Founder Fireside Chat with Preston Van Loon of Cryptex
The Founder Fireside Chat series hosted by DeFi Pulse interviews DeFi founders in the hopes of offering readers an opportunity to better understand their perspective and what drives them to build their vision.
Welcome back! This week be had the opportunity to chat with Preston Van Loon, Co-Founder of Cryptex, who offered up lessons he’s learned building in the cryptocurrency space and what excites him about DeFi.
Cryptex’s flagship product is TCAP, which is the Total Crypto Market Cap token. This is a synthetic collateralized asset. The price of TCAP directly correlates with the total market cap value of all cryptocurrencies in the space.
We think this is a really unique product in that there’s not really a great way for retail investors or any kind of investor to buy into the entire market. Maybe they think that cryptocurrencies in general are a good thing and going in the right direction, but they may not really have the ability to analyze and understand all the protocols, either a technical level or a user level. But they know that cryptocurrency is the future.
So with something like TCAP, they’re able to get exposure to the entire market and be able to capture the value of cryptocurrencies from an investment perspective.
So, the scalability trilemma is this famous problem where you have these three properties to the blockchain, and you want to be able to increase any aspect of that trilemma without taking away from something else.
That being said, you want it to be secure, fast and decentralized. And so you can go fast if you take away the decentralized aspect of it, maybe you’re running like the super node. Or you could go fast by making it cheaper to do and not verifying signatures or really just making it less secure in that way if you go faster.
I think that scalability is the problem that we need to solve, and most urgently. I think that the other two aspects, decentralization and security are also important, security being the most important, I think, in terms of a blockchain where there will always be some aspects of centralization. And that’s fine to some extent.
We always want to make it as decentralized as possible, but security being number one, if you violate the security assumptions of a blockchain, it’s no longer secured, it’s game over or could be game over essentially.
And then scalability coming second, it’s like, you want it to go fast without really taking away from too much of the other aspects.
In order to have a long lasting community, you need to keep the community engaged. You know, we’re building this together, it’s not just the Cryptex team building out cool, exciting products. We’re building it together as a community.
And it’s still initially by the Cryptex team, but going forward it’s built by the community almost in every aspect we could think of. Community members are hired to the Cryptex DAO, continuing development and outreach and these kinds of things.
On an ongoing basis, we have meetings with the community, kind of bringing everybody together, figuring out how the DAO should operate and what the next steps should be. Either on the forums and our discord channel or on a frequent Zoom call that we have every other week.
I think that DeFi is really not getting the full attention that it should. The thing that I’m most excited about with DeFi is this concept of being your own bank. And that’s sort of something that we strive to do with blockchains in general.
But in terms of really just earning interest with your capital, with your savings in traditional finance, it’s not very rewarding to do that, but in a DeFi space, you kind of take out the middleman there, being the brick and mortar banks who are making money off of you. You could be making that money yourself in DeFi space, there are a lot of really creative products out there.
Something upcoming that I think is really cool is Element Finance, it’s built by some of the people who’ve done a lot of really exciting work on the Ethereum protocol. And this project in particular helps users basically earn interest on their ether without sacrificing or locking up the principal or the full principal for the entire time.
So it’s a really interesting project in that way, that you’re able to deposit the ether. Then you can sell off your principal and just earn the interest that you would have at the end of the maturity of the contract.
There’s a lot of lessons that I have learned. I’ve been working on blockchain stuff for about three years, a little more, and it’s a very different world from traditional software development.
So from the development perspective, it’s all about really making sure that things behave the way you expect them to. Getting there takes lots of vigorous testing being, unit testing at the code level, and testing it, on some sort of testnet or simulation.
And then of course there’s a lot of testing around the usability of things. Actually getting in there and playing with it, not just on an automated level, but really being careful about, and putting a lot of thought into the design is important because once you’ve deployed it, it can be difficult to upgrade it or modify it any way. So if you release it with a bug, you may be stuck with a bug forever.
The lesson is: you got to really plan things out and move carefully, it’s the opposite of move fast and break things. It’s move slow and make sure you did it all right so you don’t get stuck or have to do it again.
I’m a big fan of the ultrasound money meme.
Basically, it’s kind of a meme for Bitcoiners where they say that Bitcoin is sound money, mostly due to the fixed supply cap. And with Ethereum’s new monetary policy coming out towards end of the year, it becomes instead of an inflationary asset, it becomes deflationary. And so the meme’s argument is that if a fixed supply is sound money, then a deflationary supply is even more sound. And that next level of sound money is ultrasound money.
So I liked that meme, you can see it in a lot of Ethereum, Twitter names and profiles that have the bat and the speaker that’s ultrasound meme. And I’m really a big fan of that because it kind of brings light to these two different types of monetary policy between Ethereum and Bitcoin.
I hope you enjoyed this chat. As always, thank you for reading and special thanks to Preston for taking the time to speak with us.