Huobi’s AMA with Dexe Network’s Dmitro Kotliarov is a glimpse into the future of capital and DAO management
Huobi is one of the largest and oldest crypto exchanges in the world. It recently invited Dexe Network’s Co-founder, Dmitro Kotliarov, to do an AMA Twitter Space. Here is the transcript (edited for time and clarity)
Huobi: Hi Dmitro, can you tell us a bit about your background?
Dmitro: Sure. I'm one of the co-founders of Dexe Network which consists of a lot of products which we are trying to deliver to DeFi. We have a bunch of products with
focus on different trading tools. Myself and the other co-founder came into crypto in 2016 starting with mining. We saw huge price volatility for trading crypto. So that gave us the idea to develop various trading and algo trading strategies and tools. Dexe eventually came out of that.
Huobi: Can you give us like a couple of sentences about what is Dexe Network and why is it special?
Dmitro: Sure so Dexe Network is an ecosystem of different tools that bring professional trading to DeFi. At the core is our decentralised asset management platform, Dexe Investment. It operates via fully autonomous smart contracts and includes different currencies, allocations, automatic rebalancing, etc. So it’s a decetnralized, autonomous capital management and DAO management platform. Any user can create his own decentralised fund or DAO, as well as delegate investment pool management rights to a trusted person.
The manager can be a trader without any ability to withdraw investor funds, so very secure for investors. Users can evaluate the traders’ fully transparent statistics to decide in which fund to invest.
Huobi: Thanks for keeping it simple and educational at the same time. What's the unique advantage of your platform? And what kind of market are you trying to go after?
Dmitro: So for traders, Dexe Investment will improve the effectiveness and ease of their fund management many times over. But it’s more than that. Our product will allow many trader-managers to evolve to a pro level. Without compromising the protection of investors.
Because, you know, it's not a secret that the top unsolved problem in DeFi trading is security. Some goes for the DAO governance.
The goal for us is not just be as good as a CeFi platform but much better because DeFi has very high potential. Increased security, more complex trading, more automation, more asset choices and so on is just the start.
Yes, our UX is much better than the competition, but it’s more than that. What Dexe Investment delivers, traders in DeFi couldn’t previously even dream about. We give them what they really want from centralize instruments.
But the real innovation is on how our platform is coded for fair reward distribution to fund managers who can finally trade unlimited assets with the all kinds of trading strategies. And it's a multi-blockchain platform. I’d be impressed to find any other platform that comes close to even our base fund.
For the trader/manager, it couldn’t be simpler: he just trades the fund as he would trade normally with just his own money and the platform takes care of everything else, like reporting, fee distribution, deposits or rewards, etc. Compare this to some hedge funds where an entire office is dedicated to the above functions and even the traders need to spend too much time and mental space on non-trading tasks. We make all the old school fund management headaches obsolete, so this is the game.
Huobi: Great to hear about that. You know you talked a little bit about fund managers, which makes me wonder what types of funds do you have on your platform?
Dmitro: Yeah, even you can be a fund manager and bring your community in as investors. We have three funds, but let's focus on the base fund, the standard fund, where the manager can try any DeFi trading strategies wither with the assets approved by the Dexe DAO or any asset via a risk proposal.
An investment fund takes the same principle and applies it outside of pure DeFi trading. NFTs, physical world assets like real estate, early stage start-ups, participating in different farming events, and so on. It's a misconception that DeFi trading is only swapping one crypto for another. Dexe Investment will shatter the myth by showing that anything can be a part of trading strategy with the participation of DAO proposals.
Huobi: Yeah, that's that's really interesting. So you're saying that in this investment fund people come together to manage funds like a DAO, is that correct?
Dmitro: The big problem is that most DAOs are not fully decentralized. DAO pools ntegrated inside the Dexe Investment will help solve the problems with the distribution of rewards to DAO members, with incentivizing active DAO participation, etc. And you can create a DAO in a few clicks with out platform, even delegate governance.
Huobi: Would you say the target is more institutional or retail? What’s the target market?
Dmitro: We are trying to be fully decentralized, so anybody can participate in the Dexe Investment platform. Of course institutions can create their own funds and even give the possibility for retail investors to participate. Or you can make investment proposals private and allow only your private investors in. So both retail and institutional.
Huobi: Can you tell us a little bit about the insurance part because it sounded very strange for DeFi?
Dmitro: We have layers of security but also wanted to develope the insurance pool to protect against the unexpected. It is funded entirely from a portion of the fees that our platform is automatically getting from the traders’ profit.
To qualify for insurance payouts, an investor has to stake, not pay but only stake, DEXE equivalent of up to 10% of his investment where staking 10% insures insurance coverage for 100% of the investment.
The Dexe DAO community can make and vote on proposals for full recovery and full refund of investor funds from the insurance. The proposals thus determine which fund loss types the insurance will cover. The power is in the DAO’s hands.
Huobi: Can you tell us a little bit about the purpose of the DEXE token. What other use cases are involved in the the token itself?
Dmitro: The main role is for our DAO governance. I already mentioned that it participated in a lot of things inside our Dexe ecosystem. Actually, just recently one community member put forward a very interesting proposal about a massive ambassador program, which we already posted in all our social media. So anyone who wants can check it out on our forum. If the community supports it, it will be implemented very soon and the core team is happy to support such DAO member activity.
Also let's not forget that the Dexe Investment platform receives a 30% cut from the trader’s fee which is split between the insurance pool, farming rewards, and the DAO treasury. So you can use your DEXE to farm more DEXE.
Huobi: Is there some sort of a leaderboard where the best funds will will be showcased and what criteria will they be showcased for for people who want to be part of that fund?
Dmitro: Yes, the platform is transparent at showing stats like the percentage of profitability, profitability relative to the base asset, TLV, the number of investors, profitability over a certain period, age of fund, and so on. So it's important to give the investors many evaluation data points to choose from, not just a single one. Let them see the stats and decide for themselves.
My strategy for this as I am also a trader is to diversify the risks and to split your budget. We also built investor protections like the automatic diversification within a fund, requiring the trader to put own money into the pool, and the insurance I mentioned earlier.
Huobi: I have to ask this question, if I as an investor put the money into one of the funds on your platform, can the trader just take it out and steal it?
Dmitro: Absolutely not. It's impossible because the manager has zero access to investors’ funds; only can trade them via smart contracts and never ever transfer them out of the control of the original investors.
Whatever the investors put in gets converted into an LP token that represents the invested capital and whose value could rise or fall depending on the strategy and the talent of the trader. The trader can cash out his own LP and the investors can cash out out theirs. So this is total security securely and we built more protections on top of that, like the one against flash loan exploits. The only thing the fund manager can do to profit is to make money for his investors.
Huobi: As far as fees, are there any fees on the platform to trade right now?
Dmitro: No, no fee for traders or investors. The Dexe Investment platform is fully autonomous: traders and the platform both make money when investors make money, automatically.
The platform will automatically take 30% out of the trader’s fee and distribute it between the DAO treasury, farming rewards, and the insurance pool.
Huobi: So can any type of trader create a fund on your platform or do they have to have certain qualifications?
Dmitro: Anyone. You can create a fund. Just select your base token and strategy, put up your money, and wait for investors. They will come depending on your track record, fee, strategy, etc.
I trade a lot on the stock market and know that investors are always looking for successful traders, there is never a problem attracting retail investors.
Huobi: Let's say, I'm not a very good trader. I don't have any track record. I don't know really what I'm doing. Is there anything you could tell me how to get started?
Dmitro: You will have to get creative like beg your friends and relatives to join to increase your TVL. Then work hard and get them good profits. And if you get profit you will get the investors.
Perhaps others will see your fund statistics on Dexe Investment and maybe we'll be convinced to invest. Maybe you will trade so well that you will be #1 on the leaderboard, right?
Huobi: Thank you, Dmitro, for joining us!
Dmitro: My pleasure, I’m personally very excited for Dexe Investment.
Stay tuned!
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