Hxro merges traditional and decentralized options trading

0:01i'm ashton addison from event chain for investmentpitch media and the cryptocoin show and today on blockchain interviews we have dan gunsberg the co-founder and ceo of hero dan welcome to the show and thanks for taking the time to be here today thanks for having me ashton happy to be here i'm really excited to dive into hero your team is working on some really interesting initiatives

0:22and i would just love to start it off for the viewers uh with an overview and the focus at a high level of hero in the platform you're working on sure so um hero network is a decentralized liquidity network for risk-based applications built on the solana blockchain we're developing a series of native protocols that will provide the framework and infrastructure

0:48for what will be a robust fully functional decentralized exchange for vanilla which are standardized options exotic options and pair mutual option markets um i guess also uh you know a hundred percent of the network's value will accrue back to staked hero token holders to specialized node operators within the network uh the network treasury and developer pools

1:14um all who are part of the hero network ecosystem and uh and yeah yeah yeah it's a quite an interesting initiative and it's good to see more options related trading in crypto you don't hear about it as often but obviously it's a huge market to be getting into and your platform is the the fact that it's becoming a decentralized options marketplace and there's like

1:37that community building and giving back to the community to sort of gamify the crypto trading can you just go into a little bit more into you know how that decentralized ecosystem part makes it more than just trading options in traditional finance yeah absolutely uh you know as i mentioned so you know one point of this is that the value accrual the network

1:57goes back to to token holders and to um you know to to people or wallets who are putting forth some type of effort into the into the network ecosystem and you know a lot of it for us really um obviously there there are many benefits that have been proven out by um by forming a network around an idea or a project or a series of protocols which have proved very successful uh you know in

2:23the blockchain space um but also for us you know we kind of took a step back and thought you know what's been going on in the world the last you know the last year or two and and there's kind of this like mega inequality that's kind of existed and and the things that have been built in blockchain kind of you know that are more um giving some level of

2:43like social thought have really helped like alleviate a lot of this and you know it's really giving everybody a chance and kind of flattening out the the world so to speak by giving everybody an opportunity to participate in a network that is transactional that really uh what's sitting on top of it is an exchange or what will end up being different exchanges

3:05uh and um being able to participate in it without uh you know needing to be a part of some closed uh old boys network or you know very agnostic geographically um and you know it's it's it's really in this meritocratic approach where can you if you're providing value to the ecosystem whether it's a speculator a liquidity provider a uh participating in governance

3:30whatever it is um you're you're fairly rewarded for that so you know we really believe in that and we kind of believe that the next generation of of businesses really really will be of uh revolve around these types of networks and you know it really is a way that that not only could solve uh uh economic issues globally but also uh social that's great dan and you mentioned there

3:56at the beginning that there's a few different types of options that are going to be first available when you have the decentralized marketplace live can you just elaborate into what are the different options and assets available uh from the get go yeah sure so and initially we're launching our paramutual options which uh currently today um underpin a pair mutual market on uh hero.io which

4:21is our you know which is our current front end and uh those what those are are effectively a a type of exotic option that have a pair mutualized payoff which means that the um each event or each options contract is based on a pool of assets um which uh you know in a market it's effectively saying like will the price be higher or lower when it closes during this time period

4:45than when it opens and uh all of those positions are pooled together and then the side that is in the money splits that pool pro rata and so that is something that we've been applying to digital assets and what is um you know the way that we look at it is that we had one interpretation of it but there are you know there's many other interpretations of it and we have this

5:09belief that that there will actually be trading on everything eventually like it's just the continued financialization of of data and of just everything that kind of goes on the world and even if you look back and um you know look you can go look at your at the younger generation who's involved in things like roblox like my partner and i my co-founder and i talk quite a bit

5:30about our children being in roblox and talking about things like like is that trade value like does it meet value is it is it rich or cheap and like they're saying these things to us and they're 9 or 10 years old and we're trying to say like well what is the world going to look like 10 20 years out and we want a position for that and so it while it's starting in things like

5:49digital assets you know obviously there's it can go into thing anything from from sporting events or like if you look at what's going on in the in the betting world um you know in-game betting is very popular right now which effectively is trading so there is this like merging of kind of all of this going into one and it could be anything from that to you know things that are that can be

6:11deemed as commodities or it could be on hash rate in the you know the bitcoin market or it could be on bandwidth uh access bandwidth for you know it uh in data centers that are that ends up being commodities could be some you know one of anything we're really trying to set this network to position to take you know to to capture that as as things evolve over coming years

6:36definitely dan i think that's a great approach to it because as you mentioned there's so many different markets and prediction markets as an example you gave are seemingly growing larger and larger uh as people are starting to trade on you know almost trade on anything um so yeah that's very cool and you mentioned you know bringing the community into it

6:57uh getting them involved and having them rewarded for contributing to the network and i was looking into the network details for hero and i saw that you're utilizing the solana blockchain technology and i was curious if you could touch on you know why solana's blockchain is the best ecosystem for this type of platform and why you went with that absolutely solana just hands down where

7:19their technology was at it for if you're doing something that is a high transaction you know highly transactional requires high throughput and requires ver a very low cost basis in terms of fee uh there's there's no other blockchain better than solana for that purpose and you know even the backgrounds of the of the of the founders and the engineers is

7:41really in like you know high speed like anatoly's background is you know it was was working uh i think for qualcomm doing things that are around like you know high speed packet capture and things like that and a lot of like building the solana reminds me of when we were first getting into high frequency trading in the in the legacy trading you know kind of the traditional finance

7:58trading side of things and um it just worked really well with us uh you know we've we've been partners with ftx on on a project you know on um one of our products on our you know on hero.io and um that you know obviously sam's influence and involvement with the solana network uh sam freed um really you know gave us a good insight into what could you know what

8:21the possibilities are there they launched serum on it we are going to be composing with serum on some you know there's kind of some things that are joining at the seams in terms of uh utilizing some of their markets and some of the protocols that exist there and uh the whole thing just made sense and um you know and we tried to really step back and we felt like the whole world

8:41was moving towards ethereum on things and theorem just didn't meet the requirements that we had for for what we wanted to build now and into the future and solana made perfect sense that's great to hear and yeah it does seem like the ftx and sam's ecosystem is exploding right now with value and i think it's the right time to be in there and to be partnered with

9:01that whole ecosystem is uh it sounds like the right move and i wanted to know if your team i know you've been working on hero and you know it's been an evolution building into this decentralized option marketplace and it's been you know um around for quite a while and if you could talk about any other partnerships uh that you have or that you have in the

9:20works um you know with inside of the solano ecosystem and outside sure um i mean just in terms of uh you know participation from various vcs and stuff who have who have really taken a you know a position in in the in the network and in what we're doing um we've had some you know real marquee partners in that way you know alameda research uh three euros capital uh cms holdings

9:47um arca funds uh coin fund ledger prime genesis all you know some real marquee names kind of in the trading side of things in the space and um they've been a big value add and uh and you know we we're going to be doing a strategic round soon um bringing in some you know an additional round of uh participants to the network who we think really can add value to it

10:11um that's one and then within the solana ecosystem yeah um we've been you know we've been talking quite a bit with uh with radium oxygen uh um starting to talk with pith network jump trading as a partner of ours and um you know they've been kind of the i think the you know a lot of the push behind and the effort behind pith network and obviously you know jump

10:32trading uh uh reputation you know precedes itself as uh one of the top you know on in in tradify in terms of uh liquidity providers market makers and trading firms you know on the planet and so um you know who better who understands better about doing things at an exchange level than them and you know and them being a part you know building an oracle out really has

10:55um a lot of potential for us especially at the frequency that we need to be turning data over so um talking to them obviously some of the you know like we we've been talking with chain link for a while and some other things around uh you know data oracles and um yeah and uh you know nothing nothing to announce yet but um i think the names that i mentioned were all pretty close

11:16to to doing something with so pretty exciting that is very exciting and yeah those some of those vc partners are i know that they're doing great things in the space so definitely good to be partnered with them and you mentioned they're increasing the liquidity in the early stages where it's a community participation of being able to add liquidity and be

11:36able to get rewards for that are you providing any incentives or marketing for early adopters to get involved as community participants in the hero network or are you expecting it to be a lot of organic growth or just a mixture of both a mixture of both um i we both of the the main protocols that are that are backing the um both the paramutual markets

12:03and the uh the vanilla options markets which is the second protocol that we're building uh and the the protocol around the vanilla options will also uh uh carry over into the exotics um both of those are amms that uh you know have a little bit of a different spin they're not constant function they they actually um what they do is they like in the case of the paramutual so

12:27pair mutuals when you look at a pair of mutual market especially a two-sided when you you're really more or less looking at what the probabilities of outcome are going to be on each side like if you were a trader and so um you have these providers who provide to an oracle in the system um probabilities like at at a regular interval leading up to the opening of

12:46the contract and um based on those probabilities the oracle then takes the from the liquidity pool and basically places the optimal position in terms of base liquidity for um for each for each contract and uh the idea behind that is that over time the way that thing runs and it runs intelligently is it's actually operating at a zero like a zero to slightly positive

13:13expected value and um it is participating the liquidity pool and the provide and the probability providers are both participating in the transaction fees of the network that's coming from everybody else who's participating in that particular contract so that's one way the same same concept in vanilla options except we're instead of providing probabilities

13:37they're doing something a little different that i won't disclose yet but i kind of want to you know save it for uh for one of our next announcements very exciting way that we're looking at building uh an amm and and liquidity in um what will end up being a very robust vanilla options protocol and then uh also uh volume tier incentive rebates like a lot of what

13:57we're looking at and a lot of what you see in markets in in decentralized exchanges and just crypto markets as a whole it they're replicating the things that have happened you know in exchanges forever like a lot of the liquidity that you see on the chicago mercantile exchange for example is is really by members trading members uh who are participating in volume tier

14:18incentive rebates and things like that uh that are kind of benefits that you get for being a part of it so the same context here you're a part of the network and you're participating in the liquidity uh as a you know as a speculator or as a hedger whatever it is um there is um and at the outset we are committing uh this the network is treasury will is

14:39committing a specific amount of tokens um and then based on the volume per day it will uh it will offer a reward to anybody who's participated in the network uh on a transaction for the day uh and then based on the aggregate number it will basically uh emit a certain you know a certain amount and then distribute that pro rata to everybody so a couple different ways to you know

15:02to to bring users into the network and then also we're working with a couple of more traditional large-scale liquidity providers who are going to be participating in the network they're they're already committed to the network we will be part of governance part of everything um to really uh bolster that baseline liquidity the amms will then bootstrap on top of

15:23that and then the combination of everything we're hoping to have the most liquid decentralized network uh you know on the planet pretty soon so wow that's very exciting and it sounds like your team has a lot of head but uh it sounds like it's something that is going to provide a lot of value to the decentralized ecosystem and i think that yeah it's very much needed right

15:42now and um sorry all the best with that and what do you think with this is seems like it's the next step um but there's a lot it it's a lot to add for traders that are just used to spot trading crypto and and margin trading and now adding in more financial products in the decentralized ecosystem what do you think is going to be one of the key factors to success for

16:06getting not just crypto traders but traditional finance traders into this decentralized ecosystem to have more widespread adoption long term good great question uh a couple different pillars number one is that uh we have the concept of operator nodes so it's almost like b2b relationships if you think about the network as a whole uh think about it as like the plumbing and

16:28the tooling or like you know uh in the chicago mercantile exchange for example they have globex which is like the big matching engine that everything feeds into all the liquidity all the trading is done there same concept with with our with our network and protocols and then on top of it are going to be operator nodes who are coming to the network uh who are who are appending themselves

16:48to the network and cap and grabbing the products out of there and then offering those through their own ui ux and they may be facing different jurisdictions have different compliance requirements whatever it is uh and that's right now that's you know it's everything from we have we have um sportsbook operators who are who are using our paramutual markets

17:08actually to offer bitcoin like a more simplistic way for their existing user base to trade bitcoin for example and something oh you know like uh somebody who is uh that sports better they understand the concepts of paramutual so there's a nice bridge there that makes things a lot easier for them so as opposed to us initially as opposed to the network trying to like

17:29capture and like go compete with everybody else we're saying no like we're really here we're the liquidity we make it very easy to plug in like building a whole sdk layer around it um make it very easy for for an operator for on a b2b basis to plug in there's a whole incentive scheme that gets worked through for them to to participate and it you know makes

17:49economic sense for them to be a part of the network um so that's one way that we're looking to bridge adoption and bring people into into not only into hero network but you know by really capturing these existing user pools the second thing which is something that we work on very heavily and work on now and you know we talked a little bit about game gamifying trading

18:10we we look at it and you know more gamifying is really a way for us to deliver something to the average user um in a more simplistic way and almost like not even simplistic as much as it is like someone can come to it and say oh wait i i understand this like the concept of um our we have these this products these products called ticks and wicks and like

18:34wix for example is a one touch uh options market and so if you take wix like if i delivered it to you and say like wix is very much based on like probabilities of x happening so similar to prediction market in some way um if i approached it to you and was talking in probabilities or i was talking in delta which is like you know you hear options traders talk

18:58to each other and they'll say like this is a 50 delta option like basically saying this based on the model like there's a this means there's an implied 50 chance of it expiring in the money and um we've taken that concept and just like distilled it down to odds so something that is a uh a 20 chance of happening is a you know is a five to one and you know it so we're taking things that

19:27like if i said five to one to anybody who kind of falls within a trading demographic they're immediately gonna understand it if i start talking about option greeks to them they're not gonna understand it so it's it's at least like more often than not they're not and so at least it's a way to bring people in and for us it's really that where that is transitioned to us where it started as

19:47very gamey and kind of exciting it's gone way more financially focused to us and it's really about simplicity and trust of the platforms that are operating within the network trust of the network and um and then we have something called hero labs that we've you know that we're continuing to build up which is really there as content and as like educational

20:09content with the same type of mission to take the complex um elements of trading and simplify it down make it relatable and just make it easier for the average you know participant to come in and participate definitely and for the viewers that are looking to start participating right away or just follow along with all these amazing updates that you're going to be

20:31bringing in the near future here what's the best way for them to get involved with the community and to follow along sure so uh the the easiest way is if you're on twitter you want to follow the progress of hero network you can go to at hxro network on twitter is is very easy uh you can check hero.network there will be updates coming soon in terms of

20:55us we're currently in a closed alpha as as the protocol start opening up and rolling out you can follow me i am at hxro btc on twitter is a good way uh and then if you're looking to uh if you're outside the us um the us is restricted uh but you can go to hxro.io and uh and become a part of you know and start uh start trading on in the pair mutuals and

21:21uh in the two exotic projects the products that we have uh wix options and ticks options and you can do that right away provided that you're non-us great dan i will leave all those links in the description box below as well for the viewers all the best with uh the whole hero platform moving forward and let's follow up in the near future definitely ashton thank you so much for

21:41the time i appreciate it