Transcript: Loop Finance AMA

Finn 0:41
Hello and welcome to The Ether. Today is Thursday, January 6th 2022. Today’s episode of The Ether is brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Visit OC’s What We Do page using the link in the show notes to take advantage of some of the other educational resources they create, including weekly meetups to discuss Terra protocols, strategies, and concepts, The Terra Luna Intel Report on Telegram, YouTube explainer videos on Terra concepts and much more. You can also support their community efforts by considering them next time you’re delegating or re-delegating your LUNA. Today on The Ether we have the Loop Finance AMA. Let’s take a listen.

Simon Chadwick 1:29
Hey, guys, happy New Year. Welcome to this week’s AMA, the first AMA of 2022. We’ve got Simon and Tom, cofounders of Loop. We’re bringing to you on the Twitter Space is and on Zoom at the same time. So this will be recorded and it’ll be popped in YouTube too. So, guys, just before we start, what has the last two weeks brought? I know there’s a lot of things have happened, and we haven’t had one for two weeks. I’d love to hear from you guys what has happened in the last two weeks and what’s come out for Loop. And I know it’s been very exciting. We know we’ve had some crazy TVL increases and all those things. So I’d love to hear from both of you guys about what you excited about and what happened in the last few weeks.

Simon R. 2:14
Yeah, I’ll go quickly. So we’ve had a lot more beta users jumping on the apps, which has been awesome. Really good feedback again, as usual, just refining that entire process of onboarding onto the app, creating your wallet the first time, or migrating from Terra Station. So look forward to improvements there. And we’re improving the integration with the community, which has seen a lot of upgrades too. It’s also very exciting, Simon will talk about that later. A lot of COVID has been happening over the last two weeks, but we’re all powering through it like we power through our products. So that won’t stop us. We’ve had some awesome new pools, Tom, maybe you want to talk about them.

Tom Norwood 2:57
Yeah, absolutely. The aUST polls are obviously attracting a lot of attention, they’re attracting a lot of liquidity, they’ve attracted some criticism as well. But in general, we see these as a very positive thing for the decks. In fact, I think we’re going to make the decision to move more and more towards having aUST pools as opposed to having UST pools. It just makes more sense for liquidity providers, because essentially, the liquidity provider can hold… They’re holding an asset, which is generating a yield in a number of ways. The aUST itself is increasing in value over time. And so essentially, they’re getting the Anchor yield by holding that, but at the same time, they’re getting the yield from the DEX. So they’re getting the trading fees, and then they’re getting the farming rewards as well. So essentially, they’re getting a triple reward on that side of their liquidity, which is amazing. I think the criticism was about the aUST-UST pool, which is not that capital efficient with the current bonding curve that we’re using, because obviously there’s a bit of slippage there, and so it can lead to a little bit of inefficiency in the pool. But obviously, the higher the liquidity, the higher the TBL of that pool, the less slippage is going to be. And that’s already growing quite quickly, which is great. So already, for small trades it’s very low slippage. And then we’re looking at actually improving the bonding curve algorithm on that on that pool as well. So that will also help to make it a lot more efficient. And essentially we’ll treat it almost like a stablecoin swap pool so that it’ll always be 1:1.16 or whatever it is at the moment the exact exchange rate is or the exchange rate should be between those two assets. So we’ll find a way to lock it in there. So yeah, look, aUST pools I think they’ll become like a real thing of the future and it pretty much every DEX on Terra should just be using aUST instead of UST as one of their core pairs. So yeah, that’s been really exciting to see that the community interest in those pools.

Simon R. 5:06
And it makes total sense to me too, right. So if we have a user that wants to get into Anchor, right, right now they can jump on to Loop, buy UST with their credit card, and then convert UST into aUST, right. So right now, the easiest way to get into Anchor is actually through Loop. And obviously, the whole process is going to be tweaked, refined, and as Tom said, the bonding curves… We we’ve been working on custom bonding curve for the last six months with a double professor in Australia who’s one of the best. So we’re very confident that we’re going to make these bonds, perfect for exactly what we’re trying to do, which is to being a Curve on Terra, and to have custom bonds for like, aUST-UST pool, so like Tom said, it’s one for one. And will be the easiest way to onboard into Anchor continually. Like the app, for example, will also have the integration work with credit cards. So you’ll be able to download our app, create a wallet very easily like you normally would, purchase UST using a credit card and then swap it for aUST one for one with decent volume in the future.

Simon Chadwick 6:21
Some really, really cool stuff. And Simon, you’re reverbing a little bit, just letting you know, it’s kind of coming back through the mic. Let’s get into questions, actually. So we’ve got a bunch of really, really spicy ones at the moment. So will there be a dashboard for earned transaction fees for LPs too? Right now we only see the rewards.

Simon R. 6:39
Yeah, good question. So in the new v2 designs, which we will make more public, there will be a button on the DEX. So you can have a sneak peek into what’s coming, you’ll be able to see on your dashboard, on your portfolio, a lot of things. You’ll have a pie chart there, you’ll have graphs there. It’s actually going to be very cool. But what you’ll be able to see is your revenue in UST value for each of the pools, and then your APR for that pool. And we’re also working on being able to harvest these rewards without having to withdraw your LP, same thing with farming, same thing with with staking. We’re working on optimizing the entire process. We’ve also had a lot of people ask us too, to have a one-click button for people to be able to harvest their awards from everything, and then auto stake them. So we’ve heard all your feedback, we’ve added all this into the queue, so you guys will be able to see it in our designs coming soon, updates to the v2. But everything is basically all broken down, all the stats that you want to see. LP vs. HODL, that’s coming in the future too. One click farming wizard, that’s another thing we’ve been speaking a lot about and showing you guys on our designs. We’re going to make it super easy for you guys to convert all of your dust into two tokens, and then auto pool that and then auto farm that. And then obviously we’ve been getting everyone excited about our LP NFTs. So if there is an opportunity to convert that position, into an LP NFT, then you’ll have a big button there which says, again, “Increase your APR even more”, then you’ll get taken through our awesome customization process of creating that LP NFT. You can choose what image you want to use. You can use loop images, or you can even wrap this position around another NFT. So you can actually go buy an NFT on OpenSea, pull it over through the Wormhole, and then wrap that NFT in this LP position, this annuity, this bond, and then trade it, keep in your wallet, stake it, it’s very cool.

Simon Chadwick 8:50
That sounds very cool. This there’s a lot… I know there’s a lot coming. So talking about APR calculations on the pools, so do they factor in the transaction fees, those calculations, at the moment? Or is it just the farming?

Simon R. 9:04
Right, we’ve just enabled that. So right now when you look at the top trading assets, you’ll see APRs, which include farming, and trading fees. If there is no farm, then it will just be trading fees.

Tom Norwood 9:15
Yeah, some of the Wormhole pairs you can see on the dashboard there, they actually show like a very low APR. And the reason for that is is because there’s no farm for those pairs yet. The APR that you see there is just from the transaction fees alone. But in the next couple of weeks we’ll also be releasing some farms for those Wormhole pairs as well. So yeah, those APR’s obviously going to increase once that happens. The other exciting thing actually about farms, while we’re just on that topic for a second, is we’re going to actually release some six month farms as well. So at the moment, there’s a minimum lockup period of 14 days for our farms, but we’re also going to release another farm type which will be a six month farm, so there’ll be a minimum lockup period of six months. But those farms will have a higher APR, much higher APR than just the 14 day farms. So just something to look forward too as well for people who are in it for the long term, and providing liquidity for the long term. This will be a way of us to sort of lock in larger amounts of liquidity for longer periods of time, and then reward those people for providing that as well. So that’s something new we’re looking forward to.

Simon Chadwick 10:25
Cool. So what does the Loop DEX gain from the staking of NFTs?

Tom Norwood 10:32
The Loop DEX itself doesn’t actually gain anything from the staking of NFTs. The staking of NFTs is just so people can collect yield on those NFTs. So basically, if you’ve got, say, an LP NFT bond, which is going to provide let’s say, 100 LOOP a day for 100 days, while that NFT is staked, you’ll collect the yield. But as soon as you unstake that NFT, that yield will be paused. It won’t be lost, it’ll just be paused. So say I stake it for 10 days, I collect 10 days worth of yields, I unstake it, that NFT will still have 90 days worth of yields, to be collected. And that won’t start again until it gets restaked. The reason for this is a couple of reasons once for compliance, because we can’t just have people earning passive income, they have to actually take some sort of an action and staking is considered an action. The other reason is because obviously, if you want to sell that NFT, you want to pause the yield on that NFT while it’s being sold. So you know, while it’s up for auction or for sale, you can have the yield paused on it, you can put it up for sale, and then when the new person, the new owner buys it and takes possession of it, they can then stake it and collect the rest of the yield on that NFT. So that’s a couple of reasons why we’ve introduced this staking process.

Simon R. 11:50
Yeah the LP NFTs serve one main purpose, right, which is to lock up liquidity, which is to the benefit of the DEX and for everyone trading on it, right. And we reward people with high APRs, and with an awesome experience. You can, number one, have your position, your liquidity position tradable. It looks awesome as an NFT, it sits in your wallet, and you get higher APRs. And also we’ve got some awesome partnerships, which we’re very keen to announce, but we’re holding off just a little bit longer, where we’ll be able to own the liquidity. So Loop DEX will permanently own that liquidity. And this is a service that we’ll be offering to all of the projects that are coming through Loop exclusively. Because again, it’s a win-win-win-win, like we were saying before. The DEX wins, the projects win, the people providing the liquidity to be taken on permanently win with very high APRs and access to these awesome new projects, and the bots also win too because they’ll have a lot more liquidity play with.

Simon Chadwick 12:53
Yeah, so I’m very excited for the protocol owned liquidity for sure. And so perhaps I’m misunderstanding, it seems that intentionally creating a pair that people should never use, and then boosting it as a farming pool is immoral, can you explain the purpose of aUST-UST pool?

Tom Norwood 13:10
Yeah, I mean, we touched on this a little bit, the aUST-UST pool is… Well, I mean, there’s a couple of reasons for it, obviously. As Simon mentioned earlier, it’s a really easy way for people to get into Anchor. So if you buy UST, which you can directly through our web app, you can at the moment, or you can buy UST on multiple exchanges, it’s then very easy to come on to Loop and exchange your UST for aUST and essentially, you’re already in Anchor. You don’t actually need to go over to the Anchor webapp, and then deposit the UST and go through the process that way. So as long as we make sure that the rate, 1:1.16, which are currently like one UST is worth… Sorry, one aUST is worth 1.16 UST, as long as we make sure that rate is held quite tight, then there’s no loss for the user to actually make that swap on our DEX as opposed to making that swap on Anchor itself. So for convenience of users, that’s one reason. The other reason is to act as a routing pair. So as we add more and more aUST pairs in the future, we’re not necessarily going to have UST pairs for all of those assets. That means if you want to go from UST into that asset, you’ll need to go through aUST, so it’ll use the aUST-UST pool to start with, it’ll go from UST to aUST, and then it’ll use the other pool to swap from a UST into whatever asset it is that the user wants to buy. So that aUST-UST pool will actually become one of the main routing pools on the DEX. And so yeah, it actually is going to serve quite a large purpose and we can actually see that in the future it could easily become one of the biggest and most highly traded pairs.

Simon R. 15:06
Exactly. Loop DEX will be 100% efficient with a UST-aUST, so we will get there. In order to get there, one, we need time, and two, we need TVL, which is why we have the farming rewards to get the TVL in while we’re building these custom bonding curves, and while we’re doing all of our integrations with Anchor directly. So yeah, obviously, it is going to be a little bit of a period in which it is not 100% efficient, but people are willing to pay for that inefficiencies for ease of use, right. So that’s what Do was talking about before, he was saying it’s not the most efficient, yet he doesn’t understand it. But it makes sense in the long run that right now we’re launching and these are the teething pains, and we’re providing a lot of ease of use for a lot of people. And very soon, we’re working on it hard, we will be pretty much 100% efficient.

Tom Norwood 16:05
And we’re providing farming rewards to people who are providing liquidity, so they actually don’t end up worse off. I mean, they’re actually getting a gain out of that as well. So we’re essentially compensating them for any potential loss with IL through the farming rewards. And as Simon said, it serves a longer term purpose of how we want the architecture of the DEX to work.

Simon R. 16:27
Correct, and DO wants more UST in Anchor. So that’s all we’re working on, automating that process and getting as much as aUST as we can into Anchor, so it’s as efficient as possible.

Tom Norwood 16:40
Exactly, and also, by having all of our pairs in aUST as opposed to UST, that obviously means that there’s going to be more UST locked up in Anchor just through that mechanism as well. Instead of having all of that UST in the pools, just sitting there, you know, not doing much it will be earning a yield through Anchor at the same time it’s sitting in the pool. So we really see it as a win-win for everyone, for liquidity providers, and for users. I mean, if you’re going to hold UST, why not hold a UST, right? Why not hold something which is accumulating value as opposed to something which is… Well, let’s be honest, the US dollar is actually just losing value over over time. I mean, the inflation in the US is really high at the moment. If you’re just holding US dollars your money is losing value, you might as well have it in aUST and be making a gain on that.

Simon R. 17:30
Exactly, yeah. Do and Anchor are gonna love us at the end of it. Simple as that.

Tom Norwood 17:35
I don’t know if Do’s ever gonna love us. But anyway. [chuckle]

Simon R. 17:37
Oh, he really loves us.

Simon Chadwick 17:40
He will just, just you wait. Okay, so we’re talking again, this question is about the aUST-UST pools again. It says there’s no current APR estimates for those pools, and it says “coming soon”. Is there any benefit to contributing to that pool now? Is there no APR number because pools are not earning APR on swaps, or because it just hasn’t been long enough to be reported and therefore the APR rate is unknown?

Tom Norwood 18:03
Those APRs are showing now, they should be showing by now. So I think yeah, that’s been rectified. Yeah.

Simon Chadwick 18:12
Okay, so are the yields still autocompounding or has that changed?

Tom Norwood 18:16
Yields are no longer autocompounding Yeah, in the beginning, our farms were autocompounding. That’s no longer the case. In order to compound you need to actually withdraw from the farm, harvest your LOOP, or your LOOPR, or your HALO rewards, or whatever reward that farm is offering, and then you’ll need to repool and refarm those tokens, or just take those tokens and stake them is probably the easiest way to continue to get.

Simon R. 18:44
Exactly, we honestly could have kept the autocompounding, and we could have used APYs instead of APR all throughout the DEX with much more impressive numbers. But again, we’re not out here to fool you guys. We had a lot of discussions and thought around this. If everybody’s being compounded at the same time, then it’s not really autocompounding. We need to have that harvest function where people have the option to leave their tokens in to be autocompounded, or withdraw for there to actually be true autocompounder. Because then not everyone can and will be autocompounded. So we made the moral decision for moving that for now until we put the harvesting in, showing true APR instead of really high awesome looking APYs and yeah, we’re just being open and transparent with you guys.

Simon Chadwick 19:39
Does anyone know of any yield aggregators that aggregate rewards on the Loop LUNA-bLUNA?

Tom Norwood 19:44
Not at the moment. I don’t think there are any yet, but I guess we’re expecting that one of the yield aggregation platforms like Apollo, or Spec, or maybe… Yeah, one of those will actually create some sort of an autocompounder. I think Apollo’s probably… They’re perfectly designed for that. That’s what their main vaults do, is autocompound. So, yeah, we hope to see something like that come out in the near future.

Simon Chadwick 20:12
Okay, so I saw that your mobile app is coming soon. And I’ve actually played with it, it’s awesome. Can you detail what will be available on the app, and also when is it going live?

Simon R. 20:22
It will, so just quickly, we’ve got obviously the swap functionality, which uses the Loop DEX. That’s what has our awesome graphs on there. And we’ve simplified the process, opposed to Terra Station. So instead of you having to input your swap details, then click swap, then have to verify on another screen, and then do the trade, ours has everything on one screen. So you input the from and the to, you’ve got the summary there, and then you’ve got the graph below that, and then when you click “Submit”, that’s when you… Fingerprint or password, and then it executes the trade. Again, we’ve heard everyone’s feedback. And we’re just trying to make this process as enjoyable and smooth as possible for you. We’ve also got numbers, so dollar values, on the wallet screen, so you can just see very quickly and easily the total value of your wallet, and the balance for each coin. You’ve got an awesome portfolio screen. So you can see a breakdown of all your assets, where they are, all your staking positions, farming positions, pretty much Ape Board, right, very nice and clean. You’ve got our community, which is obviously nice and easy for you to play around with. And we’re going to have some really nice wallet integrations with that community coming soon. And then you’ve got our LP NFT marketplace. Again, it’s only coming soon. So you can see what it will look like and how you can use it. But you’ll be able to see all your LP NFTs there, the positions, your ROI, your APRs and everything there too, which is cool. When that’s coming out? Again, we’re doing things properly. So we’ve opened up, first, the private beta, now we’re in public beta, so anyone can go on our website, scroll down on the landing page, and then click on the app wallet section. And that’ll take you to the private beta that you can join. And once we’re happy, and once you guys are happy with it, then we’ll go live. So we’re hoping to go live within a couple of months max.

Simon Chadwick 22:23
Cool. Okay, so this one is on Loop Learn, so updates on Loop Learn. Will I be able to share with my normie friends before Q2?

Tom Norwood 22:33
Simon, you can probably answer that one. You’re the Loop Learn…

Simon Chadwick 22:38
Loop Learn guy.

Tom Norwood 22:38
Loop Learn… Exactly.

Simon Chadwick 22:41
Yeah, to give you an update, it’s moving pretty hard. So we’ll be launching on the 2nd of February, I believe. That will just be a couple of the videos coming out. We’re building a new platform as well. So we’ve got a platform v1, which is already done. All the developers have finished that platform, that’s going to be quite a basic functionality. By March, we should have most of the videos. We’ve got the animation team that’s been working around the clock on it, going through storyboards, and animations, and voiceovers and everything like that. So we’re going to have about 40 videos plus, and then that will scale to over 100 videos. Everything from basics of crypto to… It’s looking like we’re going to have all the ecosystem projects housed on Loop Learn as well. So pretty much most of the projects in the Terra ecosystem, and the future projects are going to have their own education videos as well, that’d be housed on Loop Dex. And they’ll also likely develop a series for onboarding developers. So I’d say the gamification will come in around March or so. Earn to learn and we’re just rolling it out in stages, but it’s going to be very, very soon. And you’ll start to… In Feb, you’ll be able to have the first set of videos. It will be like 7-12 videos. And then from there, we’ll add more, and it will just get rolled out and it will grow and we’ll bring in more functionality and the new platform is going to look amazing. It’s really really good.

Tom Norwood 24:19
Amazing. Can’t wait. Yeah, really looking forward to that. It’s going to help to onboard so many users because, as I’ve said so many times, I mean, this stuff for us is kind of second nature now, but for normie people, I think crypto’s already complicated, but DeFi just takes that to the next level of complication. So it’d be great to have like a really structured course for people to onboard.

Simon Chadwick 24:41
Yeah, and I think that the biggest keys is understanding how it benefits Loop. We’ve got a partnership with TfL at the moment where… These videos are very, very high quality, and they may end up on YouTube, is gonna likely end up on YouTube as well. And I see these videos having millions of views on YouTube in terms of their quality. And everybody that comes, the first thing they’re going to see is Terra X Loop Learn. And so firstly it gets eyeballs on Loop. And we’re gonna have a lot of… Or driving all the onboarding into Loop Learn. But also from that it gives us the ability to… In the section where we talk about Loop and stuff, and we can give away these NFTs as rewards that can really incentivize people to use the Loop DEX as their main point. Firstly, it’s their first touch point into crypto or into Terra. And secondly, if we give people NFTs that maybe reduce trading fees or give you an increase in yield, and people hold them and maybe they have to stake them to get those rewards, then what happens is you kind of have the ability to retain users on the Loop DEX, and everybody’s going to use the Loop DEX as the main place for their training, because that’s what they’ve learned and that’s where they’ve been rewarded to do. So it’s very beneficial to build this out as kind of the glue that really helps as a first touch point, or as a lead magnet if you like. And we’re also teaching people about crypto in a way that they’ve never learned before. If you look at crypto, and the education that around in crypto at the moment, it’s not great. And this is really a way to change that and to gain further learning experience.

Tom Norwood 26:27
Fantastic. Can’t wait.

Simon Chadwick 26:29
Yeah, it’s exciting. So when will we be able to learn about some of the projects being incubated by Loop Ventures?

Tom Norwood 26:35
I think we’ve talked about a couple of them already. There’s sort of three main ones at the moment. One is solar BTC, sBTC. So essentially, these guys are building out a large scale solar farm in the US, which will be used to mine Bitcoin. We are then tokenizing that farm on Terra, which means that if you own these tokens, then you will start to get some of that Bitcoin yield which is being generated by the farm, essentially that we’re going to bring that yield over onto Terra and deliver it to people who are staking the sBTC tokens. So we’re like owning a part of a solar mining farm a solar Bitcoin mining farm. These guys have so much experience in not only the solar and wind energy fields, but also in Bitcoin mining. And we’re hopefully looking at making this, within one to two years, making it 100% solar. So that means that 100% of the Bitcoin mined for this farm will be mined by solar power, with no backup energy from the grid at all. So the idea with that is it will mine Bitcoin during the day when the sun’s shining, and then at night the rigs will just switch off. But if we have enough of these in different places around the world, then obviously we can mine 24 hours a day. So that’s solar BTC, a very exciting project, amazing team. And yeah, we’re really excited to be bringing that to Terra and of course, to Loop.

Tom Norwood 28:14
So the next one is Hybrid.NFT, these guys are building out an NFT platform, but with a difference. And the difference is that they’re actually building out factories as well, almost with these sort of next generation 3D printers, which can print out almost anything. And the idea there is, is you’re buying NFT, and you’ll be able to print it out into a real world product. So your NFT can become a shirt, or it can become a cup, or it can become a whole range of different objects. It can actually be printed from these NFTs on these machines, and you’ll be able to see them being printed in real time. So that’s also really cool. And they have a wide range actually of really top level partners. So one of the guys there used to work for Viacom, for example. They have partners from everywhere, from Ferrari, to Maradona, to Mr. Men to like a whole range of really big brands that they’re working with. So there’ll be creating NFTs, and then real world products for those brands, which is super exciting.

Tom Norwood 29:20
And then the last one is LunArt. LunArt is building, again, NFT platform on Terra, but for artists, and creating a really amazing artists community where people will be able to vote on artists and see which artists they want to see on the platform. And yeah, they’ve also got themselves… They’re a community of artists themselves and there’ll be onboarding, lots of new artists. So it’s an NFT platform focused much more in the kind of artists, art world, which is really cool as well. So yeah, they’re kind of three that we’re working to bring out very soon. And then we have Onecast as well, which is a platform for talent, models, actors, actress, etcetera, to create NFTs. And then they’ll be able to purchase those NFTs and kind of have a stake in their career. So if they do well, then obviously the early NFT holders will do well as well. And then we have a range of other projects as well. So yeah, just keep up to date, we’ll be releasing information about all of these projects really soon. It’s time to write articles on them on the Loop community, so keep an eye out there and you’ll be updated as to those projects as they come through the pipeline.

Simon Chadwick 30:30
So that’s it for the questions. And we’re going to… We’ll just cover a little bit about what’s coming, and then we’ll jump into open question time from the floor. So, guys, what can we expect in the next week? So what can we expect in… I know this Q1 is going to be massive for Loop, but what can we really expect coming in the next week or two?

Tom Norwood 30:50
Look, I think you know, more than the next week or two, I think we should talk about the next, say, four weeks. The main thing we’re really focused on at the moment is our NFT platform. That’s going to be really, really exciting to have that finally up and running with the LP NFT bonds. And I can probably drop a little bit of alpha in here as well about another really cool NFT project or product that we’re working on, which is part of our marketplace, but it’s a minting functionality. So we’re going to be offering projects the ability to essentially do a mint. So they could mint 2,500 or 5,000 NFTs. Well, they can allow the community to mint their own NFTs. So they can essentially do a launch of their collection. But through that process, when you’re minting and NFT, everyone will pay the same price for the NFT when you’re minting, and obviously some of them will be rarer than others, some of them will be common, some of them will be rare. But the big difference with what we’re doing is, is that all of these NFTs will have a yielding tokens attached to them. So it won’t just be a JPEG NFT, it’ll be a JPEG NFT with a token yield attached to it, and the token will be from that project.

Tom Norwood 32:03
I think one of the first projects we’re going to be working with on this is White Whale. So they’re going to be releasing an NFT collection. And when you mint one of those NFTs, it’s not until you mint it that you find out exactly how many tokens are attached to that NFT. So the common ones will obviously have lower numbers of tokens, a lower token yield than the rare ones. And some very lucky people will get a super rare one, which will have a huge yield attached to it. So this is kind of… It’s almost like a new kind of launchpad because the projects can raise money in this way by selling these NFTs and the community can get tokens from these NFs. And we’re actually randomizing who gets the most number of tokens. So instead of a traditional launchpad, where high tiers or whatever, high token holders who have a lot of tokens are the ones who always get the biggest number of tokens from the IDO, this completely randomizes that process and the lucky winners essentially… Turns it into a bit of a lottery as to who gets the NFT is with the most number of tokens attached to them. So that’s like a really exciting product that we’re working on as well. And that’s how our NFT launchpad is going to operate. And then of course, with these NFTs, you can either stake them and collect the yield on them. Or you can sell them on the marketplace as well. So there’ll be a lot of cool options of things to do with those NFTs. So, yeah, I think that’s the thing that I’m most excited about at the moment is the launch of the the NFT marketplace. Simon, what are you excited about?

Simon R. 33:39
Yeah, there’s a lot of exciting stuff going on. Obviously, the app refinements and getting more feedback from everyone and implementing that. But also, we are launching a few updates to the website itself. We want to give you guys a landing page for each of our products. Just to allow you to deep dive and see exactly what each of our product offers as a UVP, unique value proposition. See the stats for each because we’re starting to get some really impressive numbers, and also the bounty for our new v2 DEX design. So we’ve been trying to launch this for a while now. But we just keep getting awesome feedback from you and constantly updating our designs. Now we’re finishing all that off. Also with all the awesome stuff that Tom has been talking about with the LP NFTs. So we’ll be opening up a bounty for that where everyone can pick through the prototype on envision, see the new UI on all of the pages, like in another very cool update that we’ve done is we’ve put a compressed version of our nice and simple swap functionality with the graph on a few pages. So if you’re on the Markets page, for example, checking out all the stats for all the coins in Terra, you’ll be able to do a quick transaction there too, right? If you want to use our bigger graphs and have more powerful functionality during the swap, then you can go to our dedicated swap page. And this very cool compressed swap functionality is something that we are containerizing. So that other projects, other platforms, other web sites can implement this very cleanly, very easily, on any of their pages. And they can default, the farm and the two tokens to what’s relevant to them, right. So we’re just trying to make our platform, our tools, our UI, which we spent a lot of time and energy on, with our community refining to be accessible for everyone, really easily.

Simon R. 35:44
We’re even planning on doing an SDK, so that you can integrate it in with your apps. So for example, when we get really good, and really efficient with this whole going from fiat into Anchor, we can have that one button functionality from credit card to Anchor available for everyone to use on any site. And like the really cool minting process that Tom was talking about, too, that’s also something that we’ll be looking to containerize and allowing all projects to put on their websites. Even farming functionality too. If a project wants to incentivize one of our farms with their own tokens, they can put that on their platform and allow people to go and interact with that, from their website into our pools. So that’s what we’re trying to do. We’re trying to be the corner, the centerstone of all these amazing projects that are coming to Terra. And that’s what we’re talking about before. The DEX is just our centerpiece. All our other functionalities and platforms all connect into it and go through it, which is awesome.

Tom Norwood 36:49
Hey, guys, so if there’s anyone who wants to ask a question, please put your hand up now. You can do that here in Twitter. And yeah, we’ll do our best to answer them.

Simon R. 37:00
Cool. Got a few people asking about bonding curves, our custom bonding curves. Tom’s going to talk about that.

Tom Norwood 37:05
Guys. I think we might as well wrap up this YouTube video because we’re on mute anyway. So it’s not gonna be recording sound.

Speaker 1 37:10
Yeah, while we’re switching over here. I think Simon was mentioning the bonding curves. He we touched on that earlier today during the interview. I think something like bonding curves is such an atomic level of the dex function that it could have some big implications on the future of you know, how our Dex works mechanically behind the scenes. Oh, lucky say that Simon,

Tom Norwood 37:28
I can probably talk about that a little bit. Yeah, at the moment, we’re looking at implementing a couple of new bonding curves. One is similar to Curve v1, which is basically a stablecoin swap curve. So it’s designed to swap from one stablecoin to another. Obviously, when you’re swapping stablecoins, you don’t want any slippage at all, you just want one to one. So the idea there we’ll be bringing over Wormhole tokens. So for example, Wormhole USDC, Wormhole USDT, maybe Wormhole DAI, and then allowing people to swap those on the DEX for UST and at no loss. So that’s the stablecoin swap curve. Then we’re actually creating a bonding curve similar to Curve v2. With the Curve v2, it’s more capital efficient than the standard kind of bonding curve algorithm. So it clusters the capital around the current price point, and it uses oracles to determine what that price point should be. So yeah, for that, it’s more capital efficient than having, obviously, all of the capitals spread out across the curve, all the way from zero to infinity, essentially. And with a traditional bonding curve, it does actually spread out the liquidity across the entire curve.

Tom Norwood 38:48
Whereas the Curve v2 model clusters the liquidity around the current price point, which is obviously where you need it to be. And then it has less liquidity at the ends of the curve, so at the lower and the higher ends. Some of you might know of Uniswap v3 where the actual user gets to choose where they want to place their liquidity, so at exactly which price points they want to place their liquidity. Maybe that’s something we’ll look at doing in the future but for the moment it’s not something we’re really focused on because it requires quite a lot of manual kind of work from the user’s side to keep the liquidity always in the right places. So yeah, and as I mentioned earlier, we’re also looking at designing some custom bonding curves for things like the aUST-UST pool, because it’s a bit different. It’s not a stable swap, because it’s not one for one, but the price ratio should remain stable. So like I said, at the moment, one aUST is worth 1.16 UST. That will change over time as aUST grows in value. Initially it was 1:1, now it’s 1.16, in the future it’ll be 1:1.2, etc, etc. So we actually need to design a specific bonding curve algorithm for that pair so that it maintains that ratio and it maintains that as a constant so that there’s no slippage and no loss for either users or liquidity providers. So yeah, I think that kind of covers off what we’re doing on the bonding curve side of things. Does anyone have another question?

Tom Norwood 39:15
I think if we don’t have any questions, we’ll wrap up. But yeah, I mean, we’ve covered a lot of information in this AMA in general. So yeah.

Simon R. 40:30
We’ll give it another minute.

Simon Chadwick 40:37
Give it another minute. But yeah, so just in general, just touching on obviously, Q1 is massive for Loop. We’ve got so much happening. And it’s probably… Could be a little bit tough to keep track of everything that’s going on. But obviously, everything’s moving and the momentum has really kicked in terms of our TVL growing massively. It’s very exciting to see because, I talked to on a Space the other day about launches and how launches can sometimes have a few issues with launches and it wasn’t the cleanest start to everything, but we’re really on track now and the momentums we’re building are massive.

Tom Norwood 41:14
Looks like we’ve got CapriciousSage here who might have a question, so go ahead.

CapriciousSage 41:19
Hey, guys. Currently got COVID, can’t talk properly. So I’m going to try to keep this brief. So with this aUST-UST pull that you guys have got, there was… As many know, there was an aUST-UST pool already on TerraSwap. Its liquidity was dog awful. And people were getting utterly wrecked. We’re talking, they put 400,000 aUST, they’d get 200,000 UST out. And then a bot was coming along and sniping the arb trade and walking away with $200,000 of profit in a few seconds, which is not fair. To try and help with this situation I injected a fairly considerable amount of liquidity to the pair to try and help alleviate things. The ideal solution would have been to just completely get rid of the pair but nobody wanted to do that. And whilst that did help a little bit, TerraSwap’s multi hop process meant that if someone is trading from aUST to bLUNA on TerraSwap, it would automatically go from aUST to UST, getting people wrecked from UST to LUNA, from LUNA to bLUNA all in one hop, and people weren’t realizing that they were getting completely smushed. Now with Loop having is aUST-UST pair, the liquidity on the TerraSwap one is down again, more people getting rekt. What I don’t understand is that why would anyone want to actually use an aUST-UST pair outside of either, one, not understanding that if you right now wanted to swap $10 million, an insane amount of money from aUST to UST, you can go on to Anchor right now and swap it for $1 and suffer absolutely zero slippage to get the perfect rate. Versus if you do that on either the TerraSwap pair or the Loop pair, you’re going to get smushed. So it seems that each pair only exists to catch people that don’t know that they can do it elsewhere, and to create arbitrage opportunities for the people who realize that they should have done it elsewhere, and they’re taking advantage of the fact that they didn’t know better. So what purpose do they serve?

CapriciousSage 43:59
I’d understand that if it was cross-chain, that there is some validity to it there. But it seems that these pairs existing in the first place only seem to create market inefficiencies as opposed to efficiencies. And that both TerraSwap and Loop should instead just be going, “Hey, just swap it first on Anchor,” or ideally tying in directly into anchors built in… It’s not really a normal swap mechanism, but its process of exchanging aUST to UST to make sure that that all happens at the proper rate, and then continuing on with a multi swap hop or whatever else pair is there. Wouldn’t that be a more stable mechanism being that it functions as an infinite liquidity pool to ensure zero slippage?

Tom Norwood 44:43
Yeah, absolutely. Yeah, that’s some really good points and look, it’s a problem that we’re very keen to solve and because we do see a lot of benefit in having the aUST-UST pool. One, is just to make it convenient for people who don’t… You don’t have to go to Anchor and then get aUST and then come back, you can just… And if we have essentially what is a stable swap bonding curve algorithm which is going to hold that… Like I said, it’s going to be always 1:1.16, or whatever the exact rate at the time should be, then there’ll be no loss for LPs and there’d be no loss for the user as well, because it would be like any other stable swap, where it’s always one to one. Like the Curve v1 algorithm is always going to give you as close as possible to 1:1, so there wouldn’t be any swap there. Your suggestion for potentially using Anchor in the background is another good one. That’s definitely another way to solve that. I mean, in the future actually, I think, I don’t know, if you missed the… Maybe you missed the start of the AMA, but we talked about how in the future, we’re actually looking at having aUST pools on our DEX instead of UST pools, so we’ll have a lot of aUST pairs that we won’t actually have UST pairs for. And in those cases, if you want to go from UST to one of those assets, it will have to route through aUST. So the aUST to UST pair will become a routing pair, essentially. But before we do that we obviously need to solve this issue of the of the impairment loss issue. So yeah, it’s something that we’re working on actively.

CapriciousSage 46:21
At the moment, if someone was to swap 500,000 in aUST to UST on Loop’s pair, they’re looking at a 20% price impact. That’s massive. And I’ve been watching the trades history on both of these pair, on the TerraSwap pair, for the last two months. And it’s heartbreaking seeing how many people not realizing what they’re doing. And there goes a couple of people’s annual wages in an instant, and a bot just jumps in and goes, “Yeah, we’ll take that.”

Tom Norwood 46:56
Yeah, well look, maybe as a temporary solution, we should actually put a limit, on how much people can trade on that. Obviously, we’re relying on people’s intelligence to only trade small amounts on that pair, but probably…

CapriciousSage 47:11
The trading history says that’s not a thing. [chuckle]

Tom Norwood 47:14
Unfortunately, relying on people’s intelligence is usually a bad idea. So maybe as a temporary solution, we should at least put a warning there, saying, “Look…” Or even actually just literally stop people from trading high amounts on that pair.

Simon R. 47:35
That’s a good point. I mean, yeah, obviously, our target audience are not people who are doing 500k trades, especially right now. But as you guys said, yeah, people make mistakes. So it’s a very good point, I’ll actually get the team working on this ASAP, maybe we put in a limitation where if the slippage is higher than let’s say, 2%, then it won’t let you go above that value in the front more than two field.

Tom Norwood 48:02
I’d even say 1%.

CapriciousSage 48:03
We can push TerraSwap to do the same thing, because I have seen dozens and dozens of these well into the six figure range transactions go through, and people just getting burned. It really does… The ideal solution would be is that if it’s just going to be part of the multi hop there, is to whether or not both Loop and TerraSwap can figure out a way to rather than need to run a liquidity pool for that aUST-UST pair, which I understand on other ecosystems, it’s necessary to have that pool because they don’t have an Anchor providing an infinite liquidity perfect rate swap at essentially a negligible fee, that’s always going to be less than the fee of any DEX or anything like that, because it doesn’t have to pay LP providers. So if there was a way that basically all of the other swaps just happily go on on whichever DEX that they’re on, but that aUST-UST swap component was to use and integrate with Anchor’s, deposit, burn, redeem mechanism for getting that perfect rate, that would mean that, one, it’s going to be much more capital efficient as far as making sure that people are deploying their liquidity on the pairs that actually need it. And that you’re not putting a bunch of liquidity into a pair that’s essentially serving a redundancy and that you’re not ending up in a situation where there was rather than already having one low liquidity pair causing people to get rekt, and we’ve got two low liquidity pairs, both risking getting people rekt. If we can replace them both with just a thing that already uses, essentially, a perfect swap mechanism, then all of that capital can be put somewhere else. And I mean, I’m saying this as the guy that’s providing, let’s just say, a very unhealthy percentage of the liquidity on the TerraSwap pair. I did that to try and stop people from getting wrecked. But I’d be lying if I said that it wasn’t giving me an eye watering yield on a stable coin. Which is cool, but not… I don’t like the fact that I’m getting that yield off the back of people getting hurt. But I’m doing it to try and make them get less hurt, if that makes any sense. So yeah, but I would much rather that pool not exist, knowing that it means people aren’t going to get hurt. And then I’ll go back to doing other things. That seems like the fairest model. And then we can all put liquidity into the pairs that need it.

Simon R. 50:41
Exactly, yeah. And at the start of the AMA when we were talking about reaching 100% efficiency, that’s exactly what we’re planning on doing. But you’re right, there are ways that we can make the process to 100% more efficient and stop people from getting smushed. And this is the beauty of Loop, right? This is what sets us apart from other DEXs and other projects is that we are very community focused, we’re very engaged with people like you. So you will see a solution implemented very quickly. And then like you said before, you can get that done on other platforms while it’s getting done on Loop, right. So thanks for the feedback. That was great. We’ll discuss this afterward, then we’ll implement a solution.

CapriciousSage 51:27
Awesome, yeah. I’m hoping that you can bring on change that that will also be useful for forming a little bit of pressure on other DEX to do something as well, because that one’s also… The big issue that I see with this particular pair is that the majority of the people who will be using it on Loop… Loop is where people go when they know what they’re doing. TerraSwap is where people go to if they’re just using the default thing. So the people who are most likely to do a really big, really stupid trade, are probably going to do it on the default one, because they don’t know better.

Tom Norwood 52:03
Yeah, well unfortunately TerraSwap is the one that’s integrated into Terra Station, into the mobile app, and into the desktop app. So that’s kind of the default that people use without even realizing they’re using TerraSwap.

CapriciousSage 52:14
Yeah, exactly. And it’s not clear. Just yesterday, I watched a trade that someone did 24,000 aUST into bLUNA. And it went… And I looked at the trade details and it went hop, hop, hop, hop… And the slippage was pretty awful, [chuckle] to be blunt. And it is a whole mess of things. And the person kind of got smashed by a good couple of grand at the end. Not as bad as the other day when someone put in 400,000 and they got back 300,000, or the trade two weeks before that where they put in 400,000 and they got back 200,000. But at least it’s all better than when the aUST-UST pair was first added, it had $800 of liquidity when it was first added. And someone put in, I think $250,000, they got back $780. And the person who had the snipe bot ready put in $790 and got back $230,000.

Tom Norwood 53:19
Yeah, well, luckily we’ll… I mean, we put in a ton of liquidity ourselves. And it’s growing quite quickly. I mean, that’s part of the reason we’re incentivizing it as well is just to get that TVL up as quickly as absolutely possible to prevent that from happening. But, yeah, in the meantime, as Simon said, we’ll definitely put some kind of controls and restrictions over that pool. So yeah, thanks again. Thanks so much CapriciousSage, you’ve been… It’s great to have you on here. And yeah, keep letting us know how we can improve the experience for users. That’s what we’re trying to do. Doesn’t seem like we’ve got any more questions. Yeah, I think that’s the big one for this week. So thanks, everyone so much for listening. We’ll be back next week at the same time. And we’re always on Telegram, Discord, pretty much everywhere. If you’ve got any questions in the meantime, just hit us up there. And we’ll do our best to answer them. So thanks, everyone, and have a great weekend.

CapriciousSage 54:13
Awesome, guys. See you later.

Tom Norwood 54:15
Thank you.

Speaker 1 54:15
Good job. I think most of the speakers today had COVID so we all got together. We kept building so we’re gonna work through it, everyone.

Simon Chadwick 54:23
Yeah, I thought I wasn’t gonna make it. I didn’t think I was gonna make it. I thought I was gonna die last night, but we’re here.

Tom Norwood 54:30
Good for keeping it alive, people.

Simon R. 54:32
Well, cheers, everyone.

Tom Norwood 54:33

Simon R. 54:33
Good weekend.

Finn 54:34
Thanks for checking out another episode of The Ether. That was the Loop AMA. Recorded on January 6th 2022. This episode The Ether was brought to you by Orbital Command, the community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Make sure to visit OC’s What We Do page using the link in the show notes to take advantage of some of the other educational resources they create, including weekly meetups to discuss Terra protocols, strategies and concepts, The Terra Luna Intel Report on Telegram, YouTube explainer videos on Terra concepts, and much more. You can also support their community efforts by considering them next time you’re delegating or re-delegating your LUNA. Find out more at For, I’m Finn. Thanks for listening.