The Bit Podcast - Episode 6 with U-Zyn Chua
22 Dec 2020, by Bittrex Global Team
This week on The Bit, we’re joined by U-Zyn Chua, the Chief Technology Officer of DeFiChain, a blockchain dedicated to fast and transparent financial services that are accessible to everyone. DeFiChain’s native token, the DFI, was also recently listed on Bittrex Global.
Here are the show notes:
[01:22] There From the Start
[06:50] Unlocking DeFi’s Potential
[08:59] The DeFiChain Mission
[20:56] A Decentralized Future?
[25:33] A Crash Course in Dapps
[28:20] And in My Freetime…
Tom: Hi, welcome to The Bit, the Bittrex Global podcast, where we give you the inside scoop on all things crypto. I’m Tom Albright, the CEO of Bittrex Global.
Welcome to today’s episode of The Bit, where we sit with some of the hottest names in crypto to give you an insider’s perspective on the fast moving world of cryptocurrency. Today, we’re thrilled to be talking with U-Zyn, Chief Technology Officer of DeFiChain and the DFI token that was recently listed on Bittrex Global. U-Zyn, welcome to the podcast. We’re so excited to be speaking with you.
U-Zyn: Thank you. Thank you, Tom. Thanks for having me.
Tom: Oh, absolutely. It’s our pleasure. I’m really, really excited to have you here. I think you guys have one of the hottest tokens that’s out there and, you know, really been doing great things and we’re really thrilled to have just launched the token DeFiChain on our exchange, Bittrex Global. So first off, I’d just like to say thank you for choosing Bittrex Global to list and how does it feel now that DeFiChain is trading live?
U-Zyn: Oh, it’s been great. Bittrex has been really adding a lot of liquidity to our token and the trading volume has really picked up and I think the partnership is working really great there and the volume really started to pick up, especially the last few days. I can see that evident impression based off our first use case launch with the DEX and liquidity mining. So yeah, I think it’s very well received by Bittrex traders and community and thanks for that. It’s been awesome.
[01:22] There From the Start
Tom: Yeah, absolutely. It has been awesome and I think it says a lot about your community as well that you guys have built, you know, a really great project that people are really interested in getting access to, so, you know, I think the success is all yours. In any event, so you got into crypto and Bitcoin pretty early on from what I understand. Can you tell us more about that and how you first got interested in crypto, who got you interested, and how you bought your first Bitcoin?
U-Zyn: Yeah, sure. That’s…I actually have a story to tell there. I have been interested in computers since I was a young kid. I started really way back when and my interest, especially in computers, is related to computer security so I’ve been into reading all about the the security part, how cryptography works how,…yeah, the whole scene and everything and I first heard about Bitcoin pretty early on since 2009, almost pretty much when Bitcoin first started.
Tom: Wow! You’re not Satoshi are you?
U-Zyn: I’m definitely not. But I’m glad to be around when Satoshi was still active back then. So I was, we were participating in forums and we could see Satoshi was still participating in discussions with the community and all that before he suddenly disappeared, so it was really interesting back then. Yeah, I got into it because I think Bitcoin is such a great use case for cryptography, which I personally had so much interest in and I just look for… for a lot of people I think they usually start with some doubt. I read this thing’s going to take off. For me I just hit on straight away because I thought it’s just such a great use case for cryptography. And so I got my first Bitcoin on IRC.
I’m not sure if people remember back then when that’s not even many exchanges. So you got IRC. There’s an official channel called Bitcoin Expo TC, and then you just put up your tape there. It’s an official order book, right. You can trade for anything. You just said I want to buy Bitcoin. I have some credit somewhere and some sites anyone wants to trade and then we just trade over there. This was quite interesting.
Tom: Wow. Do you remember what you paid for it?
U-Zyn: I remember it was definitely less than $20. I’m pretty sure less than $20, maybe even less than $10. I don’t know the exact number of that, but yeah, when I first got it, like wow, this is quite interesting.
Tom: Yeah, absolutely.
U-Zyn: And there was only one client back then, the official client. You had to always download the full blockchain on your computer to use it every single time and I was like… there’s not many sites that accept it but it’s still very interesting that, yeah, I got a Bitcoin on my computer, this money thing. What can I buy with it? Whatever. I don’t care. I have it.
Tom: The money thing. It’s amazing that it’s changing the world now.
U-Zyn: Oh, yeah. I know thinking about it like, it felt like a long time ago but think about it, it’s just 10 years. 10 years felt like the evolution of cryptocurrency. I think it felt like it has been there for 100 years. So I think it’s 10X in the way that it accelerates the evolution of cryptocurrency.
Then I started mining and started one of the first exchanges in, probably in Asia, just running pretty much some small scale back then, Just got myself involved in the development of Bitcoin in the crypto space. And eventually when Ethereum came about I also really got interested in it and I started to develop some dapps and some development around it. I also developed some frameworks around. For the early days, Ethereum, to build, for developers to build things on top of Ethereum. So I built some of the earlier frameworks there, before the more widespread framework came about.
Tom: Got it. Got it. That’s really interesting. I do want to circle back to the Ethereum experience at some point. But I wanted to ask if you’ve been involved in crypto the whole time then continuously or have you been, I know, there’s a lot of people who were early adopters who really got into Bitcoin right when it first came out, and then either sort of faded out or lost interest and then picked it back up at some point or… so I’m curious if you’ve been involved continuously the whole time, or, you know, if there have been gaps here and there?
U-Zyn: I consider myself lucky to have been involved throughout the whole journey in crypto. So I have been, I remember very clearly every single crash in the crypto space, from the first one with the Mt. Gox hack all the way to today. So I’ve been through every single step of the way.
Tom: That’s right.
U-Zyn: Yeah, not only as a passive observer, but I’ve always been, I would consider myself like semi active in the space, doing some minor…I’m not an active trader, but some minor, like investment in the crypto space and also development. And I also consider myself lucky to also have a few projects that I can, that could have, that I could do throughout the journey in the crypto space. So that gets me more and more involved. And I think my participation in crypto has always been increasing. It’s been steady but always increasing as well, rather than, I don’t see any gaps in between. So yeah, I consider myself lucky there.
[06:50] Unlocking DeFi’s Potential
Tom: That’s great. Well, it certainly sounds like a lot of fun as well, in going on that journey and just watching all the amazing changes.
Obviously, one of the really cutting edge topics and the things that’s really going on, kind of at the forefront of innovation right now, is DeFi, and, you know, at Bittrex Global, we’re really interested in fostering innovation in the DeFi space. We’ve listed a lot of the top DeFi tokens like yours, DeFiChain. So I’m wondering if you could take it from the top and just explain to our listeners what DeFi is, first of all, and then why you find it so interesting.
U-Zyn: Yeah, I think DeFi really brings about the whole banking and finance industry to make it decentralized, to allow full trust, no one transaction to go through on a blockchain without having to trust any counterparty or any third parties when you do it.
Obviously, there’s some smart contract risk there. But other than that, you hold your private keys, you decide your own decision on how you want to trade or how you want to involve in some financial transactions. You want to get into some futures trade or some options, or some lending, some borrowing or some providing liquidity and all that. So you make your own decision. And there’s no counterparty involved. I think that’s super interesting, super amazing on that.
Yeah, and one thing I really find DeFi very interesting, it’s the easy programmable access to financial services. Like banks and the financial institutions that provide the financial services of today, they’re usually pretty much a closed box system where you have to, firstly get an account. And once you get an account, you have to use an interface to use it. There’s a very limited area of programmability for it. So what I like about the whole DeFi and the whole blockchain scene is that it not only provides you access to all these financial tools, but it also provides a very easy programmable access to all these financial services. And you can see the innovation that comes up, because of all these programmable accesses.
[08:59] The DeFiChain Mission
Tom: Yeah, that absolutely makes sense. Definitely. And so drawing from all of that, can you give us the story behind DeFiChain? How did that come about? How did you guys decide to launch? Which specific areas are you targeting? And what are the goals for the project?
U-Zyn: Sure, the whole project idea came about from a chat with Julian, the Chairman of DeFiChain last year, January of last year, 2019. So we were just chatting about what’s in the scene, what’s in the space, and both of us really got into it, it really got us clicking and got us talking and chatting about it. Really DeFi, it was still early days on DeFi back then, but I think both of us really liked the idea.
Tom: Very early. Absolutely. Yeah.
U-Zyn: Yeah. At the same time, we were both really big fans of Bitcoin. It was, I think, around 2018 where I kind of like switched my attention away from Ethereum back into Bitcoin, because then I kind of started to realize how much you can do in Bitcoin actually, without even Turing complete instructions in there. You can actually do a lot of things on Bitcoin itself.
So that, we got us both to chat quite a bit and started to brainstorm the ideas around it. And then it just clicked that we wanted to do something about really improving the DeFi space and really make it even safer and stronger, more efficient. And the goal for DeFiChain is basically to just solidify DeFi as the blockchain level consensus, to make it, really, a transaction that’s verified by every single node, every single miner and yeah, it’s almost like how you would send a Bitcoin transaction. You’re not sending a bunch of instructions over, you’re sending specifically how much Bitcoin I want to send. So we wanted to solidify DeFi at that kind of blockchain level consensus strength.
Tom: And is that the reason why, you know, that security and that consensus protocols, is that the reason why you guys chose to build on the Bitcoin blockchain instead of Ethereum, like most other DeFi projects we see?
U-Zyn: Yes, exactly. Yeah. I think the strong point about a non Turing complete blockchain like Bitcoin is where things are really contained in a box. You know how much attack services there are, you know how much you can contain with it, you know how much, what are the risks involved and everything is very much contained. So that’s the reason why we chose Bitcoin as the blockchain to build DeFiChain on. And we build every single transaction on…I mean on DeFiChain, every single transaction is happening as a native transaction on DeFiChain. it’s not a high level dapp instruction to move this bits over to that memory space and all that. It’s actual DeFi transactions that’s going on a blockchain space and that’s verified by every single miner.
And I think that’s a key point on why we chose to do this.
And I would like to make an analogy on this evolution that I personally see is happening, is that the whole, I think you can see this with the mining scene, it starts at very general mining where even on Bitcoin, in the early days you can mine a Bitcoin with a CPU, you just download the desktop client, just turn on mining and you get 50 Bitcoin like an hour or two later. That’s a lot of money today but back then you couldn’t even buy a pizza with that right?
And then it started to move towards GPU, where it’s more specialized, it’s less general purpose than CPU, but it can do certain things much faster than CPU does. And then it moves on to FPGA, which is a Field Programmable Gate Array, and then it moved on to ASIC. Like today, you can’t mine Bitcoin from CPU, GPU, FPGA anymore. It’s going to be burning your electricity. So you have to use ASIC. And ASIC is such a single purpose board that you can only do one thing and one thing only, to mine Bitcoin. You can’t do anything on top of it, you can’t run Microsoft Word on it. It’s just to mine Bitcoin. So I see the progression there.
And this is the same ideology where we start with DeFiChain. Like on Ethereum, it’s a very general purpose blockchain where you can build anything, everything you can think of, because of Turing complete language on it. And on DeFiChain, it doesn’t have that. So you can only do DeFi transactions only, but doing it in a very fast and efficient and safe and native manner. So that’s our goal of DeFiChain.
Tom: Well, that’s a really interesting analogy. I hadn’t heard that one before. But it makes a lot of sense. Yeah, that going from the general to the specialized results in a better result and a better output. So that that certainly makes sense to me.
Now, you guys offer a number of interesting solutions for yield farming and generating returns, which is really sort of the root thing that’s happening on, or maybe not the root thing, but the primary thing that people are sort of looking to DeFi, as an industry, to do. So I’m wondering, can you explain first what yield farming is at a high level and then second, what are the DeFiChain solutions that make it better than the other products that are out there?
U-Zyn: So, DeFiChain…I mean, we started mining our first block back in May. And we’re about to introduce the first DeFi use case. Just to wrap up today, actually, we’ve started planning for a week or so on the mainnet, but no incentive yet. But today, we’re going to be starting the DeFi yield mining incentive, yield mining incentive on DeFiChain.
Tom: Amazing, congratulations.
U-Zyn: Thanks. Looking forward to it. Yeah, so what that means is that, on a decentralized exchange, to provide a swap or to provide an exchange between one token to the other, you’re going to need liquidity. So naturally you have to add some incentive for users or traders or people to lock up the token to provide liquidity for other traders to trade against. So usually, or traditionally, the person who provides liquidity will gain from the commission from the trade. So that incentivizes a little bit to put up your coin to provide liquidity. On the order book exchanges, you will do some arbitrage to ensure that you get to extract some value out of the token that you hold.
So on DeFiChain DEX, we are providing, also commissioned but also additional incentive that’s given out as DFI, the native token on DeFiChain, for that. So if you provide liquidity on DeFiChain DEX, you’re going to get DFI that’s given out automatically as block consensus at 100 DFI per block given out at every single block, and our block time’s 30 seconds. So at today’s price of DFI, I think 40 cents or 45 cents. That’s about like $40 or $45 is given out every 30 seconds to liquidity miners and the APY that we can foresee for the first couple of weeks could be as high as 300% or more, so I think that should be really attractive to many people.
One key difference that I’d like to point out that makes us different from the other swap DEX out there is that a lot of these pools or swaps, they give out the rewards in the form of new token that newly created and then start to convince people that this token is worth trying to find utility around it. You have to then come up with a governance use case or various other use case to find utility around it. But on DeFiChain, because it’s, what we’re giving out is the actual native token on DeFiChain. So for that, we don’t have to come up with more utility because it’s native. This is almost, this is like a pool on Ethereum that’s giving out ETH as a reward and not a new food token, for example.
Tom: Yeah, we’ll probably see SUSHI DeFiChain next week if the rewards are as high as you guys say and people flock to it.
U-Zyn: Yeah, the incentive is first to attract some liquidity over from the Ethereum side. Obviously, we have a higher bar to go through, because on Ethereum, you have a very vibrant ERC-20 token space, where you get all these different tokens. So for us, we’re going to attract some liquidity over from the inside over to outside…and the reward is given out to attract some liquidity over.
And I would also like to point out one more thing, it’s that this reward is not given out as new inflation on the blockchain. It is, actually, we put up, the community put up a proposal, we call it DeFIP, DeFi Improvement Proposal, similar to BIP of Bitcoin, where we asked for the miners’ approval and the masternodes’ approval to reduce the mining reward so that we can get the mining rewarding to be given out to the yield farmers, to the people who provide liquidity on DeFiChain DEX.
So the miners are approving that, to reduce all mining rewards so that we can introduce the use case and attract liquidity over. So it’s not that we’re introducing new inflation to the coin, we’re just reducing the reward from the existing miners, so they can give it out as reward. So all of that is…our admission rate for DeFiChain doesn’t change, it stays the same, consistent.
Tom: Wow. Well, I think it really says a lot about the community that the miners and everyone involved would vote to approve that proposal, and basically reduce their own rewards to make the overall success, give it a better chance for overall success. So that definitely says a lot. Really, really interesting.
So one thing I wanted to ask about, you know, with DeFiChain versus Ethereum, as well, are you seeing a big impact in, obviously gas fees on the Ethereum network have been really, really high and they spiked quite a bit and DeFi has been driving a lot of that. Does the DeFiChain have significantly better costs versus Ethereum gas? And is that one of the other benefits as well? Or how does that play in?
U-Zyn: That’s a great point to make. Currently, the gas fees or the inspection fees on DeFiChain is really, really low. It’s almost nothing to make a transaction, to add liquidity, to solve anything, it’s almost no fees involved. But usually it comes with…there’s two reasons for that, right.
One, it’s because we’re a new blockchain. We have a bigger block space and we have shorter block time and, not shorter block time but a bigger block space, but generally also because we’re so new, we don’t get that many transactions in that space. So the fees are not that high because you don’t have to compete to get the miners to mine your transaction. So, I mean, in that sense, yes, our fees are low today. But if they, if DFI increases, gets up, even though we’re scalable, it doesn’t mean that you can fit all transactions in the world. It might one day also get high if we are successful. So it’s kind of like, yeah, do we want to get there? Maybe no, but also like, if you get there, it also means that we’re successful, then we have another good problem to have on how we can improve the second layer scaling, for example.
[20:56] A Decentralized Future?
Tom: Absolutely, that makes perfect sense. So changing gears just a little bit. So you’ve mentioned in the past that you believe tokens are going to be decentralized in the future. Can you explain to our listeners what that means? And more importantly, why do you believe that?
U-Zyn: Sure, when you have a new blockchain or side chain, usually you have to then introduce tokens to these chains to be traded on. For example, on Ethereum, you get WBTC, where every single Bitcoin is backed by a consortium of companies, they are issuing this wrapped coin and then they basically make a promise that these Bitcoins are good for one Bitcoin if you want to withdraw, if you want to change them for the actual Bitcoin. So on DeFiChain, that’s what’s happening currently, as well, that we have every single Bitcoin that is traded on.
But DeFiChain is guaranteed by actual Bitcoin. And you can verify it on a publicly verifiable address that we published. But going beyond that next year, our goal is to allow Bitcoin token to be issued on DeFiChain in a decentralized manner where it’s not, it’s not going to be issued by a single entity or group of entities or a consortium where it’s just…the community can issue it, but the value has to be guaranteed in a way that’s backed by collateral, or it has to have some confidence from the traders in the community that the value of the Bitcoin token on DeFiChain is the actual Bitcoin value that’s actually traded on the market space. So we have a mechanism on how to do that on DeFiChain and hopefully it will come early next year. It definitely will come early next year, for sure.
I mean, so what it will allow as well, it will allow a seamless cross chain exchange between a tokenized Bitcoin on DeFiChain. If anyone wants to trade the tokenized Bitcoin for the actual Bitcoin you can do it in a decentralized manner, you do not have to go to the issuer to get the issuer to unlock the vault and give you the actual Bitcoin, you can do it seamlessly across chain. So that’s why I would like to call this a decentralized tokenization of assets.
Tom: Yeah, that makes sense. And it’s really interesting in looking at this industry and the space how almost like the push and the pole between centralization and decentralization as, you know, innovations come out in a Wrapped Bitcoin that allows Bitcoin holders to participate more directly into DeFi but that reintroduces centralization, and then you know, teams like you guys come up with a solution that again decentralizes that a bit. So it’s really fascinating to watch how quickly the space is evolving and that technical solutions are being put out there to, you know, kind of fulfill the original promises in a lot of ways of the Bitcoin White Paper, so it’s really fascinating to watch.
So, you know, you guys have a lot of initiatives and a lot of things that are coming out and obviously the decentralized version of Wrapped Bitcoin is one of those, but looking long term, what does success for DeFiChain look like for you?
U-Zyn: A successful DeFiChain would mean that inactive usage of DeFiChain where we get a lot of trades going on DeFiChain, and DeFiChain also captures a significant part of the crypto market where a lot…I think what is missing out today is that it’s capturing a lot of the ERC-20 market space but the whole crypto market is way bigger than that.
So we hope DeFiChain will be attractive enough and to be trustworthy enough, to be safe enough that we will attract a lot of the larger post and bigger than ERC-20 market to go into DeFiChain and have an active crypto market space in DeFiChain actively used by traders and by users. And as a developer and as a tech person myself, what I would like to see DeFiChain, as well, to have an active developer community where we have libraries and resources and tools available for developers to actively build on DeFiChain and extend beyond what our team provides.
[25:33] A Crash Course in Dapps
Tom: Well, that’s great. So we’re certainly rooting for you guys. And we’ll do everything we can to help that happen. So one of the things you mentioned there was developers building on top of DeFiChain. You know, can you describe for the new listeners, you know, what are dapps? And what are your plans for DeFiChain? Or what are the plans overall for dapps on DeFiChain?
U-Zyn: I would like to take a step back to explain a little bit of what dapps are. Because I think we’re all taking dapp for granted on what it is. And it’s just like the part of the blockchain today. But what dapp is actually, before dapp came around, everything that you wanted to do had to be done on a blockchain natively. And because Ethereum has a Turing complete language, so you can then come to the high level language, like Solidity to allow you to build things on top of it. And that’s where dapps came around, where you don’t have to start your own blockchain anymore, you can just build things on top of it. And it comes with a vibrant community that allows people to build on top of it.
So on DeFiChain, what we have today, it’s more on the traditional blockchain offering where every single participant on DeFiChain today, if you do any trades, you do any transactions at all, what you are doing is you’re downloading and you’re running a full copy of the blockchain on your computer. And it’s a true trust no one offering on DeFiChain today. So if you make any swap, you make any liquidity, you’re doing that with a full copy of blockchain on your computer. Obviously, there’s pluses and minuses on that. So the plus is that it’s a true blockchain trust no one initiative, where you download the full. And the downside of that, obviously, is where…how do we build on top of it? Because the dapps come with a lot of convenience, where people are so used to just going to a website, fire from some plugin, and you get to interact directly on the blockchain. So what then happens in the background is that you’re trusting the plugin provider, and you’re trusting the node provider to audit the transaction for you, and doesn’t alter it for you.
[28:20] And in My Freetime…
Tom: Great, great, well, that’ll definitely be a very exciting development. We’re really looking forward to that as well. So I’ve heard your colleagues describe you as the brains behind DeFiChain on the recent AMA that we did together. So, you know, with that endorsement, I absolutely have to ask, what are you currently interested in other than DeFi in the crypto space? What’s caught your attention?
U-Zyn: I think for the last couple of months, I think most of my headspace is around DeFi, obviously, because we are working so hard on DeFi, to build, to get to where we are today. At the side, I mean, I did look into some other crypto. I’m interested in some other crypto spaces.
So for example, I’m interested in various trading mechanisms around crypto space, like options, futures, perpetual swap and all these different financial offerings in the crypto space. I’m not so much a trader, but I’m pretty much interested in the crypto financial scene. So I like to get myself involved and get myself up to date on all these different offerings and how they work and everything, also part of my research for DeFiChain as well. So yeah, that’s pretty much my interest. I’m also interested in the central bank digital currency as well, CBDC. I think that’s a very interesting space.
Tom: Well, that is a very interesting space and very interesting topic. Absolutely. So I heard that you’re also working on a couple of other interesting crypto projects. Can you tell us any more about those as well?
U-Zyn: Sure. I’m involved in Project Sand Dollar. It’s the first retail CBDC that’s deployed in the Bahamas. So, yeah, I’m the lead architect behind it. It’s a central bank issued digital currency that’s run partly on blockchain. And probably…we like to call it a dual layer blockchain system where it allows instant confirmation and immutability of blockchain together as a whole.
So that project, the key idea of Project Sand Dollar is to introduce financial inclusiveness to the people of Bahamas, to allow very seamless usage of CBDC in the country. And the difference, I think the difference on our design also is that it allows people to interact with CBDC, even without a smartphone. So there’s a card where you can interact with it, and yet, still gain a true end to end encryption for the usage; you don’t have to trust anyone.
So I always like to bring this idea that you don’t have to trust anyone in the system that I design. I really like the TNO, Trust No One. So I think that’s the theme around both of my designs, where if you own a coin, you own a currency, you own something, you should own it, you should not have to trust a central database that says that you own it. That’s usually my philosophy around design.
Tom: Yeah, absolutely. And it’s true to the core principle of blockchain again. So that’s, yeah, I think a lot of people are watching that Sand Dollar project with a lot of interest. And, you know, I think it’s going to really tell us a lot about the viability of central bank digital currencies. So really just fascinating to watch. Absolutely.
So U-Zyn, thank you so much for coming on the podcast today. And for talking with us. It’s been a great conversation. I’ve certainly learned a lot. And I think we could deep dive a lot more. But unfortunately, we’re mostly out of time here. So it’s been fantastic to talk to you. And it’s really great to have you and your amazing project listed on Bittrex Global. Thank you so much.
U-Zyn: Thanks, Tom. It’s been a great pleasure chatting with you. Thank you.
Tom: Thank you. Thanks for listening to The Bit, the Bittrex Global podcast. Our guest today was U-Zyn, the Chief Technology Officer of DeFiChain. DeFiChain recently listed their token, called DFI, on Bittrex Global. To learn more about Bittrex Global visit global.bittrex.com and please make sure to subscribe to our podcast. You can find us wherever you get your podcasts. Thank you for listening and for making The Bit one of the fastest growing podcasts in the world of crypto. I’m Tom Albright, the CEO of Bittrex Global.