This blog post was produced from a transcript of our live AMA with Professor JEY (and his assistant) founder of Integral. To participate in future AMAs, please join our Discord and follow us on Twitter.
Can you tell us a bit about yourself and how you came to be involved with Integral?
Brought a core of us together around last DeFi Summer 1.0. We all share an interest in crypto & using DeFi apps, farming/trading, and come from academic, quantitative, science/math, and startup-building backgrounds. Integral began as a way to address some of the DeFi painpoints we suffered as firsthand users
What is Integral?
Integral is the world’s 1st DeFi primitive that efficiently executes large orders, and capture the large client trading volume for DeFi.
Our AMM-based DEX executes your orders with the oracle’s average price over a period of time, which creates the same effect of splitting orders and execute them minute by minute. This practice helps Integral secure the best price. In fact, for a $1mil trade, Integral offers the best price 97% of the time compared to Binance!
What pain points did you see that Integral addresses?
DeFi has been on this explosive trajectory for the past couple of years. However, till this date, DEX’s trading volume only accounts for 4% of global crypto trading. The reason for that is quite simple.
When you look at the trading volume of leading CEX like Coinbase, 68% of it comes from institutions, whose trade size ranges from 1mil – 100mil. However, most CFAMM-based DEX cannot serve these large orders properly, because they just don’t have the financial tool and enough liquidity to support such trade. And that’s why we are building Integral for, to capture these large trades for DeFi.
To add some color from the user side, when we were users and farmers of DeFi Summer 1.0 projects, to the tune of the early YFI, SUSHI, and even other degen Pool 2s. Two clear pain points that emerged were: why did we have to pay such a big spread for swaps even as the trade size skewed larger? Are LPs bound to always suffer from Impermanent Loss in AMMs?
What technical advantages does Integral afford users over other AMMs suffering these issues (big spread and IL)?
A mixture of marrying 3 design factors inside our AMM, that allows Integral to be competitive on price/depth, while being capital-efficient:
- 1. Use of a price oracle to serve traders the most up-to-date on-chain prices, so we actually allow traders to access Uniswap’s prices
- 2. But at our own implementation of concentrated liquidity, where we shape the curve to be just as deep if not deeper as leading CEX’s order books
- 3. A trade delay aka “HFT speed bump” (currently 5 mins) which crucially makes on-chain Arb flow (eg of the flash loan, or MEV varieties) magnitudes harder, so LP’s face only mitigated IL in the long-run, while traders get the best depth+price.
Currently, we support 8 pairs at the $1-2m swap level, with only about $50m TVL total. In essence, traders on Integral for outcome get the depth of the best CEXs (or better), at a time-weighted average price over 5 mins on a competitive oracle (currently Uniswap).
This of course doesn’t come for free currently, as there’s a bit of additional gas involved. That’s why on mainnet we offer the most benefits at this stage to larger traders. Now that L2 and other chain adoption are picking up, we anticipate having these design benefits adapted and trickled down when we port to other environments!
What is “trade deferral” and why it matters to Integral?
Trade deferral = trade delay it allows the external price feed (oracle) and the Integral Pool’s user orders to track together, to allow this “simulated TWAP execution”. It mimics how CEX traders might split their bigger order, into 5 smaller orders 1/min over say 5 minutes.
This is harder to game than atomic settlement AMMs out there. Overall, this means your sizeable trades can be executed at better prices without as much price impact as on other AMMs. In short, larger traders don’t have to worry as much about moving the market.
What’s something coming up on your roadmap that excites you?
We are still perfecting the technology of TWAP and concentrated liquidity, to help us secure the best more often for our traders. We’ve launched a component called Comparator in July, which allows you to compare prices across different DEX and CEX.
Currently, for $1mil trade, we offer the best price 66% of the time when compared with 1inch and Matcha. We hope to increase this win rate, and constantly deliver the best price. Also, we are working on another product to add more user scenario for our technology.
The new product will use a 1-day to 1-week execution window in order to achieve the best execution of roughly $100m sized orders. We hope to debut this in Q4.
Is there a threshold at which the mirroring function does not work anymore? And does the change of offering the best price for a trade increase as the TVL increases?
For mirroring – Integral’s non-gameability derives security from the price oracle’s underlying market, so that must be sufficiently resistant against manipulation. As DeFi always evolves, this may need to evolve as the characteristics of the underlying price feeds change. We are aware of this and have plans to try other pricing forms on this end.
Re: TVL. Our relationship with TVL is slightly different from other DEX. Most DEXs need a big TVL to ensure there’s enough liquidity to execute trade, without giving traders too much price impact. This applies to Integral as well.
The higher the TVL is, the less price impact there will be. However, with the technology of concentrated liquidity, we can use a small amount of capital to create this extremely liquidity-rich environment. Currently, we have 50mil TVL. But if you trade in our pools, you are enjoying the same level of price impact that a $3trillion pool can offer.
If you wonder what’s the price impact of a 3T pool can offer – it’s nearly 0.
What are the tokenomics of Integral?
So for tokens, we have our gov tokens ITGR (pronounced as “it-girl”):
- 40% to farming programs with vesting (6 month – 3 year)
- 25% to founders and future employees with a 3-year vesting
- 25% to public seed round with vesting (21% 3-year vesting, 4% 6 month-vesting)
- 5% to advisors and collaborators with a 3-year vesting
- 5% to supply listing pools over 6 months or more. Most of our tokens have a very long vesting period, and we think it helps us find long-term working partners and community members.
And we will be doing this Token Generation Event around Mid-September. Btw this is the screenshot of our comparator:
How do you see the DEX space in general changing going forward?
Our focus is on financial protocol design as a team. But it’s fascinating the pace that the user behaviors in this space are changing around DEX. One big theme we’re watching is liquidity fragmentation, especially as users rush between the dapps on one environment vs another.
It reminds us of a game of musical chairs, nearly! It seems that capital-efficiency and ensuring smooth experience across environments will be an important ongoing challenge in the face of these shifts.
Do you have plans on porting Integral to other chains?
Yes, we are currently doing research into this subject. There are a lot of new chains coming up, and we will make our move after we witness a sustainable demand for block trade on that chain.
Follow Integral on Twitter to stay updated about all things!
Thanks for reading, and thank you Professor JEY for joining us for this informative interview.
You can hear more from Professor JEY by following him on Twitter.
And also, follow us on Twitter to join us for future live AMAs.
