0xDorsal on Integral's on-chain trading platform for large traders

0:01i'm ashton addison from block west capital for investmentpitch media and the Crypto Coin Show and today on blockchain interviews we have xerox dorsal co-founder of integral dorsal welcome to the show and thank you for taking the time to come on wonderful thank you for having me ashton a pleasure to be here you're very welcome let's dive into decentralized exchanges big players

0:23in space also needing to move their capital i'd love to kick off our conversation by just allowing you a little bit of time to explain what is integral this entrepreneur journey you came through and why you started it and the pain points that you see in the cryptocurrency market that you're solving and then we'll dive into the details yeah yeah sounds great so maybe i'll

0:46start with kind of what is you know what is integral more broadly so we actually you know we're focused on providing on-chain infrastructure for you know basically future trading needs right so like spa trading specifically is what we handle and a lot of people describe us as a decentralized otc protocol on chain so specifically we have two

1:15two products right now one is called five integral five which you know we launched about just about a year ago a little over a year ago and integral size which is maybe more like 10 days old so that's you know yeah just happened to be about a year apart but basically these are for you know down this line of hey like what do we need when large kind of

1:42large traders come to chain come on chain what kind of specialized you know dexes and other financial services do they need when when liquidity needs to be deeper and more effective basically to serve just this you know like but the fact that they're doing you know six seven digit trades and up right so one thing we offer is with our

2:07products is the benefits of minimal as well as zero price impact block trading at the best prices on chain so happy to dive into that for a bit further but maybe going back to you know why are we you know working on this in this area anyway as a core team you know at this point about a year i guess we've been 18 months in since if we count you know building and

2:34stealth we're a team of about 18 people on the core team now and really just aligning behind this vision of hey guess what there's this underserved area of defy on chain everybody you know i think there's a lot of narratives about institutions coming to chain and you know bringing a lot of these trading volumes you need with them

2:56But right now we really you know don't quite have a lot of the infrastructure required to serve these efficiently and that's why about you know like any is i think anywhere between about 95 to you know 99 of crypto volumes still happen over you know on the centralized exchanges eventually passing through otc desks and execution services and they all end

3:22up hitting their c5 or you know other methods of off chain trading and you know we would have a long way to go if we want the on-chain future to really be you know kind of what we look at as d5 rose so i think that's that's our motivation personally my background in crypto like my bulk of my crypto existence has been

3:50actually as a trader building font systematic trading systems building crypto hedge funds and one of the things we you know sat front row to on that journey was was basically seeing how startup centralized exchanges kind of you know grew and some of them failed some of them grew much larger i think everybody sort of i think in the space who's new might

4:14forget that finance for example is you know the big 800 pound gorilla in the room for centralized exchanges but it was a startup in 2017 right so i think we have very very much a similar moment with you know serving kind of large trades on chain right now which is like right now when a live stream is executed a lot of that is being being you know happening

4:41on exchanges like finance right and you have this whole layer of niche white glove services that kind of help for lack of a better term like you know these these whale clients in crypto like kind of past that volume you know elsewhere and what personally inspired me kind of when when and a lot of members our team when when we kind of

5:07touched these protocols as early adopters in you know around the time of d5 summer 1.0 oh it's in 2012 you know mid-2020 but is that like hey there's this whole trading environment that's now possible on chain kind of with the rise of i think ud swap b1 and v2 when when that came out and other protocols like compound and curve and wiring was really like hey we were

5:31starting to get a lot of the you know like first wave of tools that make this kind of make different you know centralized exchange functions possible via different protocols right so you can borrow then you can you know do spot trading and with it with integral ideas like look like we want for larger trades like maybe we should have something that

5:57resembles more like block trading and actually what otc desks do for you but can we actually do it in a democratized peer-to-peer way where you know we kind of cut out this layer of like having to talk to a professional dc trader like on telegram or you know something that resembles almost like bloomberg for those traffic people who who are listening like that's

6:21literally you know how how a lot of you know tradify trades and realize like look you know how would you do this on chain directly and that's i think you know that's the approach we ended up taking which is like look we think we can tackle this with direct tech and protocol design so happy to dive in there now i think if that's probably what your

6:46you know listeners are wondering next or anything else definitely thank you for the great intro and the background information i think that really helps you know paint the picture for how centralized exchanges have grown so quickly and the decentralized exchange movement is growing but there's still those pockets where as you mentioned for integral size or for whales or for big

7:10trades how can you do it as efficiently on chain as you do in binance or some of these major otc desks and from what i've seen many traders that are trying to use decentralized exchanges like uniswap i feel like if you were a whale and you had a large block of capital to trade there's a lot of limitations on the decentralized exchanges like you're

7:32buying at the spot price and if you have a lot it'll probably move the price you know 10 percent if it's some a small coin or even more you know how do you deal with those liquidity issues and how do you do it securely maybe you can talk a little bit more about integral size and how you've positioned that successfully for whales and large traders

7:54yeah yeah happy to dive in here i would say like first i'll go through like the challenges that larger traders face kind of when they do their stuff on chain and then i'll kind of paint how we you know how we address these challenges within our designs so kind of one issue with so i would say there's two probably two practical

8:18issues with large trading directly on chain so you know the difference between an otc desk and on chain is that now your orders are run through you know on ethereum for example it runs through the mempool and this is where front running is apt to happen so some folks out there might be familiar with mev which is just the process of

8:43The fact that kind of traders that are aligned with miners can and sometimes it's the miners themselves can actually you know reorder transactions within a block and so this is kind of a big weakness for a lot of these kind of spot dexes that settle right away which is you know a lot of these large trades are very nice juicy you know targets for being

9:10sandwiched or you know other types of front running so just in time liquidity is kind of another type of sort of you know attack against this but basically the idea is look like somebody's gonna push up the price before this organic large trade and then they're gonna dump after all within the same block and so this is what makes a lot of

9:32larger traders like uneasy when executing on chain so kind of a second issue is just like the fact that large trades themselves actually move sort of move the prevailing price on the price curve like right away and so we sort of you know we try to address both these issues by basically combining the fact that hey like when large traders transact

9:58really what they're agreeing on with their counterparty is like kind of a they need to agree on a price and they need to agree on what kind of like you know sourcing the right amount and settling kind of at the end of a certain you know time period and this is kind of what happens you know when when traders go to either odc desks or you know

10:24liquidity pools kind of in traffic or you know i think a good example is out there of block trading is in crypto or as a gemini so gemini has a if i recall it's about a 24 hour auction period for i think best known for actually selling auctioning off you know fbi confiscated bitcoin i think if anyone recalls that was one of the

10:51first big use cases for it and people would you know enter into these block trading procedures with you know kind of with the procedure being known ahead of time how you arrive at that settlement price so we do that the same with integral like interval five and well size are both this way as well size is the simplification so i'll describe that

11:15But basically we think of the perfect you know trade as like literally hey we specify look what's the reference price prevailing in the market we specify which is right now it can be typically it's uni swap v2 what we use i don't know that like sushi swap is also usable here currently in our designs and so we sort of set this for you in the trading pair

11:41and then there's a time lock procedure which you're committing to when you trade and when you're being the counterparty as the lp you're also committing to this so right now that's 30 minutes on size and what happens during this 30 minutes is we look at so basically the infrastructure pulls in what the reference price is doing during that 30 minute commitment

12:03and at the end of that once it's elapsed your your as a trader your funds are basically you know released from this time commitment escrow and actually you know traded directly against the pool you want it that you're trading against and you know that's where the lps are kind of being the peers that are serving you know now this block trade and then so everybody

12:27Kind of has to you know commit to doing this organic trade for a 30 minute period that they might not know what the price is right so this is this is how we screen out a lot you know pretty much you know all the front running that happens in the space as you can't do a lot of these tricks that happen on kind of spot indexes so this way we keep the price low for

12:52everybody and maybe zooming back out how we think of our design is that you know through this organic trading time commitment and this block trade mechanism and the fact that now we can match people directly on the prevailing time weighted price that happens on unity swap without actually like you know without even having a pricing pair of rights we actually allow people to

13:14trade at directly at that price for whatever depth potentially whatever depth the pool is at so we have our own primary liquidity from our lp users and we have our traders coming in being bashed against them and what's missing now compared to the spot trading environment on normal dexes is that there's no third party called arbitrages so the

13:39arbitrage traders are you know notably absent from this picture and a lot of the profits that they've taken demand basically for updating you know uni swap or you know sushi swapper these these these price discovery indexes are basically you know relying on this breed of trader to like update the prices you know throughout you know as block time passes and we sort

14:07of position ourselves to not redo that again but rather to use you know leverage what they already use kind of the price discovery they already maintain and say hey let's you know we're not trying to reinvent price discovery we want to use what price best price discovery that already happens on chain but make that available at better depths right so like

14:28it's really the question we answered was what if we could make these ideal prices you know tradable at larger depths like you know why do you have to slip down a curve now you don't with integral size and that's that's the direction we're going so you know i think we've already served like our first million dollar trade on size in the past week

14:52and on integral five which was sort of just to keep it short it was a little bit more complex than sizes now we actually had a aggressive and configurable price curve but that ended up being you know overkill i think for the point of both decentralized and simplified protocol design so that's something we ended up sort of like dropping and

15:18flattening out and that's how we ended up with just instead of minimal price impact just flat out zero price impact design which sort of you know we dropped one ingredient that kind of made things more complex from a design point of view and wasn't something that you know people necessarily you know it wasn't one of the top three things people raved about

15:39generally so we so through five we've already served close to a billion half a billion dollars in volume in our first year so that's that's sort of where we stand is like look there's promise to the mechanism but really going you know going forward for this next year is starting to apply this to more and more e-liquid assets

16:03where a lot of the trader pain point is right now that we you know we get when we speak to we speak to you know these prop traders trading on chain we speak to you know people who are sort of this next target audience that is you know looking for anywhere actually to execute like you know promising project tokens that maybe aren't heavily listed on the

16:29largest centralized exchanges right now they have a an issue sourcing liquidity from you know normal centralized exchanges or otc desks or other services and we think it's the perfect question to answer like like why can't the first best answer be on chain for this right like a lot of the best d5 protocols release their tokens first on chain when they're

16:52early so why isn't the best place to trade them also yeah and it's kind of ironic right so like i think we had a saying which was like when we first launched integral 5 last year we prided ourselves as like look there's capability for the ethereum ecosystem to actually host the best trading venues for ethereum at size unlike you know when we're talking about

17:19like million dollar trades plus and in the first few weeks we launched we did have these traders who needed places to buy and sell ethereum and we saw this happening like i think our favorite user in history this address has done about close to 20 million dollars in spot volume like in the first month when we opened full trading and so you know there's definitely

17:45capability for us to serve to have the best places to trade be actually on chain and i think the bigger long-term challenge is how do we as an ecosystem like everybody like all these projects how do we ins you know how do we keep that execution you know how do we keep these financial outcomes really good on chain but also do it in a sustainable way that

18:10you know actually is a real alternative to centralized exchanges and that's i think that's the biggest challenge that you know not just our protocol but others will face going forward so i think that's that's sort of like you know where d5 1.0 and 2.0 kind of meet where it's like hey we want these things to eventually be decentralized to be run by you know the user the users

18:36can also be the operators right and but like you know the whole push of i think 2.0 like this past maybe the past six to nine months in d5 is really like hey there's a chance to make things a lot more efficient and so we see ourselves as like trying to embody like both both values at least when we think about it 14 which is you know how do we get really good

19:03outcomes but you know decentralized and in a democratized way like out in the open for the sake of you know transparency right like a lot of dark pools and otc desks are private but these large traders are actually trusting human human traders who by the way gossip like i'll tell you once you spend time in the space on the trading side people say all sorts of stuff at

19:26happy hour so like you know somebody's gossiping about your your big trade so if you know for those you know million dollar traders out there like if you do use this you know otc desk you know no matter who what type of guarantees they give you on paper you know like it is visible by somebody right so just know that and i think you know in d5 we have the chance to build

19:51everything to be verifiable or you know right now a lot of things are visible completely but maybe you know maybe things will shift to be verifiable publicly but maybe like details that are acted out but still like this is this is sort of the way i think services are are going if this whole space is actually you know the thesis plays out

20:19great points dorsal i'm really excited to see the growth for size as you mentioned already hitting half a billion dollars on integral five is very impressive congratulations to that i'm looking forward to seeing the rate of growth for size and how many whales jump onto the on chain you know where i feel like they i feel like something that

20:42they really want to do and you said it hit hit in the nail right on the head where you know all of these coins and protocols that are coming out on chain you know trading those assets properly should all be done on chain as well in almost the same manner so i'm looking forward to seeing how your team continues to grow out with that and we don't have a lot of

21:03time but i would love to know the best way for people to learn more about this more about the process that you guys have developed to make this efficient fast and more appropriately serving this clientele because i feel like there's a lot more people that are going to be coming into the space with a large amount of capital and they're looking

21:26for solutions like this so with that said what is the best way for people to learn more use the product and get involved with the communities yeah wonderful i would say like there's two ways to be involved as a user there's the trading side so if you are a whale trader out there you might be interested in actually doing this t-wob execution we offer

21:50you know on size and that's available at size our you can also just find all these links on our twitter which is at integral hq for the liquidity providers out there you can also plug into the pools and lp side of these same interfaces on size and you know there kind of there's opportunity to be the counterparty to you know the whale traders and we will

22:18What we have periodic rewards for basically you know earning integral governance tokens and that's itgr so you know that's that's two ways to be involved on the user side if you're an nft forward person and you're just learning about deep we do have a collection that also launched around the same timeline as size which is called

22:42whalesquad.com so it's the d5 wheel squad and that's the profile picture you're seeing here that's one of them this one is actually not that rare it just says builder but which which matches the story here and you know integral.link is our landing homepage where there are further you know like tabs and foot footer links to documentation our white

23:12papers and kind of anything else that you want to poke around at including like prior coverage and other kind of archive from when we launched last year yes i would say those are the best ways to plug kind of plug in and if you want to follow kind of my synonymous account that's at xerox dorsal on twitter

23:39which is you know part of you know building as a synonymous team is you actually get the chance to you know roll out different different people on the team and then allow each each particular whale here to have their own personalities so that's that's part of what you'll see more of as you follow our teammate throughout the year if people want to follow more on a you

24:04know team member by team member basis so that's something we're rolling out as well yeah so i think that's that's you know those are the best ways to plug in and thanks ashton for you know having us here and giving us an opportunity to just you know talk about you know where we're headed kind of you know how we got here and yeah like our

24:29sort of we pride ourselves on being you know sort of taking this a lot of the things like you know doing things synonymously launching trying to launch you know in a fair launch way which was something we did and that's how we persist and keep growing we launched the product first last year and you know raised capital from our are directly on

24:54chain from our early community and users so that's that's sort of you know something we always you know think we would like to see more of in this space but we understand that's kind of hard and not prevailing model for everyone but you know if anyone wants to reach out on any of these types of topics and if you're building yourself and one of multiple things feel free to

25:17you know reach out to it you know either the team twitter or mine so yeah thanks again awesome thank you so much dorsal for coming on i will leave all those links to integral and your socials and the community links in the description box below all the best with integral size and five moving forward and let's follow up in the near future

25:39all right thank you