You head up the foundation of one of the most high-profile crypto platforms, but we don't know much about you. What is your background?
I'll try to keep it short! When I finished my business studies at ESC Rennes, I quickly made the choice to travel by sailing across the Atlantic. It was the only holiday where I didn't know when I'd be coming back (laughs). Then I started my professional life in Asia, where I learnt Mandarin. I then went to Hong Kong where I co-created an electronics company. I then recreated another company, which I sold after taking it public.
And the link with cryptos?
After that, I moved into the world of finance by joining 8 Securities, an investment company with which we launched the first robot advisor (automated portfolio, editor's note) in Asia. I then held the position of Head of FinTech at the Hong Kong Department of Finance. I had followed Bitcoin and Ethereum quite a bit in their early days, but it was at this point, between 2016 and 2019, that I got very serious about blockchain.
I worked with a bit of everyone. I helped Pascal Gauthier from Ledger, the Cardano teams, Joseph Lubin from ConsenSys, and so on. My business card allowed me to go wherever I wanted and talk to whomever I wanted. That's one of the great advantages of working for a government!
How did you take the plunge?
Joseph Lubin hired me at ConsenSys in 2019 to set up the Hong Kong office. I then managed the entire Asia zone for four years. We did a lot of work on central bank digital currencies with Australia, Singapore, Thailand, Dubai, China and South Korea. We really did some incredible things at ConsenSys.
How did the adventure end with ConsenSys, which is a bit 'the' start-up in the Ethereum ecosystem?
ConsenSys was an exceptional adventure and training. However, after Covid I had a desire for new things. When the opportunity arose to join the dYdX Foundation, I didn't hesitate. But I'm still very close to the ConsenSys alumni network.
What do you like about this new experience?
Lots of things. Firstly, DeFi and the fact that dYdX has leadership on the subject. Secondly, it allows me to work on the development of a DAO (decentralised autonomous organisation).
A lot of people are interested in the subject, but few are really building one. This is a real opportunity for me to get my hands dirty. Finally, it's great to be able to work on Cosmos and explore the theme of DAppChains, i.e. blockchains that take care of running a single application, as will soon be the case with dYdX.
What's the purpose of the dYdX foundation?
Its purpose is to develop the ecosystem. What you need to understand is that up until now, dYdX was an application built on Ethereum, but that it is in the process of being transformed into a fully-fledged protocol on Cosmos, in other words precisely a dAppChain.
The foundation focuses on helping developers, setting up effective governance, establishing a DAO and so on. We're also talking a lot with validators to build a 'healthy' blockchain, particularly in the context of value redistribution and decentralisation.
What makes you different from an application like Uniswap, the historic player that enables tokens to be exchanged without an intermediary?
Uniswap is an Automated market maker (AMM) that works with liquidity pools. It's a very interesting tool, but it's less efficient in terms of the price of the assets traded, especially if you're trading large amounts. For our part, we work with order books, a technique that has existed for decades in traditional finance. This allows us to handle much larger volumes and achieve a more efficient final price.
If I had to sum up, Uniswap is aimed more at retail investors, whereas dYdX caters mainly for institutional and professional investors. But we've also been attracting a lot of private individuals in recent weeks...
Have you seen a spike in activity since the fall of FTX?
Very clearly! We have tripled the number of our users and our volumes. There's a lot of interest from people who've had their fingers burnt or come close to disaster. With a decentralised tool, you control everything yourself, unlike a centralised infrastructure that operates like a black box.
How is an order book built on blockchain? Until recently, this seemed impossible...
On the current version, the order book is not on the blockchain. It runs on a server managed by the start-up dYdx Trading. It is only once orders have been executed that settlement is implemented on the blockchain.
Why are we using a server? Because it was the only way to support the correct number of transactions. Writing data to a blockchain takes time. It has to be put into a block, distributed to the whole network, validated and then read by the whole chain. Hence the need for a server. On the other hand, this is not optimal for decentralisation...
We had to find a trick to decentralise, without losing speed because institutional investors, like market makers, need to place high-frequency orders. If you put everything on a blockchain, it won't work. That's why we found another system.
With version 4, which will be on Cosmos, the order book will be housed in the RAM of the validators of the future dYdX blockchain. The validators' RAM, which is as fast as a computer, will have all the orders at all times and will be capable of matching them. This will enable progress to be made on 'pure' decentralisation without losing speed of execution.
You couldn't develop this without going through Cosmos?
Our current tool is based on StarkWare technology, which is a secondary layer of Ethereum. The problem is that this layer is not totally decentralised. There is always a sequencer that has to act as a bridge to the network. From an engineering point of view, there are elements that decentralise, but there are always centralised links. It's the same problem with other secondary layers, like Arbitrum for example.
On version 4, we'll have the order book and sequencer, which will be decentralised.
So Cosmos is the most appropriate to build the tool of your dreams?
Yes, it allows us to have a blockchain dedicated to our use case. Whether it's Ethereum or its secondary layers (L2), anything developed on it doesn't 'own' the protocol. When you have a critical size, it's hard to be satisfied with a global infrastructure...
We can do everything on Ethereum, on the L2s too: smart contracts, storage, etc, but when you want to process everything, you do everything "pretty well" but not "very well". By building our own blockchain, we remove everything that doesn't serve us and optimise what's important.
What comes first at dYdX is the user experience and we don't put any affect on the choice of technology. If we need to change the database underneath, that's no problem. This can be seen as Web2 thinking, but I think we need to get away from the tribal aspect of crypto, which is sometimes too strong.
What explains why we hear less about Cosmos compared to other projects?
Because it's decentralised, there's no leader, so it's a product that attracts big 'builders' who fear the influence of certain entities. On the other hand, there is clearly technological leadership.
Isn't it risky to leave Ethereum? Historically, that's where the innovation is...
It's ambitious, but it makes more sense for us. It's a decision for the users! I'm not sure the next wave of users will come for the technology. I'm sure they'll come for the quality of the experience.
Ethereum will certainly have some very nice products, but Cosmos will gradually make its mark.
What's the timetable for the launch of version 4?
We're launching the private testnet at the end of March, before opening to the public at the end of July. We hope to be able to inaugurate the mainnet in September 2023. We will be able to absorb volumes of tens of thousands of orders per second.
And once the mainnet has been launched, what else is planned?
The community will have a growing role in the ecosystem, particularly in governance. We should certainly see the arrival of new trading pairs, the addition of new products or even better ways of connecting to the Cosmos ecosystem.
Will the fact that income from trading fees goes to the American start-up dYdX Trading change?
The community will decide
What role could the DYDX token play in this new organisation?
This token is already used to exercise governance of the protocol, but potentially the community could choose for it to become a utility token, with a very different role.
Could there be a staking option to receive revenue from the protocol?
I can't answer that legally, it's up to the community, but there aren't multiple solutions...
What do you think of the competition, particularly GMX?
I don't want to comment on the competition, but I would like to say that dYdX has been around since 2017 and on some days handles more volume than Coinbase. Even though some traders may sometimes go elsewhere, the majority of volume happens on dYdX. You have to be wary of the noise on social networks and those who get people talking about them thanks to financial incentives...
