Cryptex (CTX) the protocol and community behind Total Crypto Market Cap token (TCAP), is constantly inspired and impressed with the creators and builders of web3. Cryptex created Space Invaders to help people get an inside look into the minds of the most important web3 creators and builders of our time. ****
On September 30th, 2021, Cryptex welcomed BFresh and Cris as host and Ribbon.Finance's Julian Koh as the guest of the 6th episode of Space Invaders. Typically these episodes are recorded live on Twitter Spaces then published on YouTube and a variety of podcast platforms.
In this post, we are sharing the most thought-provoking and alpha-infused pieces of the conversation. These are things most people would not get a chance to find out unless they were listening to the conversation at air time, which you can find on our Youtube channel and podcast formats.
Read on for the alpha leaks from Space Invaders Episode 6 with Julian Koh from Ribbon Finance.
BFresh: For people who don't know what it is, what is Ribbon Finance?
Julian: We call ourselves a structured products protocol, but our main goal is to compose all these financial primitives into products that regular people can use. It's so complicated for most people to know how to do a covered call strategy that rolls every week, but with our vaults, we just plan to package all of that into a single offering so you can sort of automatically opt into this strategy.
BFresh: You guys do a really good job at explaining how your products work and what the risks are. What was the mindset behind doing that?
Julian: We are very, very product-focused in thinking about How do you make things simple? and How do you make things understandable for people? We have spent a lot of time doing that. I still don't think it's trivial, but we can slowly try and get better at education. And videos, like what you have made, obviously help a lot of that as well.
One of the inspirations that we had, came from this US-based company called Wave Financial. Like institutions, they sell these covered call products or these crypto yield products. But if I'm not wrong, the minimum ticket size you need to participate is like $250K. Not all of us have a million bucks to put into these things, and maybe it's only for accredited investors. Since we have built [this model] in a decentralized way, there's no more quarter-million-dollar requirement - you can put in a hundred USD or something. That opens up the space for a lot more people to try out these things.
BFresh: Does Ribbon Finance plan on using other underlying protocols as well, or do you just plan on using Opyn?
Julian: For now, it's just Opyn because when we first created this product, we did a study of all the different protocols that were available out there, and we just found that Opyn has the best customizability for what we wanted to do. For example, let's say protocol X is also an options protocol, but it doesn't let you mint whatever strike you want - that is too restricted for our vaults. Our vaults need the ability to set up and choose whatever it decides, and Opyn is great in that case. So we don't have a plan to change unless a new protocol X is obviously superior to what Opyn offers us.
BFresh: What role does the DAO play within your ecosystem?
Julian: The main question becomes, What if we want to change the strategy of these vaults? They cannot be immutable - it doesn't make sense for our strategy to be immutable because the market can change and maybe the product has to do something a little bit different. So, the best way to do it is to have a set of people - a community - that decides.
What is the trade-off between growth and charging fees today? These are the sort of parameters that are very important to the long-term growth of the project. We launched $RBN, which is a governance token for the protocol at the end of May. One interesting thing that we did was make this token non-transferable. I think that had the amazing side effect of basically building a very strong core community of people who are interested in the project, and it also kept the speculators away.
BFresh: Well, that's so interesting. So then I assume when you say you can't sell in Uniswap, you mean you can't sell anywhere, right?
Julian: Yeah. You can't even transfer it to a different account. We actually just put up a governance proposal today to make it transferable, so it's been about four to five months now, and we think it's about time to turn on transferability. Frankly, I think a lot of people are going to copy the same model.
Cris: I was going to ask about that model - do you think everyone should do it? We had something similar in the sense that we lock all our assets.
Julian: I think it works extremely well for liquidity in mining programs. Usually, you want to give out your token to incentivize users, but if this token that you're giving out has a dollar value attached, mercenaries literally just look at the dollar value, do some computation on whether it's worth their cost of capital, and they'll eat it.
So by setting this non-transferability, mercenaries opted out entirely. We also did this study of how much of the capital actually immediately left after we finished a liquidity mining program, and our vaults did pretty well. I don't have the numbers now, but it was like 15% or something of the TVL was withdrawn within the next few days, yeah. I think having these non-transferable rewards actually improves the churn a lot.
BFresh: So are you guys looking at exploring any alternate chains, like layer 2s, for example, or sidechains?
Julian: Yeah, so this is probably an elephant leak, but I don't care. The Opyn guys, just deployed the algorithm farm over on Arbitrum. Because we rely on them for our vaults, if they're on Arbitrum, we can also deploy there. So if we decide to do layer two, it would be there. That's the extent of our investigation into alternate chains, or L-2. We haven't looked at like Solana or whatever, or like Polygon or others, but our products work okay in layer one because it is a 'set it and forget it' thing vs. being very active. We are okay being on layer one for now.
BFresh: So what does your roadmap look like for Ribbon Finance? Is there anything that we can kind of look forward to coming in the near future?
Julian: Yeah, right now V2 is capped at two million bucks of TVL. We are going to increase that massively in the next few weeks, and I think once we remove those caps, it has set up just a biz-dev effort to add more assets like crazy.
That's going to unlock a new leg of growth for us. I'm quite excited for the next few months.
Want to hear the whole conversation? Check out the recorded version available on YouTube and podcast formats.
To catch the full episode, go to:
Youtube: https://youtu.be/jwPkiEITp_Y
Podcast: https://anchor.fm/cryptex
Learn more about Julian and Ribbon:
Julian's Twitter: https://twitter.com/juliankoh
Ribbon: Ribbon.finance
Learn more about Cryptex & TCAP:
Website: https://cryptex.finance/
Twitter: https://twitter.com/cryptexfinance
You can catch future Space Invaders episodes live on Twitter Spaces! Cryptex awards POAPs to those that attend the live Space. Follow @CryptexFinance on Twitter to stay up to date with upcoming episodes.
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