Unchained - Ethereum's Layer 1 Lacks a Perp DEX. Synthetix Intends to Change That - Ep. 926

Episode Date: October 17, 2025

Kain Warwick, founder of Synthetix and Infinex, is returning to Ethereum Layer 1 with a bold new experiment: a perpetuals DEX built directly on mainnet. In this episode, he joins Laura to explain why Synthetix is taking this contrarian step, how its hybrid “optimistic order book” can run efficiently on Ethereum’s slower block times, and why he believes the future of trading will move fully on-chain. Warwick also discusses the tradeoffs behind using USDT, what it will take to match centralized exchange performance, and his “super app” vision for how DeFi platforms could finally outcompete CEXs. Thank you to our sponsor, ⁠Binance⁠! Guest: Kain Warwick, Founder of Infinex and Synthetix Links: The Superapp Thesis by Kain Warwick Blockwork’s Dan Smith on Spreads for ETH-USD Timestamps: 🔥 0:00 Introduction and ads: Binance ⚙️ 0:56 Why Synthetix is launching a perps DEX directly on Ethereum mainnet ⏳ 5:18 How a perpetuals exchange can even work on slow Ethereum block times 🔍 10:34 How transparency will differ from other onchain trading venues 🏗️ 13:53 Why Kain believes being on Ethereum mainnet still matters 🧱 17:00 The challenges of operating on L1—margin posting, gas costs, and more ⚔️ 21:43 How Synthetix plans to compete in an overcrowded perps DEX landscape 💣 24:33 How liquidations on an Ethereum perp DEX would play out during a Black Friday-like crash 🕵️‍♂️ 29:32 How traders could maintain privacy while staying fully decentralized 🌐 31:57 Why a perps DEX on mainnet could reshape Ethereum DeFi 💵 34:25 Why Synthetix is using USDT—despite its centralization risks 🏦 37:28 Which premium assets will serve as collateral 📱 39:36 Inside Kain’s “super app” vision for DeFi’s next evolution 🏁 50:31 Why Kain is fired up about Synthetix’s upcoming trading competition Learn more about your ad choices. Visit megaphone.fm/adchoices

Today, Ethereum still has the most assets, the most stable coins. It's got more margin assets on it than any other chain. And so by removing the need to bridge off Ethereum and allowing people to just deposit margin into a contract that is running on the 01, we think that it will be far easier to attract liquidity and far easier to attract traders. Hi, everyone. Welcome to Unchained, your no-hip resource for all things crypto. I'm your host, Laura Shen. Finance is the world's number one crypto exchange, trusted by over 290 million users. With industry leading liquidity, security, and a wide range of digital asset products,

finance is the place to buy, sell, trade, and earn crypto. Download finance today to get started. Today's guest is Kane Warwick, founder of Infinex and Synthetics. Welcome, Kane. Hey, Laura. Good to be back. So you are joining the Perp Dex party. you're about to launch a perp stacks on Ethereum, as if we don't have enough of them already. Not that I'm saying we have too many.

I'm just kidding. So explain why you've decided to launch a perp decks on Ethereum. The goal of synthetics from maybe 2019 was to build derivatives. And perps at the time that synthetics originally launched were dominated by Bitmex. All of the exchanges started supporting perps over the course of that. cycle. And we launched alongside DYDX, one of the first PURP DeXs. And the challenge of building a PURP Dex was huge, I would say.

Right. And one of the things that we had to do was to move to an L2. So we moved to optimism to be able to support the PURP Dex. But now we're coming back to Ethereum. And there's a long story. So, you know, we've been building perp-dexs for six years. This is our fourth version. And I think that we have finally put all the pieces together to build something that's going to be very competitive.

So talk about when you say that there's a long story there, explain like kind of the trajectory and like why you decided to come back now. So in 2019, I saw the first demo, the UniPig demo, which was Uniswap and Optimism. And that was around the time when congestion, was first becoming an issue on L1. And so we looked at that and said, okay, this is only going to get worse.

When the L1 cannot keep up with the demand that is there for block space. And so optimistic roll-ups were the solution that I think the Ethereum community rallied around. I did at the time have some concerns about fragmentation. And so I pushed really hard for the Ethereum community to kind of rally around a single L2, which was optimism at the time. Unfortunately, it didn't go that way and we ended up with like 100 L2s or, you know, at this point,

it's probably a thousand. But in that period of time when we moved to the L2 to allow us to scale because we needed that, we learned a lot that L1 also got a lot better. Ethereum L1 is not the same chain it was in 2019. It's a much better chain. It has much more block space. It's more performant. There are a lot of advantages that are one today.

And we also learned a lot about how to kind of build hybrid infrastructure off chain and on chain. And so I think that it's the perfect time to come back to Ethereum. Ethereum needs a canonical perp decks in the same way that every centralized exchange needs perps, even Coinbase is launching perps. I think every chain needs a perp-dex and Ethereum today doesn't actually have a perp-dex on L1. Okay. And, you know, so you had your comments targeted to synthetics, but would you say they also apply to like D-YD-X or G-MX and like other previous, you know, perp-X incarnations on Ethereum? Yeah, so, you know, D-YDX moved to cosmos. You know, they moved around a few different times. It was starkware at first. So, you know, D-YDX. was on Starkware and then Starknet and then they moved to Cosmos.

And I think the lesson from almost every perp-dex is that it is very challenging to attract liquidity if you're on an L2 or a side chain or something like that. Probably the only perp-dex that it's actually pulled this off is hyper-liquid and they're an L-1. And so, you know, the combination of an L-1 and a perp-dex is clearly the right culmination of kind of features. So the big question is that we asked ourselves, you know, last year was, could we build a perp-dex on Ethereum Mainnet? Could we give Ethereum L1 a perp-dex, like a canonical perp-dex?

And we eventually kind of answered the question and said, yes, we think we can. And so we're about to roll it out and see how it goes. So please explain how you plan to do this on a chain that has 12-second block times. Yeah. Because that's like obviously the first question. Yeah, the first, the first question is like, how could you do this, right? And the solution, interestingly, partially comes from what we learned from roll-ups. This idea of, you know, running a lot of transactions much faster, you know, much faster finality on an L2, but settling to the L1.

And so what we're effectively building, and this is going to take time and will probably be rolled out in stages, is like an optimistic order book, if you want to think about it like that. So the order book itself, the order matching engine runs off chain, but all of the orders are batched and settled onto Ethereum. And the important aspect of that means that there is no need to bridge your assets off Ethereum. And today, Ethereum still has the most assets, the most stable coins. You know, it's got, it's got more, you know, margin assets on it than any other chain. And so by removing the need to bridge off Ethereum and allowing people to just deposit margin into a contract that is running on the L1, we think that it'll be far easier to attract liquidity and far easier to attract traders.

Okay. So I understand that bit about, you know, just like, having this, you know, a whole bunch of different assets. But what I still don't really understand. So you guys, is it that you have like a centralized company that's settling on Ethereum or because you're not saying, you know, like if you look at like a lighter or whatever, like their whole thing is like, oh, okay, we, you know, batch these ZK proofs. We put them on Ethereum. But yours just seems more like, is it a centralized company? But yeah, I don't fully understand how it works.

Yeah. Yeah, so the off-chain order matching system is a centralized service that's running, right? And so there is like this trade-off of you can't run it fully on-chain, so it can't be fully permissionless, but the margin and liquidation engines and all of the core infrastructure run on-chain. So is it just like an L-2 with a centralized sequencer? Is that what that is? It's not quite there yet, but that is eventually where we will kind of take it to turn the order book almost into its own sequencer, its own L2, and then it will settle on Ethereum. But for now, like most L2s, the order matching engine will be centralized.

Okay. And then like what kind of speeds is it like if you were to, so, you know, because we have some other. you know, perplex-exes that we can compare it to, like how would you compare it in terms of speed? Because, you know, the marketing materials I was sent was saying like high speed and all that. But yeah, just how would you compare it to like a hyperliquid or a lighter or edjax or really any number of the other. Yeah. Yeah. Yeah.

Yeah. I mean, the goal of the matching engine is to be as fast as possible, obviously, right? And, you know, I think the key design. constraint that we're making is to keep the margin on chain, which is going to be slower. So there will be a period of time where a trade has settled off chain, but not yet been kind of pushed on chain. And so there's definitely some tradeoffs here. But in terms of how fast can you make the matching engine, by keeping the matching engine off chain, you can make it as fast as you can make a matching engine using current technology. So there's a bunch of improvements that we can make. At the moment,

our goal is to make the right set of trade-off so that we can match orders as quickly as possible. So we're trying to keep things sub-50 milliseconds in terms of order matching and then settle onto the L1 as quickly as possible. But as you pointed out, there will be 10, 10 second delay between settling an order and it actually hitting the chain. So there's going to be some dialing in of different parameters to get this right. But we're really confident that the key insight is that the order matching is what people care about. They want their orders matched as quickly as possible. Once an order is matched, if there's sufficient margin for a user to then be able to be able

to keep the trade open and monitor the trade. They don't really care about that part of the kind of trading engine as much, the margin side. It's really about making sure their order gets filled as quickly as possible. Okay. And then one other piece I just want to make sure I understand is, so everything still remains on chain. So we'll end up getting the same transparency that we get now. like, you know, the way that we could all see what happened on Black Friday and Hyperliquid,

is that, is that what's what this setup is going to be? So yes and no. So the one difference is standing orders will not be exposed. So you won't be able to see what, you know, what standing order, standing limit orders people have, except if it's in the book, right? So you'll only be able to see orders that are coming through the book. So you won't necessarily. be able to match up in the way that you can with hyperliquil because it is fully on chain,

every single person's order with liquidation prices, etc. So that, for what it's worth, we think is a feature and not a bug. You know, there's obviously arguments on both sides about like fully transparent or, you know, having some opacity to the order book and liquidations, etc. we will see what traders think. As a trader myself, you know, I personally have a preference, which is for people to not be able to hunt my stops, but, you know, we'll see in aggregate,

you know, an exchange is a complex dynamic system, right? And so, you know, it's hard to necessarily say from first principles how people will react to different sets of tradeoffs. One of the things that we're doing, though, a pre-launch, which will help us to kind of dial in some of these tradeoffs, is running a very large trading competition, some of the top traders in the space. So we can get feedback for 30 days on what the current design constraints are and the parameterization we've made and choices we've made.

And so I fully expect we'll get some feedback from those traders that will require us to, make some changes and modify things to, you know, ensure we get the best experience. Okay, yeah, this is so interesting. I mean, my immediate reaction is that the privacy aspect will be appealing to people. But then so in the competition, is it like the results are just you guys are posting them like with your. Exactly. Okay. Yeah.

Yeah. So, so, you know, the idea is it's supposed to be entertainment, right? I'll be participating in the training competition as well. So when I get liquidated, you know, I fully expect that there will be tweets from, you know, Synthetics main saying that I've been liquidated. So, you know, it will be, it'll be kind of a spectator sport during the competition in a way that the, you know, the main exchange won't necessarily be. Obviously, people have the choice to publish their trades and we'll have shareables and, you know, all that sort of stuff. We'll probably even have a leaderboard.

But it'll be up to each trader to decide whether or not they, you know, link their identity with their trades, et cetera. Okay. Yeah. And for people who haven't heard about this, you have, you've gotten some big names to agree to do this. Ansem, Gainesi, Dijan Spartan, who's coming back from wherever they were. Who knows? North Korea. They were in North Korea.

Okay. Got them a visa. Oh, great. Evgeni, there are others. So, yeah, so that personally sounds fun to me. All right. So one other thing that I'm wondering about is, you know, here we've just talked about kind of like some of the hurdles to running this kind of thing on Ethereum.

So like, why is it so important to you to choose Ethereum despite things like the slow block times and all that? Yeah, I think that's a very important question. So as one of the people, and I've been saying this for a little while, as one of the people who push really hard for Ethereum to make what I would say were the pragmatic choice. for scaling back in 2019, 2020, 2021, I think the unintended consequences of that have been both good and bad. You know, the fragmentation of L2s, particularly when it comes to uncertainty of like which asset a potential investor should buy, right? The proliferation of L2 tokens changed the dynamic, I think, for investors where it wasn't as obvious that they should buy.

should just buy ETH. And in fact, there were a lot of people in various communities who said, you know, almost don't buy ETH, buy my token, my L2 token, because we're the future sort of thing. And I think that that created a lot of uncertainty and was one of the major unintended consequences and had a significant impact on ETH the asset, right? The positive unintended consequences were that we ended up with a lot more block space than I think anyone expected we would have. And the ability to post-transactions from L2s to the L1 extremely cheaply. Now, there's also some trade-offs there. You know, base is extremely profitable as one example, right?

And there's people, including myself, who say, you know, Ethereum should probably charge more for block space than it does. But at the moment, I think it's worth Ethereum kind of subsidizing the block space of L2s because that's where a lot of the activity is happening. But if you can bring all of that activity back to the L1 and build an app that is fully on L1 in terms of the assets themselves are on the L1, not bridge off to an L2, I think that right now today is the optimal response to other L1s, whether it's hyperliquid or salina. or Sway or Aptos, from an Ethereum perspective, putting my Ethereum hat on, bringing all of the Defi that drifted off into different L2s, whether it's AVE or Uniswap or whatever, bringing all of that back to Mainnet and running it efficiently on Mainnet, I think is the optimal thing for reassuring everyone that Ethereum L1

is still the best place to build Defi, which I personally still believe it is. Huh. This is so interesting. And it's especially interesting to have this conversation now because obviously you made that decision to move back to Ethereum, you know, how many months ago. And then we just had Black Friday. And I kind of, like, I kind of thought that it might have changed the calculus for you, but maybe I'm wrong. I did see your tweet thread, which we'll get to in a woman. But the reason why I'm asking this is because I don't know if you saw. So the price of each, you know, if dislocated the most on Ethereum Mainnet itself. Like it fell further on Ethereum L1, it stayed down there for longer than on base, on Arbitrum, even on centralized exchanges like finance or Coinbase. So I don't know, like, would that affect, you know, something like, you know, your new PIRPtex? Or like, how would that factor in?

Yeah. So I think the main impact that you would have would be margin. The margin engine being on L1, being a contract that runs on Ethereum Maintenet, would create potential issues for people either depositing or withdrawing margin, moving margin, et cetera, if gas prices spike and it is very expensive to deposit margin. We have some ideas and solutions for that that we think could be viable, which is, I mean, the simplest one is allow people to have another place where, they can deposit margin. So, you know, either an L2 or something like that, where the matching engine will look at both of those places. So, you know, during times of high congestion, if someone, there is an obvious solution, which

everyone hates, which is if it is critical to you, you can pay, you know, to get a transaction to land, right? On Ethereum, it just might be very expensive. Obviously, that's not a deal for someone who has $500 of margin. But our view is, I think, that at least initially, the goal is to attract large traders with large margin positions. And if you talk to traders, whether they're institutional traders or large personal traders trading their own book, the thing that I think is the most concerning for almost every trader is counterparty risk. The risk of putting your assets on a centralized exchange or through a bridge,

or something like that. And I think all things being equal, most people are more confident leaving their assets on an L1 like Solano or Ethereum than bridging them somewhere else. And so, you know, we have to dial in exactly who that set of tradeoffs for. And my expectation is that at least initially, it's going to be for traders who have larger positions,

larger margin, and we're going to work really hard to attract the liquidity to support those kinds traders. But we do need to be able to handle congestion when it happens because it will inevitably happen. And so, you know, one of the one of the kind of areas of research we're working on is how to have some escape hatch for people to either move margin off in times of congestion or add more margin that doesn't require depositing straight onto L1. Yeah, because essentially with the fact that Ether dropped, you know, more on on you know, MayNet than elsewhere.

It basically kind of recreates that same scenario that happened on Binance, where those three assets, the prices dropped. And so like basically more people would be liquidated. So that's why, yeah. Yeah, I think the challenge, you know, on any trading venue, right, is if you're an island and you get cut off from everywhere else, bad things happen. You know, prices dislocate, you know, it's really dangerous. given, you know, in TradFi, this is not as much of an issue. Like, it does happen. But, you know,

trading venues are so winner take all in Tradify where, like, there's one place where all the liquidity is and provided that venue is still running, you know, whether it's CME or NASDAQ or whatever, it's kind of fine. Like, the assets only trade in that one place and, you know, they've got all kinds of, you know, infrastructure to ensure that, you know, you know, trades are kind of happening continuously. Crypto's weird because we have 100 pockets of liquidity that are spread across different places. And if one of those pockets of liquidity stops talking to the other ones, then yeah, bad things happen. Yeah. Well, so the other thing, of course, that I need to ask is because we are in this situation

where there are just so many perp dexes all of a sudden. You know, how do you, how do you plan for synthetics to compete? Because it's not even just that there's a bunch on, or not a bunch, but, you know, we're already lighter in EdgeX are on Ethereum. I'm sure there are others, but then even beyond, like on all these other chains. So how do you plan to take some market share? Yeah, I think there's two things in crypto that you need to be able to do in order to take market share or in order to even be viable. You know, you need to have the best product and you need to build the best product for, you know, in the case of a prop decks, the best product for traders. And I think one of the things that synthetics has a very

good history of is being incredibly trader friendly. We've always built our prop dexes to be as efficient for the trader as possible. I think the meta kind of changed probably with GMX, where it became almost more important that the token of the project went up than that traders had a good experience. And there's a tension here, right? And I've talked about this a lot. Synthetics, we have always understood. And SNX holders have always understood that if you lose the traders, then you have nothing. There's no token, right? Like you have to support traders.

You have to make sure traders are confident in the platform that you're building. So I think that we have a good history of that, historically we've been very supportive of traders. We've had very good trader experience and we've done a lot of work there. That's kind of table stakes. The next thing is you have to have the ability to attract attention. If you can't attract attention, you can't attract liquidity, you can't get that flywheel going. And look, I've been doing this for a long time and I know how to attract attention in crypto.

With a good product, I feel really confident that we can, you know, and this is also part of the trading competition, right? We've got some of the most entertaining people in crypto for various reasons, whether good traders, bad traders, non-traders, just, you know, funny people on the timeline. So I think for the next 30 days, we're going to have a lot of attention on this new exchange because it's going to be all over the timeline. And so, you know, those are the kind of the two elements. Being able to attract attention, being able to, you know, get people to pay attention to the thing that you're doing, build it and there will come has never. never worked in crypto and it works even less today than it ever has, which isn't to say that you

don't have to build a good product. You have to build the best product, but you can't just build the best product and sit there waiting for people to show up. It doesn't work. Yeah. And I also wanted to ask you to explain more when you talked about how you know, you're prioritizing traders because you had this tweet thread about how the events of Black Friday kind of reinforced, you know, why it is that you made certain design decisions. And, you know, like when interesting piece of it was you had sort of the priority list for like how liquidations would go. So just talk, yeah, about like your thoughts on on your design and like in relation to what happened on Black Friday. Yeah, I think at the end of the day, you know, success is, is dangerous when it comes to building a perp decks.

And synthetics has seen this as well, right? You know, one of our most, even before the perp decks, right? one of our most successful things was our spot derivatives. We had all these spot derivatives, and there were multiple instances where the size of the derivative versus, let's say the market cap of the underlying asset got big enough that it became profitable for people to try and manipulate the underlying asset. This is, again, before perplex is at all, right? This is just spot derivatives.

And so I think that we have a pretty good. sense of how to put the right guardrails in place to ensure that, that, you know, we don't have a situation where the exchange goes insolvent. Like, you know, there's, that's the key thing. You want to be able to keep trading. You want to be able to ensure that the exchange doesn't become insolvent. So there needs to be layers to that. But the bigger a perp decks or any trading venue gets, the more open interest there is, the higher the risk, right? Because you have to have something that's going to backstop it. And so, you know, our view is that you have to have some relief valve, which is obviously going to be ADL at some point. If, you know, markets move so

quickly that the exchange can't respond and your liquidity gets fragmented or prices dislocate or there's some huge event. So it's not to say that ADL is wrong. Like at some point you need ADL, It's just you need to dial in the parameters of when do you use that and it should really be as a lost resort. And I think that particularly in the case of synthetics and SNX stakers and all of the people who are, who understand what it looks like to build a trading venue, we understand that it is critical that we build with this new exchange, the trust of traders. If you lose a trust of traders, it's really hard to get it back. And, you know, there's a lot of different things that can cause traders to lose trust in you. Not getting paid the profits that they believe they deserve is probably the highest as a trader.

You're like, no, I did the thing and I didn't get paid for it. So, so, you know, it's really critical that we have, you know, as I said, the right kind of waterfall of like ownership of trades from, you know, the individual trader down to some kind of vault like system, you know, which which, which we. we've built. And then eventually you get to ADL and then eventually you get to, you know, backstop of token holders or something like that if things are really bad. But the break points between them are critical to choose, right? Like you could have an exchange which, you know, just ADLs everyone, the instant price is moved by more than like 3% or something, right? But no one would trade there because they would never feel confident that they could actually profit if, you know, what you want as a perpetrator is big,

moves. You don't want to, you don't want as soon as the price moves 1%. It's like, all right, guys, sorry, that's it. That's your maximum meeting. So. All right. So in a moment, we're going to learn more about plans for this perpdx. But first, we'll take a quick bird from the sponsors make this show possible. Finance is the world's number one crypto exchange, trusted by over 290 million users globally. With world class liquidity, security, and a wide portfolio of digital asset products, finance makes crypto easy for everyone. Whether you're new to crypto or a professional, finance offers a simple user experience. Learn with Binance Academy, browse hundreds of tokens, and track your portfolio on an easy-to-use dashboard.

For experienced users, Binance Pro provides industry-leading services and bespoke trading products. With some of the lowest fees and deepest liquidity in the market, it's no wonder over 290 million users choose Binance for everything crypto. Buy, sell, trade, earn, live, crypto. download Binance today and begin your journey into the future of finance. Disclaimer, Binance is not available in certain countries, including the US. Check its terms for more information. Binance.com slash E.N. slash terms. One thing I wanted to ask was earlier when we were talking about how it's starting more centralized.

You said something about like, you know, you would want to move it to something more decentralized. But then if that were the case, wouldn't it go on chain and then, Wouldn't the privacy aspect be lost or no? I think you would still be able to run an off-chain orderbook that was not centralized, but that was opaque. Like there is a design space where you can do that. You know, whether it's like zero knowledge proofs or, you know, running it inside of some, you know, cryptographic computation system or something like that. We don't think that that's worth doing yet.

One of the things that synthetics always did well when I was running it, which it kind of lost sight of, unfortunately, in the period where I wasn't running it, was that trying to design a perfect system in a vacuum, what I call like building a palace in the sky, Right. Like we're going to build the most beautiful thing and it's going to be amazing. We're going to go and lock ourselves in a room for three years and build this incredible thing. And then everyone's going to come and love it straight away. That's not how products work. You need iteration. And so what we've tried to do is make the right decisions to get the core framework in place. And then based on the feedback and empirical evidence we get from users and seeing how the exchange is used and see, you know, where are the kind of, uh, places where we could improve efficiency or make the UX better, we can iterate on that. And that will kind of dictate where we put our resources. So the last year has been about putting the right framework in place to run a perp-dex on Ethereum. Once we decided to do that, we're like, let's do the optimal thing to get a framework in place

so you could actually run a perp-dex on Ethereum. Once we've got that running and we see how people use it, then we can lean into, okay, What are the concerns? It may be that no one cares about a centralized order matching system. And they're like, this is actually great. We love it. It would be crazy to invest nine months of resources trying to solve that problem if that isn't a problem people care about.

Okay. Okay. Interesting. One other thing that you wrote about, I think, in one of your blog posts was that you projected that perpetuals will partly cannibalize the business of lending protocols, since people can get more exposure with less margin. And then at the same time, to me, it feels like part of the reason that you're building on Ethereum is partly to power up defy on Ethereum.

And so in your blog post, he said, quote, without main net perps, Ethereum has been running a financial system where you can lend, borrow, and trade, but not efficiently hedge. So I was curious, like, you know, when you launch this, like how do you think defy on Ethereum will change? I think that's a very good question. You know, we we seeded all of the derivatives volume that Ethereum could have captured from, you know, call it 2021 to today, right? Four years of derivatives volume, which, you know, is trillions of dollars, right?

To other L1s, L2s, et cetera. And, you know, there's no question. that having perpetual futures creates opportunities for other areas of defy. And so I think bringing that back to main net and allowing for people to, you know, whether it's hedging or whether, you know, it's directional exposure or whatever it is that they're doing, it will be net beneficial for the rest of defy on Ethereum. because the fragmentation of we've got Ave on Ethereum and that's the place where, you know, everyone borrows and there's this amazing, you know, margin system that you can use. And even things like Pendle where, you know, you can split out, yield, there's all of this amazing infrastructure that has been built on Ethereum.

But then all the derivatives volume is somewhere else and requires bridging and friction and, you know, all of these things. So my view is that the more efficient a market is in a single venue. And if you want to call Ethereum, I want a venue, the better it is for everyone on that venue, the more efficient the market is. And so not having perps of any kind on Ethereum main net has definitely been net negative for Ethereum. But I think bringing it back is going to be a net positive. All right. So last couple of design choices I want to ask you about. I noticed you talked about how USD

will be a base settlement asset. I think, you know, USDC is more popular in TFI, so I was just curious about that choice. Well, I mean, this is another funny story, right? A funny OG story. So back in the day, you know, synthetics has its own stable coin. It's a, you know, purely decentralized stable coin, not crypto collateralized. It's not algorithmic, but it's not, sorry, not RWA collateralized, right? It's crypto collateralized, not RWA collateralized.

collateralize. So it's purely on chain. That's good and bad. And we've been suffering through this. We had a large deep peg earlier in the year, which we've now fixed during this transition. But it was one of the big concerns, I think, for almost anyone who was interested in synthetics was, can this stable coin actually scale, et cetera? And it turns out it was very hard to scale it. Same issues that Maker had, where they made a decision to move towards RWA as the primary collateral. Back in the day, we used to use Dye before it became powered by USCC, right? And when USC was out as collateral, synthetics said, sorry, we're out. We won't touch Dye anymore.

It's too centralized because we were crazy ideologues, right? And we're like, it has to be purely decentralized or nothing, right? And I think that that lack of pragmatism definitely hurt synthetics. You know, there was an audience for that back in DIPI summer. and I think that audience remained very niche. And so injecting a bit more pragmatism has been the right approach. Now, when we were making a decision about, you know, what the underlying collateral that denominates the exchange should be,

and they proposed to me that it would be tether, there was a, you know, Ethereum OG, Maxi, Decentralization, Maxi, I was like, I don't know about this guys, but they, they were, you know, the engineers were able to convince me and that like especially on Ethereum Mainnet, given how much USDT there is, it is the best possible asset you can use. And if you're, again, optimizing for the trader experience, then you have to choose that. Now, that's not to say we won't have other collateral assets, other margin assets that

you can use. We will have multi-collateral. But the actual exchange engine is denominated in USDT. Interesting. I know. So I used to walk around in a t-shirt back in like 2018 that said, Tether is a crypto abomination. And yet here we are, right? So, you know, pragmatism.

Yeah. Well, you know, we all get humbled with, you know, like we have a take at one time. We later realized we're way wrong. So many such cases. Me too. I also noticed, so you were listing five premium collateral types, USD-T, S-U-S-D-E, C-B-T-C, wrapped teeth and wrapped steak teeth. I actually don't know what that means, premium collateral.

So just explain that. Yeah, I mean, I think, you know, from an Ethereum perspective, it's a question of like, what are the assets with the most liquidity on Ethereum maintenance, right? you know, what are the assets that we can be very confident can be, you know, easily liquidated, can, you know, easily be absorbed, you know, into a margin engine, have wide adoption across the L1. And if you look at those assets, I think, you know, there's a very good case for all of them. But you'll notice, like CBBTC is a centralized wrapper of the internet, Coinbase, Nussities. But, you know, I also use Coinbase custody. So, like, again, as a trader, you know, my view would be if you're going to choose a centralized custodian for your Bitcoin, it's hard to go past Coinbase.

I think that's probably one of the best choices you could make. And so CBBT, it just is the obvious choice as a wrapped version of Bitcoin. Okay. But premium collateral means what? Like there is like certain benefits for using those types of collateral. I think we're just saying, like, those are the primary collateral assets that we will support. If we add other versions of collateral, they will probably have different parameters in terms of, you know, how much you can borrow against them, how much margin you get, et cetera. So, but I think in the initial instance, that it will be rolling out with, you know, stable coins and then we'll add wrapped Bitcoin and then, you know, we'll slowly expand the collateral options.

I don't know if we'll get to the point where, you know, you can margin a position with, I don't know, to pick a random token like uni or something like that. But we're not ruling it out. Okay. So let's switch gears. You also recently wrote about your super app thesis. Talk about the thesis. I found this super interesting.

And I think it also ties into your plan for Infinex. So, you know, you can present both together. Yeah, it is pretty wild to me that I'm running two startups. So, like, that was not on my bingo card in, in 2023. My goal was to run zero startups at the start of that year. But, you know, the, I think the emerging decks narrative, right? Perp Dex narrative has become such a dominant theme in crypto that we, for my my own personal kind of satisfaction, I had no choice but to put as much energy as possible

into getting synthetics there. I always found it dissatisfying that synthetics had created so many novel things over the eight years that existed from binary options to spot derivatives, inverse tokens. There were so many things. We were one of the first Bitcoin derivatives on Ethereum, on Ethereum Mainnet, right? And we just never quite landed a product that could get to really solid product market fit. You know, we're either just didn't quite make the right choices or too decentralized or, you know, whatever the issues were. And so that as someone who's very competitive and, you know, likes to win, that was just not satisfying to me, right?

And so when we started to rethink how to rebuild synthetics, it was like, okay, we need to build a perplex and we need to go and go off to this narrative. And so I've thrown everything into it. But the transition that I think we were in the midst of this cycle is the most important transition in the history of crypto. So if you go back, there's, let's call it the prehistoric era of crypto, 2009 to 2011. In 2011, the first centralized exchanges emerge, and it's almost like multicellular life, right? They are so much more competitive

and so much more adapted to their environment that they just out-compete everything. And all of the other organisms are just pushed to the side and these multicellular centralized exchanges dominate. And they dominate until today. It's been a decade and a half of dominance, right? But this cycle, for the first time, even though we've been building DFI for a long time, Ethereum is about being on chain, you know, all of this work that a lot of people have put in,

it has taken time because centralized exchanges are just that good at what they do. They're the most efficient cross-chain, multi-chain, multi-asset platforms ever. they just have a superpower, which is be completely centralized. And so what's happening today, I think, is that finally the transition away from centralized exchanges. I think we will move out of this era of centralized exchange dominance into people being on chain. But there are many, many things that need to come together for that to work, which is you need to be as good as a centralized exchange for all users, not for enthusiasts, but for all users. And that's what Infinex is trying to do.

That was the thesis behind Infinex is find a way to take on centralized exchanges by improving the user experience and getting it to a point where it's not just at the same level as a centralized exchange, but it significantly exceeds it because you have access to everything that happens on chain. And so I think by the time we get to the next cycle, and if you look at every centralized exchange, they all have a plan for how to become a hybrid on-chain, off-chain system. every single one is working on this because they see it. And so I think that by the time we get to the next cycle, it will be the first cycle where on-chain platforms dominate and centralized exchanges start to fade into the background. It may be that the on-chain platforms are launched by what were formerly centralized exchanges or by companies that ran centralized exchanges.

It might be that they're pureplay platforms like Infinex. But I think that we will see the ascendancy of on-chain platforms, and this super app thesis of give everyone access to every asset on every chain and every platform, every defy opportunity in a single application and make it non-custodial and you will win. And we finally are starting to see the first kind of glimmers of that of this new era. Yeah, I mean, like we can already see this shift happening. Like obviously we all know in recent days, but it's been going on for months really a few look at it in a zoomed out perspective. Finance has been receiving a lot of criticism.

And, you know, there was that whole listings thing that everybody was talking about the past few days, but obviously before that, they're clearly being challenged by hyperliquid and, you know, reacting in their own way. But then, you know, on the other hand, we have Coinbase, you know, with base and the new base app. And it's like clearly aiming for this new everything app. So, yeah, like, I agree with you that that writing is on the wall. I'm just curious, like, because Infinex compared to something like, you know, the base have tied to a coin base. Like, how are you thinking about how to compete in this world where, like, distribution, I think,

will matter a lot. And, yeah, so what are your thoughts on that? I think if you look at this, the current landscape, the current environment, right, to use my, you know, evolutionary analogy, right? The dominant life form is the centralized exchange. But it's not like there's just one, right? There are many species of centralized exchanges that are either, you know, regional in the case of, you know, Coinbase to some extent, being very focused on the US, being very dominant there, or they have some particular niche that they occupy in the environment, right? There isn't a single centralized exchange that dominates, even though Binance is obviously

huge, but the 25th or even 50th centralized exchange is a very profitable business, right? There is a lot of opportunity for, for, you know, more than just a single winner in, you know, the crypto space, right? And this is in our current, still very nascent phase that we're in, where, you know, we have, let's say it's 10% adoption or something like that or even 20% adoption or whatever in terms of holding crypto assets. So if we fast forward 10 years, 20 years, you know, I don't think that we will see a single application because I think that's what, you know,

crypto applications is what we will eventually become. There won't be one crypto application. That would be crazy. In the same way that there's not one messaging app or not, you know, one food delivery app, there's always going to be competition. And so our goal is ensure, that we find the right niche where we can thrive and we can build distribution and a loyal user base.

And we have the right kind of set of tradeoffs for that class of user who wants to use something that feels like Infinex. And at the moment, that's very squarely aimed at people who are already on chain, but are frustrated by the day-to-day frictions that they have in being on chain. they've overcome it and they've done it and they have eight wallets and they have all of this stuff. Monad is a great example, right? There's this Monad AirDrop that's happening right now and everyone is putting all of their wallets together. And in every single group that I'm in, there's this ongoing discussion of like, do I add all 50 of my wallets to the Monad air drop or do I just put eight of them or like what's the optimal strategy? Which is crazy. Like the idea that you have 50 or 100 different accounts.

accounts and you're trying to aggregate them. Like we should have platforms and Infinex is going to be that platform that stops you from needing to have this proliferation of addresses and managing gas, different wallets for different chains, et cetera, but be able to participate on chain. And so we think that there is a huge tam, even in the existing, you know, crypto, kind of early adopter cohort, that already sees the benefit of a platform like Infinex. And that's before we've rolled out our extension, a mobile app, the ability to import your legacy wallets into Infinex.

There's a bunch of features that are coming up in the next few months that we think will kind of solve this and just make it the most obvious place for you to do your crypto stuff if you're already on chain. Yeah, honestly, the way you're talking, it reminds me of like, you know, AOL was kind of like a handholdy way to get online in the early days of the internet. And it's like you are preparing for when people are ready to like graduate from AOL. Yeah, exactly. Right.

Yeah. Exactly. There's people. And the thing is that it used to be so niche, right? People who were on finance didn't know that Yams was going on or harvest finance or, you know, any of the yield farming stuff that was happening in DFI summer, today, I think everyone who's on Binance knows hyperliquid exists. They might not necessarily feel comfortable going and trading on hyperliquid, but they are not unaware of it. And so there is this kind of FOMO building

and interest of, well, if I can just figure out how to do this thing, I can try sui or I can try, going to Solana and buying some meme coins or whatever and not waiting for a centralized exchange to list the asset before I can get exposure to it. And so making that easy for people, I think is a huge thing. But for what it's worth, we think the existing on-chain user base is so large and there is a huge kind of benefit to tapping into that first, building that first wave. And then we can go, okay, centralized exchange users are looking for an alternative. We can be that credible alternative. Okay. Yeah, that totally makes sense. All right, Kane, well, it's always a pleasure chatting with you. Is there anything that we didn't talk about that you feel like we should?

I think we talked about the Synthetics trading competition, you know, and for what it's worth, like, of all of the things that I've cooked up over the years, and there are many, this is the one that I'm maybe the most excited about. It's actually shocking to me that no one has really tried to do something like this before. And we have so many interesting people. I think just being able to see how someone like Jordy Alexander trades is going to be riveting for like the average person on the timeline. So I expect this to blow up and be all over the timeline for the next like 30 days while

everyone is following along. We've got some really cool graphics that will show like P&L, like literally on an hour by hour basis of like who's winning. So it's going to be we're working to make this like max as entertaining as as possible. So yeah, I would really encourage people to kind of tap into that and be ready when it kicks off next week. How many players do you have? So there are 50, call them celebrity traders, if you will, and then 50 people who earned slots either by depositing or had high volume on a previous exchange. So, So there's a culmination of pro-traders, celebrity traders, KOLs, influencers.

So, yeah, it's going to be quite funny. And, yeah, I mean, honestly, like, it reminds me, yeah, just like a leaderboard on, like, I think, you know, BetMax, and there's a bunch of these exchanges that had them. So it's similar or? Yeah, similar. It's going to be literally like a leaderboard for that 30 days. We actually, we didn't ask you. We maybe should have asked you to.

But I'm not a trainer. that's the funny thing it's actually you don't necessarily need to be a trader right um you know there's a couple of people who are not traders who are like yeah it's you know because we give the margin to the people so the the goal is have the highest P&L at the end of the trading competition but you don't take any personal risk we give you the margin and the winner wins a million dollars um which as a trader you go uh one and a hundred shot of a million dollars like evy you know 10 grand is but also I'm the best trader. So really, it's more like 50 grand or 100 grand

that I'm going to walk away with. So it was actually quite funny how easy it was to get most of the people involved. They were like, well, I'll definitely win. So yeah, of course I'll play. Yeah, I feel like I had one more question about that, but it fell out of my head. You were thinking about whether you could win the competition,

weren't you? You're like, I can maybe do this. No, there's pretty much no way. unless I don't know, I'd have to just get super lucky. Oh, I remember. Sorry, I remember. So I don't know if I fully understand. Like, so they're not putting in their own money. Correct.

Oh, got it. We give the margin. Yeah. So what we're doing is we have a delegated trading system. So we are going to get an address from them and give that address delegation power over a margin account. So they can't withdraw the margin. They can just trade it. So, you know, if they, if they lose it, that's fine.

We're also, we've got a, we've got an interesting little element where every day there's going to be a vote on Twitter for, or on X, I should say, for which of the liquidated traders should get brought back in. And so, so that alone is going to be quite entertaining to see, like, you know, if someone gets liquidated, can they rally the troops and, you know, get voted back in? Nice. Honestly, now that anything, this reminds me of the whole James Wynn thing, but like in reverse. Yeah. Yeah, we tried to get James Wynn. I don't know exactly what happened there. But yeah, we thought he would have been pretty entertaining, but we couldn't quite hit. There are a few people that we couldn't quite get over the line, but I've got 48 hours to try and get them over the line now. Okay. Okay. Well, it sounds super fun. And yeah, we'll have to be. to see what happens. I definitely will be watching this on the timeline. And thank you again so much

for coming on the show. Amazing. Thanks for having me. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aranovich, Margaret Curia and Pam Majumdar. Thanks for listening.