Christian| Saddle 0:00
Very excited about the tokenomics discussion, actually, because when I was whentalking with him, we had like the initial SEMPI partner meeting was kind of like touching base with him seeing like, what the vibe was was going on. He was just unloading the floodgates. For tokens, I was very impressed. It's like one of the coolest tokenomics structures I've seen in a while. So I'm really excited to unpack that a little bit with him.
George| Capsules 0:24
Thank you, Christian. Thank you. Hello. I'm wondering-
Eric| Saddle 0:30
The man of the hour.
Eric| Saddle 0:33
Good. How you doing? Guys? I don't mind. Even if I start with five people. I don’t mind at all.I'm very excited to talk about.
Eric| Saddle 0:42
Sounds good. Yeah, we just have Mune in here as well. Maybe wait another minute or so. See what else I actually saw. There's a bunch of spaces going on. At the moment. I think TechCrunch is crushing us. Yeah.
George| Capsules 0:59
We paid for(-)
Eric| Saddle 1:01
Yeah,12 o'clock on a Wednesday is a busy time for spaces. It seems like.
George| Capsules 1:09
to be honest, like, I don't know if on TechCrunch, they will hear about new ways to make money. But yeah, I think marketing is a big thing, too.
Eric| Saddle 1:23
We're working on that. That's my job.
George| Capsules 1:33
So, if you have any specific questions, we have a niche. I believe that the relevance of: tokenomics, explaining liquid loans, explaining gamified training, trading all the time- but if you have any additional question, please let me know.
Christian| Saddle 1:55
Yeah, absolutely. I mean, I just want to kind of get the community to hear some of the very unique tokenomics That you're building out. Because it's like a kind of like a social media, social trading eToro based DeFi protocol. And I think it's pretty unique, I don't think I've really seen much of that before.
George| Capsules 2:19
My knowledge…even eToro, they don't have that kind of gamification in their trading. And they believe it's a huge loss opportunity for DeFi in particular, blockchain, it can be used to give us so many new opportunities and new abilities to do the same old stuff, but in a better way. So why we don't incentivize people to get profit?
Christian| Saddle 2:52
Absolutely, absolutely. And like markets are all psychology, right? And so if you can leverage the psychological edge to you know, acquire certain tokens or to meet certain thresholds or hit certain achievements, to make those markets more, you know, energetic, more liquid than, like, why would you not do that? You know, so it's like, one of the DeFi protocols I'm also very excited about is DeFi Kingdoms. And so that's gamification in like a very literal sense.
Like, there's actual, there's actually a video game based around, essentially, an AMA, in a AMM, excuse me, or a DEX. And so there's this whole video game apparatus built around. And it's, it makes it way more interesting. It helps people learn, it helps people get more engaged. And it just gives people more incentive, right? Because at the end of the day, like all of these market forces are driven fundamentally at bottom by desires, you know. I have something that you have that I can't make myself or I'm not willing to make myself and so I will give you these tokens, you know, this money,this service, whatever in exchange. And when you have a video game, right, i it's basically leveraging fun, it's leveraging play, it's leveraging something that we just want to do intrinsically, right? It's just something if we had all the money in the world, you know, people would, people would try and do things that are just fun, right?
It's like a very, it's a very deep point. And so being able to incorporate that into the process of acquiring money in the process of market making, and in the process of setting up these DeFi protocols is a no brainer to me, right? It just makes sense. So seeing you do that with Capsules Finances is something I'm very excited for then to talk more about, specifically about your tokenomics.
George| Capsules 4:46
The thing is that aside of that, and side of the world economic will explain tokenomics but when it goes early on designing the protocol, what I found was, you know, the statistics of the traders. So basically, I think only 10 to 20% from the world trading market, even if it's currency trading, if it's forex trading, whatever, most of them, they lose. I think it's 80, even more than 80%. So it's like, why did they lose? They lose because they do their own actions. They're more impulsive than others. So this was in particular, when I was designing the top (-), I was like, if you have only the the five most successful traders, and you put the bar for them to be successful, you incentivize them with crazy opportunities with so the protocol gives them basically tokens that they represent the future sales of the protocol economies.
That this is weekly income. So they have actually incentivization to be at the very top and the other guys like the guys, that usually could have been the 80%, or they have to be in this way, it's like, they have to just copy the top five winning traders who pick one of them, and just copy that strategy, send the results for the incentivization for the traders to be successful on on the next week, and then the next week, too, because it's a weekly thing. But yeah, the tokenomics basically, the Capsules protocol has many economists. So it has the trader’s economy, the (-)economy, it has the Saddle economy, of course, because it will be also the Saddle fork of Avalanche and another chains, possibly. And with tokenomics, what I tried to do is how to incentivize people to use all the economies and do that in harmony. So it's early now in five phases.
And right now we are …phase one. So the smart contracts for the phase one, they're all finished. And at this point, just doing the designs and passing it to the front end developer to just finish the job. And after that, scoring on the testnet and face on the first stack of the(-) will be introduced, and it's the liquid loans. So what are the liquid loans? If you're familiar with how liquidity pools work, and if some of you are not familiar with liquidity pools, please let me know. Because I think it's important to understand that and yeah, so basically, when you provide liquidity, you get back LP tokens from Saddle, right? And, but what you do with this LP tokens, you just need to return them to withdraw your liquid. And that's it, that's their functionality. But what if you can lock your LP tokens?
And by locking the LP tokens, you are able to receive liquid loans. So these loans for another 80% of the value of the LP tokens. So for example, you bought $10,000 of liquidity with USDC and you receive around $8,000 of our native coin, Bitcoin or USD, but it can be any stable coin really doesn't need to be our net stable coin, you receive that 80%. So that's plus $8,000. While you're still able to receive the swap fees, from the liquidity that you provide, so you're already done learning, you have these $10,000 adding interest from swap fees, but you have on the top this $8,000 that you can possibly put in another pool, do whatever else you want. And all you have to do to unlock your liquidity together with your swap phase is to just return the loan amount and there are no fees whatsoever.
If you return it late. It's just a time point for reference. So you're basically you have 14 days, two weeks, you can't repay the loan and less than that, but after that, you can even never prepay the whole loan and it will be turned back by your swap fees eventually. Even if it will be in, in many, many years from the point that you took the loan, it will be back, even if you never repay the loan, because the liquid guarantees it. So you can't unlock your liquidity but you still owe on the liquidity.
Christian| Saddle 10:21
So George, I have a question. So these LP token BAK loans, you're essentially able to double dip, right? So you deposit liquidity and you're collecting a trading fees. And then you can, as you're collecting those trading fees, you lock up the liquidity to first guarantee the trading protocol liquidity, which is the entire lifeblood of the protocol, right? Without liquidity, there's no training, right? So you guarantee liquidity for for a protocol, which is great for the protocol side. But then on the LPer side, you not only are collecting these trading fees, but then you can take those stable coin loans and, you know, yield form with it and provide more liquidity, you know, loop around, do all these things. The question I have is, while this is happening, are those LP tokens also accruing, say, your governance token? Right? Is that also happening? While you're while these LP loans are taken out?
George| Capsules 11:24
So there are incentives to interconnect the economist and to incentivize further, certain actions. So this is not scheduled, but it can be scheduled. So thank you, Christian, for the idea.
Christian| Saddle 11:39
Yeah, of course, I think I think it's a good idea is also something we're looking at here at Saddle is LP BAK stable coin loans. It's because it just makes sense, right, you know, short of bonding, which is the mechanism that we also think makes sense and is something Saddle wants to add in, down the road. This is all on like our tokenomics proposal (-), which you could find in the Saddle Twitter.
But short of bonding, liquidity, and purchasing it straight up, just being able to incentivize liquidity providers to keep their liquidity parked in the protocol for longer is a very valuable service, right? Because the whole game in DeFi for the longest time, and even still, to this day, is people just keep renting out liquidity. You know, we deposit your tokens here, you know, enable our services to keep running. But in exchange for that, to incentivize that happening, and to incentivize this protocol to keep running into perpetuity, we're just gonna keep printing out these tokens. And it's not a good model, right? We've talked about this before in the past, right?
Where it's like, you have this, you know, governance token, which, you know, has some utility can because you can vote on some proposals here and there. But like, let's be honest, nobody really cares, unless they're voting to like, increase trading fees or something to that nature. By and large, nobody was really interested in governance alone. So the whole the whole play is that governance token has to be traded on the open market, and that price has to stay consistently high enough, or at least not decreased fast enough, such that the staking APY of that token or the the emissions of like when you when you LP and you get that governance token’s reward has to be high enough to compensate for that negative price action.
But it's like it's ultimately it's very ponzi like it's ponzinomics that bottom. So that whole liquidity renting that that whole mercenary, liquidity problem in DeFi is something that can at least be alleviated partially by giving LPers the option to take out loans. So I think it's a great idea what you're doing of having those LP BAK stable coin loans.
George| Capsules 13:56
Just thank you Christian, and on top of that because you asked about the LP if we're able to follow other strategies to rephrase the question better. After they get the loan. They're basically designed the strategy where they're able to stake oUSD, if we take the loan in August, they're able to stake it to receive Pylon and generous amounts of Pylon.
I didn't design exactly the calculations that have been done yet on the amount of filing they can receive with their own use the loans, but it's definitely something that I see many people doing, especially counting the Pylon is not only a governance token, and this I believe. The mistake that many people make is that they're doing their tokens governance solely in the platform. Every token has a utility value. So it derives its value not from governance, but from an actual utility that it can be either traded for, so people ask for the utility, so they want ... buy pressure to receive the coins, and tokens, or, and governance is just rated as an (-)for utility. So for example, Pylon, it's a token that you're able to buy for the platform, you're able to trade and on can get that going and to receive 30% of the economies that will belong still face for every week. So this is passive income, I assume that people will continue to want this token. So buy price will go up and up eventually until it reaches like all the coins.
The time where it's going to be over valuated. And that happens. But even then, there is another type of tokenomics. And I think it's pretty unique that people are going to be getting coins, not because they bolt coins but because they have returns. So the top traders have the platform, they're going to receive the BAK tokens. And that's actually the biggest revenue generating token for the users because it's generating 70% of the same economies, that the Pylon users receive 30% or so the BAK token users receive 70% of the of these economies. So there's the biggest pie cut.
Christian| Saddle 17:03
So George, when you're referring to economies, what you mean is, so there's the Pylon token, which is like a governance token. But when you stake it, you get 30% of essentially the trading fees that you guys are collecting. Is that right?
George| Capsules 17:19
Oh, you're basically the Pylon users-all the Pylon users. Let's say that the buying token is loaned two weeks later from now, and the total holders are 100 holders. So the revenue of the trading economy and the revenue the NFT wallet economy, they will talk about that in a few minutes. 70% of that revenue will will be distributed to these 100 people so they currently hold the Pylon token. That person-
Christian| Saddle 18:02
Ok 30% of trading fees from trading plus here, the NFT platform will go to people staking Pylon, and how do you get the Pylonin the first place?
George| Capsules 18:12
So you can either stake USD, that you took us liquid loans. Ususing the first and very basic functionality of the protocol, the liquid loans functionality. And they're also Pylon is distributed to contributors, there will be two ICOs and only two where 20% of the Pylon token will be distributed, targeting predominantly venture capitalists, another 10% will be distributed directly to the Saddle. I don't know if you know that. We discussed it with Gonzalez. So 10% goes to Saddleto continue-
Christian| Saddle 19:04
Just so you know, I’m Gonzalez. I'm Christian Gonzalez.
George| Capsules 19:11
So, yup. And 15% 20% goes to the company that will manage the protocol. It's called DeFi-Plan. It's my company, and 51% will go towards user and user incentives. So this is how you get the token. And it's completely passive. You don't need to do anything at all, and you get 30% of these two economies for as long as you hold the token. The thing is that if you get the BAK token, you can only get it meritocratically, and what I mean by meritocratically- to get it you need to be the top man. That's it.
You need to be on the top five of the traders of the weekly traders. If you're on the top five for more than one week, then you get more of it. You need to do something for the platform that actually brings profit. This is the only way that you receive the BAK token. And also it doesn't have a cap to supply. This is to incentivize people to to actually care more and more about getting BAK tokens and competing with each other. So yeah, I think this is a unique characteristic, because so far, we see many implementations in DeFi protocols that they target, democratic governance, for example, and they miss out of who is doing the best for the protocols.
And they really want to do incentivize people who actually bring profit to the protocol, not just people who they just as waves, they took 15% of the Pylon supply, and they're able to have voting power for that. And this is also BAK is also used as a governance token, but in a different context.
Christian| Saddle 21:31
Okay. So let's just zoom out really quick first. Yeah. So Pylon is the primary governance token. There's a 50 million token fixed supply. And when you vote, you are burning these tokens. Is that all? That's accurate, correct?
George| Capsules 21:48
Um, no, You don't burn it when you vote.
Christian| Saddle 21:55
That's been changed. Okay, but it's your governance token, and it's fixed supply. You earn it by LPing. And by staking it, you get 30% of the trading fees from the AMA, plus the NFT. platform.
George| Capsules 22:12
You’re getting 30%, even if you don't staking it, if you staking it, you get a third coin. So I hope people are not too much confused now. I talked about the trading economy and that economy, you're able to copy other people try this other successful individual strategy of the trades, they're promoted. So we want you to really be a successful trader, even if you don't know about trading, we want you to just go on a web interface, see the top five traders and be highly confident that you're gonna make profit, even based on these people's strategies, because you can see all the stats and everything. So when you stake Pylon you get Nectar.
And Nectar is the main way that the protocol actually makes money. And you can copy one person's trades till that point. So let's say that, I'm going to do that column right now. That top right now, and I'm going there. And it's eight and 25. In the UK right now. So I see Joe's and Joe is the best trader right now on the protocol. And I want to copy his trades. If I do it, as it is, it's totally free for me to copy his trades. But I can copy his trades right now. So if Joe has 33% position on BTC, 33% position on Ethereum and 33%...scoring and that will store example, a winning strategy. For example, Joe has 100 API for the previous week. And I think that yeah, cool. I'm gonna copy that.
I can't, what you can do, this is not the best way, this is not what you would like to do. What you would like to do is to copy Joe's immediate trades. So we enable people to copy other users' immediate trades. So they're the trades that the top users will immediately to, for the next 24 hours by spending one Nectar and you can get Nectar in very few ways. One of them is to stake Pylon. So this is the main incentive to stake Pylon. And I'm also exploring the possibility to have the protocol selling it directly.
So it's not a market cap coin. But yeah, the main sense to get it is only by staking Pylon, or by utilizing the the NFT wallet, By the way, the NFT wallet changed name. So because it no longer…have any question about the tokenomics guy so far, because I know they're a bit confusing, but there is a good way they're confusing because they need to borrow many economists for indefinite time, probably right?
Christian| Saddle 25:40
So George, let's try and summarize this really quickly see if we can make this simple. So Pylon is the main governance token fixed supply, you stake it, you get 30% of trading fees, but then you also get Nectar. Right. Now Nectar is a token that you can use to essentially pay to copy the trades of the top five traders from the previous I guess, day or week or whatever it might be. So what you can do is by staking right in the incentive to buying staking to buying Pylon is not only and trading fees, which which of course, you know, are great, but in addition, you're getting this this Nectar token, which you can use to redeem to have essentially what are these these these these crazy good traders make trades for you. And-
George| Capsules 26:35
You can just sell it to interest people.
Christian| Saddle 26:37
You can also sell it right as for other people who want to copy these trades, so o that's that's Pylon, and then you get Nectar, right, and nectar is to to follow is to copy the trades of these top traders. Now, why does anyone want to be a top trader? Why does anyone want people copying their trades? Well, the answer that question is because the top traders, the top five traders get this BAK token, BAK. And the back token is not only is essentially entitling these traders to of course you can sell it which you know, of course, is always an option.
George| Capsules 27:12
No, no. You can sell it, sorry. You can sell. Thiis a token that you can sell because it was a part meritocraticly.
Christian| Saddle 27:20
Right, right. And so you're not going to sell it. But what you can do is you stake it, and you can get the other 70% of the trading fees, right? And so, but you also have the option of-and correct me if I'm wrong here, of redeeming those that 70%. Your portion of the 70% you're entitled to, or waiting until the next day or next week, or whatever it may be to click the 70% of what's hopefully a larger pot of that-
George| Capsules 27:49
Yeah, most of it, like 98% of it was correct some details of how the BAK token exactly is gonna work is still in the making. Because you know, you need to have out that economy in that design phase three, before you finally decide how exactly it's going to be utilized. And yeah, so basically that’s it about the economics and the last thing. I didn't talk this if you do you know, even on tech, guys, and if you-
Christian| Saddle 28:28
No, I don’t.
George| Capsules 28:31
So he's a brilliant speaker, crypto guy. He's a developer too. And he made like, a very comment that stood out to me when I was making the product. So he said, if you make something that requires gas, either gasless or for way less gas originally was, then you basically have a reason to exist as a protocol. Whatever else you were doing, if you only do that you have reason to exist. So for Capsules, the reason for the protocol to exist outside of the tokenomics, outside of the gamified trading, outside of everything, outside of the liquid loans that they're basically into every money making lego and money making way that the protocol offers.
The main reason that actually exists is because it makes multiple token transfers in 10 scans in just one transaction. This is very big in my opinion. So let me explain to you guys. This smart contract is also almost ready, and it will be out very soon. So let's say that you have multiple tokens that you want to trade. It’s an online block and so normally two blocks and so even if you're on Ethereum you can have USDC, you can have USDT, you can have Bitcoi. You can have Ethereum. Now, if you want to trade all these tokens at once, you may be able to do programmatically but you have to pay separate gas fees. But what happens is, and this is the name Capsules Money by the way, it's because encapsulates money.
So what can happen is I found out that by making a smart contract that you're basically making addresses that they can accept only specific token. So let's say that address one can accept only USDC, address B can accept only Ethereum and under C can accept only Bitcoin. And you store these values there. So you store Ethereum on just to Bitcoin to Ethereum, another still five, Bitcoin, another three, and 1000 (-)to see another one, you can just swap the owner of this smart contract. Okay, so in one transaction, then it's not even a token transaction. So it's smart, smart super, you just change the owner of the smart contract. And you it's you're swapping a huge amount of multi currency money for a fraction. A very small fraction of what the price would originally be, if you're tempted to exchange all these currencies, through regular transfers.
Christian| Saddle 31:53
And so what do you plan to do with this ability to transfer ownership of smart contracts.
George| Capsules 31:59
And so you basically, what explains that, if you have multiple tokens that you want to exchange, for another token, to convert them to another token, you need to do it separately. So you need to do it separately for wrapped BTC, so you need to pay the gas fee for that to you, then you need to do it for the wrapped Ethereum. Then you need to do it for USDC; you need to convert each one independently. And that costs a lot of fees. And especially with the fee price of Ethereum. It's crazy, you can't do that. So instead of that you just sent all these values to the same smart contract just on different addresses that they're modified only accept for a specific address and specific tokens. And then you just swap with another user for a predefined value.
And this also something very nice, because on top of that we can make liquidity pools that they provide liquidity for that exchange to happen between the users. And yeah, but you basically don't pay the extraordinary gas fees of (-)transactions, this can be used from institutions. So institutions diffused, obviously and right now even they try to they making more up transactions every day in these transactions. They very rarely include one coin.
Most of the times they do have many coins, so they can save cents on that it can benefit traders, because traders are going to instantly exchange many times or tokens, it can empower anyone, basically.
Christian| Saddle 34:04
That's great. So so we went through the tokenomics of that incentivizes people to the good traders that then incentivizes people to want to copy these traders. There's a there's an asymmetric distribution of these trading fees, right. So the better traders who who have earned their BAK tokens can claim 70% of trading fees. The Pylon governance token holders get the other 30%. And then while you stake Pylon, you also will be an addition of 30% of trading fees you are collecting Nectar tokens which you can use to copy the in real time the trades of these top five traders. So that's that high level that seems to be tokenomics. You mentioned an NFT platform. George you want to say a little bit more about what you what your current plans are for with NFTs?
George| Capsules 35:00
Yeah, instead of with the NFT wallet, it signs because it doesn't need to include the NFT. This was the old architecture. The NFT wallet is basically the work Capsule wallet that I just explained for the guys that were in here is basically the way to do multi token transfers instantly. And that. So this economy also provides fees for, for the pylon, and the back holders. And because it's something that required a lot of gas to be able to make it which adds a little bit of a fee. So it's 50 bps or 0.5%. Not a lot. But it will always be cheaper than users exchanging all their tokens for for another token. So this basically the NFT wallet, it's called Capsule. Now it doesn't include the NFTs because it doesn't need to include them. It’is very pricey when I put an emphasis on the mix.
Christian| Saddle 36:12
Right. Awesome. Sounds good. Cool. So Eric, do you have any other questions for George?
Eric| Saddle 36:18
No, thanks for joining George. I think- I guess the last question is, what would you want to ask the Saddle community here? How can the team get involved? How can community get involved in supporting a project?
George| Capsules 36:31
Oh, thank you so much for asking. So, guys, right now, the most needed is a front end developer, because I personally, don't have much from that experience. I have experience with smart contracts, with designing, taking on some stuff, but not with front end. So it's fine. If you are skilled in front end, especially react development or native react, just drop me a message in the Capsules Discord and we can make it work out. Also would like to say that they already helped one project get VC funding, then it was this funding. I'm sorry, not not this funding, basically, from the Algorand foundation. So I already have experience on that. And I believe that this project will be also financed, I then gave it to the Algorand Foundation, because this time, I wanted the project to be open source, not closed source.
So yeah, I'm looking to source developers from early contributors, because I believe that the people are very passionate at the very beginning about the idea and the possibilities…it's better than the people who will be added later on, on the process, after we go to the job market and try to find people. So if you're good with marketing, and front end development, just keep me up on either the Saddle server or the Capsules server. And we'll find a way to make it work. That's also token allocation, the SDL allocation that the Capsules project work, all of that will go towards development. I'm not keeping any of that. Everything will go so the protocol will be up and running as soon as possible.
Eric| Saddle 38:34
Amazing. Thank you for joining. And, yeah, as a SEMPI partner, we're really excited to have you and watch Capsules Money grow like crazy. I think this is a really, really encouraging project, especially with the innovative tokenomics that we just discussed and really excited to watch it. Watch it go to the moon.
George| Capsules 38:53
Thank you, man.
Eric| Saddle 38:54
Cool, awesome. Thank you, Josh. Thanks, Christian, and everybody on the next AMA. Alright. Bye Bye. Cheers. Bye, buddy.
Saddle Finance: https://saddle.exchange/
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Capsules Twitter: https://twitter.com/GeorgePolymena1
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