#citizenweb3 Episode link: https://www.citizenweb3.com/persistence Episode name: Institutional DeFi, borrowing and stable coins with Tushar Aggarwal Citizen Web3: DeFi, collateral, stablecoins, interoperability, compliance and KYC. These are just some of the topics that have triggered the focus of this episode. Anna: Hey, it's Citizen Cosmos, we're Surge and Anna and we discover Web3 by chatting with awesome people from various teams and communities. Join us if you're curious how dreams and ambitions become code. Citizen Web3: Yeah, hey everyone and welcome to a new episode of Citizen Cosmos. Today we are glad to have you with us and I hope I'm going to pronounce it correctly, Tushar Agraval, if not he's going to correct me. He's the CEO of Persistence who are building a protocol to breach DeFi and traditional finance, obviously using Cosmos SDK. Tushar, hi. Before we start with the questions, I would like you to maybe briefly introduce yourself for everybody and say what you guys recently have been working on and I think that will be a great brief to start with. Tushar Aggarwal: Absolutely, so to give a very quick introduction about myself, so prior to starting Persistence, I was the first employee at Lunex Ventures, which is the crypto of a traditional venture capital fund called Golden Gate Ventures. Golden Gate Ventures is a traditional VC based in Singapore that has been investing in different kinds of startups in and around Southeast Asia for slightly more than a decade now, manage more than $200 million. One of the equity investments that they had made in 2016 was a payments company in Thailand called Omise, so OMISE. So that's the company that ended up doing the Omise Go token sale, which Golden Gate could not participate in because the fund mandate didn't allow them to participate in that token sale. So that was the genesis of Lunex Ventures, which was much friendlier towards holding tokens and equity in the fund and also could invest internationally as opposed to just investing in Southeast Asia as a geographical kind of restriction. So as the first employee was involved from the very beginning in terms of fund incorporation, working with multiple service providers like lawyers, tax advisors, fund administrators, cybersecurity consultants, monetary authority of Singapore as the local regulator. And that was a pretty fun experience. I was involved in fundraising, so I was involved in raising funds from a publicly listed company in Japan. The VC Arm of a sovereign wealth fund was involved in raising money from some family offices in Western Europe, Southeast Asia, and then did seven equity investments. Some investments on the primary side in terms of tokens and then also investments in liquid tokens. But there were two things. So one was me wanting to move over from being a capital allocator and VC to more of something on the lines of building something on my own. So that was one, and I'd been on the lookout for different use cases. The second was I had spent almost close to 10 years in Singapore, but I originally come from India. And if you look at India in general and the tech scene in India, India has the third largest number of unicorns now globally after the US and China. But 80% of these unicorns were born after the year 2010. So almost 10 to 15 years after startups of similar sizes came about in the US and China. So the bottom line is India can scale up very quickly, has a huge population, has great access to talent, but India operates with a bit of a lag. And so my hypothesis was that this was going to happen in crypto as well, where there are going to be a lot of crypto companies that are going to be formed in India and come from India, building for the world, but it was going to operate with a lag. And so in 2018 and kind of beginning of 2019, I flew down for multiple events and hackathons representing Lunex. In fact, wanted Lunex ventures where I was previously an employee to be very active in the Indian ecosystem. But at that point, Lunex did not see that much traction in India, so did not bet on it. So anyway, I decided to move to India, met my co-founders and big part of the persistence team during these events and hackathons. And simultaneously coming to India was one hypothesis. The second hypothesis was how can we actually use the public blockchain technology to solve some problems for someone in the world and as a byproduct of that, facilitate more capital to flow into this industry. And that's how we came across the commodity trading use case and things like that, which I'm sure you'll kind of dig into. But essentially, that's how persistence came about and that's a little bit about my background as well. I think one of the things is I used to also host a podcast called the Decrypt Asia podcast, which unfortunately is now kind of defunct because I've been super busy on the persistence side. But that was kind of my formal entry into the industry as well. And that's how I kind of learned a lot of things and built a network in the industry. We're very happy to be here and happy to answer all the questions. Citizen Web3: I do have some more questions and I'm sure Anna does as well about the podcast, but a little bit later on. First of all, about persistence. Obviously, we started to dig in what you guys do and there's a lot of things that I'm sure you will help to decrypt today, especially with you having such a, I think, amazing and cool background and understanding how products work. Let's start with a simple question. If you were to describe in a sentence, what is the aim of persistence and what problem it solves and for whom, how would you describe that? Tushar Aggarwal: So in one sentence, what persistence does is facilitate the borrowing of crypto assets using real world assets as collateral. So that's the one sentence part, but to slightly to dig into that statement slightly more today, if we see most crypto assets, a lot of people use BTC or ETH as collateral or some of the ERC 20 assets as collateral to borrow stable coins. And typically the stable coins are borrowed to essentially leverage up, which is essentially buy more crypto assets. It's great from a speculative perspective, but that doesn't really solve any problems for anyone, essentially. And that's not how borrowing lending works in the real world, because in the real world, you can put your property as collateral, you can put your business machines as collateral, you can put your accounts receivables or invoices as collateral to be able to secure financing. But today, we have not reached that point where we can do that. So essentially at a high level perspective, that's what persistence is trying to do. Citizen Web3: I guess the idea is to build a defy bridge in protocol between like the traditional world and crypto, am I correct? Tushar Aggarwal: Yeah, so from a high level perspective, absolutely. And again, that's what we have publicly communicated as well. But our approach is sort of too prong. So if you talk about what you just mentioned, it is sort of bringing institutional use cases to the crypto world. But at the same time, what we're also doing and seeing a huge demand for is the other way around where we're taking certain crypto products to the institutional folks as well. And I would be happy to kind of dig into some of those things and happy to give examples as well. Essentially, how I view persistence is a suite of financial products that is at some level using blockchain technology to solve problems for institutions. But on the other hand, also bringing institutional products into crypto land. So although we haven't publicly communicated too much about that, but happy to dig into that during the podcast. Citizen Web3: Sure, makes sense. And let's dig into it. I mean, one of the projects I know you're working on is called Comdex, right? And the website suggests that it's a blockchain based trade tech platform. Now, let's dig into that a little bit more. What does it mean? What is a blockchain tech trade platform? I mean, how does it help me as a user? Or how does it happen as an institution? Tushar Aggarwal: So in a nutshell, what is Comdex? Comdex is, I mean, if we, and you know, since it's a cosmos focus podcast, you know, happy to kind of talk about the high level architecture as well. So essentially, we're sort of creating and we've tried to build on Ethereum. We've tried to build on hyper ledger. We've tried to build on waves as well, which I'm sure you would be familiar with. And ultimately, we decided to go down the application chain specific route and started building on tendermints. We were kind of early believers in tendermints participated in game of stakes, game of zones. Tech team was the first team to do an cross chain NFT transfer. So usually people talk about interoperability only from a fungible token perspective. But you know, we've done a cross chain NFT transfer. We also lead the working group for defining the inter NFT standards, which is essentially NFT standards from an inter chain perspective. But coming back to Comdex, essentially, Comdex is an end to end solution for the commodity trading and trade financing industry. It covers the end to end journey of the traders all the way from onboarding the trading organization, onboarding the traders of the trading organization, doing that KYC, giving them different access rights in terms of who can trade what commodities, what is the value of the commodities that they can trade, the actual marketplace of matching buyers and sellers, the trade settlement in terms of the buyer paying the seller and also the trade financing aspect of it, where essentially the seller usually sells to the buyer on credit terms of 30 to 90 days. And the seller essentially puts their invoice as collateral to be able to borrow quote unquote stable coins on the platform to fulfill their short term business financing needs. What is the value add of Comdex? There are three things. So one is the trading organizations that Comdex is targeting to bring on as clients are typically small to medium sized enterprises that may not have a technology solution of their own. So they will talk if they want to buy or sell commodities, they will call up different traders in different parts of the world, try to get the best bid or ask. And then once you have a trade that you want to execute, then lawyers would get involved and you would send emails. So essentially the entire process is extremely fragmented. What Comdex does is at some level acts as a SaaS solution, which covers the entire journey and creates an audit trail, which is again, because it's a blockchain based platform, immutable in nature. The second part is trade settlement. So today for cross border trades in the commodity space or any trade, they settle on a T plus two or T plus three basis. So if you make a wire transfer on Friday, it will probably reach you on the Tuesday or Wednesday or even Thursday and for an intermediary bank is involved. Because we use stable coins in the background, we can facilitate instant settlement instead of the end traders having to wait for two or three days. And the final thing, final bit is essentially trade financing, where the small to medium sized traders have the most amount of difficulty in terms of borrowing assets. And this kind of ties into our DeFi offering as well, right? Where not only do we work with institutional trade financiers on the platform and allow traders to borrow from these institutional financiers. What we're also doing, especially with the explosion of stable coins, we're allowing the traders to borrow in stable coins from the stable coin holders and allowing them to borrow from fundamentally new sources of capital and also allowing crypto people to generate returns from a completely new sort of asset class, which is trade finance as an asset class. And so essentially, this is what the commodity trading and trade financing product does, where Comdex essentially solves problems for institutional folks, but also ties into crypto native people because it allows crypto native people to lend to these traders and generate whatever, you know, six, seven, eight, nine percent returns. Citizen Web3: That sounds like a lot to take, but it kind of makes sense. And I think it fits perfectly into today's market as well. But coming back, you mentioned yourself that a lot of it is cosmos based and coming back to cosmos now in terms of architecture is what persistence doing. Are you guys building a looking forward to building a hub where other blockchains can join persistence, maybe take advantage of the SDK you build in or whatever, or is persistence going to be a blockchain on the cosmos hub, a zone on the block out in the cosmos hub? How do you guys see that in the future? Tushar Aggarwal: Like I mentioned in the beginning of this conversation as well, we view persistence as a suite of financial products. So we're not commodity trading and trade financing is just one of the use cases that we're going after. And so each of these applications we envision would reside on their own tandermint in base chains. And then each of these applications can range from being extremely crypto native products to very, very kind of quote unquote real world or institutional products. And that's the beauty of the cosmos tandermint in ecosystem where you can just spin up these application chains and customize each chain for the amount of security that you need privacy considerations in the future, whether you need institutional grade validators or if the chain can be a little bit more permission less and more decentralized in nature. So if we talk about the tech stack as a whole, we have these a bunch of application chains with Comdex being the first one. As far as the SDK is concerned, so the persistence SDK is built on the cosmos SDK. What the persistence SDK does is it has modules to model exchanges and marketplaces. So things like an identity module, the NFT module for asset tokenization, or decks for facilitating trading of these NFTs against stable coins and then a trade finance and trader reputation module. So essentially these modules are again, you know, these are open source modules that have certain functionalities for anyone to come and build exchanges or marketplaces on top of them. And then if we go to the application layer, Comdex is an institutional focused application. The persistence native application is more of a crypto native application which will sort of help to aggregate stable coins from the crypto native holders and funnel them into trade finance as an asset class. But we have a couple of other entrepreneurs, which are essentially separate third party entrepreneurs, third party founders, who are building couple of other use cases and couple of other focusing on different asset classes, where they're trying to solve something for some problems within different financial use cases, but more geared towards the institutional side. And then how we view persistence application, and I wish I could this was maybe a video podcast or if I could share my screen and explain it more as a presentation. But essentially the persistence application is the aggregator of all the crypto liquidity, all that liquidity for flows into the different applications within the persistence ecosystem. So we view kind of persistence as a financial hub of sorts with multiple zones, Comdex being the first zone in the persistence ecosystem. Anna: So as I understand them of your ecosystem is to involve more and more people and users and buy this to get more and more liquidity. Is it correct? Tushar Aggarwal: Yes, absolutely. And the thing is, you can say that it's the creation of alternative financial products. Today, if you're a stablecoin holder, or in general as a retail investor, you don't have the option to invest in trade financers and asset class, but large family offices, pension funds, all of these people have possibility to invest in trade financers and asset class. Now if we talk about the macro world today, increasingly most parts of Western Europe, Japan now increasingly the US is entering a world where the interest rates are almost zero or turning negative. And so in this case it's getting harder and harder to generate sort of fixed income returns. From that perspective, trade finance as an asset class becomes super exciting. Now one of the things that we haven't talked about publicly yet too much, but we will be starting to talk about in the very near future is now what's happening is some of the traditional asset managers, mostly in Switzerland that we are working with that are looking at trade finance as an asset class also, but are also looking at validation as a new way to generate fixed income returns. So you can think of an ETF like product where you have sort of traditional asset managers that are running validated nodes on the Cosmos Hub or kind of multiple P-Pause chains where they stake their own assets or the assets of their investors and are able to give them sort of quarterly dividends from the inflation plus transaction fees generated from validation on these different networks. So we have been a persistence, our validation arm is called audit and we have been running nodes on the Cosmos Hub, Iris, Kava, Terra and essentially so far it was a way for us to kind of attract delegations on these different nodes produced some returns. But now what's happening is we're getting to collaborate with some traditional asset managers who want to run these nodes as well. And also as a byproduct, we're working with them to create these ETF like products where you as an investor can say put in a million dollars into a fund that fund will buy items and stake them on the Cosmos Hub and produce returns. And this is what I meant, right? So with Comdex what we're doing is we're taking public blockchain technology to institutions to solve their existing problems and also allowing crypto people to get access to institutional products. But the other way is that we're taking these crypto products to institutions and allowing them to generate fixed returns and getting them to start being involved in the crypto ecosystem. Citizen Web3: It makes perfect sense. And the question that I think derives from it automatically is of course again taken in consideration the technological architecture of the Cosmos SDK, will a user that is not a financial institution or that has not passed certain KYC ML consideration be able to use the instruments that persistence is offering or will those instruments only be available either to well not just financial institutions but to anyone who does pass all these requirements, financial requirements that persistence is building? Tushar Aggarwal: I think that's a good question, right? So when you talk about again, especially in crypto, there are different shades of gray in terms of you know, comes to regulatory Citizen Web3: It's a way to put it. Tushar Aggarwal: when it comes to regulatory compliance. So for something like Comdex like product we want to be as and Comdex is a completely institutional focused product. And so on that front, all of the complexities of just using public blockchains, we've tried to abstract away. So things like the transaction details, you know, we have a way of anonymizing them. The identity is anonymized but verifiable. We have natively factored in some of the data privacy, data compliance, data access, data leakage considerations. And even some of the other things that people don't think about that much, right? So how do you abstract gas for the end user? Because if you have an institutional person, even before using a crypto wallet, they have to acquire crypto assets to be able to pay for gas. So completely abstracting away gas for the end user, providing fiat gateways for trade settlement while still giving them the option to settle on an instant basis. And then abstracting away some of the complexities around custody, key management, wallets, things like that. So as far as Comdex is concerned, all those complexities, KYC considerations are taken into account because it is an institutional product. But when we talk about the sort of quote unquote persistence, the app where we're trying to aggregate stable coin liquidity from crypto users at this particular stage, we're leading more towards aggregating capital in a non KYC manner to not create additional points of friction for the crypto user so that they can just interact with their crypto wallet and just supply liquidity, which we can then funnel into some of these institutional products. And essentially like how that works is we create SPVs or special purpose vehicles. It's very similar to how it works in the real world as well, where the stable coins flow into one entity, which is an SPV, that SPV is actually the one that does KYC AML checks by the final trade finance fund and things like that. And then the capital is deployed. So again, it really depends for some of the things on the validation front, some of the institutional folks, they want to implement some of the KYC AML measures in terms of who is delegating it. They want to integrate it into their validator nodes and things like that. But again, that may not 100% be possible from a technological perspective or some of the tech hasn't been built around that. Again, I think everyone tries to mitigate risks in their own ways. And every product, depending on who the end user is, requires a different level of scrutiny or level of due diligence that is required. And we try to kind of customize depending on who the target audience is or who the user is. Anna: How do you handle with all this big, big amount of different kinds of users and different kinds of requirements? I mean, do you have something like special thing to manage all these requirements or how you follow all these regulation compliance and all this stuff like this and user groups? Tushar Aggarwal: Again, I think in general, partially, I think it's my background that helps a little bit as well in terms of going through that process of working with tax advisors, auditors, fund administrators, lawyers, and also some regulatory bodies, especially in Singapore. Singapore in general, I have to give it to the government is extremely, extremely forward looking. You would have seen DBS Bank, which is one of the largest banks in Singapore. One of the three major banks from Singapore is now offering its clients to purchase Bitcoin, Bitcoin Cash, and Ethereum as well. And so it's one of the few like traditional banks that I know that is offering this service and creating sort of a crypto exchange for its clients. I think Singapore today without doubt is one of the best places in the world to build a crypto company in terms of how easy it is to access regulators, how easy it is to find crypto native lawyers. So like our lawyer, for example, he knows what D-POS is. He knows we've structured some very bespoke agreements in terms of we want to do a token swap, for example, with data running validated nodes on them. And so he was able to structure that agreement. And I think it's a combination of background plus a lot of the all our sort of businesses and entities are based in Singapore. So I think all of these things help us pretty significantly having access to crypto native service providers in terms of lawyers and accountants and things like that. So I don't know if that answers your question. but yeah I think those are things that help quite a bit. Anna: Yeah, it's perfect in terms of answering my question. Thank you. Citizen Web3: Would you say that the experience that you had working with VCs in the past, because obviously you have quite a lot of that plus management consultancy and so on and so forth. Would you say that it helped you in building persistence? Tushar Aggarwal: Yeah, so again, I think when you're building a company, right, it's I think there are so many different aspects to it right all the way from just incorporating the company to figuring out the legal and compliance, the operations and then finding co-founders, you know, building the team and then figuring out what problem to go after actually building the product testing it out going to market acquiring you initial customers integrating the product fundraising and then obviously with a token project that are additional complexities of building the community, doing marketing, figuring out token go to market strategy, ensuring that your token sort of doesn't die on the market. And so essentially not only are you managing your actual product that you're building, you're also managing your token as a product which requires a whole separate team. And again, crypto is so dynamic and so challenging where you could have expert, economists and computer scientists and traders and still have a not a very well balanced team. So crypto just cuts across so many disciplines. I think different people just have to bring different skills to the table. And so definitely having the management consulting experience working with traditional financial sectors, especially we didn't intend on doing this, but we kind of ended up speaking to quite a few kind of traditional asset managers and folks in traditional finance. So definitely that really helps being on the VC side definitely helped in terms of the network that had built for fundraising of persistence itself and figuring out our token go to market strategy. So definitely I think those experiences, but I have to give it to like for example, my CTO as well, who's worked on unified payment solution in the past. So he's had a lot of experience working on the payment side and figuring out the legalities and compliance of just payments in general. And also that was early into like mining of Ethereum and things like that. And so combined that with very crypto native experience, plus some members of the team who have had experience in terms of creating communities of developers and things like that. So not just my experience, I think it's the combined experience across business technology and sort of community, I think which builds a big project in crypto. And it needs to be well balanced because there are some teams that manage the tech part very well, but then some of the business and community sides are not that well taken care of or some people that are very, very good on the kind of business and legal side but don't have access to good tech folks. So I like to believe that at persistence we have a very good balance across business tech and community, which are the three ingredients of being successful. Citizen Web3: What made you decide at a certain point that you don't want to work? I mean, you worked with obviously quite successful companies in terms of venture capital and so forth. What made you decide to stop that? I mean, you did mention at the beginning you wanted to change the perspective of not just attracting capital but building. But I mean, before that, before you discovered blockchain, why did you even go that way? What made you change your mind and get attracted to that? Tushar Aggarwal: I think one of the big beliefs and that's I think more of a philosophical question than I guess a crypto focus question. And so from my perspective, in today's world, there are fundamentally three kinds of leverages that are available to any individual. One is capital, the second is media, the third is technology and the best individuals and the best companies are leveraged upon all three aspects. So to dig into this a little bit more like what do I mean by leverage on capital? So I could have managed say $100,000 of my own money or excuse me, manage $10 million of other people's money. Obviously, when I manage other people's money, I'm essentially making the same decisions, but my decisions are being put into the world at a much higher scale. Essentially, that allows me to be leveraged up. The same with media if I have a 1000 followers on Twitter vs 10000, 500000 followers the impact of what I say is going to be different and The amount of leverage that I have is going to be different. It's the same with technology, I think, where if you're building a product, if you're building it for a million people or 10 million people, essentially the product remains the same, but the amount of impact that you have is going to be fundamentally different. So ideally, my thought process, and you know, I spent a couple of years, especially when I was working as a consultant to the financial services industry, I definitely wanted to be involved in tech and was trying to figure out a way where my skills would be relevant for whatever I did next. And the obvious, because I'd worked with consulting for the financial services industry, the obvious answer was fintech. But then I just came across crypto and I'd been investing in real estate with my parents, had a liquidity event, so I was looking to do some angel investments, but instead ended up putting it all into crypto. And then over a period of time grew my portfolio, which led me to have greater amount of interest in the industry, and then which led to me starting the podcast and started to write for Tech in Asia, your story, which led to the job opportunity to build out this Southeast Asia's first dedicated and properly structured crypto VC fund. And so it's been a journey like as the late Steve Jobs would say, you can only connect the dots backwards. And so again, for me, it's been having been on the media side through the podcast, having been on the capital side through the fund and now on the technology side through actually building. I think that's sort of been what I always wanted to do in terms of being leveraged up on capital media and technology. And so I think that's how the three aspects kind of tie in together. For me, it's been an absolute blessing to be operating at the bleeding edge of technology and doing such cool things, especially in the wake of COVID, right? It's been a hard year for everyone, and the ability to just sit down in a completely remote structure sit down in my bedroom and be building this exciting company and be building products which are seeing traction now at the global level is something that is super, super exciting. And it also speaks to what crypto can allow you to do, right? Like, do it in such a democratic way where I'm sitting in, you know, India or entities are in Singapore are users and communities are all around the world. I don't know many other industries where you can claim to do this all within a period of like 12 to 18 months. Interesting. Anna: Interesting And you talked about podcast and third power as a media power. So do you feel that podcast is more powerful that Twitter or you can affect more than you do podcasts, even if you do just small Twitter or blog or some kind of info public some kind of information. Tushar Aggarwal: I've been a big fan of this gentleman called Gary Vaynerchuk. I don't know if you follow him, but he's this American businessman who creates a lot of content. And the reason I started the podcast as well because you sort of talk about content creation as sort of the biggest marketing tool. I mean, I've seen the amount of connections that I've been able to make just because I used to host the podcast and number of doors that opened up for me because of the podcast was just amazing. So I am a true believer in creating content in all forms, whether and it's like the same message but being delivered based on the platform. So whether if you want to say talk about staking in general, for example, you can write a medium blog post about it. You can write a Twitter thread about it. You can host a podcast about it. You can create a YouTube video about it. You can also create a 30 minute video, but also a 30 second video about staking. I'm a big believer in capturing short form text, long form text, short form audio, long form audio, short form video, long form video and essentially repurposing the content in all different platforms so that whatever message it is that you want to get across can be put across in the maximum number of ways to the maximum number of people in a way that they like to create a consumed content. Citizen Web3: Well, it's always, I think, a question and a debatable thing of trying to find the best balance as you say, right? Where you mentioned finding a balance between technology, money and community. The same thing, I think, with producing content works more or less in the same way where you have to find that balance of between which way you produce the content and which way users consume that content. And then you have this ideal content production and consuming kind of bridge, if that makes any sense. But I mean, you obviously have a lot of knowledge with everything, especially with your background, the economical background and with persistence doing what you guys are doing and taking it kind of in that direction. And the first question I would like to ask here is about NFT tokens. I mean, I know you guys are a member of Interchain NFT and you mentioned as well that you did the first cross chain like NFT transactions using ABC and so on and so forth. So obviously, you have some plans for NFTs. Do you care to share what plans are those and why you think NFTs will have a use case? Tushar Aggarwal: Absolutely. And so we're already using NFTs. And when I mentioned initially that we that persistence facilitates the borrowing of crypto assets or stable coins using real world assets as collateral. So how are these real world assets represented on chain? We represent these real world assets on chain using NFTs. And so the first few quote unquote real world assets that we're representing on chain. The first one is called a bill of leading a bill of leading essentially is a document that shows you ownership of over a particular commodity that is on a ship. And so these commodities are traded, but essentially on a tech platform when we say that a commodity is being traded, it is essentially that document that bill of leading which is being traded again. So essentially it's a trading of NFT against the stable coin. And the second way in which we're using NFTs at the moment is for the financing aspect where once the trade has been done and invoice has been issued that invoice is again a business document that is being represented on chain using an NFT and that invoice is kept as collateral to secure short term 30 to 90 day business financing. And so essentially as far as usage of NFTs go, we're using them to represent some of these real world assets on chain. But again, these NFTs again with some of our work. So I mentioned earlier we're leading this inter NFT working group. So NFT in the context of Ethereum is smart contract based, whereas we're trying to do it as build at the protocol level in on the and secondly in Ethereum, for example, the storage of the metadata is happening off chain in cosmos. You can actually facilitate, ensure that storage of data is actually happening on chain. These are some of the things some of the improvements that we're trying to make as far as NFTs themselves are considered. But then also what we're trying to do is work with as many other projects as possible, because especially if you want to make it a standard, then you want to make sure that the NFT itself is as generalizable as possible. And so in that context, in that working group, we try to collect the different use cases for NFTs and try to create the NFT in such a way that it is generalized for different use cases. But of course, we've had some use cases and some implementations as far as NFTs are concerned. Citizen Web3: I guess you see a much more productive, let's call it productive. I'm not sure it's the correct word to use here, future for NFTs, because I mean, I mean, totally understand what you're saying, but usually right for most users, especially those who are outside of crypto, when they hear for the first time, especially when they hear about NFTs, usually it connects to things like crypto kitties, or it connects to other games, right? And then when people realize that actually NFTs can be used, for example, trade in real world, I mean, assets, it's a bit hard at first to intake. But as far from what I'm hearing from what you're saying, you're saying that NFTs actually have a much bigger use case than we currently use them for. And there's a lot that we still haven't seen yet. Is that correct? Tushar Aggarwal: Yeah, so I think most leading edge technologies are looking like a toy as the cliche goes, and then over a period of time, you actually find use cases. Again, the way I explain this to people is like similar to how every crypto kitty is unique, every business in voice is unique as well. So fundamentally, the concept is the same, similar to how every art piece is unique, similar to how every piece of ammunition in a game is unique. It's essentially the same concept that is being extended to different use cases. And again, ultimately, like you said, people outside of crypto, they don't even care about the difference between a fungible token or a non fungible token, right? They just want to have interesting things to trade, especially within COVID, we've seen that there's an increased propensity for trading in general, even like trading of traditional stocks and things like that. So you look at it in the US Robinhood traders are literally moving markets. And so I think over a period of time, there's an increased propensity to have these alternative assets in your portfolio as well. If you own stocks, then you want to maybe have some exposure to crypto. Maybe you want to have some exposure to some actual like collectibles like sneakers or maybe even like a fraction of an art piece. And then over a period of time, you know, and that's mostly at the retail level. And then at the institutional level, obviously, there is increased propensity to find alternative ways to generate fixed income returns. And so again, it's the evolution of finance and what people want to hold as financial assets. Definitely, I think the scope is way beyond gaming and collectibles, as far as NFTs go, but we're just beginning to sort of scratch the surface of sort of what is possible. Also, it comes with its own complications also, right? So when you capture off chain data on chain, it's not foolproof because you still have human inputs required and you still have points of failure, you have points of sexualization, which we deal with where it's not like what we have created is completely foolproof. You still have to, these systems still require trust, but those are just the limitations and constraints that we work with them. But our goal is to try and see how we can facilitate slightly more efficient, slightly more instance, slightly more borderless way to move capital, slightly more interesting or useful financial products. Citizen Web3: You guys also did recently what you call the stake drop and I'm not sure if you were guys the first project to do it or so, but obviously this is a very interesting distribution mechanism. And it's quite obvious to most people who work with crypto and you don't have to work with crypto to understand it that initial vocation is quite important now in your opinion in your experience does blockchain provide better or worse distribution mechanisms And if so, why? Anna: Oh, it's tricky question. Citizen Web3: It's a tricky question indeed. Yeah, but I think that to share might shed some light on this. Tushar Aggarwal: Yeah, so to give you backstory of the stake drop, you know, so we thought that we will possibly attract about, you know, say 10, 15 million dollars worth of atoms to be participating in the stake drop. And I think the first day itself we had 50 million dollar plus within 48 hours we had about 150 million dollars worth of atoms participating in the stake drop and things went completely crazy. You know, eventually we had about more than 1050 unique delegators unique addresses participating in the stake drop on Cosmos Hub with the total of $170 million worth of atoms participating. And so almost one in every six atom was participating in the stake drop. So like I said, for us, it's crazy what you can do in the crypto world, right? And how global you are from day one, like our investors are from all around the world, our community on telegram, our followers and Twitter are from all around the world, our validators are from all around the world, people participating in the stake drop are from all around the world. I spoke to random people on calls who said that they were participating in the stake drop from like other validators to people running crypto communities to folks within the Cosmos tournament team. I mean, it's crazy how wild that went. And of course, now we're doing it with other Cosmos based chains as well. So we have Kava, I don't know when this podcast would be up, but we have Kava starting on the 26th of November, which goes on for 21 days. And then we'll be doing that with Iris and Terra, not in that order, but we'll keep the community posted. On the dates, but I mean, I think it's just crazy the kind of distribution. I think depending on how we take our token to market, we possibly have like, you know, 7000 to 10,000 people holding the persistence token around the world, which is just, you know, crazy to me. Anna: Maybe you can remember, we're talking about distribution and sometimes distribution can be crazy. Maybe you can remember some unusual outstanding distribution system or the distribution picture that you can see in some projects. Tushar Aggarwal: Yeah, I think so. For example, there have been different variations of the stake drop that have been attempted in the past, like Edgeware has tried to implement it, NewCypher has tried to implement it, Keep Network has tried to implement sort of this, you know, stake drop or lock drop kind of mechanism. But that was primarily all within the Ethereum ecosystem. But I don't think it's been implemented using validator nodes and within the Cosmos ecosystem. So I think post the success, we were able to execute. I think hopefully more teams should follow this. And if there are any teams that want to implement the stake drop, they were happy to kind of help them as well, because we've kind of built that mechanism. And we have some other variations of the stake drop in mind as well, which we might like run in the future. But I think there can be so many things just around staking that can be done. Staking in and of itself is very exciting. Citizen Web3: What advice would you give to any teams that are starting out with regards to achieving the perfect or our better? Let's not talk about perfect, but at least a good initial allocation. What advice do you think you could give to teams that are starting out in that? Tushar Aggarwal: In the context of Cosmos, it's a little bit different because typically the token is a staking token, which is used where the security of your chain depends on the staking ratio. But Obviously, a lot of the recent tokens that have been launched are more like just app governance tokens where even if the market cap of your token falls, it's not like the network security gets affected. So I think it's a little bit different. And I think it really depends on what the use case of the token is. Who are the target users? Is a project trying to target developers? Is a project trying to target capital? Like DeFi folks is a project trying to use it like target stakers? Is a project trying to target other projects? And so depending on who those individuals or stakeholders are, I guess there is no like holy grail of distribution. It just depends on what a project is trying to achieve. From our perspective, the target audience was high quality other projects. So we have some other projects in the Cosmos ecosystem that hold our tokens. We wanted stakers, people who are familiar with staking to hold our tokens and hence the stake drop. You obviously want some high quality investors. You obviously want some high quality financial institutions as well or more like traditional asset managers to hold your token. And so we've gone about in interesting ways to make sure that some of these people who we want to be holding our token are holding our token. Citizen Web3: I guess right in a sense you could say that DeFi instruments are things like stake drop, right? Which could be kind of seen as a DeFi. I mean it is to do with finance, it is to do with centralization, it is to do with capital flows. So I guess if we kind of wrap it all together and say that DeFi made some kind or would you agree to that statement to say that DeFi has made some kind of the next evolutionally step in helping projects to achieve an initial distribution or it doesn't make any sense? Tushar Aggarwal: I think what's happened is a lot of the folks that are involved in a very active manner with some of these products definitely take part in governance and things like that. We've seen even on the Cosmos Hub there have been certain proposals on which the turnout has not been that great. When you're a user of the product, the incentive to be involved in governance decisions is a lot more because it affects you now how many people are actually taking part in these decisions is still a pretty small number of people. But at least there is more of an incentive to take part in some of these governance decisions, especially from a retail perspective. Obviously that decision making is delegated to the validators on Cosmos, but even from that front, I don't think the engagement has been super high. So I don't know if that answers your question or if that was what your question was. Citizen Web3: It does because there wasn't any specific question. I wanted to see how far you agree with the fact that we are progressing in the objective to achieve better and better distributions. That was the kind of idea. Okay, so last traditional question for you. What are some of the blockchain projects out there that currently excite you or motivate you to do what you guys do with persistence? Tushar Aggarwal: I think on the kind of traditional finance side, I think centrifuge in Berlin is doing a pretty good job in terms of attracting some of the crypto capital to move towards, to be allocated towards some real-world debt financing products like real estate debt financing, financing of invoices and things like that. So I think that is definitely one product. I think a lot of the, and like I mentioned, definitely a big fan of staking and how staking is evolving and proof of stake in general. And so some of the newer kind of staking derivatives products, I think can be super exciting depending on how staking derivatives evolves in the market. I think most people forget that staking right now, the market cap of staking is much higher than the market cap of DeFi or the TVL and DeFi. People don't realize that. And so I think staking doesn't seem so sexy, but I think if you get into the numbers, it gets quite exciting. Citizen Web3: Cool. Sounds awesome. Thanks for joining us today and I hope that we can take this forward maybe next year or so when you guys are closer to the launch and see how far you guys have progressed. Tushar Aggarwal: Absolutely. Thank you so much guys for having me and I look forward to all the exciting updates on your end as well. Citizen Web3: Thanks. Anna: Yeah, thank you. Tushar Aggarwal: Bye. Outro: This content was created by the citizen web3 validator if you enjoyed it please support us by delegating on citizenweb3.com/staking and help us create more educational content.