Table of contents
- 🔄 From Synthetix to Infinex: Transforming DeFi UX to rival centralized exchanges! 🚀✨
- 🌐 Governance power to the people! NFTs ensure fair DeFi decisions! 🗳️🔗
- 🔒 Say goodbye to lost funds & hello to secure self-custody with Infinex! 🚀💼
- 💸 Forget gas fees! Infinex makes crypto transactions as easy as clicking a button! 🚀✨
- 🚀 DeFi is ready! Simplified UX will bring the masses on-chain! 💰📲
- 🔗 DeFi's future: Smooth UX = Mass Adoption! 🚀💸
🔄 From Synthetix to Infinex: Transforming DeFi UX to rival centralized exchanges! 🚀✨
Hi Kane, welcome to the Defined Podcast. It's great to have you on again.
Kane: Thank you.
Host: So, obviously you're the founder of Synthetix, but now you've started a new protocol, Infinex. I'd love just a brief overview of both to get us started.
Kane: Synthetix was one of the OG DeFi projects. It started off as a stablecoin, evolved into synthetic assets, and now is a perpetuals protocol. It's been around for a long time and is one of the longest-running contracts on Ethereum at this point. About a year ago, I took a step back to evaluate the space and identify what was missing. I concluded that while we had built a lot of robust infrastructure and protocols, the missing piece was the user experience (UX). Many people, even crypto natives, were still using centralized exchanges like Coinbase, Binance, or Bybit instead of on-chain solutions. The idea was to create a platform with a user experience similar to centralized exchanges, offering simple onboarding and deposit flows. We've built that now and are in the process of rolling it out.
Host: Congrats on that. Do Synthetix and Infinex interact at all, or are they completely separate?
Kane: The genesis of Infinex was actually Synthetix. The original idea was to build a wrapper that would replicate a centralized exchange on Synthetix. Liquidity on decentralized exchanges has now reached a level where it can compete with centralized exchanges, but the UX was still lacking. As we started building it, I realized there was a much bigger opportunity. The same UX improvements could be applied to lending protocols, NFTs, and more. Eventually, we will integrate Synthetix, but we're also integrating other protocols like Jupiter and various lending platforms.
Host: Nice. Infinex is now in its launch phase, which I understand has different phases within it, right?
Kane: Yes, that's right. The first part was the waitlist jump. We used passkeys for onboarding, which made it quite Sybil-resistant and hard to bot. In the first 10 days, we hit about 100 million TVL from around 10,000 accounts. Many protocols might achieve that TVL with a million accounts due to people creating multiple accounts for incentives. We have a fairly small concentration of users but still achieved very good TVL.
Host: I'd love to hear your thoughts on how you designed your launch process, including your incentives and point system. I saw your governance system uses an NFT rather than a token, which I find super interesting. You also have extensive experience with incentives, having been one of the first to introduce yield farming on Synthetix.
Kane: I wanted to bring back something that was fun. I got called out for referencing DeFi Summer too much, so I won't reference it again, but the early incentive schemes, even during the DeFi 1.0 and DeFi 2.0 phases, were really fun, complex, and interesting. The early incentive schemes during the DeFi 1.0 and 2.0 phases were complex and engaging, with game theory playing a significant role. It was not immediately clear what the best strategy was, which created a dynamic and interesting environment. Complex mechanism designs made it challenging and fun as participants discovered optimal strategies in real-time, leading to lots of debate and interest.
In contrast, straightforward strategies like depositing money across multiple accounts and engaging in transaction washing are less appealing. Such approaches tend to attract swarms of bots rather than genuine engagement. Therefore, we've designed our current campaign, Create R, to be more opaque and challenging, making it less attractive to bot farms. Even with points, the outcome isn't immediately evident, deterring bot-centric activities and encouraging genuine participation.
To add an element of randomness, we utilized the Pith entropy contract. This prevents the campaign from being dominated by whales, even though they have more opportunities. Notable examples include participants who have opened around 80 crates and received a patron NFT. The campaign targets those who are genuinely interested in governance and innovation, making it engaging and fun.
We’re also organizing a token sale where people can buy the governance NFT. This approach hasn't been widely tried recently but aims to create a closely-knit community of engaged users. By gating the sale to those actively participating in the game and farming access, we ensure a loop of deeply involved participants.
You mentioned different points needing clarification. The crates in our system serve as engagement tools, rewarding participants with various NFTs. The governance NFT allows users to take part in decision-making processes. Regarding the token sale, our objective is to involve users who are genuinely engaged and interested in governance, rather than just accumulating metrics or attracting bots.
Credible neutrality is crucial for governance. Back when designing Synthetix governance, and this applies to Maker as well, the focus was quite narrow, dealing with protocol-specific decisions like interest rates and emissions. For platforms like ours, integrating various protocols across different chains, a broad distribution of governance is essential. We aim to treat protocols on Solana, Aptos, Ethereum, Arbitrum, and Optimism equally. This requires broad community engagement, avoiding dominance by any single group, such as ETH Maxis. To this end, we've taken steps like incentivizing meme coins and launching on Solana to foster a diverse governance ecosystem.
🌐 Governance power to the people! NFTs ensure fair DeFi decisions! 🗳️🔗
When discussing governance and decision-making around a DeFi protocol, questions often arise such as whether to have high interest rates or significant emissions. For wallets or platforms that integrate various services, maintaining credible neutrality becomes even more crucial. This ensures that protocols on different blockchains, like Solana, Aptos, Ethereum, Arbitrum, and Optimism, are treated equally. Achieving this neutrality requires a broad distribution of governance. If only a narrow slice of the community, like ETH Maxis, is involved, it becomes challenging to engage other communities. Therefore, efforts have been made to incentivize participation from diverse segments, such as through meme coins. Initially launched with Solana support, the protocol is expanding to other networks. The governance token is designed to achieve a wide distribution of governance power.
In terms of user engagement, the protocol implemented a points farming campaign, which is a classical method where users farm points through linear distribution based on their Total Value Locked (TVL). To introduce more fun and randomness, the protocol designed a system where users farm crates containing prizes with varying probabilities. Prizes include items like Pudgy Penguins, ETH, Sol, and meme coins. This system ensures that even users with smaller TVL have a chance to win, unlike a purely linear distribution where higher TVL users dominate.
Additionally, the crates gate access to a token sale. Only crate holders can purchase the token. There are three categories of NFT-related rewards: direct NFT wins, governance tokens, and mint passes. Mint passes guarantee access to mint when it opens, while the third category involves a randomized draw for minting opportunities. This gating mechanism ensures fair distribution and prevents capture by a small group.
The decision to base the governance token on NFTs stems from the desire to keep it as governance-oriented as possible. Unlike traditional tokens, NFTs don’t trade as easily, reducing the risk of turning into speculative instruments. This focus on governance is crucial for ensuring credible neutrality and fair integration decisions, such as choosing between protocols like synthetics, hyper liquid, GMX, or dydx.
A total of 100,000 NFTs will be issued, with 45,000 to 60,000 being sold during the token sale, depending on various factors. The remaining NFTs will be allocated to the treasury, team distribution, incentives, and airdrops. A detailed token distribution chart is available. However, the exact timeline for the token sale is yet to be fixed. The governance process, which includes a council-based governance model, is still finalizing the components of the sale. A proposal was passed recently that finalized the distribution, but not the actual timeline. It is estimated to occur around late August to early September of this year.
CK Verify is revolutionizing the verification of proofs, making Web 3 networks faster and more efficient. At its core is a modular system that separates proof verification from execution and settlement layers, reducing costs by over 90%. This system is currently live on testnet, and more information is available on their website.
The focus is to establish a wide distribution and decentralized governance before proceeding with integrations. This ensures that early participants share the vision and are involved for the right reasons. Initial integrations, such as Wormhole and Curve, support non-custodial platform operations. Users' funds are stored in smart accounts across multiple chains, allowing them to withdraw funds directly from contracts even if the off-chain infrastructure fails.
Additionally, the system is designed to prevent censorship, maintaining a purely non-custodial setup. This includes integration with Curve to swap various stablecoins into USDC and using CCTP and Wormhole to bridge funds across chains back to the main net. Some integrations are still in the R&D phase, such as Jupiter on Solana, with further functionalities needed to compete with centralized exchanges, including spot trading and possibly perpetuals.
🔒 Say goodbye to lost funds & hello to secure self-custody with Infinex! 🚀💼
To achieve our goals, we envision a future where we have the necessary infrastructure to compete with centralized exchanges. For the last decade and a half, since Mount Gox, the vast majority of crypto activity has happened off-chain in a database. There are valid reasons for this, such as security for users who are not comfortable with self-custody. However, the tech is now available to provide self-custody and security simultaneously. We can prevent users from making errors that could lead to the loss of funds while ensuring that no one else can steal their assets.
FTX was a significant turning point, highlighting the need for an alternative. The situation with FTX, where a substantial fraud resulted in stolen funds, and people simply switched to another centralized exchange, is not acceptable. Hoping for widespread adoption of hardware wallets hasn't worked.
Our goal, as the crypto cycle progresses and new users enter the space, is to provide a self-custodial solution like Infinex. When a new person wants to buy Bitcoin, instead of directing them to self-custody with a ledger or to a centralized exchange like Coinbase, we can recommend Infinex. This way, users don't have to worry about their funds being stolen, and they can be confident they won't make mistakes that result in lost funds.
If we can onboard hundreds of thousands of new users and manage significant assets on the platform, we will achieve distribution power in a way wallets have never had before. MetaMask has some distribution power with MetaMask swaps, but it can't effectively direct users to new decentralized finance (DeFi) protocols. In contrast, Infinex can leverage its distribution power to highlight emerging protocols.
Binance serves as a comparison. Binance has used its distribution power primarily to affect token prices. For instance, it can direct attention to Dogecoin, which impacts the token price but doesn't drive activity on the Dogecoin chain. Infinex, on the other hand, aims to focus attention on actual protocols, not just tokens, creating a powerful distribution mechanism for new protocols.
Interestingly, this approach seems to compete with centralized exchanges as an onramp to crypto while also replacing the function of non-custodial wallets, which have traditionally served as the gateway to DeFi. Unlike these wallets, which leave much up to user discretion, this new vision aims to create more visibility for various DeFi protocols. This ambitious vision seeks to simplify the user experience and enhance security, critical factors for attracting newcomers to crypto.
On the ease of use and security front, the goal is to abstract away complexities completely. This means no gas fees or seed phrases, instead using POS keys. POS keys represent cryptographic tokens stored in secure hardware enclaves, making them non-phishable. These keys can be stored on physical devices like a YubiKey or within the secure enclave of an iPhone via iCloud. This setup prevents common pitfalls like phishing attacks or losing seed phrases and private keys. Major tech companies like Apple, Microsoft, and Google design these secure systems, aligning their incentives to ensure maximum security.
By tapping into this technology, we can bring it into crypto. Using TurnKey, built by the creators of Coinbase Custody, enables secure private key storage that is non-custodial. This allows users to unlock their private key with a pass key stored on their device, eliminating the need for seed phrases. Logging into Infinex is simplified; users can access it via a webpage and log in through their device or password manager. This cross-device functionality, combined with abstracted gas fees and chain bridging, ensures a seamless user experience without needing hardware wallets or signing transactions manually.
This long-term vision for Infinex is to create a platform where new users can safely and confidently engage with DeFi applications across various chains. This will help build a robust ecosystem, providing both security and usability, thereby fostering a thriving crypto environment.
💸 Forget gas fees! Infinex makes crypto transactions as easy as clicking a button! 🚀✨
With the integration of a key that's in your iPhone, you can now perform transactions via TurnKey without the need to write down a seed phrase or chisel it in stone and bury it in your backyard. For the average user, logging into Infinex is straightforward: simply pull up a web page, click log in, and it finds your key on your device or in your password manager. You can log in across devices, such as going to your laptop and logging in through iCloud. There's no need to plug in a hardware wallet or sign a transaction. Once logged in, you just click a button, and everything from gas to bridging and chains is abstracted, making the user experience much more like a centralized exchange with a web 2 UX.
All gas fees are subsidized, which raises the question of who pays for the gas. The gas is incredibly cheap now, so much so that it’s a solved problem. For example, tens of thousands of crate-opening transactions have used about $10,000 worth of gas. While governance votes could add some Ethereum mainnet tasks, which are more expensive, most people have migrated to other platforms. For valuable users, such as whales wanting to deposit significant amounts, Infinex would cover the gas fees because the return on investment is proportional to the deposited assets. Once assets are on Infinex, transactions can be managed to occur on cost-effective platforms like Arbitrum, Optimism, or Base.
Many users, including those with long-standing crypto experience, still have assets on Mainnet. Infinex aims to facilitate easier transactions on other chains, easing users off Mainnet to Layer 2 solutions. Even with the current Mainnet gas prices being lower, the cost of gas is still manageable, as evidenced by deploying contracts everywhere for around $10,000 — a genuinely solved problem.
Protocol 20 introduces SORON, Stellar's cutting-edge smart contracts platform, which creates new opportunities for developers and enhances transaction capacity. This is the most transformative upgrade to the Stellar Network to date. As for profitability, making money is not the immediate goal. The focus is on distribution and incentivizing sign-ups to promote growth. By removing gas fees completely, even if they are as low as a tenth of a cent, the psychological cost is eliminated, allowing users to click buttons and perform transactions without hesitation, significantly reducing friction.
The transition from a cent to a tenth of a cent represents a quantitative change. While paying 10 cents might make you reconsider, the shift to a tenth of a cent means you hardly need to think about it. Yet, even then, there's a psychological cost associated with acknowledging you're paying for a transaction. If this cost is removed entirely, you can click a button and perform actions without worrying about the expense. This allows for a much smoother and frictionless experience. By abstracting the need to consider transaction costs, especially across different chains, users are placed in a more intuitive and seamless environment.
For instance, I discussed on a podcast within the Solana ecosystem how a deposit on Solana contracts could enable farming on Base. This kind of abstraction can be confusing for users who expect their actions on one platform to remain confined to that platform. However, by abstracting these details, users can, for example, deposit on Arbitrum and play a game on Blast without needing to worry about the underlying mechanics. The technology to achieve this level of abstraction has been available for the past year, but it required someone with the incentive to integrate and optimize it. Having built protocols and experienced the challenges of developing user experience (UX) for many years, I realized that starting from the UX layer and working backward was a more effective approach than starting from the protocol and moving upward.
The current state of decentralized finance (DeFi) platforms presents a significant improvement over previous iterations. There are two main groups of users: those who have used the platform and those who have only heard about it. The experience difference is substantial; once someone uses it, they often find it amazing. Despite the challenge of capturing people's attention in the crowded crypto space, we've been onboarding users individually to demonstrate the transformative potential of the platform. At ECC, our team has been actively engaging with users to facilitate onboarding, aiming to create a zero-to-one moment for new users.
Presently, the platform offers a yield farming game, which serves as the primary product. Users can interact with the platform seamlessly, whether on their phone or laptop, providing an aha moment similar to using cloud-based services like Gmail. Unlike other crypto services that require hardware keys or other barriers, our platform, Infinex, allows users to log in from any device effortlessly. This ease of access is enhanced by features like Android's POS key sharing or iCloud integration, making the user experience continuously better.
In the debate over what crypto UX should look like, whether it should embrace its unique complexities or strive for mainstream familiarity, our perspective aligns with making it feel like any other internet application. Instead of forcing users to adapt to a new paradigm, our goal is to create a user experience that is straightforward and familiar, reducing the friction of confirming transactions, paying gas fees, and understanding their actions. This approach aims to make crypto interactions as seamless as possible, akin to other cloud-based applications.
🚀 DeFi is ready! Simplified UX will bring the masses on-chain! 💰📲
Getting better and better as well, okay, so it sounds like your perspective on crypto UX and how to get it to mainstream is that it really doesn't need to feel like any other application on the internet. There's been this ongoing debate for years about what crypto UX should look like. Should crypto just embrace its weirdness and have people get used to this new paradigm? This is an interesting perspective too, that we should be upfront about it. People interacting with confirming transactions and paying gas brings more transparency. On the other side of the debate, which seems to align with your stance, is that it just needs to be as simple as possible.
I've gone back and forth on this. In fairness, you can definitely search and find tweets where I said it's good that people are signing transactions. Honestly, that was cope—we had no choice. There was no way to abstract away signing transactions. If you go back to 2020 or 2021, I'm sure I said all kinds of crazy stuff. The UX, honestly, is in the ability to do something permissionless with money. The fact that you can take money, put it into a platform, borrow a different asset, and perform other actions in a decentralized way—that's the UX. That's the job to be done. Forcing users to go through weird hoops and sign things is not needed. If I want to put some USDC in a platform and borrow some ETH with the click of a button, that's just better UX.
There is no possible justification for making it more complex. People say it’s important for users to understand what’s happening in the background, but I think that's wrong. People don't need to understand how complex infrastructures like Cloudflare work. Could I spend months reading about their architecture and failover nodes? Yes, but why? Why would I do that when I can employ their services and know it will work no matter where someone is in the world? That's their job. As someone who needs infrastructure, I shouldn’t need to know how it works. The idea that an end consumer should understand how Cloudflare works is madness.
When there was no choice, when people had to be onboarded via seed phrases and all that stuff, then yes, if you're taking a huge risk, you need to understand the risk. But if you're using a passkey—the same way you log in to Facebook, Twitter, or Gmail—then no, you don’t need to know how it works. You just log in and do the thing.
Switching gears a bit to Synthetix, I want to get your perspective on what's happening there. Looking at TVL recently, it had climbed to about a billion earlier this year but has now declined to about 300 million. What explains that?
Honestly, I really don’t pay attention to Synthetix that much. I'm back to working 80 hours a week on early-stage startup grind. Though I've had a few conversations with people recently, it's not my focus. Other people are running it. While I have some opinions about some things and the timing of when they should happen, the most interesting thing for us at Infinex is which network to choose. Now that Synthetix is on Arbitrum, there's a genuine choice of Optimism, Arbitrum, Base. Infinex needs to choose the network, considering different trade-offs around the way they set up each of these different configurations and what the collateral is. As we get closer to potentially integrating Synthetix, we'll need to make some calls. However, Synthetix is its own thing, it runs, and it has a robust governance framework. It really doesn't need me at this point.
On to the next topic, what are you seeing in DeFi right now? Is there any innovation that has come up, or anything you're excited about?
I'm excited to actually get people using DeFi. The subset of people who are crypto enthusiasts and have actually used DeFi and done on-chain transactions is less than 10%. We've had a long period where, in the late part of the last cycle, I was looking around and seeing that everyone was still on Binance. We haven't actually brought them on-chain. NFTs did a good job of getting people to install Metamask and do all that stuff because OpenSea was able to gain traction before centralized exchanges could stand up NFT marketplaces. This had both good and bad sides. But I'm excited for people to try DeFi. There are many people out there who haven't tried all the DeFi projects. They haven't played around with Curve or Uniswap, for example. We have amazing protocols, they are really robust, and they've had years of Lindy effect—they're hardened and work really well. It's time to make sure everyone feels comfortable using them.
Do you think DeFi is ready for a more mainstream adoption?
100%. It's ready at the protocol level. The protocols are ready; liquidity is there. You can put tens of millions of dollars into them. For the average user, that's more than enough. Most people are not dumping $10 million worth of ETH into a protocol. For the average user, it works, and transaction execution is cheap. We have multiple L2s, liquidity is good, and spreads are still tight, even lately. It’s a UX issue; we haven't created the onboarding process. These are crypto-native people who have crypto on centralized exchanges. It's a very easy hop for them to withdraw some USDT, USDC, or ETH from Binance into Infinex and suddenly have access to all these different protocols in a way they haven't had to date. I think it's ready, but it does need that UX layer, and that's what we're trying to build.
What do you think will excite centralized exchange users about DeFi? What's the use case?
Speculation is still the thing. The people who are on centralized exchanges right now are there for speculation. We have more fun speculative things to do in DeFi. Certainly, there are more efficient ways to do things—cheaper ways, and more efficient ways to get leverage, etc. There are a whole range of things that people would love to play around with on-chain but, for whatever reason, don't feel comfortable with. I'm sure there are still people waiting for the latest meme coin to get listed on Binance before they decide to buy it. You can go to pump.fun; the source is there. Whether or not you think that's a good use of people’s time, if people want speculation, that's one of the use cases.
🔗 DeFi's future: Smooth UX = Mass Adoption! 🚀💸
Centralized exchanges are primarily used for speculation. There are more fun and efficient ways to speculate in DeFi, which offer cheaper and more efficient methods for leveraging and other activities. However, many people are still waiting for the latest meme coin to get listed on Binance before deciding to buy it. While the source is available at pump.fun, the speculative nature remains a significant use case. Until we can transition users from centralized exchanges to on-chain with self-custody, our job in DeFi isn't complete. As an early DeFi founder, I feel a strong obligation to bring the protocol to the people, rather than waiting and hoping they will come.
For crypto holders and centralized exchanges, speculation is a significant driver. The challenge is to attract users who are not even on centralized exchanges, such as regular people needing access to financial services in emerging economies. They might need stablecoins or loans without good credit, yet have no idea how to use platforms like Aave. Getting these individuals on-chain requires fiat on-ramps and off-ramps. I have experience with on-ramps, having built a service allowing people to buy Bitcoin with cash.
Infinex needs to prove its value to existing Binance users who already have crypto. If we can't convince them to transition and show that the user experience on-chain is better, we haven't demonstrated that we should cater to retail users outside the crypto ecosystem. If we solve these problems and bring crypto activities on-chain, we can then discuss solving issues in emerging markets, stablecoin payments, and international remittance. Although centralized exchanges still have friction, if we address onboarding, UX, security, and self-custody, a significant number of people will likely solve the remaining issues.
Success at Infinex begins with getting Binance users to transition to our platform. If we can't achieve that, we haven't accomplished our goal. For the next few months, we expect to progress through the bootstrapping phase and engage early enthusiasts who are critical in validating the non-custodial nature of our platform. These advocates are essential as they discuss trade-offs and make recommendations about the platform's safety.
Once we have their engagement, we can begin rolling out integrations, starting with spot trading. Centralized exchanges emerged from spot trading, and our competitive advantage is that we can tap into everything on-chain without needing to build additional infrastructure. This allows us to quickly integrate any new, novel features. Unlike Binance, which takes time to integrate on-chain developments into their centralized ecosystem, our on-chain backend provides immediate access to these innovations.
In conclusion, this has been an amazing discussion about Infinex, and we look forward to following and covering its progress on The Defiance. Thank you for having me.