Jane Ma on decentralized lending with zkLend protocol

0:01i am ashton addison from block west capital for investment pitch media in the Crypto Coin Show and today on blockchain interviews we have jane ma co-founder and co-project lead at zk lend jane welcome to the show and thank you for taking the time thanks for having me on ashton you're very welcome i'm excited to dive into zk lend i feel like d5 needs to take to

0:22the next step with introducing zero knowledge and i'm interested to hear the solutions that your team is driving into the blockchain space i would love to kick off our conversation with just an overview of the solutions that your team is working on right now and then we'll dive into the details sounds great so i guess a quick intro on zk lend we are actually a borrowing

0:43lending product built on built on stark net one of the latest layer twos out there on a very high level the name of our project is actually called zk lend but we have two protocols embedded underneath it one is called artemis and it's an unpermissioned d5 protocol targeting basically anyone anyone would be able to deposit their assets and earn a yield as well as as well as put it up

1:06as collateral to borrow other assets as well on the other hand we have another product called apollo and that is our permission lending product and it contains a white listing layered and it's really catered to institutions so in order to access that protocol you actually need to go through a kyc or kyb check and get white listed and interact with other whitelisted participants as

1:27well as well so i guess the focus of the project is really to deliver a first-class lending product on starknet so that there is the ecosystem participants have an option to really go to a flagship money market protocol on borrowing lend very cool jane i'm interested to hear about both sides of the project and about starcraft as well we'll dive into

1:53that in a little bit i would love to you know hear a little bit of the problems that you first saw in decentralized finance with borrowing and lending and how you derived the solutions from you know what we're currently facing in d5 yeah i mean i think there are two parts to it and that's that's really central to our investment thesis the first part is we really like ethereum

2:18right we've been we've been looking at d5 for some time now but as a retail user myself when i first started using some of the solutions and i was just you know pressing a bunch of buttons and trying to figure out what was going on in the protocols i realized that the money i was trying to deposit in was the equivalent of like the gas fees that i would have to pay to transact and this

2:36is like a one-way transaction like never mind about like redemptions and everything that comes along with it and i realize that affordability is actually a huge problem in the market and i know that there have been a lot of other blockchain networks that have come about but a lot of them do trade off kind of security and decentralization for scalability and for me it's really a

3:01non-negotiable so i felt that you know a lot of these layer twos do retain the security and decentralized features of ethereum layer one and delivering scalability to users so it's a win-win and that's that's one of the reasons why we decided to build on stark.net the second part to kind of our investment thesis is really the institutional aspect my co-founder

3:24brian and myself we actually both started out and tried five backgrounds and what we've realized is that this market is truly untapped you know you do see a lot of native crypto institutions very actively involved in the d5 space you know prop shops pcs but at the same time there is still a lot of on top potential from traffic institutions and we think that's

3:48really the next frontier so as retail money tops out we really want to make sure we capture this opportunity definitely great point there and further on the institution side you know with the market dip in the last few weeks here i feel like it's a great opportunity for institutions that have been waiting for that time to get into the market you

4:11know have you been seeing institutions increase their interest throughout 2022 and just waiting for a time to be getting into not just crypto but define lending protocols as well yeah definitely i think the first barrier is just getting interested in crypto as you said because that like just because you're you're interested in like buying bitcoin or ethereum doesn't

4:34necessarily that mean that you're interested in b5 that's like another barrier on top of you know i don't know what you call it but that's another barrier on top of kind of becoming or entering into the web 3 space we've definitely seen a lot more of that you know the recent i don't know if you guys saw the jane street kind of i think jane street and who it was but

4:57Drain street got super involved in borrowing and lending protocol and you know we also saw goldman a couple weeks ago announced kind of they were also getting into the space so i think there's definitely a lot of opportunity but fundamentally institutions also have to be very cautious because of the regulatory environment and as we know with d5

5:19there are still a lot of kind of regulatory questions surrounding it so i wouldn't say it's like a dash towards defy or rather kind of a slow and steady case where maybe one or two institutions will come out and they'll do something and kind of test the waters and see kind of what the regulatory response would be before more of them pile in and then

5:39kind of jump in to the space great insights jane and now this is for both products but i'm sort of interested in the retail side you know how long has your team been working on this and is it live right now yeah so maybe i'll give you a bit of insights on kind of our timeline and the way the way we plan to roll our protocol so we kind of see artemis which is the

6:04d5 protocol as the bread and butter of our project because ultimately we are defy users ourselves we kind of understand the product whereas with institutions we do need to go out there and find the institutions involved understand the regulatory requirements understand kind of the kyc and kyb off chain and on chain so there is a lot more work and a lot more time that we

6:26need to pile into this so with our artemis protocol we are developing our mvp right now and that is i think scheduled to launch sometime in late june however this will only be on test net and to a select group of participants the larger protocol which we call v1 which will be open to the public should be coming out at the end of september

6:49and hopefully this coincides with the wider kind of stark net public launch for as the network also ramps up for public use that's great to hear and yeah i haven't heard too much about starknet in terms of layer twos and you know obviously in the last 12 months layer twos have really taken off to be you know multi-billion dollar projects on top of ethereum

7:13is there something specific about choosing stark net as the layer two for zk len that makes it the optimal choice yeah i think a little bit of background as to kind of why we started with ck roll-ups in the first place you know our tech lead he's been he's been looking at kind of layer twos for some time now and we're thinking between optimistic roll ups and

7:37zk roll ups and we knew at the time that z roll ups were a little bit well they were a lot more complex and would take the network itself would actually take a lot more time to come to i guess come to be like realized but we felt that you know this in the long term not only thinking about like one to two years but the three in the three to five year

7:56horizon that really is the ultimate scaling solution for ethereum and vitalik has actually said that in an endgame as well so we knew zkw were the way to go as to the different solutions out there i know that there's obviously ck sync starkware as well as well as squirrel at the time with starkware we saw starkx which is kind of like a it's not exactly stark net because it's

8:22not a general network for like ck roll-ups but rather it's kind of like a compression network made for specific applications like dydx so rare immutable x we've kind of seen the kind of great work that they've done with dydx and we saw kind of the gas fees that they've been able to save and the trading volume they've been able to support so for us it was a track record

8:50that had been proven by the team and so with that in mind we felt that starkware had the best credentials we also spoke with the team felt that they were very supportive of different dapps building onto stocknet so we really felt that they were they were the winner of all the of all the zk rob layer 2's out there great insight i'm looking forward to

9:12seeing that launch as you mentioned now with lending and borrowing protocols you know often there's a lot of people that want to borrow capital to increase their leverage in d5 but that capital needs to come from somewhere right and i've heard of other d5 protocols you know having a harder time finding the capital for people to put in to

9:36to be borrowed from do you see any issues with that are you guys expecting there'll be a lot of capital on the borrowing side and a lot of lenders as well yeah actually i think it's interesting that you say that because when i look at some of the lending protocols what i have seen is there's often a slight imbalance between like lenders and borrowers i do

10:00actually see a lot of lenders or people who want to earn a passive income so let's just say i hold a lot of eth and i just want to earn a passive income i would deposit it into a lending protocol and i've seen a lot well if you look at some of the pool numbers of let's just say avian compound you will see that especially with stable coins and eth and rap btc there's a lot of

10:20people doing that whereas the demand to borrow tends to be slightly lower so fundamentally there is an imbalance but that's what basically sets the interest rates right based on pool utilization that's how interest rates get determined i mean there are different ways to also incentivize this utilization rate we can obviously use our own native zk len

10:43token called zend to incentivize borrowing so let's just say if people are not borrowing and people are depositing money into the pools and realizing okay my yield actually is not so great because no one wants to borrow then what we could do is we could actually offer z zen tokens to borrowers incentivize this kind of activity so they're definitely levers to do that but as to kind of

11:05naturalizing the market balance i do think that the utilization rate within pools generally figures like or balances itself out good insights jane and interesting you know addition in there with the zen token and i'm curious if it's also utilized on the other side for the borrowers or for you know a barrier to entry to get into the platform or for governance

11:32and what else you can maybe mention about zend since we're talking about it yeah so still early days we don't have well we have token launch plans but we don't have a date for it yet but what we do know is that the token is going to be at the center of the protocol what it's going to do is we're going to use it to incentivize to incentivize borrowing activity

11:57we might incentivize lending activity as well depending on market conditions and with the zen token we do plan to use it is also our governance token so eventually as we transition into a dow setup we do expect token holders to be able to vote on different proposals such as listing different assets collateralization ratio interest rate curves even emissions so i

12:23would say the token plays a really big role and i guess more details to come later on that's more than enough for now and yeah you're right it's there's still a lot to be done you know with upcoming launches and it's it's a lot so i don't blame you there and you mentioned they're about voting on assets i'm curious if you have any insights into maybe the first assets

12:47that'll be there you know will it be stable coins and the major caps or are you focused on something specific yeah so we are focused on the shorter tailed assets to begin with in our mvp just because starknet is still a pretty nascent network and chain link actually hasn't come on to start net yet and we will be using a native price oracle on stock net just to test

13:14it out so i think ultimately there are a lot of inherent risks in listing long-tailed assets as i'm sure you have seen with a lot of d5 exports in the past i don't know forever so we are starting out with five assets wrapped btc eth die usdt and usdc so really the safest guys out there and it's a good way for us to test the soundness of our protocol before we take

13:41on more risk because it's it's ultimately our clients or our retail users funds that are that are like safe their safekeeping that's the most important for us definitely i like those assets and i'm looking forward to seeing that you know in the mvp and you know you mentioned really the timelines what are the main things that you and your team need to do to ensure that

14:04the product rolls out on time and you know at the level of readiness for the borrowers and the lenders yeah so i think the reason why we started out with an mvp that is for internal or for a white listed group of users only is because we want to get feedback on the entire user experience right we've we've done user interviews we've we've i mean we've designed the ux and ui

14:32in-house we think we know what users like at the end of the day they have to deposit with test tokens and really give us feedback before we iterate on version one version one will actually be a little bit more aggressive we do plan to list out more assets and we do plan to introduce the token reward mechanism so what we call it the euro growers model but

14:55really it's our way of incentivizing borrowers to participate in the protocol and this version will actually be formally verified by one of the auditors well and then it will also be audited by another auditor so we're really going through kind of two levels of checks before this gets deployed onto mainnet with real money being used by retail users that's good to hear jane and you know

15:23for the viewers and people that are interested in you know innovative d5 protocols what is the best way for them to follow along in lead up to those launches yeah i mean i would say we're probably most active on discord and twitter so our twitter is ckland and our discord channel i don't i think you would need like a an invite

15:50link to join but i'm sure you can find it on our website see we're very active there brian and i actually host amas every one well twice a week now actually to really keep the community updated on developments we'll likely also open a whitelist for users to actually try out the mvp even if it's not real money just to get some feedback on the protocol so welcome

16:14everyone to check that out very exciting and yeah i will leave that discord link and the website and the other socials as well in the description box below for the viewers to make it easy i appreciate you taking the time to come on jane to talk about all things zk land it sounds like you have a big project and there's a lot to do before the launch but i have high

16:37hopes that you're gonna do a good job on it so i'm looking forward to seeing that i would love to follow up in the near future when that happens and until then let's chat in the near future thank you ashlynn