Vinod Manoharan on Jax.Network’s stablecoin and merged Bitcoin mining

0:01i'm ashton addison from eventchain for investmentpitch media in the cryptocoin show and today on blockchain interviews we have vanad manaharan the ceo of jack's network vanard welcome to the show and thank you for taking the time to be here thank you ashley for having me here you're very welcome i'm excited to dive into jack's network uh the ecosystem that you've developed

0:23and the unique perspective you're bringing to stablecoins i would love for you to kick it off for us with just a an overview of jack's network and then we can dive into those details thanks for the introduction i'm excited to be here too so i'll give you guys a bit of update you know for you and your viewers about what our project is about so we are a bitcoin merge mind stable

0:45coin and in a nutshell that's what we do if you look at the other stable coins they're algorithmic like you look at tera there's dye and they have no bounds like you can print as much data as you want if you're a luna holder you can manipulate the markets so it's basically even die you put up collateral and then you issue die so it's like you take power from the elected officials

1:08and then you give it to someone in a decentralized dow okay although it's a dow the only thing you get is transparency but they're still unbounded in terms of how they manage things and it has a bunch of risks so we at tax network build a completely natural resource bounded stable coin that is you know an extension of the bitcoin protocol and we also solve scalability problems

1:31in the bitcoin network so in a nutshell that's what our project is about of course you know during the course of this call i'll give you more information as you have doubts or questions sounds great if not and yeah i would love to learn just a little bit more on how specifically having this merged mining with bitcoin allows you to solve those problems that

1:50that you've obviously pinpointed in these other stable coins that are in the market right so interesting question so bitcoin uh by default a lot of people first thing you know disclaimer first a lot of people say that merge mining is an increase in the block size you know it leads to more centralization uh for those skeptical people i ask them to read our paper because we

2:13have created a new reward function uh which kind of equitably we call it equitable merge mining wherein like the nodes get rewarded based on the effort they put into verification of the blocks and the mining of the blocks right so that's how uh we still keep our merge mining in a decentralized fashion now how does that fix the problems that other people have so our

2:37coin issuance is very unique meaning that in our network at the top level you have bitcoin as the uh anchor shard and then you have a beacon chart which is used for communication within our universe and then we have a bunch of transactional starts where coins are printed so when i talk about merge mining what's happening is uh miners are merged mining bitcoin which is the

3:00anchor shard along with our beacon chart and the transactional charts and how it works is that miners choose to get either so they get transaction fees across all three all three shards bitcoin transaction fees jax net which is our asset coin transaction fee which is mined on the beacon chart and they get the jax transactional fees jax is the stable coin in our network

3:22by the way our network has two coins one coin is a tax net point it's a beacon chain coin which is the asset coin and there's jax coins which are stable coins and mined on the shards so as some miner you're getting transactional fees across all three networks the transactional charts beacon chart and bitcoin now interestingly the miners have to make a choice before they start mining

3:44they say okay i'm going to get bitcoin and the asset coins or i'm going to burn both of these things and i'm going to get the transactional coins so without getting into the technical details of it our protocol through a decentralized article which is existing within the blockchain that is the hash rate of the network so if you're burning let's say one bitcoin

4:04today our protocol will issue let's say 30 000 jax coins on the shots right so this way you are bounded because you cannot keep printing coins because of market manipulation because bitcoin price is decided by the market and the bitcoin it's it's the price is even manipulatable but we issue coins based on the hash rate of the network so as more miners have joined the

4:27bitcoin network the higher will be your stable coin issuance if you burn bitcoins right so you are like naturally bounded by natural resources but compare it with the case of tai if ethereum is let's say two thousand dollars you put in ethereum as collateral and die you could print about let's say one thousand two fifty die for instance right and if ethereum drops below one thousand

4:50two fifty now die goes into an emergency shutdown and this is one of the problem they have right on the other side you look at terra it's completely not backed by anything you know uh terra has luna and luna price goes up they decide to you know they have something called senior edge they burn luna and create terror usd but you know in reality this is

5:11all manipulatable by the holders of luna and it's not naturally bounded so this way we put a lot of controls on the stable coin issuance that's one of the problems we fix i mean i'm not even going to go into usdt and stuff which are like uh collateralized by commercial paper uh so so so yeah so let's leave that aside for a minute let's not get it a bit

5:32political so it's going to be that so that's one way how we solve that now when it comes to scalability they don't even try to solve that because they're like private blockchains by itself die operates as a set of contracts on top of ethereum so the scalability itself is limited by ethereum we are around we have our own native blockchain housing our stable coins and

5:51we have proof of work starting to bring about scalability so we differ from these uh existing stable points in a way that we are extremely bounded and we scale right so this is the key difference between the existing projects and the one we have great explanation bernard and yeah it's really interesting that your team has come out with the a beacon chain um connected to

6:16bitcoin and i guess that means that you're really backing on the security of the network uh for bitcoin and the hash power and to have merged mining where bitcoin is the strongest network in in the blockchain industry uh to be able to back that on to jax sounds like the strongest way to protect the network but then obviously there's scalability issues with

6:39bitcoin and not being able to go past a few transactions per second so having your own chain to solve that how does that work where you know you're backing on bitcoin for the security but then you're actually utilizing the jax uh whole blockchain that you've created for the transactions yeah so good so you actually ask very interesting questions so it's

7:02so it goes like this right so let's look at how the dollar scales you know so so one thing to add is that we not only get the security of the bitcoin network we also get the liquidity of bitcoin because think about it if we have our own blockchain then we have to go get listed on 100 exchanges do market making create liquidity for our coins because we are issuing coins based on

7:25burning bitcoins our coins are mathematically related in price to the bitcoin so we know so as long as there's bitcoin liquidity in the market our coins automatically get liquidity this is one of the advantages we also have on top of getting the security of the uh bitcoin network right so when it comes to scaling the problem with scaling is the data availability problem

7:50now in ethereum like vitalik has been promising scaling for like five years now uh because the problem with scaling is that data availability is a very difficult problem if you share the network you can either centralize the system and have no shards which is the route that solana guys have taken you know they simply say hey forget about it we have a super node everybody

8:10trusts the super node and we'll be good to go so that's fine you know except that you lose censorship resistance now in a decentralized network if you want to keep censorship resistance you need to have sharding of some level and the problem with sharding is the data availability one shot does not know what's happening on the other side since it's money itself they're unable

8:30to reach consensus you can have spend some money on one chart and then try to use the same money or another chart now the other guy needs to check what you're doing right so what we do is we avoid that problem with math how do we do that so let's look at the dollar you have like ten dollars in your pocket i have a ten dollar bill in my pocket they are

8:49not unique you know they are not the same so what is it that connects them is they have a universal exchange rate the us government says that a dollar bill is equal to a dollar bill now in a decentralized network there's no centralized authority to do that so what we do is our coin issuance of jax coins are based on the hash rate of the network so let's say you spend uh you computed 2

9:12power 64 hashes and there is proof on that in the block uh the block number itself you know the block hash is proof of that so if you spend 2.64 hashes you have one coin regardless of what shard you participate in so this way all the coins across all the shards have a universal exchange rate then we go about establishing an exchange agent ecosystem which is like an atomic strap where they

9:38swap one to one between all the shards and as long as your balance is fine you don't need to worry about the other guy because he's checking that his balance is fine at one to one so we kind of avoid the data availability problem with math and this is how we bring about scaling through an external blockchain uh why we decided to have our own you know we can start is because

9:58we need to make a few tweaks to the bitcoin protocol for us to operate and of course it's you know bringing tweaks the bitcoin protocol is almost impossible they've been discussing taproot for a long time we have to approve integrated into our beacon chart so so we decided to have our own you know ecosystem uh our own beacon the chain that is anchored to the bitcoin chain

10:18and we continue to bring stability and scalability to the bitcoin network itself so this is in a nutshell i mean of course there's much details we've been working on it for three years so if you want more information feel free to check our academic paper that's available on our website great explanation venat again and thank you for you know sort of summarizing that and it

10:37is it is very technical so i appreciate that that short version and i'm glad that you have those academic academic research papers available as well and you did mention there the liquidity uh and the having the stable exchange rates and i'm curious in terms of the adoption uh for jax and the liquidity and access to it has this helped get it to exchanges and

11:03get it accessible to people who want to use it as an alternative to some of these stable coins that have been around for a long time so we're still in a test net phase because we're a proof of our network you know we can't mine our coins ourselves unless miners do that so we're in test net phase we still have some improvements coming in terms of our merge mining patch

11:23because when you mine bitcoin uh then you let's say use percent of your hash rate when you merge mine let's say our network along with bitcoin you might lose some hash rate so we are patching that to minimize that loss and then we'll onboard miners and we're still in a test net phase so as soon as we get to main net we'll find out but we are confident that see we can

11:42i can mathematically give you an exchange rate between bitcoin and our tax points and asset points right so so i don't see that liquidity should be a problem for us for adoption but you know still you know we're still in the early stage i think i'll be able to answer this question the data by october when our network is live we plan to get listed then on many exchanges

12:02and uh i'll be able to give you precise information then as to how we are doing with market adoption and how the trying to bitcoin is helping with our liquidity problems and how much market share are we capturing from other stable coins definitely okay well thank you for that and i know that your team has been working on this for years already and i can tell that you've

12:22put a lot of work into it and really thought it out because it is important to build the foundation properly when you're building stablecoin like this so i would love for you to give a glimpse into you mentioned their october launch just the roadmap for the rest of this year what do you still have to do and then you'll launch and is there anything else that are

12:43uh you're going to take immediate steps of action after the launch yeah so yeah so interesting you know our guys are right now in miami there's a mining discrept event happening there so we are there to seek commitments from miners in fact we had a couple of calls with miners today who are interested in merge mining our network even some mining pools want

13:04to integrate this so we can get on board hashtag to them so we are getting commitments from miners launching our main net and it leads me to a discussion with uh i had an interesting discussion with the head of investments from visa from the for the middle east region and he told me vinod look okay you have a decentralized stable fine but people are happy with

13:25the dollar so we said that okay uh we need to somehow soft peg it to the dollar in the beginning for people to understand what it is because maybe it's too early for a decentralized stable fine that is based on the cost of hashtag right so what we do after the mainnet launch is we are working with our partners distributor lab they're famous for building you know financial systems

13:46they're building us uh usdj which is like a stable coin that's backed by proof of unchained results of jax coin so let's say you create a usdb but it's backed by bitcoin and you have bitcoin on chain right but the problem there is that bitcoin price could drop and you don't have enough money to pay off all the withdrawals should that arise right so because we

14:08are a decentralized stable point we are able to hold unchained results in our stable coins and issue a usbj so as soon as our main net goes live we're launching this kind of usdj to uncirculated in the market so that we can bring about adoption so then the next quarter let's say q1 2022 will be focused towards market making to bring this usbj to adoption

14:30then eventually as we grow uh we have a setting for dows so we have a we're writing a paper on it which we have new consensus mechanisms for running decentralized autonomous corporations uh through proof of equity and proof of stake as on layer two right even our own company we are going to run it through proof of equity so kind of we build a decentralized validator set based on

14:54who's burning coins let's say you know we agree that we'll build a dow where in the validator set is based on people burning bitcoins you burn 10 bitcoins then you are like 100 uh shareholder of this dac or dow i burn 10 then we both become fifty fifty percent somebody else burns ten then we become thirty three point three so you dynamically build the shareholders head

15:17and you have a consensus based on that on layer two and you run your own organization so so you you can expect you know dows and dacs and related tools to come into action from q2 2022 and then you know as our coins go up then we'll probably get into ecosystem growth with some grants you know getting some projects to build on top of our protocol so yeah in the short run

15:40it's the main net and this usbj stable point to bring about initial adoption of our network these are bb that sounds great if not i'm looking forward to seeing that launch and then getting it into the market and yeah as you continue to develop out get into the market and then as you mentioned focus on market making uh are there other are you reaching out

16:02for other strategic partnerships exchanges maybe more team members or just users of the platform and what are your goals around expanding right so right now we are getting into partnerships but right now like i said our immediate goal is the mainnet launch so we are right now getting into uh mining partnerships like i said we partnered with distributed lab and in fact an

16:24interesting discussion i met uh professor scott cornetta from in dubai he's actually uh he was the inventor of co-inventor of blockchain technology and they had a yeah he was mentioned in the bitcoin paper like three times out of the eight references that were there and and i was talking to him about this and he felt that we are critical infrastructure

16:44for the bitcoin ecosystem itself because scalability and stability are some of the biggest problems right so right now we've decided okay let's first solve these two problems so for us we are seeking partnerships in terms of mining pools we have some partnership with distributed lab for building this usdj for us and you know we're getting investments

17:04like today i have another call after this one uh where you know we're going to talk to a couple of vc funds we have some former european union member of parliament who's invested in our company so a lot of things are coming in um happy to you know you can you can keep uh updated yourself by you know looking at our website we constantly keep adding partners and

17:25doing press releases and yeah so so these are the kind of partnerships we're doing now you know somebody's watching here during the bitcoin mining please reach out to us so that you know i'd be happy to see how we can work together definitely vernon i was just going to ask about that in terms of you know mining partnerships or just users or people that are interested in

17:46following along and getting involved potentially in whatever way they can do they just go to the website or do you have socials or what is the best way to get involved into the jax community right so you can go to our website there's a resources section where we publish all our papers there's a telegram chat if you come in you know we try to be very connected with the community

18:05uh so so we are like very community friendly people you send a message on the community chat i will personally maybe answer you within like an hour if i see the message so so you can join our telegram chats that's one of the fastest ways to reach out to us we're setting a discord group for especially miners and developers but that's more like tech support right

18:27so the community people you know the telegram chat would be the best place to catch up with us sounds great for not i will leave the website link telegram discord everything in the description box below all the best with the continued uh work and launch for jax network it looks exciting i will be following along and let's follow up in the near future

18:47thank you so much aston thank you for having me here you