Jupiter x Katana AMA

Jupiter: the key liquidity aggregator and swap infrastructure for Solana

Jupiter AMA with Ayush (https://twitter.com/ayushmenon_) from Katana (1/4/22)
Learn more about the yield generation protocol for Solana.

AMA Transcript

Ben Chow: So I have Amenon from Katana.

Amenon: Hey, how’s it going?

Ben Chow: Good. How are you doing?

Amenon: Doing well, thanks for having me on.

Ben Chow: Yeah, Quick question. You’re not anon, right?

Amenon: No, my names are used. I’m fully doxxed.

Ben Chow: Oh cool. Awesome! I just wanted to double-check that, a big fan of doxxed teams but we want to respect people who want to stay anon or pseudo anon or whatever it is, so awesome, awesome. Uh, well, thanks. Thanks for coming on. Thanks, everyone, for joining us. The AMA with Katana, it’s gonna be a fun one, so let’s get started.

How Katana got started [00:00:58]

Ben Chow: Basically, the first question I ask everyone is, do you mind introducing yourself and sharing how Katana got started.

Amenon: Yeah, for sure. So I guess, for myself, I’m a student. I studied computer science and economics at Harvard. I’ve done my first year there and I’m currently on my second leave of absence at the moment. So, actually earlier this year, I found out about crypto during March, I joined Delphi Digital which I joined as a founding engineer on Mars protocol, which is the money market on Terra, and then got into Solana with the previous Solana Hackathon.

So I started a project called Laguna Finance. It was an asset management ecosystem. We ended up winning a prize at the previous hackathon and then I was working on a crypto FinTech idea, interim then. And then, just given the regulatory climate, decided to come back to pure Solana DeFi, so for the Ignition Hackathon, so this past hackathon on kind of six days before I partnered and I decided to start something, so we decided to build a structured products protocol.

So we built kind of, the MVP in those six days and submitted it to the hackathon and then, got some good response and I think like, took it full time afterward. So that’s kind of the little crypto backstory.

Ben Chow: And what was the spark for wanting to do the structured products? What was there, what was it just one of the ideas you were playing with, you got some good feedback, or what?

Amenon: Yeah, it kind of went back to the old, like Laguna idea had come. So my previous idea was to build sort of a one-stop-shop for yield, so a comprehensive suite of investment products across the spectrum of risk, one of which was structured products.

It did prove a little bit ambitious to try to do everything. And I think instead of doing one thing really well might be the way to go. So, I think structured products we’re taking off on Ethereum, I think there’s a clear kind of product-market fit for them. And I think more sustainable yield and the challenge maybe is the explainability, how easy is it to understand for users. And so I thought that we could do something there. And so that was sort of the decision to double down on structured products specific specifically.

In terms of structured products, what is Katana about? [00:03:32]

Ben Chow: Great! Actually, this is a pretty good lead-in, because now I want to ask, for people who are new to DeFi in general, how do you explain to them, structured products or what Katana is about.

Amenon: Yeah, I think at a high level, we’re all about simplifying yield generation and we package different strategies into simple-to-use vaults. So you only interface with deposit withdrawal, and then you get access to this more complicated strategy in the backend. So initially we have two strategies, we have covered calls and put selling strategy, so what those mean, covered calls are just selling potential upside on an asset to lock in initial yield, and then put selling is just betting that the price of the asset will go up essentially. So those are two strategies that generate very meaningful yields that aren’t tied to liquidity mining, which I think is the important consideration where these are much more sustainable yields because they scale very well. And they exist after finite liquidity mining programs deteriorate over time. So that’s sort of the high level on what structured products are and why they’re useful.

Katana’s Solana Hackathon experience [00:04:47]

Ben Chow: That sounds great, man. I’m gonna switch back a little bit because I’m really curious about the hackathon experience. I’ve been really impressed with how Solana has used hackathons to really grow the ecosystem and some really great projects that have come out of that. Can you share a little bit more about your experiences there and maybe even why you chose that route as well?

Amenon: Yeah, it’s a good question. So I think I can talk about both hackathons, so this one, and then actually the previous one as well, which I think might be more interesting to people. So I think the wonderful honesty in the hackathon back in May, which one I really just learned about Solano. I think as you said, the hackathons are a great way to sort of introduce new developers and get them to build real projects, and then once you get started, I think it’s hard to leave. At least that’s how I feel. For the initial hackathon, I actually was building on Terra and so they wrote in Rust as well, so I didn’t have to learn a Rust, which I think is somewhat of a barrier for new developers but that said, I would say you don’t need to know that much Rust, especially with Anchor and so that was sort of the introduction to Solana and throughout the course of the hackathon, I took the approach of, I wanted all my friends to join and to build like a huge team.

We build like a team of thirteen, fourteen people for the hackathon. And I think that wasn’t necessarily the wisest thing in retrospect, because when you kind of scale, your size, like not everyone’s doing kind of meaningful work at that same time. Learning from that, for the most recent hackathon, we’re just two people, we’re actually still only two people on Katana and I think there’ll be an approach where everyone knows exactly what they’re doing. You can move a lot faster and you have a less, lot less operational overhead as well. So I think that was a big learning between the hackathons and then I think it’s also just a great way to get to know other developers in the ecosystem. Everyone’s in discord, everyone is trying to help each other out. I think that’s generally true in Solana and so we benefited a lot from that. Just getting to know all of the early projects from the last hackathon. It’s great to see them coming to Mainnet or already launched on Mainnet now.

And then, I mean, for us, we’ve benefited a lot from learning from other developers and getting their advice and any other feedback, peer reviews, etc. So I would say the hackathons are probably my favorite part about developing on Solana.

Ben Chow: That’s great. And do you think you’ll continue to participate in other hackathons as Katana or?

Amenon: Yeah. I mean if it’s legal. I think if we don’t do the Katana idea, it would have to be something brand new or something we definitely like, it’s just for fun, even so, I would definitely participate.

Ben Chow: Yeah. And what was it like, winning the grand prize and what happened afterward? I’m really curious.

Amenon: Yeah it was good. I think we got a lot of nice exposure from it so a lot of people got to know about Katana. I think it was a great way to bootstrap the community and I think that’s the most important part about our project, is we want to be a community-led, community-driven project and the hackathon gave us that exposure to bring new people into the downright community and so that was probably the biggest benefit. We also got to travel to Lisbon for the Solana Conference, which is cool, I think we were going to go anyways and so overall, I would say the main benefit was exposure and getting new people into the Katana community and then I think it’s really been about just executing and shipping after that.

The drive behind Katana use case on Solana [00:08:51]

Ben Chow: Yeah, I totally agree, and really nice. I think you just recently launched on Mainnet, right? Was it December, late December? Really good job building up TVL and, and attracting liquidity. Is there anything I can attribute, to the work you’ve done, the intention you’ve had, the hackathon or do you just see a lot of demand on Solana for these kinds of products?

Amenon: Yeah, I think it’s a function of votes, certainly. Although, I would like to think that it’s inherently useful product. So that’s the one nice thing is that people are using it without any incentives to use it, so that’s maybe the most promising thing about the product and it’s great to see people actually benefiting from it. I think it still feels like a nice use case. It’s not their whole portfolio, at least some allocation that they say they want to sell potential upside on SOL or they want to make a bet that SOL will go up in price consistently over time. So those types of things I think people want to make and it’s nice that we can provide that. I think beyond it in terms of TVL, it’s more about finding the right people. There are many ways to boost TVL, but it’s more about catering to the people that really need the product and building the best products for that. So that’s at least how we want to approach it.

And I think at the moment, we definitely have a lot of work to do on the explainability side, that’s our whole value add which we’re supposed to be simplifying. Your generation and at the moment I wouldn’t say our design is there just yet. So that’s the next leg of work is putting out explanatory materials enhancing the explainability of the web app itself and then in conjunction and trying to add more assets, more strategies, etc.

Some educational contents for users on Katana [00:11:04]

Ben Chow: Okay. Yeah. I mean, honestly, I feel like that is one of the top things for every DeFi protocol. Are there some things you feel people struggle with the most, trying to understand about Katana that you could share or what are some of the EDU things that you’re thinking about?

Amenon: I think the main one is the risks involved, people may sort of misunderstand exactly what the covered call is and, and why it’s useful. So, at a high level, the risks are generally much lower than people think, you’re always up in US Dollar terms but you’re sometimes selling your SOL a little bit early if it moons, right? So that’s sort of the consideration. I think a lot of people think that they’re losing their SOL, which isn’t the case. They’re essentially outperforming the US Dollar and they’re still up in US Dollar terms, but they’re selling their SOL a little bit early.

So that’s, the major one, and then we have this concept of shares that are essentially LP tokens that track your position in the vault and so there is some confusion around: Do you need to claim your shares in order to earn the yield? Things like that. All those questions have that simple answers, but it’s just a matter of educating the committee and maybe a FAQ blog or something like that would be helpful.

We’re going to put out much more material just to explain exactly how the thoughts work. Step-by-step, how strike selection, where is how rollovers work, from each option period. The nice thing about the product is you essentially get this perpetual option exposure, where you don’t need to manage your position for years if you didn’t want to and you still got this optimized covered call exposure so that’s the piece that still needs to be explained to people. Whereas some people think they need to do something every week, for example, we also don’t have a portfolio tracking page on our web app which we want to add very shortly so people can track their positions over time in all of their Katana vault positions. So things like that are the next big step beyond the core product itself.

Katana’s most recent milestone achievement [00:13:32]

Ben Chow: That’s really great to hear. Let me switch it up a little bit. Is there anything recently that you’re most proud of that you’ve shipped?

Amenon: I would say I’m very proud of the speed at which we shipped. I think generally we would like to move fast. I mentioned we built the MVPA in six days and then with a little bit of a slowdown in that pace. It was hard to sustain that but over time I think we’ve shipped the amount of products in two months at this point. I think we support more assets than Ribbon and a lot of the next leg of work is actually optimizing what we have and then the big piece that I’m super excited about.

And the big value add to the ecosystem overall is our treasury management efforts and so that’s getting to where the bulk is going to be because today there are very few treasuries on Solana, but we do want them to be the protocol that caters to treasuries generating yield on their assets. That’s building a full suite treasury management product. So the natural use cases are protecting downside on their native token and then selling potential upside on their native token, both of which lend themselves very well at the structured products. And you can turn treasuries into endowments of sorts, that sort of are productive assets that can sustain the protocol over time, even in bear markets. So that’s sort of the big value out of Katana and then, in addition to its retail offering.

Ben Chow: I totally agree. I think treasury management is going to be huge and absolutely agree that it’s early. I feel like a lot of projects are thinking about that now.

How does Katana seek to simply its products for users? [00:15:45]

Ben Chow: Going back to Jupiter, and maybe, maybe all DeFi apps have the same thing of trying to simplify the finance aspect towards it, but then also find ways to help people understand what’s going on. Like with Jupiter, we simplified sort of the complexities of dealing with a central limit order book on Serum but then we have to expose some of it because there are some of these edge cases and things, and some people, because we’ve abstracted it away a little bit, some of that stuff needs to be understood, to understand what’s going on when, when these kinds of edge cases pop up. I mean, I think you’d have a very similar, maybe more, more urgent thing because you want to both keep it simple for people, but help them understand what’s going on. And especially because each vault is a little bit different, right?

Amenon: Yeah. I think what you’re hitting on is, is definitely the most important part and I think you guys have done a fantastic job on this, in sort of simplification without obfuscation. I think that’s maybe the goal, right where, we’re not hiding anything from the user, but we’re simplifying it to the degree that they want to: they just want to interact with deposit, withdraw. They can do that and if they want to dig deeper, all that information is available and open to them, that’s maybe the goal that we need to get to and then where we are today, it is relatively simple, but I don’t think it’s as explainable as it needs to be and so that’s maybe the balance that you played.

Maybe it’s not all on the web app itself, there’s also the docs, there’s also video resources, etc that kind of supplements the core web app to keep that simple and provide additional information elsewhere.

Ben Chow: Yeah, Actually I just want to share that. I think we’ve tried a bunch of these things and I feel our trend, the trend of work that we’ve invested more in is just putting more of it into the UI which is in itself a little bit more challenging because you want to keep it simple, but you had explained things. Not everyone looks at the docs and not everyone looks at the videos or goes through things. Some people just like really literally hop on the UI and start doing stuff.

I actually think that there are some learnings and what games have, doing games traditionally have a really nice sort of onboarding tutorial flow of like, click here to do this, then click here to do that. And this is why you’re doing it. And I feel the next phase of DeFi UI might really lead into doing some of that stuff so that way people are like if they want to ape into the vault, they’re doing it, but they’re learning as they go and that might be a really good way to make it more approachable for the next wave of people.

Fun Trivia Questions [00:19:05]

All right, we’re going to switch it up here. So we’d like to do a trivia and sprinkle a sort of these questions with trivia. So I’m going to hop in our AMA channel and just ask our first trivia question here.

So, here we go!

Trivia Question Number 1 is away. The question is

“What was the size of Asia’s first hackathon team? What was the size of the second?”

Amenon: Yeah. First hackathon team, I would say

Ben Chow: Oh, everyone else is answering.

Amenon: Oh, got it. I totally misunderstood the format here. My bad!

Ben Chow: So basically I’m basically quizzing people if they’re paying attention and then there are there.

Yeah. So, what we’ve been doing is that every trivia winner will get a special co-lab NFT that we’ve been working on. We’re a little behind on them but we do a custom NFT with sort of both of our brands and give them out. And you want to hold these entities. They’re really good.

All right. So I think the answer was thirteen for the first hackathon and two for the second. Is that right?

Amenon: Yup. That’s correct.

Ben Chow: Okay. So the winner, the winner is Captain Red Beard. Congratulations.

Alright, we’ll do another one. We’ll do another one.

So trivia question number two is out.

“What Katana’s upcoming feature they’re most excited about?”

By the way, this is not the most, sometimes we actually do the most wrong answer version of questions.

Yeah, that would be funny. That would be funny because we could switch that up. I’m not sure if people are actually doing the most wrong answer version now or I’m just kidding, a lot of people are saying NFTs.

Amenon: Yeah. Well, we did a, we did an early access NFT, so maybe they’re referring to that.

Ben Chow: This is upcoming. “Upcoming”, not past.

Essay says “portfolio dashboard”. Does that ring true to you?

Amenon: Yeah, that’s a good answer to get into.

Ben Chow: All right, I’m going to give it to Essay. Congrats Essay.

Yeah, that’s a good one.

We should do it! We should do it!

Okay, so the other thing, I’m just going to share it on this. If anyone actually also wants to come up on the stage and ask a question, feel free to wave up your hand. We’re happy to add you to the stage if you have a question, otherwise, we can also continue with the interview.

What was the thought behind the name “Katana” [00:24:52]

Ben Chow: So I guess, I guess the thing is, this is a question that came up. I just want to ask, this is just a silly, somewhat silly question. I feel like it turns out that a lot of projects are called Katana or have some sort of ninja name and seem like on Twitter and in our community. I think some people thought that you guys were a DEX game or a game, either a crypto game or a DEX, or anything.

Can you talk about what was the thought behind naming Katana? Have you thought about changing it in light of all this stuff?

Amenon: Yeah, I know it’s a good question. So I guess it’s funny because we decided on the name Katana right before the hackathon submission. So, the week afterward, I actually came out with their own index was called Katana. And so we’re, like I said, like, shit, that does clash, Um, I would say we can add Katana Finance at the end or something to differentiate, so we might do that. We do like the name Katana a lot. I mean, I like Japanese culture overall, and I think it’s pretty, pretty heavy in crypto.

That was sort of the reasoning, I like a song named Katana, so that was nothing crazy behind the naming, but unfortunately, it does confuse some people with their own index and so we might add a suffix to the name “Katana” to differentiate.

Ben Chow: So you’re saying you need the Katana because you’re into Japanese culture. Is that what you said?

Amenon: Yeah, I think that, and I like a song called “Katana”. So those are the two reasons.

Ben Chow: Oh, what song is that?

Amenon: it’s a funny song, I guess it’s not necessarily for everyone, like Kelly, he’s like a hip-pop artist and it’s called Katana.

Ben Chow: Okay. Yeah. That’s interesting. Have you ever thought of like doing a Collab with them, where they’re your theme song or something?

Amenon: I’ve been to one of his concerts. So maybe, I’ll try to get in contact with his team. I don’t think he would……

That would be funny though. I would definitely love to do that.

First question from the community [00:25:29]

Ben Chow: Cool. All right. It seems we have a question from the community. So, I’m going to ask it. Plummy River, asked, “Will Katana develop a C2C option mark marketplace feature, maybe something, maybe like Psy Option?”

Amenon: As in, for selling our options. Like, will we be open to reselling? Is that the question?

Ben Chow: Let me, let me see if I can get him, to elaborate, but why not want to take a step from that?

Amenon: If that is the question, certainly we’re trying to open up our RFQ process to everyone. Not only, so the way it works today is we have a select group of market makers that we run a competitive auction with, to try to find the truest price on our option.

Naturally, the more people we add, the more, it becomes a perfectly competitive market. The closer we get to the truth and so all our incentives are aligned to first open it up to everyone. And secondly, has the whole process feels a little bit more accessible.

So people who just want to buy these kinds of out of the money strike can do so whether it’s called footsteps, I think it’s a great way for the ecosystem overall, to start sharing liquidity, as opposed to having these segmented options that divide liquidity where it doesn’t end up being optimal for anyone at the moment.

Second question from the community [00:27:14]

Ben Chow: That makes sense. That makes sense. I’m going to switch to another community question, from TheSageLion, because I think it’s also interesting. TheSageLion asked, “Is it possible to make adding your own vault independent, as some DeFi project users can add their own liquidity pools?”.

So I guess, I guess they’re wondering if you will have a permissionless vault, is that something you’re thinking about?

Amenon: Yeah, certainly and so the real question there, we can do that today, but the limitation is, will market makers bid on random strikes cause then you’re spreading out liquidity and if you have a 200 strike and then a 201 strike that someone else created like you’re not going to get optimal pricing on either one and so that’s the balance that we need to play. So what I would say is that we will provide the kind of base vaults where anyone could throw up a vault on top of it as well or they can set there and configure their vaults with their own strategy. That’s maybe, you can also trend into multi-step strategies there so not only are you using a covered call, but maybe you add some sort of selling into USDC. So you’re progressively diversifying your asset into USDC and those types of vaults will be very easy to piece together and we’ll provide all the building blocks for it. That’s a great question and definitely something on our roadmap.

Ben Chow: That sounds great, man. I totally get the balance there. You know, I feel like every project has to balance that, but I’m a big fan of permissionless and I think it’s really going to unlock s of the promise of DeFi there.

Amenon: I think that’s the whole money Lego.

Ben Chow: Yeah. Honestly, I think we see that with a lot of projects, I mean the explosion of tokens and that’s common because it’s so easy for anyone to create a token, create a market, I feel like on the good side, created a lot more unique communities and interesting value propositions for tokens, along with everything else, it’s pretty cool.

Third question from the community [00:29:58]

Ben Chow: So, uh, another question from the audience. Ari75 asked, “Any plan to implement fees at some point?”.

Amenon: Any plans to implement fees? Yeah, so certainly, we want to leave the lever on, we baked it into the code but fees are currently set to zero. So today we have no fees and then we want to leave the lever for governance to turn it on in the future. So kind of following the Uniswap model where, one day, if it was determined wisely to start turning on fees and accruing value into the treasury, then governance can make a decision on that and we will abstain from those sorts of decisions. So that’s a decision that the community will make but today we have no fees and I think it’s one of the big value ads of Katana today.

Ben Chow: Awesome. Awesome. I mean, we share the same ethos really, Jupiter takes no fees as well and that’s going to be a decision of the DAO. So I think it’s the right approach, the way that we have been thinking about it. A lot of people have been thinking about it. It’s a sort of a more long-term approach, like let’s focus on growing Solana now rather than taking teas now.

Amenon: Exactly. Yeah. I think you just want to have an inherently useful product that people use for the sake of the product itself. And then, it’s so useful that if governance decides to turn on fees, that’s something the community is moving on and is okay.

Ben Chow: I guess people mostly ask that question is because they’re looking for the inherent value, not necessarily whether you turn it on or not, but that it’s there and that this is a place to invest in the long-term.

Amenon: Yeah, exactly. I think that comes back to mechanism design, having generating cash flows, I guess is the sort of core value of any business. And so, coming from there, I think that standpoint makes a lot of sense, and then it’s sort of a startup mentality where you’re optimizing for growth in the early days and you want to reduce friction to the degree that you can. So no fees make it not a consideration nobody’s turned away for not having fees for using the product. And then you build the sticky, useful product that in the future can charge fees. That’s tied to the performance of the assets.

Fourth question from the community [00:32:34]

Ben Chow: For sure. All right. I’m going to ask a funny question. Just, I’m just going to rip on this because Marty from Jupiter, this is a joke, by the way, a question from your parents, “When, when are you, when will you come back home, stop living in a car?”. I think I helped you with your audio, your audio.

Amenon: Yeah very, very good ears. Yeah. I’m certainly in a car right now. I will. Yeah, you can tell my mom I’ll be home in like an hour and a half or so. I have a doctor’s appointment, unfortunately at the moment, just heading there and I’ll be home in an hour and a half.

Ben Chow: Ah, no worries. No worries. Multitasking with the AMA, you’re our first AMA in a car.

Amenon: Okay, awesome. Yeah, that should be a series though. We said we should have a continuing. Oh, yeah.

Ben Chow: Yeah. It’s like one of those. What is that? There’s a comedian.

It’s that one?

Amenon: Yeah, that one’s hilarious. I like it. Although, they’re in the car together, so that, that might be slightly different than meeting. Yeah. There’s also the…

Oh, no, I was just saying that. I think there’s another comedian Jay Leno, he does his episodes in cars, so I think it gets the conversation flowing pretty missive.

Ben Chow: Oh yeah. It’s totally cool. I think we should try it. It’d be fun to be fun.

Trivia: Most Wrong Answer Edition [00:34:18]

Ben Chow: All right, we’re going to switch back to trivia. This is going to be the most wrong answer edition. And here you go.

All right, should be a number three. Most wrong answer.

“Why is Katana called “Katana””

Amenon: That’s a good one.

Ben Chow: ninja turtles.

Jack inspired.

Oh, is that literally it, that’s a real answer?

for cutting our wallets.

Amenon: Hopefully we’re not doing that

Ben Chow: sword was already taken.

That’s pretty funny.

Fifth question from the community [00:35:17]

Ben Chow: I actually want, while people are answering all this, I’ll ask a couple of other questions, so Crytome from the community asked, “Will there be a wider range of products with different times of expiring? Any, any plans to add more products like range sniper?”.

Amenon: I know that’s a good question. And so there are a couple of considerations on more time. Um, so one of our products, as I mentioned earlier is the treasury management products. And so those will run longer expirees so those will be biweekly, every two weeks or it could even be longer than that and so that’s optimal where you get the most time value out of your options.

You still have this meaningful cadence where you can select a new strike depending on market conditions. There’s also the consideration of shorter time periods for retail, so the way our vaults work and this is one of the parts about explainability is that they run weekly strategies.

And so if you miss the current week, your funds are essentially sitting in a queue, to be deposited into the next week strategy, so that’s where, if you extend it to two or three weeks that people are waiting for two, three weeks to get into the strategy, it’s not ideal for retail but I do think for DAOs and treasury its sort of a one-time deposit plus some additional deposits over time but that’s where I think there’s a careful balance between selecting shorter than weekly because you get very little time value and your options, and then longer than weekly, you’re just asking retail to wait for a couple of weeks to get into the strategy, which I think is a tough ask in a very short attention space in general.

Ben Chow: Yeah, actually, I wonder if there’s an interesting partnership between that problem and what mean finance is doing where they’re streaming vaults so may solve some things there, you know that might be interesting.

Oh! so this is a funny answer, but I don’t know who these references are. Kataro mentioned that “I guess you had, sorry, the origin for Katana is like you had dinner with Yon Sheena, the Walk, and Shelong Musk and they forced that Southeast Asia influence onto him”. He’s like Asian, Asian, hot finance bros or something.

I don’t know.

Amenon: Asian version. And then,

Ben Chow: All right, let’s give it to you. Well, let’s give it to Kataro.

That was pretty good. Although actually everyone has shared some really cool photos of sorts. Now. They all had really good answers actually. Another fun one was, uh, Fatima says, Katana is $36 in Amazon.

Explain more on Katana’s vaults and strike price [00:36:09]

Ben Chow: I’m kind of just going back to the vault again. I’m kinda curious, did you say that with the vault people can choose their own strike price? I thought you were picking that for that’s the part of the things that the vault does automatically for you, or, or is there a difference between treasury charging to manage vault and sort of retail, retail vaults? Like what is the kind of thinking or, what kind of control.

Amenon: So we select the strike prices, so the vaults select it, honestly and so, yeah, that’s the benefit of the user is that they don’t need to sort of actively manage positions. They get these perpetual options, exposure, and access to the optimized strategy for that specific asset. So that’s what the vault does for you. Again, there are different risk preferences, so if you want to be very like, sort of, if you’re willing to sell the asset at a very low price to lock into high yield, then you can choose strikes that are very close to the current price of the asset and if you never want to sell your asset, so never get exercise, you can choose strikes that are all the way, like SOL at 1000 next week, for example, you’ll get a very little for that option because it’s almost impossible but at the same time, you fulfill your use case that you never want to sell it. So we play in the middle over there, where we choose strikes that are very unlikely to get exercise but still generate meaningful yield. So if you take a look at our web app, I think we’re generating somewhere around 40 or 50% on SOL APY.

And so that’s kind of a balance where the current Delta we’ve selected is 10%. So you’re 10%, looking at past price history and volatility. There’s a 10% chance that you will be exercised on these options and all that means is that you sell your SOL a little bit early and you don’t get the full benefit of the upside and why would you do that? Well, you lock in this kind of very meaningful yields initially and so it’s a careful balance there. And we have an idea on how to tranche the vaults, such that different people with different risk preferences can express those. So there may be very aggressive defaults, which generates 150% APY on coal, but it’s very likely to be exercised and then there’s also the very low-risk vaults quote to quote risk cause you’re always up and USDC but essentially you can select the strike that’s way out of the money. You’ll lock in very, very little APY, but you never sell your SOL so that kind of caters to different people’s preferences over time.

And then the one thing I’ll add actually, yes, one thing I would add there is that the vaults are very tax efficient as well because it encourages you, like when you when you do these processes yourselves, you incur taxable events on every transaction. Here what’s happening is that the vault runs it for you so you’re actually not incurring these events yourself. And then you get the yield at the end of the day from the vault running the strategy.

Ben Chow: Yeah, that’s a really interesting point and that’s because technically you have shares in the vault, right? You don’t have, it’s not actually your cap.

Amenon: So exactly. And you’re not sort of selling the options. You’re not transferring into the underlying asset. Like all of that is automated for you and you kind of get these LP tokens that represent your stake as the vault.

Ben Chow: Nice. That’s very cool. That’s a really great point, actually. Cool. Awesome. Alright. I feel like we’re near the end of our AMA. So, anything else you want to share? Any upcoming plans you’re excited about that you want to share with the rest of the community? We’ve had a great turnout, by the way, there are over 138 people listening. 138 people fluctuate a little bit. We’ve had some great questions and it’s been really fantastic.

Amenon: Yeah, this was awesome. Yeah. Thank you for having me on, with regards to your question, I think adding more assets today, actually, to stake SOL on Solana, liquids staking solution on Solana will be live, ratting serum today. And I think like the goal really is to improve the UI so you can expect some designer and then overall, I would just say like, we’d love for everyone to come to join, our discord, I think we’d love to work together with you guys in any capacity and I think, very exciting times and funny overall.

Ben Chow: Yeah, same. I just want to echo that, like really love this. I’ve probably said this a million times, one of the great things about the Solana ecosystem is that projects all find different ways to work together, you know, and everyone’s been very helpful, really good partners out there. I think that’s where the exciting thing is going to happen in Solana and DeFi is that you have that composability, you have people building on top of each other because it because it’s sort of less competitive, right? Instead of people just sort of building their own instead of sort of building their own feature sets that compete, you’re really just trying to find ways to work together and, and, and, you know, to build more interesting products so I think this is going to be a great time.

Amenon: Yeah, I think all the incentives point to just growing the Solana system overall, as opposed to kind of competing at this stage, cause it’s, it’s too small to compete. I think there’s so much room for growth that everyone’s inclined to just help each other out and grow the overall ecosystem together.

Ben Chow: Yeah. And that’s the mindset anyway. That said, I think it will unlock so much more. Not just, growth, but really interesting stuff, like real stuff that you’re not going to see on Ethereum or other chains, so I’m pretty excited for this year for sure.

Awesome, man. Well, it’s been great having you. Thanks. Thanks for joining. Thanks, everyone, for listening in and for the great questions and the fun trivia answers. So you guys all have a good day.

Amenon: Yep. Thank you for having me and thanks everyone for joining.

Ben Chow: Cheers!

Amenon: Alright, Cheers. Bye!


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