?

12:38 Yeah. You put a limit order, you want to buy a Solana while it's dumping and you set a limit order at $100 and it goes 110 987, reaches 100, goes lower. Basically what they do is that money sits somewhere offchain probably accesses offchain order flow or sometimes even onchain but it actually interacts with oracle Raydium. It does a swap.

12:59 It's not a limit order. Doesn't really pay you. You actually pay fee for swapping and you might get swapped. A large majority of the time you actually don't get swapped because market moves fast. It's not very reliable. We have builtin limit orders inside of the AMM which means that just like a regular AMM, you know, there's loads tons of liquidity gets swapped and like if it would reach $100, you have a limit order there.

13:26 It would never go lower until it fulfills your order. It's a maker order. You you get paid for this order. I see. Yeah. This actually reminds me a lot of something we audited, I think almost like two and a half, three years ago at this point. It was called Pool Shark and it was trying to do, you know, pretty much exactly that.

13:45 Although I think it sounds like you're trying to achieve it in a little bit of a different way. It was basically a directional AMM. So you would provide, you know, whatever. Let's say I want to have they had cover positions and they had like stop-loss positions or Yeah. And basically you could instead of in a normal liquidity position where the price goes up you're buying the token that is depreciating value.

14:12 It would allow you to do the other thing. The flip side you would buy the token as it goes up and it wouldn't trade back the other way. So it was only a single direction in the AMM. And that way you could also do things like stop losses, you could do limit orders and it wouldn't trade back once the liquidity went the other way.

14:32 But yeah, so I'm interested to hear like what is the mechanism by way you guys are achieving this? Is it directional liquidity? What's the what's the underlying technique? Limit orders is a d it's a single directional liquidity. But the mm itself is both ways. So like if you're providing liquidity, you go both ways. If you put a limit order, that's a strict one-way limit order.

14:55 It can be bid or ask. But again, it pays the user. So like that's and it's a reliable. it will never execute when current price is lower or higher than the bid or ask. So it's a combination. That's why we call it fusion AMM. I see. So you have liquidity that's just sitting on the curve. That's actual AMM.

15:14 And then you have like this kind of liquidity that's sitting on top of it that is only a single direction. That's right. Yeah. I see. And and if you if you know like technically how is that like orchestrated together? Like how is this directional liquidity also included in swaps? I'm trying to think. So, it's very very complex for many different various different reasons.

15:36 I guess if you really wanted the nuances around this, you'd need to speak with her smart contract engineer. And to be frank, like he said it many times over like there's probably on your hands you can count the amount of engineers could that could put together such an AMM on Solana. You know, we're we're very bullish on the fact that like we're sort of on the forefront of releasing it.

15:58 If you're going to be in New York, more than happy to show you in person. Going to be live on DevNet. We don't want to release it on mainet because the IDL gets leaked and we don't want that yet. No, I'm Yeah, I'm interested to see how it was achieved. I remember in the past the system that we were looking at used like a Dutch auction to basically have arbitrageers come in and make the swaps for you along the way.

16:25 But yeah, interested to see. Oh, no. No. all fully onchain. no arbitrage going on whatsoever. The smart contract level. Yeah. So, I'm in I'm I'm interested to to see how it works. But, yeah. So, that sounds really cool. And are you guys thinking of also adding leverage on top of this? Yeah. So, the way our leverage works is it interacts with the lending pool and like it's through PDAs.

16:50 It creates so we don't hold we don't have any access to the positions that people open. you know, you like your pool on Orca, you think it's profitable, but you want to leverage up for whatever reason. Either you want to enter a short or or amplify your current position, you can do that. That the entire position belongs to you.

17:08 You're the only one who who has access to it. And all said and when all is said and and done, then you know, you get to keep your profits and the lending gets paid back. And the way we view it is DeFiTuna will not have any prejudice towards like anym. Orca obviously is integrated. Raydium is going to be integrated.

17:27 Meteora we will add as well in the future but DeFiTuna also has its own AMM fusion AMM. You know we have always been thinking about the liquidity provider first. And there are a couple things that go for in our favor. One thing is there's 10% more profitability on our AMM versus the other ones. So you make, you know, we've had so many instances where certain seasons people just not provide liquidity because they're like, you know, I'm making 3%.

17:58 Is it worth the grind? 13% now, you know, amplified with leverage. That's that can like three times, you know, 30 something%. That's a big deal. Very big deal. Also with leverage, you're getting I mean there's some strategies that you can add on top of that that give you, you know, I think what you guys call like pseudo delta neutrality.

18:18 And I think that's facilitated through the coins that you borrow to provide liquidity. But I'm interested to hear more like what what is the your guys' approach to almost delta neutral. So what we have is crab strategy. We call it pseudo delta neutrality because it really is pseudo delta neutrality. Once you open a position, you're break even at a current price.

18:41 The long the further it goes away from your current price and more to towards the edge of the range, the more at a loss you are. but the longer you spend within the range, the more you make money. And you know, if you spend 3 4 days within the range, you close it at where you opened the position initially, you know, you're going to be in profit through the roof depending on like how much onchain activity there was, right?

19:05 Yeah. The best take I've seen towards neutrality that is as pure of neutrality as it comes was when people use DeFiTuna in combination with Deribit options. So options you know you can hedge volatility or you know you can long volatility and if you long volatility and and hedge volatility on D5 with the delta neutrality you probably have as close to delta neutrality as it comes.

19:31 I hope that makes sense. Yeah, really just a matter of if the curves for the option pricing sort of line up with the curve of the losses of the LP. Yeah, that's pretty much bang on and you know if if you have time and go to DeFiTuna play around with you know our borrow assets like you can borrow one asset and then you see how the calculator shows you profitability.

19:54 Yeah. If the token goes down or goes up, play around with it and then the delta neutrality and you dela neutrality, you really get to see and visualize picture on the calculator exactly how the curve looks like. Very nice interface. Yeah. Okay. Cool. So you can literally see the price curve and see like you know at this price I'm at this percentage P&L.

20:16 Oh yeah. Yeah. Yeah. That the whole suit. Very very nice. nicely projected. That is really cool. And then I mean if you wanted to try and find some financial instrument that gives you the exact flip side of that then you would then then you would be delta neutral. But yeah very cool. And so so you mentioned the Deribit options strategy.

20:36 What other kind of strategies do you guys see people using on DeFiTuna? The most popular one would probably be h you know there were some exciting launches like penu was one of them. There are a few more and sometimes we list them if they're credible. Anything leveraged is always scary. And if you farm liquidity with leverage on any of those ones because of the onchain activity and sometimes because of the fee rate, it's just a money printer.

21:01 So like just go long or even if you get the direction kind of wrong, the the fees on chain are just kind of insane. you don't need to be a genius. And then on the Solana pair, I mean, you know, sideways markets, people just have like a semi- long position. and you know they don't need to be a genius also to get that right there.

21:22 The best one for the last 2 months was probably Fartcoin against the Solana volumes are insane because a lot of AM's route swaps through the Solana to Fartcoin and it's very correlated so you really don't need to bother about like being out of range. Also, if you're out of range, like, okay, you're in Solana or in Fcoin, that's like pretty much appreciating.

21:46 It was free money literally for anyone who grabbed the the leverage. Mhm. Yeah. You know, speaking of these newer Solana coins like like Pangu or even Bcoin, you've been building on this chain for a while. How have you seen the evolution of like what's getting built on Solana and maybe even more importantly like what users of the chain are interested in?

22:05 You know, it used to be the case where there are like crazy pre-sale, not pre-sales, but like people would just raise tons of money and then you'd see the product maybe maybe gain any adoption. These days, you need to have a working product, revenue through the roof, a proven track record in order to raise anything. So, like in terms of like builders, like it's mega competitive.

22:26 I I've never seen such high competition out there for anyone building on Solana. What's interesting out there right now? I mean, it's very hard to say. It looks like everyone's onto the launchpad craze, right? We used to struggle with like a one popular, you know, launch of a token, the whole network would almost shut down. And nowadays, we're just seeing left and right in the billions launches.

22:49 Obviously, Melania and Trump really did almost clog the whole network down. Very stressful. But, you know, that's like as big as it gets. I mean, and Solana's done really well. anything that's currently interesting right now that I see. I mean, it's hard to tell. Most of it is primitives going back to, you know, there there's one that's like for ver verifying transactions and getting them.

23:13 It's what is it called? it's it's by a person who who was working in margin. What are they called? Paladin. Paladin is really exciting one. So, you know, when when the whole congestion happened with Melania, I was sitting down. I mean, Jupiter was not working. people were liquidating left and right on u drift. but my brother, he works in Star Atlas, he said, "Hey, you know, have you tried Paladin?"

23:37 Because like Star Atlas's transactions were going perfectly fine through their service. So we we looked into that. That was like pretty interesting tech. Yeah. Any anything that solves the issue of passing transactions, I think, is like gold mine. Yeah. And I think I mean obviously there's a lot of problems even yet to be solved in the Solana ecosystem.

24:01 What kind of problems do you see that are maybe like even lowhanging fruit in the Solana ecosystem still? Used to be lowhanging fruit amm nowadays a lot of people are don't not showing their source code and building in stealth. So I I believe next year it's going to be like one of the most competitive markets but also one of the most profitable markets for sure especially as we on board institutions.

24:25 I can definitely see institutional money flowing in and buying out AMMS that can definitely take take place very easily. what else? you know, anything to do with transactions and that's like always going to be the gold mine. any other primitives? I don't know. I think I'm bullish on those two. I think that's the bread and butter. Absolutely.

24:49 And I was also interested when you use DeFiTuna, what how do you use it? What do you use it for hedging? liquidity providers for a very long time. You if you there's a depreciating asset and you still want to farm it because there because there's a lot of fees but it's falling right like how do you hedge correctly hedge I think primarily hedging also lending we have by far the best rates for Solana.

25:13 Nobody comes close lock Solana with us for the last 30 days it was like averaged 13 and a half% APY. Wow, nice stables as well, we do well. We average 6 and a half% on USDC. Other months with we average much higher. Yeah. And in terms of Okay, so we've got the the fusion AMM coming and that's going to kind of plug into the modular like LPS that you're able to accept as as collateral and borrow against.

25:40 What's the long-term vision? Like what are you guys looking to ultimately capture once we've got everything built out? What's like the ultimate goal? build by far the best place for liquidity provider to just sit and provide his liquidity. Just everything across the board from from great risk mitigation tools all the way to the best AMM model to also potentially lenders who lend their funds for leverage.

26:11 I see. And and are you guys because there's definitely two ways that you could approach this. I think a lot of Uniswap v3 providers are more sophisticated and of course now have institutions coming in and I mean some could even say that Uniswap V4 is very much like an institutional product to be able to give like that customizability and you know be able to add on stuff like a KYC and whatever.

26:35 But there's also the retail side of providing liquidity. And I think you could very much attack either one of them and be very effective at, you know, meeting the demands and needs of each one of these like ideal customer profiles. What is it for you guys? Are you guys trying to go more after retail and just make it super user friendly or maybe you're going upstream to the more sophisticated market makers?

27:03 Currently we've pretty much the way we we we see it is you know lending is going to be the the place for very simple user who just knows hey 8% USDC yield or 14% salan yield some months 20% that's great it beats the market. I think that quitty provision is like high tier sophisticated user. We've done a good job at targeting both but you know with fusion AMM it's going to grab again both you know limit orders is for everyone.

27:35 A new memecoin comes out. How do you set a cell on a current AMM? Sure you can give the flow to to an offchain u liquidator like Jupiter but what if it doesn't hit? And so on the anm level you know it will amplify hopefully both sophisticated and and simple users. But I have a question for you.

27:58 I mean how do you make that distinction? So like if you're when you ask that what's the distinction between somebody who's targeting the institutionals versus someone who's targeting simpler audience on an AMM level? How do you see it? I think the biggest difference is going to be at your go to market level. I mean, there's a very distinct way in which you're going to market to everyday DeFi users.

28:22 And I think even just being in the Solana ecosystem, maybe it's just my perception, but it, you know, sort of it gives you kind of a head start in just like these normal DeFi users. I think I mean at least it's my perception that there's more like institutional interest in like EVM and and Ethereum but I mean you're going to it's a completely different process to go and court like institutions like what if you want to bring like a black rockck fund and have them start like market making on your on like a a Uniswap V4 pool or something like this.

28:58 I think that's the biggest distinction is building backwards from there and how do how do you onboard the the market makers from that side. Yeah, that that's the difference in my mind. And then obviously the product will meet their certain needs and of course I don't know exactly what an institution is what an institutional market maker is looking for in terms of you know how they want to manage it but I I mean obviously there's going to be different needs at at every level of the like capital deployment stack.

29:29 I see. So yeah. So then I would say then that probably are the AMM that we're launching is probably institutions first but obviously very very useful for users on every level and you know we've sort of started like doing that trying to attract people who are sophisticated on institutional level. I think that that's sort of the only way of launching an MM that makes sense.

29:55 Yeah. And I think the institutional versus like more so everyday user. I mean obviously it's still going to be a sophisticated user if they're using like a concentrated liquidity platform is like the customizability. Like I think that was very much with the Uniswap v4. You're seeing more customizability. you know this way institutions they can spin up their pools that have like a KYC or they have like you know whatever whatever whatever they need to bolt on but it is definitely much more of like a customized solution once you go up market like that and you know have like much more capital to deploy but you need to deploy it in this way etc.

30:37 Yeah. So that that definitely makes sense. Yeah. I think for us also maybe you'd understand our journey a little bit better. It was primarily self- financed the whole product by myself and we did have help of sold Big Brain. He's one of the he's the founder of Big Brain Holdings. You might have heard of him. But we weren't financed through our teeth.

30:58 In fact, we only raised like 300K preed. And when we worked for a year and I pressed the green beautiful launch button, we only had one month runway. You know, we really didn't know what to expect. Two weeks in, we become profitable. What are we five months live now? Close to a million in revenue. So nice. You know, we we just are so taken back by the amount of love that we received from from the community and the equity providers and we're thinking what is the next level up.

31:30 Now what you said about custom to make it customizable is something that we've already kept a close eye on everything we build and from that sense you know layer of KYC that that shouldn't really be an issue if need be. Yeah I mean at the end of the day there are like teams that are working on like specifically being able to like add on KYC to things like predicate.

31:53 Actually had a great conversation with with them and and what they're building. They're working with a lot of teams trying to bridge the gap between that like traditional world and and the onchain world. But yeah, so I mean with with that with that in mind like you guys were able to get profitable. I think it's do you attribute a lot of that to like the ecosystem that you're in the product that you built?

32:15 Like what do you think was the underlying like success point there? Well, well, that was really the peak of the market as well. Like a lot of people are looking into AMMs. A lot of them first time ever got into the AMM business. You know, at the time also people weren't looking so much into centralized exchanges. They're looking more into DeFi.

32:36 And with all these problems, you know, we managed to get a certain niche audience that were already into the liquidity provision space. and they helped us almost like like our disciples, you know, on board other people and it steamrolled for quite a bit. during this dip in the market, obviously we've seen a slowdown, but also on a larger scale, I think that leveraged AMM is like mega complex.

33:04 You know, it's not like everyday user is going to get that. Even for someone who's nuanced enough, it would take him like quite a while to to to grasp it. so I think there's a limit a very strong limit to like how many people you can onboard to leverage the MM business. Yeah. Or or a model, but obviously the revenue is great there as well.

33:24 So we got lucky. I would say we definitely got lucky. I mean, it's almost like you get lucky in the sense that you just pick the right thing to build in the right market at the right time and then you can spin that up into, you know, really it just takes like that little piece and then if you execute right from there because obviously if you guys just started shipping all the wrong things then that's just going to go back down to to zero.

33:50 But I think, you know, with this like fusion AMM and stuff that you guys are are thinking about adding, I mean, you guys are swinging for the fences in terms of like how big you can you can really push it. I mean, like if you if you really do bring like a 10% boost in in yield, like that that's going to be like a no-brainer offer.

34:11 You guys can get all the liquidity on Solana. Yeah. You know, we were just users first. I think users first and like our team are very very strong builders. The combination of both is very very powerful as you said very right you chose the right things to to build. Yeah. And that plays to our luck and the follow through is very very important.

34:36 The the 10% we think is a no-brainer also like you know where where else can you get a stop or like risk management tooling on your liquidity provision. you know, where can you get that limit order in and the whole suit is hopefully going to cement us as like, you know, I think also like our current community, they can appreciate us for bringing in like a lot of these things because I think that like other CLM companies or projects, yeah, it plays to their hand that most people don't actually know that they're at a loss at a net loss providing liquidity.

35:12 They people think yield is money and yeah well if I've generated that yield and price goes back up then like you know I'll make all the money back and there's just this big narrative around it but at the end of the day like it's not a very good idea to keep trading if you're at a a net loss like what's the difference between you going buying like Bitcoin for very high selling it for very low and you going out there farming liquidity on Bitcoin you know and okay well at least I made yield.

35:43 Yeah, you did, but like you're just as much of a net loss as the other guy. So, what's the difference? And we're we're out here, you know, we are in this AM business. obviously, especially with the AMM that we're building, but also we're more than happy to show users, hey, you guys are actually at a net loss with us.

36:02 You might reconsider doing some other things, you know, and we go out there perfectly fine showing it to users and more than willing to lose them, right? Yeah, I love that candid approach like looking at like it is a veritable problem with concentrated liquidity type positions. I mean well really with any type of LP and in in DeFi that's totally on chain and I mean you guys are actually looking at the problem and not just accepting it.

36:30 I feel like there's you know maybe a lot of teams will just kind of say like oh it's it's just like a nature of the product. It's a feature not a bug. And in some sense it is a feature but you can try to hedge it like you say or you know try to attack it all these different strategies.

36:48 And then I mean I'm interested to see how the AMM that you guys are working on Fusion AMM addresses this technically speaking but yeah like being candid about like hey this is a problem and it kind of makes providing liquidity on chain like not a good experience and not actually like a good opportunity and able to actually once you accept that fact then you can work to address it and that's the big opportunity with on train LP I feel especially you at this time.

37:19 And I mean secondly, this is just something that's it's really this is a complex thing like concentrated liquidity is a headache. I mean we've I've personally audited a handful of concentrated liquidity protocols at this point. and the rest of our team has done even more and we've even done some of these leveraged concentrated liquidity protocols. And it is it is these are scary things to to develop and and put out because I mean there's all kind of manipulations especially when you try to borrow against this collateral.

37:51 It's like, oh, I mean, you can like flash loan and and like in one in one transaction move the price of the underlying LP to this and that changes the underlying token balances of the LP position and you can inflate the fees and you can do all this stuff and there's just a lot of like scary price manipulation accounting issues.

38:13 So, I mean how has this been? I mean, maybe of course you're not the the best person on the team to to ask this question, but like how how have you guys been developing this? What's the dev experience? What's like the security process for you guys? How's that whole experience been? So, I give you a real life example.

38:32 When Melania token launched, the whole network was congested. Have you tried interacting with Solana back in the in those in No, I wasn't trying to use it then. It's definitely come a long way. It used to be like unusable at points of congestion. Yeah. Yeah, definitely. You know, but during that time it really was unusable. I mean, and the the thing is that the primary driving factor was that people tried to outbid each other for a transaction going through and also Melania and Trump tweeting about their tokens didn't really help.

39:05 So, it really stood still. And what happened is Binance was trading Solana USDC pair for at $260 but Orca and Raydium went sub$200. Now we have leverage on top of Orca and we check for Orca's pool for liquidation events. So we had an interesting situation where we have a lot of leverage positions impossible to communicate with the chain and we just deprave the price back.

39:34 So you start thinking about these kind of situations and then very quickly understand ah you know it is a very scary business to get into. One of the things that we did for example is like we used to have this philosophy or like okay we're going to let anyone be able to initialize liquidation like once like all the parameters match you know anyone can call a liquidation event and get paid for it.

39:59 But then we realized, oh no, you know, we started putting like all these scenarios together and like flash loan attacks and flash loan attacks like they thrive on this. You take from lending at a certain price, you manipulate in a single or bundled transaction like a flash loan attack and then you close it out and hopefully the liquidation hits at a completely different price and you you profit it.

40:23 But you know we've put a lot of a lot of thought around risk management. Hyperliquid also like is a really great example of you know using what they discovered and and like try to mimic that on your own platform. Y we always look at left and right what other people are doing you know. So like us being the sole liquidators helps.

40:46 Another thing that really helps is like having open interest that is proportionate to the total TVL within the pool. So we wouldn't allow you to open a position that is $1 million in value on a TVL that is $1 million, right? Like so that's another thing like so all these risk factors like we really sat down we put a lot of thought myself and our core engineer on the smart contract.

41:14 Actually I was very very involved on the on the risk management side. So like I'm very much aware of a lot of these attacks and we put many different like a lot of hours and trying to think of and come up with and obviously audits helps a lot but the problem with auditors as well is that such complex piece of work leverage on a liquidity provision space that you know we we contacted two and we even even like for them it was quite a task like they said like hey you know it's a quite a piece of engineering but thankfully we we pass with flying colors and even then like that doesn't really tell us much because back end can be exploited liquidation event happens on the back end right like it's not something that

42:02 Is built on the on the on the smart contract and more often than not like what gets audited is actually the smart contract and not so much your backend server or like what what your logic is behind there so yeah what can I say I think your number one priority should be like launching but also not having an overnight success because you're going to end up like Luna Terra which frankly I think if they had a slower pace success they would have done fine.

42:28 Mhm. Yeah. And that you know and also you need to be mega motivated to be 24/7 by your desk during the first three four five months really taking care of of the baby. There's just no way to prevent yourself from all vectors of attack. no audit will do that for you. So that's that's what I can say like invest heavy into into audits.

42:49 Make sure you're not overnight success and you're going to do fine with flying colors like should be fine. Yeah. And I mean that's an interesting point. First of all, I will say I like the fact that you guys are the sole liquidator. I mean obviously the the decentralized maxis will will not like that. But from a from a security risk perspective that that that definitely makes things a lot easier not having to worry about like anybody can liquidate themselves.

43:15 How can they like force themsel into selfquidation and all this stuff? try to get some like a flash loan attack like you said. And then also, yeah, I agree like a lot of I I think I see this as a trend where more DeFi protocols are moving increasingly offchain actually, especially with like the pers order book sort of wave that's happening where it's like an order book that lives off chain and it settles onchain and that's where you can custody your your funds whether it be like a USDC or like a USD and then be able to deposit withdraw but trade on the order book and then just have it settle there.

43:56 I think a lot of these systems are going to move they're going to start to move more and more offchain and I think people are going to realize in the security space that hey we need to be auditing actually like the entire offchain system as well and we we started doing that we started just doing like full infrastructure backend audits I mean included because I mean with a lot of these systems the more you have offchain it's like to spot if something's an issue you kind of need to see the full scope of the the surface area.

44:27 So yeah, I definitely agree with that comment that you made there. Yeah, and I think man, it is it is especially when you're building something novel and on the edge. I mean, the amount of investment that you have to have like the amount of conviction that you have to have in your product is under completely understated. Like you've got to be building for I mean I'm sure you guys have been working on this for I mean like it can take teams like years to this.

44:55 I mean, how long have you guys been been working on this tech? We one year in stealth and to be frank our most brilliant engineer that's on the smart contract side which is really the bottleneck. Mhm. If so like he was busy with something else and for half a year we spent time around circles with some other guys who if you gave them three years they wouldn't finish it in three years.

45:21 Yeah. And that's the scary part where you don't really know that if you can build it unless you spend that time and like burnt money and then you know you need to look for someone else. I think that's also like a big big hurdle. A lot of these things you don't even know if you're if they're possible to be done on chain on smart contract level a year.

45:41 Yeah. But out of that year we probably lost at least five months. Mh. and that's also part of the reason why we were super scared when launching. You know, you're thinking initially, oh, you know, I have this budget. We're going to launch at this date. We have four months to become profitable. And life's like, no, it slaps you in the face.

46:02 Yeah, you're not going to build it with this engineers and and and then you're left left scraping. Really stressful time. And then like when you have built it, you know, we were really burnt out, but also like we just launched and burnt out and we had I mean there's this one guy, he would pop up in Discord on the weekend every time when everyone's asleep and write, "Hey, I found an exploit, pay me money or I go on Twitter and we'd start asking what is it?"

46:30 You know, he did DDoS us. We had nothing behind Cloudflare. So like our front end would go down but nothing gets hacked really. like we reboot it, we put it behind the Cloudflare and then he comes back and he finds an API that he can like the is not sitting it's like our VPN that was not sitting behind the Cloudflare he nuke that and ask for money and it's just around the clock 24/7 attacks from all vectors network shuts down liquidator bot suddenly decides to like not work because you know you don't have any wrapped SOL in the wallet that is responsible for and it's like what the hell you know I never accounted for that or just so many things it's hard really really hard but it's it it pays off once once you

47:22 Have it going and I will say that also like we're doing everything on chain we strive to do everything on chain yeah sure the liquidations engine is not on chain for various different reasons and some of the infra infrastructure is not but the MM AMM side and settlement and everything the order flow from zero to hero everything's done on chain but still like you know we we have servers right we have infrastructure thankfully we we built everything on bare metal I was thanks to my brother he was very keen on the idea you know we've been speaking to like other companies who are our competitors and they pay like you know they're on cloud and AWS 50k a month you know Some wallet providers they spend 200k a month.

48:09 Wow. on infrastructure we we are 3k three and a half thousand the difference. And that's because we really you know on a fundamental we level we really like to have a scalable solution frankly because we're also we weren't like mega funded through our teeth which goes back to the fact that it's a also a blessing but also like a curse in disguise being funded through your teeth.

48:34 You might just go with like building everything on an AWS server or cloud service. Yeah. Then as you build and expand there's no way there's no going back. You cannot switch back. Yeah. The tech is is way too high. So yeah those are some of the challenges that we face. Yeah, I like that like giving having a constraint and it kind of forces you to think outside of the box and even like innovate in some cases and I think I mean bare metal is a that's a great example.

49:04 I mean 200k a month is crazy for for cloud. Wow. I didn't even think it would be that high, but I mean, yeah, I can imagine for some wallet providers. Yeah, I guess that that adds up, especially with the amount that they raise. But yeah, and I think you mentioned like the bottleneck around engineers. Is that still the bottleneck for you guys?

49:27 Like what what is the main thing holding you guys back at this point? We found a goodsized team. I mean, we're eight. Most of them are engineers, including myself. I'm not an engineer, but like I'm part of the full-time team. founder, janitor, you know, hiring is so hard and part of our success is our burn rate is like on on on staff like 50k a month.

49:48 Yeah, that's like lean actually. Very very lean. Yeah, very we do a good job at hiring. I think it's very un understated. I think that really the the key to being successful is not hiring from the US. Yeah. Yeah. I'm sorry to say that. anyone who touched drift protocol, APIs, anything, he just they quote 170k a year.

50:13 Whereas in the Russian market or Ukraine, you know, thankfully we speak Russian, we can snatch a talented guy, work with him and he costs 6K, you know, constitutes for like, okay, 7 70k yearly makes a big difference. Multiply by three. But the bottom line currently is one full stack developer to join the team. As a lean team, you know, you're looking for someone who's proactive.

50:36 You don't need to tell him. He goes, he gives you a call. He annoys you. He goes out there looking for answers. And to find such a hire is extremely hard. And even price tag like we we we we quoted we started quoting like really ridiculous salaries and all we got was even more noise. Yeah. So many North Korean scammers.

50:55 You know, the amount of North Korean workshops that we've encountered in our job interviews, I would say more than 50. Really? Yeah. Yeah. Yeah. It's a real thing. Wow. I I think I've had a few runins, but I try to avoid them like early on, so I'm not sure. But Wow, that's that's a lot. Yeah, hiring hiring is I think the biggest challenge of any startup in crypto.

51:19 I would say money is like the least of your worries these days, provided that you're building anything that is significant. Hiring is I've I've heard so many founders who just fund it through their teeth, don't have talent to build anything. The right talent, the right people. Yeah, it's about finding the right people and the folks who are like a fit and ideally I mean really to get folks like bought into the vision of the protocol I think is just as important as them having like the actual technical abilities to actually like deliver and be productive and and build the future of the protocol as an early employee.

51:55 Yeah, definitely you want people who are in it not for the salary. Yeah. Or the stock and you're hoping for that. But then again, that really leaves you to hiring talented people who are just ambitious. Our best hires were just talented, ambitious guys who would be able to be brought up within like during the work experience. It's also a risk, but it's been by far our biggest reward.

52:17 And what have you guys tried so far to to go out there and hire? Like what what's your overall strategy there for the game studio? used to be like forums like Unreal Engine forums, odd places, never really job posts. we had mixed results. So like forums like we found our best hire ever through a a random Unreal Engine forum.

52:34 A guy who built the first lobby for for online gaming on Doom. He he built it. He built his own like game engine 2004. Like it's insane stuff. Nowadays, we tried a bunch of HR companies. Never go to HR companies, especially if they have offices. If they tell you like we're HR, we're in US and London, just just think of all the of all the expenditure you're covering on their behalf.

53:01 And a very very popular strategy by HR companies is that like they bring you a guy, they negotiate that they're going to offer on your behalf. Like so they go to companies, you go to HR, you say we're looking for like elite dev for 180k and they go they find someone for 7k or 10k and they beef up the he's beef up his pricing and like they offer you like the same guy for like 180k because that's their incentive like that's the the game and we've had zero successful hires.

53:32 We we tried six different HR companies. Some of the biggest ones doesn't work. have your own HR guy paying like even like a random guy you teach him like two 3K a month is better than any HR company out there that's one of the strategies job posts need to be in the right places so we tried Solana's you know job post website I love Solana but the amount of scammers that we got through that portal never again yeah just maybe manual work is the best no agency no nothing have someone you teach them what you're looking for how to detect for that and bring him up internally to look for talent in the right places.

54:11 There's I think no other way to be to be frank. Yeah, 100%. And I mean so these HR companies I mean first of all they don't even know the industry right like they have no idea like what Solana ecosystem looks like. So I mean yeah I can definitely see where where things go wrong there. I mean how much do they ultimately charge?

54:30 You said like they would like beef up a salary, but do they have like any kind of like a onetime fee or something like that? Yeah. So, usually how it works is they charge 10 or 15, sometimes 20% of whatever the guy that the the person you're employing him gets a yearly basis. So, like 10% out of 180K is, you know, 18K multiply by two because it's 20%.

54:53 And and then like the thing is especially for senior staff it's more to do okay like it's less to do with technical skills and more to do with soft skills. So like if you hired him sure he works four weeks in there's odd behavior or maybe he's he's he's got bad habits. He disappears maybe he's uninterested. You ended up paying that fee and you carry the burden.

55:16 What do you do next? We've we've had a hire where the guy just in the middle of the day goes to the forest, comes back after 5 hours, and you're wondering what the hell did he do? He said like, "I needed to get inspiration." Weird cases. And they happen. They really do happen. Oh my god, dude. And then that's kind of wild.

55:35 So, you still have to pay the fee. It's not like, okay, you only pay if they stay for 3 months or something like this. No, they usually do like three weeks in you you pay 50% and then after that third week you you know you pay the rest of the 50%. That's it. But the best model that we found when it comes to hiring is like you give whoever you found hopefully not through an agency even if you found through an agency you tell them you guys are getting nothing until like he's actually properly situated and after that there's also like a buffer and like but we found no success with HR companies and we used a lot but what we do with employees is okay you're working like a test period it's fully paid

56:13 But like with a discount of 10% because we don't know if you're what we're looking for and once we've hired hired you, you know, like after 3% of of 3 weeks of test period, then you have like another two weeks and after that then you're on your salary like fulltime salary with contract. There's no other way I think.

56:32 Yeah. No, I I I totally agree with that. I think I mean, of course, our approach has also been, you know, manual organic. I mean, my approach was even to start teaching a lot of folks in I mean, we're in the web 3 security niche. So, I mean, a little bit different. I mean kind of adjacent to what you guys are because you're Solana devs.

56:51 I mean I yeah I started literally just teaching people and I mean it's it's on my channel. and through there you you get like I mean first of all you can help people actually gain the skills because there's just simply not a lot of people with those skills and then from there like now you've got the audience and now you can build from there and say like hey do you want to work with us?

57:13 And from I mean that that has been really helpful for us to get to almost 20 people at this point. with I think most of them I mean the vast majority of them maybe technical. So I mean that's the CTO of the company. What's up? What's your position in the company and you're on an auditing firm? Yeah I'm I'm a co-founder.

57:33 I I guess you could say the I don't like to I don't know CEO but I don't we're not that big yet but technical or Yeah. technical I think if if you're going to be a founder of a auditing firm you kind of have to be in my opinion. Yeah. Yeah. But you know you'd be surprised some very tech I mean Chachi PT you know they have like a non-technical one of the co-founders.

57:56 You'd be surprised. But regarding that I think anyone who's in the a successful company with good hires oftentimes has a a real teacher on the upper ranks. you know with us it's our CTO Danny with you it might be you know yourself own I think that's like the greatest success is to have like a guy who's part of the hiring process who's at heart a teacher 100%.

58:21 Yeah and I think I mean it it goes all the way into the culture of the company and and how everybody you know the chemistry and the team and everything like that. So yeah, I mean I first of all I totally agree that man it's just a hard problem in DeFi cuz I mean there's just not a lot of people with a lot of experience and yeahve I've heard this is a painoint a number of times.

58:41 So it's a very interesting problem to try and solve but yeah I mean wish you guys the best of luck with with filling any positions. I mean of course we've got a a little bit of a technical audience here as well. So, of course, if anybody's interested in what you guys are building at DeFiTuna and and the full stack position, of course, we'll we'll send them.

59:00 Is there any link for like a job description or something we can send them to? We could post Yeah, if if they reach out to you and you just send it to us, more than happy to review. We're looking for one full stack developer sort of senior level. He'll be in the coms and very much on hand building between our senior smart contract and the rest of the team or you know just a a very strong back end is also fine programmer.

59:25 Absolutely. Okay. And I mean I think we'll be releasing this around the time that you guys are sort of discussing the the fusion AMM. Is there anything else that we should push folks to? I mean, obviously we'll have like the website and the the Twitter down below for folks to to check out, but anything else we should let them know about?

59:46 I think Oh, you've covered pretty much everything. Not a lot of people interested in the difficulties of of building out in the crypto space companies. It's just a lot of small secrets that you know people who just build anything know or like the headaches hiring. My goodness, so hard. Awesome, dude. Well, I mean, first of all, thank you so much for for taking the time and and hopping on to discuss everything that you guys are building.

1:00:14 Once again, really interested to see how the Fusion AMM comes to being and the technical details of that. but yeah, dude, I think it was an awesome hour. Yeah, I appreciate your time, guys. Brendan, I have no idea how you found. Well, again, Owen, Brendan, thank you very much for for the space and we're always excited to just share.

1:00:36 It's a very small space. Absolutely, man.