Julian Hosp on Cake DeFi's liquidity mining and staking

0:23while and cake defy is doing some really interesting projects in the decentralized finance space right now so if you could just kick it off to start with just a high level overview and the focus of some of the products you're delivering and the solutions you're providing with cake d5 then we can dive into the details we started kt for two years ago and with

0:42me i mean myself and my co-founder husen who is more on the technical side i take care more of the business side and we realized this upcoming trend of d5 decentralized finance back then this over two years ago and so we wanted to have this one-stop platform that kind of pulls all those services together we started with staking then we added lending now we're doing liquidity mining

1:02and so one thing that we're really looking forward to is this entire tokenization of our assets but doing them synthetically and offering them to our customers in a very very easy way so that's always what's been our credo not losing the transparency that blockchain has but increasing usability definitely and do you see anything wrong with chasing high-yield defy

1:25the strategies that are being done to chase these high yields right now and are there any specific solutions that you're trying to provide for specific problems in d5 i think it's a really good question it depends where the yield is coming from if the yield is coming from nefarious sources because it's more like a ponzi scheme then i think there's definitely

1:47something wrong with that and cake d5 stays very far away from any possibilities that goes this route and we have projects to come to us and say why don't you list us we provide 200 per year and we're like yeah this is probably dodgy let's not add that but if the yield is actually coming from the protocol itself then what's going to happen over time

2:08are either two things either the protocol has to decrease the yield because otherwise you have too much inflation in the protocol or option number two and that happens actually most of the time is that this information arbitrage that only a few people understand how this yield works it's going to be more and more people and thereby the yield is just going to

2:25go down it's going to go to an equilibrium in comparison to many other yields so what i just see at the moment is cake is using arbitrage a lot and over time more and more people will use this and i just want to quote the s1 here from coinbase who stated the business model that we have been doing over the last five years is probably not going to be the same

2:44business model we're going to be doing over the next five years and for cake d fight it's going to be very similar i just think in five years the yields that we have seen are not going to beat anymore definitely well said and yeah there are some ridiculously high yields and of course those are unsustainable so to do it right from the beginning and to have

3:03the right products i think is going to put you off on the right foot and build a strong foundation and of course in five years from now the d5 space is going to be drastically different and you're going to have you know probably a lot more advanced decentralized financial products as well can you just talk about when you started out what are the main

3:23products and the most popular products on cake defy most of the people in decentralized finance they want yield so when we look back a bit over two years ago the biggest driver for yield was staking so you had mining but there you had to invest in the hardware and it was just a bit complicated so staking was the biggest part so you lock up your funds you get a return

3:43from the protocol from that then i guess block fine the us was one of the biggest drivers they always call kkd fighter the asian block fight which i guess also comes from because we also started with this lending so you lend a bitcoin you lend ethereum and you're getting a lot of cash flow from there i guess what's really different here for us we try to

4:04keep the same transparency that you would have if you would be lending directly on the blockchain so we for us this has been always a big focus the hottest topic right now is really liquidity mining and it is because of the yield some of our products offer over a hundred percent per year again this is completely legit it sounds insane but it's completely legit

4:26you just have to expect that over the next one year the 100 yield is not going to stay it's going to go down more and more and more the more people are actually using that service so that's been a bit of the evolution of our product offering and obviously people love when there's higher yield and so yeah yeah liquid mining is the hardest thing at the moment

4:46yeah well that's why it's good to you know if it is a it has a strong foundation it's a legitimate project and you're there first when there's not a lot of people that are providing liquidity then obviously you're going to be earning the rewards more than you know one once people and everyone's doing it and there's not a lot of extra value to add so

5:04i could see why being over 100 is normal and it is legit right now and it is impressive which is why people are starting to use cake defy and i was looking at some of the other products you have and i saw that there was a freezer option and i know that there's like locked staking and locked liquidity but this freezer seemed like a unique twist on you know

5:26freezing your assets can you talk about the freezer in cake defy so we are completely transparent about how we make money where the money is coming from actually all our services and products can be used by our users themselves so in theory if they have the technical knowledge the funding they could do all this themselves so we're just a technical play

5:46we're also completely transparent for that how much money we're making and it's about 15 on the revenue that the customers are making so if the customer ready to do it himself he would get 100 with us he gets or she gets 85 obviously some customers say hey i really love you guys but you know the 15 is there something we can do about it and so we say you know what if you

6:06become our loyal customers who you commit to use us for longer we are willing to cut down on that fee and so we call this a freezer where you can lock your the service up to 10 years so you can commit up to 10 years it goes in monthly stages one month three months six months a year you commit to use our service for longer we're gonna reduce our fee so you're

6:28gonna see a higher return but simply because we're taking a lower cut and i mean it's just like any service i guess out there the best customers you have are the loyal customers and so you try to give them extra benefits and for us there's nothing we can add on top because we are getting the money from the protocol itself all we can do is cut down on our fee

6:47Understanding hey in return we're gonna have this customer for a committed period of time and that's how the freezer works obviously a pun with our with cake so yeah a lot of it's very playful on our website yeah that's great and you know that is great to be rewarding your loyal customers and long-term customers and early on do you see that as you know

7:09it's hard to provide these different incentives when you're really just getting the yields from the protocols do you see that as one of the incentives to drive early adoption and or are you also just seeing a lot of organic growth from early adopters on cake i mean both on the one hand we see massive organic growth simply because a lot of people just

7:27appreciate this one-stop platform with access to so many things and then they say you know what i'm not gonna use that service because that service i can use myself but the other two services i use because cake is just so easy i don't have to worry about so many other things so a lot of this comes organically and naturally also because we follow that

7:45that's that spirit of trust but being able to verify so that is kind of the credo here not just you have to trust us so we're really transparent about that and then on the other hand we do have a very aggressive referral program and that is and that has been i think almost 60 percent of our users actually come in from referrals and the reason for that is also

8:07because we incentivize the referee and the referral both ends and up and we incentivize them based on how much money they deposit with us how long they keep that money with us how many people people refer and so it's a very attractive referral program in the industry and it has shown yeah to really do well and yeah i think water mouse is

8:29just very powerful especially in the crypto space definitely right now and then i'm guessing that the majority of the d5 products that you have right now are on the ethereum ecosystem because that's really where the bulk of defy is but there are a lot of other ecosystems that are popping up and as you said you know five years from now d5 is going to be drastically

8:47different i'm curious on your future plans and is this something that you're looking towards as you expand cake to potentially be moving into other decentralized finance ecosystems and tying into other blockchains we are completely blockchain agnostic so for us whatever works works one ecosystem we haven't integrated yet is the bind and smart chain ecosystem it's one that we're

9:12starting to integrate right now one exciting one and that's also because a lot of the team are actually involved in there is a entire project called defy chain which brings d5 to bitcoin so that is one that we are really excited about obviously the ethereum ecosystem but we also have some of the very old kind of staking coins dash for example obviously we have

9:33bitcoin integrated mostly for the lending side we are blockchain agnostic we go for what the customers want what from a regulatory standpoint works well what obviously generates yield for the customer and these are the things that we're working on and yeah so far that has been i think that's the good game plan you try to stay

9:53agnostic and yeah just kind of pick the best of both sides definitely and i completely agree and i was looking at some of the yields on cake and i saw that there's the dfi token which is fairly high yield and it looks like that's part of a native token for the platform i was wondering if you could talk a little bit about the dfi token the functionality throughout the

10:15platform and does it create a sustainable ecosystem for all the participants of cake d5 the blockchain was started a year ago and diva train is exactly that what i mentioned before a couple of us are really deeply involved there so obviously we're huge fans and huge drivers and the idea behind it was to extend the functionality of bitcoin to bring d5 functionalities to bitcoin especially

10:36the lending side the tokenization side at more advanced smart contracts it follows the same principles it has a limited supply it doesn't have a proof of work it has a proof of stake and so this is where these high yields are coming from because the train is only a year old it's just like if you were mining bitcoin at the very beginning you would

10:55have received insane yields just because there are not that many bitcoins yet out there are not that many dfi yet out there so the yields are just look very very high because inflation at the beginning is just very very strong and i'm a big believer in the project long term i think it's gonna be a very exciting toolkit especially for the bitcoin

11:15ecosystem obviously most people on the platform right now are staking because they can give us what like 90 it's it's absolutely crazy again over the next two three four years those returns will also go down but it's just at the beginning so yeah a lot of people are using the liquidity mining tool there supporting the decks from bitcoin into all the other coins

11:36Yeah so that's where i stated once on twitter that i don't understand anyone that doesn't invest in bitcoin and i don't understand any bitcoin that doesn't invest in d5 chain simply for that additional functionality yeah i stay by that statement definitely and yeah it's it's gonna be so important for bitcoin to integrate that d5 to catch up because

11:58there's just so much functionality inside of the ethereum ecosystem because of the decentralized finance capabilities and you know these bitcoin maximalists that aren't having any of it in terms of the defy stuff i think that eventually they will definitely come too yeah i agree 100 yeah and so you do have this partnership with d5 chain

12:20which is great and i was wondering if you could talk about any other partnerships that you're working with and have worked with cake defy so far i mean okay so d5 chain is not really a partnership it's just one of the chains we have integrated obviously because a lot of us are contributing to the chain obviously there's a bit maybe a deeper connection

12:37but in theory really blockchain agnostic i really wanna highlight that's also why we're adding the finance smart chain ecosystem the serum ecosystem we're gonna look into others as well polkadot and so on from other partnerships we need institutional partners especially for the generating yield on bitcoin and ethereum side we've worked here in singapore both are

12:59regulated entities we work with sparrow exchange we work with signum capital they have humongous fund here and the way we work there is different to how for example block fight generates their yield on bitcoin and that's why their yields have really been collapsing they are really speculating on arbitrage opportunities for example the greyscale

13:17system and for us we always shied away from there a bit because i had assumed that these yields are going to collapse just like any arbitrage possibility is going to collapse at some point and so for us this is way more work together with large platforms where people short bitcoin where people have requirements to actually borrow bitcoin and so for that we do need these large

13:39regulated partners so that on the one hand we actually have access to those opportunities but then on the other side to really protect our customers definitely and it you need to have those big partnerships i think is gonna make a big difference when the platform gets into that widespread adoption and just like a lot more participants and i'm curious

13:59if you as you continue to grow in terms of the defy space you know what do you see as one of the key factors to success for cake d5 becoming you know one of the leaders and one of the go-to's for people in d5 i kind of scratched the surface at the very beginning and it's i think a good point a good time to close the loop there i do see that

14:19the returns and the revenue and i posted those numbers in on twitter we have these transparency statements we made 170 million in revenue in the first quarter of this year we did about 15 or 10 to 15 of that in net profit so we're talking about like 20 million dollars in profit just in q1 we are self-funded my founder my founding partner and myself we own 50

14:43a company each so our business is extremely profitable extremely attractive but and this is the big but it's the same like coinbase data i don't think that over the next five years we can do the same things that we have done not for the past five years because that's not when the company existed but for the past two years and so i think for us a big thing is going to be

15:03to transition into less arbitrage businesses and way more true d5 business and to me this entire true defy actually comes as soon as you approach the entire financial space it is when synthetic stocks decentralized stocks are actually coming to the platform not like what fdx or binance is doing right now where they're actually just tokenizing stocks it's still a security

15:26and that's why all these platforms get in trouble with the regulator but so you want to do this from a regulatory standpoint really really solid so you want to make this synthetically decentrally and you want to offer that and then you want to offer this really strong interchangeable ecosystem that's why we want to stay blockchain agnostic where people have access to literally

15:47any financial asset they can do anything from a one-stop platform without having to worry about what do i need to do what how do i need to sell this how do i need to buy this it should be algo supported automated and that is kind of so right now people call us like the asian block fight i hope maybe in five years they're gonna call us i don't know the asian robin hood or the

16:07asian wealth front something along these lines and that's kind of what's going to be a major major factor in being successful over the long term definitely well said and you mentioned a couple you know integrations things that you're planning on working on i'm curious what are the next steps for kd5 and you're running right now in terms of the next couple months what

16:30are the main things you're looking to bring out for the public and for the participants of the platform i think the main thing there's really to kind of finish off these traditional d5 products right now to offer a couple more different freezers to offer a couple more lending opportunities to clean up the staking liquidity mining so this entire chapter

16:50works really well and then we're probably gonna stop working on additional service when it comes to that and really start shifting over and saying okay we have added those three kind of streams let's go to the next one and the next one is this concept of decentralized tokenization let's start adding stocks let's start adding commodities let's start adding

17:09precious metals and let's start adding those so that by the end of this year 2021 you actually already have access to pretty much all the asset classes because then in 2022 we can go ahead and we can start using algorithms beyond that where you as an investor can just go and say hey i want to do low risk low return no you know what yolo i want to do high risk high return

17:30and the portfolio itself kind of adjusts to your preferences and what you want and then when when reasons kind of take over unless the emotions generally speaking your investment results should be doing really well and so that's what i hope over the next six months one and a half years that's kind of the road map ahead great and for people that are looking to

17:53get involved with kd5 get involved with the communities and start using the decentralized financial products what's the best way for them to get started go to cakedefy.com so that's just like cake like eating it's a piece of cake cake defy d-e-f-i dot com twitter the same handle and if yeah if people wanna follow me on twitter my name is julian hosp

18:14on twitter i tweet a lot about cake obviously it's my company my baby so yeah that's quite an exciting journey awesome julian i will leave all those links in the description box below for the viewers thank you so much for taking the time to come on to talk about cake defy all the best with the platform moving forward and let's follow up in the near future

18:33definitely appreciate it you