Minterest CEO on building a multichain DeFi platform

0:01I'm Ashen Addison from the cryptocoin show and today on blockchain interviews we have Ken the CEO of minest Ken welcome to the show it is a pleasure to have minest back on thank you very much I'm really excited to be here with you I know we've been talking for so many months and uh we waiting for this moment to happen so finally we're here you're very welcome excited to dive into the

0:22depths of Defi and and how can we make an efficient system that maximizes uh the value creation for the users of defi with with with also making it distributed decentralized and throughout the principles of defi uh I would love for you to kick off our conversation with just sort of a high level of what is minest as a di5 platform and what makes it so great and then we'll dive

0:44into all of the details sounds good Ashton so minest is a defi lending protocol with a number of I guess killer Innovations under the hood whenever you think about defi um it lending Protocols are a core a core form of decentralized banking infrastructure that's how we kind I kind of think about it um you know in the real world many of us have savings accounts or you know

1:13checking accounts where we're depositing our Fiat and we're earning in abysmal amount but we're earning some kind of an interest rate the bank typically takes your deposit it will then load it out to somebody else earn interest on that and give you a portion of it right as a depositor that's what we're typically cust to in the real world so lending protocols um in Defi and

1:33blockchain basically act like that so it allows for a user to deposit their crypto assets and earn yield because typically right now what's happening is 85% of crypto holders are acting like they're basically putting their money under a under a mattress you know it's like they're not putting their money to work effectively right so what we're trying to do is provide an environment

1:56where you can safely deposit your assets and on the other end there are people who want to borrow what as well uh so it makes for a very effective and efficient uh Financial economy in defi on blockchain that's a general idea but when it comes to lending protocols like minest um they operate as being over collateralized and what that basically means is that if someone wants to borrow

2:19say $100 they need to first put up maybe about $150 of collateral equivalent so this way what happens is you know that the assets are protected and it's all transparent on the blockchain there no shenanigans that can happen behind the scenes everything is there everything is written in code and that's what makes it much safer generally speaking in terms

2:40of the way in which you actually deposit your assets you know exactly what's happening behind the hood at any time um and with minest we've been building it for the last three years uh we've spent a lot of time on it it's been operating in a private launch environment on mainnet ethereum for the last six months we just keep putting it through his paces securi really important for us as

3:01well so we have gone through seven security audits as of the two weeks ago basically with some of the best in the space here trail of bits PEC shield hackin and zoko and we're also in addition to that you know just for additional security we have we are partnering with Cube 3 for active smart contract monitoring so you know the idea is that even in a live environment you

3:23can test it out and make sure that you know things are secure we can monitor that so that's that's defi lending and miness in a nutshell H very great analogy there of the bank lending and you know I've i' I've seen the rates and at least when I logged into my bank and it's not it's not very good um so I everyone's in especially in crypto they're looking for Alternatives

3:45but you're right that there are a lot of people that are sort of not doing anything with the capital that they have in crypto just sitting there um especially if it's in stable coins and you know they're not earning any potential interest that they could be with D5 platforms and you defi is very early on in its adoption phase compared to traditional Banking and the lending

4:07that they do uh and in summer of 2020 was sort of when it all kicked off in the defi summer and these mechanisms that came out were allowing people to get quite a good yield for their stable coins or for their other kind of assets that they're depositing and lending as well um and it's although there have been quite a few iterations since then um although we're still only a few years

4:31in I feel like uh there's a lot of work to go and there's more advancements that have been made in more recent times here in the last year or since layer 2os and different expansions and ways to make it more efficient U maybe you can talk a little bit about minest and how it builds on sort of the original vision of Defi and how you're actually looking to

4:50maximize the yield and the efficiency in you know modern day times of defi good question so again if we go back to the whole banking analogy as you were saying you're not really earning very good yields right because what ends up happening is uh the bank effectively is extracting the difference between what they're paying out to the borrowers and what you're getting as a depositor right

5:11there's a big chunk there that's being that's missing and it's going to the um the owners of the bank shareholders and the like right and this is actually there's a similar problem with that in defi lending where um if you look at the last two years hundreds of millions of dollars of fees have been generated by the largest defi lending protocols in the space your AES and your compounds

5:38and the like but those fees are not going back to the users they're going to third parties or to uh owners um or or stakeholders basically and so what miness is doing is is designed it so that all of these fees actually do go back to the users of the protocol so it's actually capturing a sign significant number of fees and sending it right back so basically it means that

6:03if you're a user you're also essentially an owner um you are getting the benefits of what the protocol actually does and we think that that's much fairer Finance uh across the board no that's a great point and sort of ironic that they would create a decentralized finance platform and you know you're supposed to be cutting out the middlemen with these

6:24smart contracts and making it more decentralized uh but in reality it's it it's still maybe it's just because it's early on but it's still not as efficient as it could be and and as decentralized as it could be now in I know you were mentioning that your team's been working on the application and it's not in the full public beta yet um working on obviously security is of utmost

6:45importance uh when you're depositing millions or billions of dollars into a a protocol um could you give me an example of if when the public launch happens if I was a new user to Defi and I I'm not really familiar with how exactly a and compound and all these intricate systems work um and I had some Bitcoin or some stable coin what would I do if I went to

7:08minest and I was like okay take my capital and I'm going to earn a specific amount do I have to do anything it's uh it's actually very simple you know if you've ever used something like uni swap or any of these other dexes right and you're trying to provide liquidity it's actually more complicated to do it there than to make a deposit on minest on minest you come

7:27to the website come to the application you log in with your metamask or whatever wallet that you're typically using from your browser and then what you'll notice is you'll say you if you're having usdt you'll see hey deposit your usdt you just hit a button to hit the supply you hit Supply to basically saying is that you know promps you it asks you how much of your usdt do

7:47you want to supply you put the number in um you then hit basically one button to say I'm depositing one more button which will require you just to make approvals basic approvals that we can actually access your wallet right and then it'll make a deposit and from there you're earning interest block by block you're not locked in you can always withdraw at

8:09any time that you want to uh and that's that's effectively what how it works wow that's very cool and with that interest how is there some secret of maximizing the efficiency or maximizing the reward is it the you know the difference in the spreads or the fact that the smart contract is more efficient and that you're able to offer higher Rewards or maximize those fees it's good question

8:36so essentially uh in terms of the the basic interest rate it's supply and demand so it depends on how much of what you're depositing someone else wants to borrow if other other borrowers want to borrow a significant portion of what you're supplying they're going to pay you a higher interest rate that's the simple that's the simple method of the interest which is really no different

8:56than any other lending protocol out there however when when it comes to maximizing yield the way that it works on minest is you are also earning in addition to basic interest like if you're depositing usdt you're you're earning interest in usdt but you're also earning an additional reward and that is with minest owned token which is called minty and so you're also earning this minty

9:22token now all lending protocols typically have some kind of a reward token it's it's a way to incentivize users to come on board in the first place but when it comes to the minty token it does it does one more thing and that is that you can actually have a of the minty token will be automatically staked in our governance process now why this is important is not only does it

9:44allow you to vote on proposals but the fee distribution I was talking about where m is able to capture more fees in a distributed back to users of the protocol right the way it decides who gets those fees is based off of your stake so whatever proportion of the total number of minty tokens that you stake in the governance process right you will get a proportion of that fee

10:09distribution that's the Gen that's the basic idea so as a result of that um you know if you're just lending on minest you're just supplying you're depositing your assets onto minest and you're automatically staking those uh those tokens you're earning a portion of that fee distribution automatically wow that's that's really great to hear because so you're getting uh if say you

10:32were risk averse and you were just looking to lend out stable coins you'd be earning stable coins as the reward you wouldn't have to worry about the volatility of any any cryptos plus you're earning the minty token plus your if you're staking in the ecosystem then the actual mechanism of the D5 part itself is rewarding you for contributing to the system that's exactly correct

10:57that's exactly right so you're earning there number of ways in which you're earning rewards and this way um the underlying economic engine of minest you're benefiting directly from it whatever you know feeds is generating you're getting it right back to you um and I think that's the way it should that's the the fair Finance portion of it basically that's very cool and if you

11:16had minty tokens and there's different governance proposals what what are the what are the active contributions that you can make to actually shaping the the the platform form is it just different updates or expansions to different networks and what are kinds of things that people could do to actually maybe increase their uh allocation and and make it even

11:41more efficient for themselves yeah it's a good question so in terms of mest doubt that is a structure we're actually putting together and one of the first proposals uh that we're looking to do is have our our existing user base um shape the structure of how d proposal should be and how voting should be uh so we're that that's that's kind of the first

12:03piece of it but in terms of what you'll be able to do really I mean it can it'll be everything from um being able to make key decisions on you know how much of the interest rate spread is captured by the protocol and then distribute it back to users you know more or less uh all the way up to larger things like you know which other chains do we want to

12:22support right so it can be it's it's a pretty broad area of decision-making obviously at the very beginning um the core mess team will make more decisions But as time moves on the intention is to make it far more decentralized so larger and larger decisions more important decisions can be made by the minty token holders no I think that's a great path

12:45forward and it's if you it's hard if you release a protocol with sort of no vision at the beginning just to adow and try to get thousands of people to agree on the same thing of where we should go um it sounds like you guys have buil build a great Foundation of where this is heading and then being able to gradually let the minty holder sort of take over I feel like that's more of the

13:07true nature of decentralization otherwise it becomes a bit chaotic right because because I mean if there's no structure in place then it's just you know people basically shouting at each other saying I want to do this I want to do that and then how do you make a decision out of that so yeah you're right that's the intention that's the idea and and with

13:26decentralized Finance working on the smart contract side to depending on what blockchain you're using you know there's a lot of defi on ethereum I know you guys have launched the private and the testing on ethereum I know that nor sometimes ethereum Network costs a little bit more not too much but a few dollars uh compared to some other networks that maybe can cost cents or

13:49you know there's a lot of advancements that have happened in the last year that I feel like the people in defi summer of 2020 when defi was first creaded they didn't have the advantage of of having these networks that were as efficient I feel like this is a huge move for defi what is there any plans for minest in increasing the efficiency with different blockchains or newer

14:10Technologies great question and uh the answer is yes so you're absolutely correct what's happening right now in the space as opposed to a few years ago um right now we're seeing the launch of so many different you knew and very interesting layer one and layer twos um you know I I mean every single week we're hearing announcements right so there's so many new blockchains being

14:35launched and uh when we look at the space when we look at liquidity like the overall liquidity in defi or across all the blockchains about 55% or so is sitting on ethereum right and then the rest of it 45% or so is sitting across a hundred different blockchains you know uh 10 or so capture maybe about 85% of that liquidity that's like 20 billion basically basically uh right now that is

15:01fragmented across multiple chains and if we look at 2021 the peak of 2021 right that value of 20 billion would actually be a 100 billion so like there's a there's a there a tremendous amount of growth potential over the next couple of years even if we just look at 2021 numbers so the what we're seeing is that this fragmentation liquidity requires some way of combining it back together

15:25again like how do you get access to it so what m is looking to do it has a basically a three-stage multi-chain deployment strategy so the whole point is at the end of the day doesn't matter what chain you're on you should be able to lend on minest deposit your assets on minest and be able to borrow and it doesn't matter what chains you're on lend on one borrow on another one that's

15:47the direction we're moving in so right now yeah ethereum is our initial core Hub uh we are looking to deploy uh what we're calling mirrored versions of minest basically we're taking minest and we're taking it we're copy paste somewhere else but it's not just a copy paste what we're actually doing is we're connecting the two versions of M together on two different chains using

16:06the same governance token um and so you can vote doesn't matter where you are you can vote you can participate in the fee distribution um but the eventual idea is that as we're deploying different versions of M across different chains eventually you'll be able to able to talk to each other directly so you can lend on one and borrow another one and that way we're looking to unify that

16:26liquidity across the board especially as we move into the next cycle where we definitely see we're going to have a number of very interesting chains and users will be a littleit confused in terms of where to go how to operate and we want to be a solution for that that's really great to hear Ken because all of these different blockchains in there's there's a little

16:46bit of fragmentation as you said spread out but also the process of trying to move funds you know say some newer blockchains uh they're more efficient and then there's a bit of a higher yield but but the old ways there's a bit of a process to like get your funds over there and nobody wants to spend the intricacies of trying to bridge assets and all of this stuff uh you need to

17:07make a def5 platform that is just straight cross chain compatible that doesn't matter what blockchain you sort of unify that liquidity which will also help with the efficiency of the markets uh to being able to deposit or lend on any chain I fully agree and you were right also by the way about the gas uh issues like on ethereum right so uh for minest uh we have a passionate community

17:29over 4,000 at this point over 4,000 token holders most of them are actually retail and the challenge for them is on the ethereum main net launch of minest it's very hard for them to be able to deposit assets or to borrow or to participate on that side because I mean gas fees can be $50 to $100 for a single action right and and as the congestion continues to increase as the price of

17:54ethereum goes up the E token goes up it just becomes um ins accountable for them to be able to participate and that's the other reason why it is also imperative that we look at solutions that are on other layer ones and layer twos so that our community and so many others can participate uh on that it's very important that's a great Point especially if we're going to make it

18:16truly decentralized so that retail and people that have you know hey I want to lend 20 bucks uh and and earn a little bit of interest uh but the fee is more than that then that that just sort of cuts out any small people so uh I like I'm looking forward to seeing how that cross chain compatibility part fits into Min I'll be watching to follow along I

18:38know that there's throughout this year I think it was the year of layer 2 Chains that were efficient and fast being accepted by retail and understanding hey you know these can all tie in together and it's fractions of a penny for a transaction so I'm looking forward to that um and I was looking through the the SN snapshot of what's to come with mest and I saw that there's also sort of

19:01like nft incorporation into it which is sort of cool maybe you could just touch on that briefly on uh how nfts fit into Defi and like how people can benefit from that mix of nfts and defi together sure absolutely um we all all internally at minest we love our nfts so minest does have an nft play uh but these are not just pretty look at nfts the way we've done it is

19:28you have um The Collection essentially is 100 of the most influential in blockchain and what's interesting about the collection is that we created it back in 2021 so which includes descriptions and names and everything right and what's very interesting about it is how things have shifted the last two years basically especially for a number of these individuals but we're

19:51not going to change anything on that front so it'll be uh a part of history but anyway moving forward so the idea is that what these nfts do Beyond looking pretty is that they're actually functional in nature within the miness protocol so if you were holding on to any of these nfts and you're either lending or borrowing it actually provides you with a yield boost so that

20:14basically means that let's say for example you're lending and you're earning five of our minty tokens but you're holding on to one of our rare absolute rarest nft which is a Satoshi nft you'll earn not five you'll earn 50% more so say seven and a half tokens instead on that given day that's the idea the purpose behind it is it's in order to have it so that um our

20:37liquidity providers are users they're incentivized to come and stay right so uh that they're not just basically looking and leaving they have an asset that they have which is the nfts they're providing liquidity so they're more committed in that way um but even even beyond that I think the idea is that you know these nfts in nature they're also great tools in terms of generating more

20:59awareness for M because again as you were talking about we're not looking just to be on ethereum We want to go to other l1s and l2s which are much more retail friendly and what that basically means is that these nfts which really play very well to retail um you know they'll it's a great way for them to learn more about what defi is what minest is just through having access to

21:19you know be able to see these nfts through other types of Partnerships that we do other marketplaces that we deployed on to and by the way we haven't sold a single nft we give them away basically right so there's there's there's nothing about a selling that it's really a tool for us to be able to give value to our users and at the same time for them to

21:35learn more about what we're doing so I think it plays really well in you know the traditional whale Market but really tapping into retail as well because we really do see miness as being available to everybody not just to one segment of users very cool I'm going to check those out after I saw a glimpse of it and yeah I can imagine 2021 some of the influential people uh maybe they were on

21:58the cover of Forbes may not be on Forbes anymore um a lot has happened since then um and a lot in defi has also happened in terms of the tvl and you were talking about that a few minutes back about how you know it was very high and of course there was quite a bit of speculation back then in 2021 um but I feel like the fundamentals of gii since 2021 to now

22:22almost moving into 2024 uh not just the cross chain and adding in more layer tws just efficiency overall of defi is stronger than ever but the total value locked is not necessarily back to those all-time highs I'm curious about your insights and your optimism for the future of defi what is the sentiment right now are people Everyone is eager to jump into platforms like minest or do

22:50you think there will be other catalysts where defi will start kicking up towards next year in the Bitcoin having good question so when it comes to defi in general right again this is I see it as an even though it's not a technology infrastructure as most people might think like blockchains but it actually is an economic infrastructure so if you believe that blockchain will continue

23:13then def5 banking so to speak right lending protocols like minest are going to be there no matter what what's very interesting is we haveen been actually talking to a number of these layer ones and layer twos that we were talking about right earlier because there's so many launching we've been speaking to a number of them and aside from maybe a couple they're all looking to be general

23:36purpose blockchains and what that means is in order for them to acve Value they need lending protocols they need dexes they need Bridges they need oracles right like your chain links right they need all of that infrastructure and they're looking for um Blue Chip protocols or they're looking for projects that are already built built have been tried and tested that teams

24:01have been doxed right like they want to make sure it's safe and secure and so every one of these chains is looking for a quality lending protocol to be deployed onto those chains so there is definite demand from all of the chains for a lending protocol now coming back to the use of it certainly if you believe that blockchain is going to continue if you believe that you know a

24:25fin it'll be a financial Hub then lend is going to be one of those core pieces that will continue to build now you'll have to keep innovating but it's going to be there right and in terms of uh use of lending protocols at least what we've been seeing over the last one year um from liquidity I mean it bottomed out basically end of 2022 early 2023 and it's slowly moving its way back

24:50up now one thing to keep in mind is that I remember at the end of 2019 that when we looked at defi when we looked at lending right the market had reached 1 billion like the whole Market reached 1 billion right now at like the bottoming out of this last cycle we talking about about 40 billion right so it's like it's definitely moved from one to 40 in like three years four years

25:15right at this point so um I don't think it's going anywhere I think it's only going to grow so the whole point is right now for anyone who's building that believes in this space it's about how can we position ourselves so that we are able to capture as much value as we can for our users when we move into the next cycle which we all believe uh is going to be coming um you

25:38know we're seeing plenty of regulatory Clarity you know whether you like it or not but it's coming right uh you're seeing uh whether it's the the talk of ETFs um whether about govern uh governments that are trying to adopt or are pro crypto right like AR like the Argentina president recently who very pro pro Pro Bitcoin so it's moving and so yes long a long answer to your

26:03question but it's here to stay it's here to grow that's our view no that's a great perspective Ken and yeah I could imagine 40 billion when you look at it in terms of the stock market and and derivatives and lending it's nothing um I could easily sort of see that being 500 billion or hopefully a trillion which is sort of the total total market cap of of cryptocurrency right now which

26:29is even still small um so yeah I I I I agree with your optimism and I I like that perspective of what you're saying the bottoming of it we're 40 times bigger and I feel like if what you're saying is true about the layer 2 platforms and blockchains need this technology um and that there's a demand from the retail users and it sounds like the perfect concoction moving forward um

26:54now I want to talk about the future for minest I I know you've your team's been working on this for many years and you mentioned all the security audits making sure that everything obviously is safe and secure and proper and efficient to maximize the returns for people and make an efficient system for Lending before it goes out to the general public um is

27:14there any time frames for that or is there any way that people can get involved right now today to learn more about it or get involved in other ways yeah sure absolutely so uh right now I mean we do have we are allowing some select users to come on board and test drive it basically um you know if you have a m nft and you can do that there are ways to get them and certainly if

27:37you come to our community we'll guide you along the way in terms of how to get one of those you want to try it out um in uh what we're going to be doing is in February or so uh end of January February we'll be actually launching into what we're calling private access what that basically means is that uh users will be able to come on board we'll be jacking up the incentives the

27:56rewards basically testing it out kind of before we go into a true public open launch phase so it'll be pretty exciting there'll be quite a few quite a bit of um activity that we can see happening at that point in time so I think that's a very good moment to look forward to moving into the end of q1 where we'll be going into a public launch that'll be

28:14really good but certainly come into our community um I think at our Twitter is minest mist.com for the website right and you'll find all of our links there and and that's probably the best way to learn a little bit more about how to get access Sy interest and how to participate in that amazing Ken I'm looking forward to uh those stages for interest and hopefully that coincides

28:35with an ETF approval for Bitcoin and the having and everything going crazy and wide success form interest as well I'm hoping that works for you and your team um I will leave those links that you mentioned in the show notes below appreciate your insights into how dii works exactly and where the industry is going uh it sounds very optimistic I would love to have you guys back on the

28:57show uh leading up to uh the next stages for interest growth and I really appreciate your time today so thank you so much thank you so much Ash it's it's been a pleasure appreciate you take bringing me on to the onto the show looking forward to the next one as well