Kevin Tai on Linear Finance's cross chain protocol and synthetic assets

0:01i'm ashton addison from blockwest capital for investmentpitch media in the Crypto Coin Show and today on blockchain interviews we have kevin thai founder of linear finance kevin welcome to the show and thank you for taking the time to come on thank you very much for bringing me on to this onto this contest yeah likewise there's a lot to discuss

0:22in terms of layer one protocols layer twos and side chains and where the industry is moving as it continues to grow so quickly that all these protocols need to keep up and linear finance i've been following your team for almost a year now i would love for you to start our conversation off with just a high level overview to get people familiar with linear finance

0:46then we can dive into all those details yeah so linear finance is essentially a cross chain or multi-chain synthetic asset protocol so users can come on state linear tokens generated our stable coin and subsequently use the stable coin to purchase liquids on our exchange with limited with practically unlimited liquidity and limited slippage and essentially you can invest in things

1:13like synthetic versions of crypto commodities currencies and currently right now we have a lot of a number of indices which are like d5 indices or large cap points basically almost similar to synthetic etfs very cool thank you for that background and yeah it seems like synthetics and derivatives are getting very popular in cryptocurrency and you know

1:41been popular for a long time in traditional markets but it seems more and more platforms are utilizing this technology maybe you can talk about the rise of synthetic assets in digital assets and cryptocurrencies and i know that really ties into all of the other assets being traded as well how how is that moving in the cryptocurrency industry how have you seen that evolving

2:04It's actually evolving quite quickly obviously because of the advent of the smart contracts and the ability to generate tokens which have a underlying essential value based on either a synthetic version of either bitcoin ethereum or certain financial positions options and what you've seen is a very large explosion of synthetic assets in the space particularly in d5 and i

2:32think it's practically there's more polysynthetic acids just regular tokens itself in terms of value i mean it just mirrors what we see in the in the normal financial industry so all people will use this to either speculate okay so say you have synthetic versions of tesla or certain etfs or as simple as hedging so either futures options so we have with like the evolution of d5

2:58and over a very short period of time we've gotten to a point where you have these i would say so called more more advanced financial products for investors to use definitely and with this landscape of all of these different blockchains having different consensus and programming languages and not the best communication between each other how does linear finance exactly fit into

3:23that and allow this cross chain or being able to work with multiple blockchains yeah so for us obviously we are native on ethereum and we bridged people over to binance smart chain so all of our transactions are done on a side sheet which is which is bsc okay so users essentially stake you know build their other stable coin as well as

3:48invest or buy or use the exchange on bsc now how it works is that given that we have an ethereum bridge with finance marching you can actually bridge back your tokens to eve if you wanted to use those tokens and other d5 protocols on each side and so you would basically have access to both ethereum and bsc d5 at the end of the day and hopefully soon we will have be able

4:15to access the polka dot ecosystem through a moonbeam and through moon river on kusama so that's kind of how we envision a crosschain works for us very cool i like that and yeah i've been digging into moonbeam we're having them on the show actually soon so i'm looking forward to releasing more information on that so that will definitely be a cool integration and

4:40it's it's such an interesting predicament that the blockchain space has moved into with the way that ethereum works right now and the need for these side chains and l2s when you first started linear finance what was the state of you know side chains l2s and the need to move off of ethereum although the platform is based on ethereum to get

5:04things done more efficiently when we launched a linear we were kind of in the midst of defy summer and so what you've been what we saw were a number of users coming onto the ecosystem particularly in trying to do their transactions and as you as you can tell at that time the it's always been you know 15 transactions per second and gas

5:29prices were were increasingly starting to become very high so users started getting priced out and that's essentially why we chose to do the transactions on binding and smart chain at the end of the day now at that point in time when we launched interception questions not even that long long ago the number of chains that we could launch on was actually quite

5:49limited versus what it is now so at that time you know hgbsc was probably one of the bigger and better evm compatible chains that were available for us to use i think solana you know the solana development was not exactly there yet so a lot of there were not a lot of the system was literally just starting up so we made a conscious decision to do

6:18bsc very interesting and yeah i feel like in rapid time all of these other protocols just grew so quickly and now it's becoming closer to a holistic blockchain communication protocol where you're able to have cross chain and move between polka dot avalanche whatever else but right now there's still i feel like the

6:46network effect is just on ethereum and you're using that to you know use the sidechain to save costs to save time as you know you i know you spoke about adding more protocols in the near future here which i think is a great add-on but i want to get your insights on way down the road you know let's say that ethereum solves their problems is the need

7:13for side chains and as necessary at what as it was before or if that does happen how do you think linear finance will model its business model in years down the road yeah i think with if 2.0 coming along and another that comes you know proof of stake and in sharding you're essentially able to have you know additional transactions that

7:39can be that can be put onto the theory machine now does it exactly solve before we solve these scalability issues it actually does not and so with that in mind there will be a need for l2 solutions that are building on top of ethereum so that ethereum ultimately becomes a settlement layer so we do see that happening and as more and more people and as you said

8:06the network effect continues to grow i mean it's it's i mean we let's all say it right i mean ethereum has the biggest network it's a long-standing you know dapps that are that are in place so when people come in and use they're going to use things that are long-standing and they're familiar with and it's secure so it's not just non-crypto users but

8:27also institutions coming in will like that with ethereum now with l2 layers they still have to pay ethereum fees to get their transactions onto the blocks onto the chain and so there i mean in terms of the cost savings it may still end up to be a bit more expensive than than than other l2s okay or sorry with other l1 side chains all right and so

8:57the l1 side chains have their own purpose maybe for high volume transactions and that they that they still serve they're they still have a need in the ecosystem in general so i do see everybody coexisting at the end of the day now where is everything going to grow i think it's probably going to be une all right so for us from from linear's perspective

9:20it's let's go kind of where the users are all right so we you know we see some users at bsc we see users that are going to be emerging on polka dot and ultimately you know our end game will likely be back on ethereum in some form of l2 and so that's kind of where we want to go from a from a tech road map perspective very cool and you mentioned there i

9:43think a lot of viewers are not 100 sure on the differences between layer two solution layer one side chain for ethereum maybe you can add a little bit of insight into that yeah i mean essentially layer one side chains are just evm are essentially evm compatible it's built very similar to up to ethereum court you can deploy your smart contracts i think you could deploy like

10:0995 99 percent or practically almost all of your contracts onto onto something like finance smart chain okay and any of the evm compatible chains now there's obviously some other ones like solana which is not built which is not evm compatible right now i think they're trying to figure out the right versions for it but that needs to be built in

10:30rust and have smart contract-like features at the end of the day now that versus layer 2 solutions which either use things like roll-ups they're built on top of layer 1 on ethereum so which means that you basically process your transactions on the layer 2 chain and then batch them and roll it up and put it back onto the ethereum layer 1 chain and what you

10:56essentially get is you can scale with the layer 2s you can really scale up ethereum okay as well as maintain the security all right and this and hopefully the decentralization of it now and that's something that is a bit controversial at certain points in time but the thing about the effects is that ethereum goes from you know 15 transactions per second

11:22to it can go from go to a thousand to four thousand transactions per second and it continues it will ultimately scale up even more as as yeast 2.0 comes out and so that's kind of where i think where i think ethereum will end up is that people will really use that as you use the layer twos as kind of their where they do their transactions at the end of the day and then subsequently

11:46you know if they need to settle it and get out then they can do it still do it through the ethereum chain okay thank you for clarifying that kevin that really does bring some light into the differences and although it does sound a little bit technical i'm i'm curious in the platform i'm guessing that it's a lot more user-friendly and usability is easy for

12:10people that are normally trading cryptocurrencies with the platform are you catering towards a specific audience with the synthetic assets whether it be more traditional investors that are used to synthetics moving into cryptocurrency or those that are new to d5 or those as well that are in need of financial inclusion because of the layer twos and making it cheaper

12:34and making it more available to more people now what is the real target audience of linear i think for us we obviously try to touch all the markets a lot of times in many cases it is it is about financial inclusion so you search what we may have certain assets on our site where you know seems like the indices right where you know not everybody can get access to certain

13:01tokens right maybe the industry has a one or two tokens which it's very fine difficult to find on certain exchanges you don't need because you don't have those exchanges so with that you can actually get some price action and exposure to that and in terms of ease of use you know linear is not the most it's almost not the most simple protocol obviously you have to stake and there's

13:22p ratios and collateral ratios you need to you need to adhere to and be mindful of so a lot of that is education and trying to make the site easy for people to use and understand and so we do put a lot of effort into doing that through obviously our ui ux as well as through our community management we have kind of a we have a discord channel where you know it's 24 7

13:46you can get access to the admins to ask questions and get support on any of your trades so we try to cater to we try to make it easy for new joiners in crypto to come on board and trade at the end of the day so we try to try to have touch points for everybody from all walks within the crypto world to come and to come and use linear definitely

14:10very cool and with these synthetic assets and the appeal to them from traditional traders i feel like we're on the cusp of especially with nfts being able to tokenize real world assets and tokenizing commodities already on linear and tokenizing stocks you know at where do you see this transition with the traditional stock markets you know becoming fully tokenized or you know a

14:37large portion of them starting to become tokenized you know right now crypto is obviously in terms of the transactions into synthetic assets and derivatives we're just a small drop in the pond versus versus the traditional guy so that world will continue to obviously move on but from from ours from our angle you're right in terms of there will be continued

15:04explosions of what we consider to be derivatives or advanced structured financial products okay so you know we had you're right you know that with the advent of nfts in place you know which you can use it to it's not just jpegs it's also holding separate financial products or unique financial products at the end of the day so if you look at somebody like opine

15:29They've been doing options for a while they have that technology kind of in place all right and it will continue to go on there you know more and more what i'm seeing in d5 now is more and more structured products that are going to be coming out people are building etfs people have building cdos people tranching trunching risk so if you look at

15:51something like one of the protocols like waterfall d5 right they're tranching yield far yields basically yield farms into separate types of risk and with these with these types of technologies in place in pearl someplace you're starting to see people getting more refined in how they're investing how they're hedging and how they're speculating on their products

16:14very cool kevin and for the viewers that are looking to learn more about linear finance and get involved with communities as well as you mentioned what is the best place for them to go to i think for us you know you can go to our website linear.finance and with that you'll find the discord channels and telegram channels my sense is the best way to do it is one join those

16:38discord channels okay and you can read the logs and in the judge and you know join the general conversation and ask questions to the admins and then also our meeting links which have a lot of basically what we've started writing on synthetic assets and how to use the protocol since the beginning of linear amazing i will leave those links all in the description box below as well

16:59thank you so much kevin for coming on to talk about linear finance synthetic assets layer twos and all things blockchain i really appreciate you taking the time looking forward to following up on the next updates for linear finance so let's follow up in the near future we'll do thank you very much you