Jan 19, 2021 · 14 min read · cat
Linear Finance is a cross-chain compatible, decentralized synthetic asset protocol to cost-effectively and quickly create, trade, and manage synthetic assets (Liquids) with no slippage and unlimited liquidity.
Sam(Admin): Welcome everyone to the pre-Linear.Exchange launch AMA. Firstly, we are extremely grateful for the continued support each of you have extended to us over the last 2 months. Kevin and the team have been tirelessly working towards releasing a fully functional suite of dApps that will contribute to and positively disrupt the DeFi ecosystem. As you are all aware the team are due to release the mainnet Linear.Exchange soon and Kevin has agreed to answer some questions from the community providing an update as to the progress made over the last 2 months and also current developments.
The chat will remain muted until the quick fire rounds where you can all ask questions directly to Kevin, I will pick 1 question per round for 5 rounds, please have your question prepared.
Kevin: Hello Everyone….
Sam: We will begin this AMA with an update from Kevin, he wants to first share with you the developments made by the team, his current sentiment towards the DeFi space and also a brief overview of the last 2 months.
With that being said, welcome Kevin, we really appreciate you taking some time to update us all.
How have you and the team been, I hope everyone is well and healthy?
Kevin: Thanks much Sam for taking the time to set up this AMA for our community. The Linear team and myself would like to wish everyone a safe and Happy New Year. Our team is currently extremely busy as we are in the home stretch of releasing our Mainnet Linear.Exchange product. We also would like to thank the users in our community, especially those who have been with us since the beginning of the project. Many users have provided comments and feedback on all aspects of our products and it has helped us tremendously in our product development.
Yes, as many of you have already seen or noticed, last Friday we launched our Mainnet Buildr v2.0 with full Binance Smart Chain (BSC) and Swap functionality and have successfully migrated all users over to BSC so now all users can stake, build, burn and transact at extremely fast speeds and ridiculously low BNB fees. In addition, users can still have access to the Ethereum network through our swap function which goes to our cross-compatible/composable nature. Soon users will find that they can swap all of Linear’s synthetic assets between ETH chain and BSC, essentially bridging two separate DeFi ecosystems.
Both the latest Buildr iteration and our Linear.Exchange are a culmination of months of tech development and numerous challenges due to our cross-compatibility nature. As such, I want to thank my tech team for all the hard work and sacrifice in bringing our vision to reality. But, I also want to remind the team and let our users know that this is just the beginning of our journey. Linear still has a lot of building and runway in front of it. In the short-term, we have a number of UI/UX and workflow improvements that we will introduce into our Buildr product. At the end of last week we submitted our Linear.Exchange code to Slowmist for auditing and we are currently in the process of internal testing. Pending audit and final testing, we are targeting to have Mainnet Linear.Exchange launched near the end of this month. We will provide specific timing shortly.
Once launched, a portion of the team will be focused on innovating and bringing more synthetic assets for users to trade and building partnerships in the DeFi space while the tech team will push forward on bringing additional functionality to our protocol such as multi collateral staking and more importantly, beginning the work to bring Linear onto Polkadot.
Sam: Thank you, exciting. So with things moving at a rapid pace within DeFi, what is your current sentiment on how things have evolved and progressed since the launch of Linear.Finance?
Kevin: So what has changed since we started Linear? Obviously we have seen a surge of DeFi adoption by crypto users and a proliferation of financial products. A positive of this is that it leads to product innovation, particularly in the leveraged and derivative space which causes disruptions in the insurance, lending, and exchange space. Another positive is that a number of projects are pushing forward from a L2 perspective to solve the existing scaling and high gas cost issues and many of them have gained significant traction in this realm. Yet, many of the L2 solutions are not ready for deployment into DeFi protocols given there remains delays in finality when interacting back with L1 layers. As such, in many instances, DeFi protocols who decide to be innovative and push forward with L2 implementations will find themselves bringing additional systemic risk into their protocols which will have adverse effects on the users. Devils are always in the details. Be vigilant with your funds and always read and ask questions…..
Sam: Thank you, really appreciate your thoughts on this topic.
Before leading into some of the community questions I’d personally like to say that I appreciate the effort you have given to getting things done the right way. I have watched you work around the clock during some difficult times and you have always remained extremely positive. As a token holder you have given me great confidence that the project will meet the expectations of those that hold the LINA token, so thank you. Really appreciate it boss.
Kevin: I will respond to this in an Asian way… Get back to work. Just kidding, you and the team have been doing a great job and the Linear team is blessed to have you guys with us on this journey….
Sam: LOL, ok so, we received over 400 questions from over 100 users. I appreciate that you are extremely busy at this time, but I have selected a range of different questions to try and cover as many topics as possible. If you would like to use the toilet now is the time to go!!!!
Kevin: Ok, lets hit the questions…
Sam: The first question is from (R1Ixoraa)
“One of the major challenges militating against DeFi mass adoption is barrier to entry. Most DeFi solutions are only accessible to those with high level of understanding of blockchain technology. Could you tell us how is LINEAR approach to addressing this issue? “
Kevin: This is a good question. We are always talking about mass adoption of DeFi. This is going to take some time as mass market users have to become accustomed with using stablecoins as a medium of transfer, all the many altcoins in the space and then have trust in the protocols. These users are JUST becoming ok with HOLDING Bitcoin after how many years? Imagine asking them to deposit and stake funds into Curve? I think they would shake their heads and run for the hills as the interface is confusing and once people are confused then it becomes fear. This is a natural reaction so we are working hard on our UI/UX experience so that it’s easy for users to understand coupled with providing educational pieces that will show how to use our protocol. I will be frank that this is a big challenge for us as synthetic asset protocols are not easy to understand, are complex and difficult to navigate so great job to our users…..
Sam: Second from (elvie3193)
Linear Finance made a strategic entry into the Asia market through partnership with Ellipti and HASHED. What are your plans for expansion to Europe, UK, Africa?
Kevin: Yes, we are lucky to have Hashed as a core strategic investor and themselves and Ellipti were extremely helpful in the market entry strategy for S.Korea and they helped bridge not only the language barriers but also how to market as the user dynamics for that market is quite specific. As many of you noticed, we have other community groups in core market and we will continue to leverage upon partners to help us in this regards. Especially in the European and Western markets, nowadays it takes more than just setting up communities, and we need to have targeted marketing campaigns in each region to cater to different tastes. Right now we are focused on Western markets and Asia, including SE Asia but eventually will reach out to emerging markets such as Africa where cryptocurrency adoption is high but accessibility is varied.
We are having discussions internally on how to even cater certain synthetics towards key markets. For example, we are looking at potentially offering a “Kimchi” Index synthetic which will be based off certain economic indicators rather than just investing in the KOSPI…
Sam: Third from (cryptoboy237)
“What drew you into DeFi and where do you see the space headed in the next few years? And of course, how do you see demand growing for products such as yours along the way?”
Kevin: I think for me, DeFi has shown that with the use of blockchain technology and smart contracts, we can innovate and disrupt the traditional financial markets. We have seen tremendous growth across the spectrum in DeFi and I believe that Linear will have value in the ecosystem as a derivative product provider…Our synthetic products will be another Lego in the DeFi building blocks.
From the time that I have been in DeFi, the growth in product proliferation has been tremendous. Obviously the growth of yield farming and vaults shows that user that hungry for yield. This has led to the next level up where leverage is being applied. Ultimately this is great for users who now have access to liquidity to boost yields but for the users providing this liquidity, there is substantial systemic risk they face if the risk management systems are not in place. And it is this that I think is a big risk we face in the DeFi ecosystem….
Also, as we continue to build out the ecosystem, many projects are all building on different blockchains…. BSC, ETH, Polkadot so it will be interesting to see how the ecosystems play out over these different chains. Its likely we will end up with a “network of network” of DeFi and us as players within the space will need to figure out to maximize composability and bridge users across different chains. One of our visions at Linear is that we will sit as a hub and be able to move assets across multiple chains…
Sam: Next from (Double_Christ (JulesOnTheBeach))
“Hi Kevin .. Curve Finance (CRV) recently announced zero slippage + zero IL for cross asset swaps, even up to $100MM. this is achieved by interposing synthetic asset swaps via the SNX platform. This is great for achieving zero slippage and zero IL, but these transactions still result in huge gas fees, (thousands of dollars for achieving a desired asset swaps in some cases), which even SNX’s latest L2 solution won’t demonstrably lower for high end traders .. my question is: as SNX is going to suffer these high gas fees for the foreseeable future, has Linear Finance reached out to teams like Curve, to offer them integration with Linear’s BSC solution? Cheers
Kevin: Jules, one of our most knowledgeable users. Thanks for this question. We are well aware of this collaboration between CRV and SNX and the concept of the cross asset swap is quite innovative as the ability to create the synths and bridge such a large transaction is a great thing for users who need that liquidity and great for CRV as they can collect the fees for the swap from a synth to another token. But, there’s never a free lunch in the financial world nor the crypto world so who bears the burden in this transaction? As synths are created by CRV and SNX, this goes back to their debt pool holders aka SNX stakers and then stakers need to be more vigilant in managing their C-Ratios. In addition, the transaction are still subject to SNX’s fee reclamation period of 6 minutes as it’s still built on ETH which has significant fluctuations in block times given gas fees… So the chances of slippage are higher.
From Linear’s POV, we are currently in discussions with a partner to offer this form of routing but we will build it on BSC where the block times are fast and the chances of slippage are low. In addition, as we have our own stakers in mind, there will be systems built around this so that our debt pool doesn’t go out of whack and have adverse effects on stakers.
Sam: Next from (Huong83015142)
“How does the dynamic portfolio management technically function that is being implemented in LINEAR ‘s platform? What kind of further implementations are you planning to have against impermanent losses?”
Kevin: Right now in the short term we will be offering passively managed portfolios with certain thematic exposures. At Linear we call them “Digital Structured Portfolio” and these will be based on specially curated from well known sources or third party providers with solid experience. This is the first level of product sophistication but then we will soon move over to actively managed strategies with indices built by actual portfolio managers with strategies who are searching for alpha and then we will look at Greek derivative products and leverage. We likely will not be implementing any form of dynamic portfolio management unless its for certain TA trading strategies. Look, at the end of the day in DeFi we disintermediate the back end but hard to replace portfolio managers who have years of crypto and research experience with code.
Sam: Next from (Shabbir30260554)
I understand that assets such as commodities, and index, their prices are taken from oracles. But for trading to take place (to be possible), there must be liquidity, users willing to offer liquidity anchored to price indicators, right? How does LinearFinance structure this trading mechanism?
Kevin: Yes, as many of you have read in our WP and materials on medium, the stakers of LINA in the collateral pool essentially act as the counterparty to the traders on our exchange.
Sam: Next from (Halady251)
What do you consider to be the weaknesses of the other existing synthetic exchanges? Where did the idea to build Linear Finance come from? What motivated you to create the best synthetic asset exchange?
Kevin: I think other synthetic asset exchanges are afflicted by the scaling and gas fee issues that ETH is currently facing. The smart contracts on synthetic asset protocols are complex and as such consume substantial gas which the users end up facing. Our users know this too? Remember for a while we were on ETH Buildr and how much were gas fees to simply stake, burn, and claim rewards? Many times so expensive it was even prohibitive to conduct the transaction… Now we are on BSC and users can tell the difference in both transaction speed and gas costs. I think everyone will see this difference and the true meaning of cross-chain compatibility when our assets begin appearing on other protocols on both ETH and BSC.
Also, remember that a number of the team have asset management and product structuring experience so we will be working to bring assets for people to trade on the exchange. We are actually focused on building a synthetic asset exchange.
Sam: Next from (EgorCypto)
How will Linear network profit sharing model differ from other DEFI projects? What incentives does Linear offer to members of the Buildr.Linear ecosystem?
Kevin: Right now for users who build LUSD/Synthetic Liquids we offer our standard staking rewards and a share of the LUSD collected from trading fees. We have made an announcement on this program but what we haven’t announced are the additional promotional staking bonuses we will run going forward so be on the lookout for these. Our rewards program is currently run for a year with a review at month 9 so we can adjust accordingly. Lastly, this isn’t just for people who stake on our protocol but also provide liquidity in AMM pools.
Sam: Next from (Hansweller2018)
According to roadmap for 2021 we will get integration with Polkadot in Q2. Could you please explain in few sentences, what will this integration bring to end users?
Kevin: We have committed to building on Polkadot with our partner Moonbeam and the team will soon start this process of integration. We face quite a challenge on this front as we will face a number of questions such as the level of integration and what parts of our system architecture we want to put on Polkadot. And, this may ultimately be decided upon the performance of DOT and the types of DeFi players end up on DOT ecosystem. Our vision of Linear on DOT is there but over the next 2–3 months will be finalized and then subsequently shared with the community.
Sam: Thanks Kevin for the transparency and detailed answers.
We will now have 5 quick fire rounds where the chat will be unmuted, I will select a random question for Kevin to answer. Ready Kevin?
Kevin: Ok sounds good…
@cryptotranbinh: BRIEFLY EXPLAIN THE features/improvements you are planning to add to your products in the near future and the Ecosystem? Hi
Kevin: Yeah, so we have a number of UI/UX improvements we are making in the short term so that it’s easier for users to interact with our dApps but users will see a whole new set of features upon our Linear.Exchange launch. In addition, as our smart contracts are upgradeable, we will be offering multi-collateral staking soon so you don’t just have to stake LINA but also a number of your other assets.
Sam: Ok chat will be unmuted again, please post your questions
@starshades007: What kind of decisions can the DAO make? Will Linear be completely decentralized and governed by its users? Is it currently semi-centralized? When will it give full control to its users?
Kevin: We have started the process of moving to a DAO structure. Once established, users will be able to decide upon aspects of the protocol such as P-ratio, composition of staking awards, choosing synthetic assets to lists, and voting on the Linear Improvement Plans.
We will be moving to a DAO structure even from a corporate basis and ultimately we want to be done in a few months time pending any legal barriers we need to overcome
G D: Hi Kevin. The Sto market is growing and there is so much potential to tokenize illiquid assets. Do you see a possibility to integrate Security token into your pool of syntethix? Lcx is planning to tokenize everything on a regulated basis maybe there is potential for both of you to partner in this space and increase the pool of different syntethix. I could Imagine tokenized stocks, real estates, diamonds and crypto combined on your exchange. Cheers!
Kevin: Hi G D, this is actually a great question.. We have discussed this internally and its actually doable but the challenge here is that we need a reliable price feed in order to make it tradeable. In addition many of these assets that are on the STO market and the fact they are illiquid make it a bit harder to value (In many cases you will need an independent third party valuer or even a bank/investment bank) to provide this… Therefore if we can get over this barrier and have frequent updates, its an asset we will consider.
Sam: Ok so, finally do you have anything you would like to add before we wrap up the session?
Kevin: Yes, I want to thank all of our users who have decided to join us on this journey. This is just the beginning and we appreciate your feedback and support on our product. If you have questions feel free to ask our wonderful admins!
Sam: Thanks Kevin and thank you all for attending this AMA, as always, the team will ensure they engage with the community as much as possible. We will announce the winners of the giveaway competition via our twitter and announcement channel within 48 hours. Until next time, stay safe and have a great rest of the day.
Over and out.
Kevin: Thanks Sam…
Stay in touch!