Barney Mannerings, Co-Founder of Vega Protocol, on Crypto Derivatives and Permissionless Market Creation in DeFi | Ep. 240
In an exclusive interview with cryptonews.com, Barney Mannerings, Co-Founder of Vega Protocol, talks about purpose-built blockchains for DeFi applications, the present + future of crypto derivatives, and permissionless market creation in DeFi.
About Barney Mannerings
Barney Mannerings is the Co-Founder of Vega Protocol, the derivatives layer for Web3, backed by Coinbase, Pantera, and other prominent VCs. Barney sits at the intersection of institutional finance and crypto, having founded Vega after building two versions of the London stock exchange matching engine and working in capital markets in London for 15 years.
Barney Mannerings gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication, provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- Vega’s recent deployment on Alpha Mainnet
- Purpose-built Blockchains for DeFi Applications
- The present + future of Crypto Derivatives
- Permissionless Market Creation in DeFi
- DeFi Trading – Things to consider for Retail Investors vs. Institutional Investors
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We’re buzzing as always, and today my guest is coming in hot from across the pond in the one and only London, England top tier, world class city of the world. And today we have Barney Mannerings coming on the pod. Co-Founder of Vega Protocol, the derivatives layer for Web3 backed by Coinbase, Pantera and other prominent VCs, Barney sits at the intersection of institutional finance and crypto. Having founded Vega after building two versions of the London Stock Exchange matching engine and working in capital markets in London for 15 years. A true Chiseled vet now moving and grooving in the Web3 space. Barney, pumped to have you on. Welcome to show my friend.
Barney Mannerings
Matt, great to be here.
Matt Zahab
It’s been a while. Very excited for this one Barney. I think a good place to start would be the sort of crazy news that we’ve experienced over the last couple of days with SEC versus Binance and Coinbase. Me personally, I don’t really get it. I get the Binance part, but the Coinbase, it’s like Coinbase is the to my knowledge, the only super reputable American based institution who has followed all the rules, who has helped the SEC and other American governing bodies develop legislation and policies for Web3 Crypto blockchain. Obviously a publicly traded company, I don’t know if they still are, but was like almost Fortune 100 at one point. Obviously all the books are open. Why the heck is the SEC going after Coinbase almost in the same capacity that they’re going after Binance? Barney I really don’t friggin get it. I have no clue why they’re doing it.
Barney Mannerings
No, I mean, it’s it’s a hard one. I mean, I think it it sort of seems to be the case that they have decided to sort of, you know, maybe as a result of the sort of FTX collapse and everything, maybe they felt I don’t know whether regulators and politicians felt exposed because of how close they got to people like SBF. But it sort of seems like they’ve decided to kind of go hard against crypto and kind of apply what, like nearly 100 year old rules, basically, to the letter, as far as they can against everyone. And I think for a long time and again, and indeed in many other countries, I think people expected regulators maybe to kind of work with them, maybe create new rules or carve out something to treat crypto assets and digital assets a little differently. And that’s what we’re seeing in a lot of other jurisdictions, like here in the UK or in Europe. But it seems to me, from afar, it seems like they’ve basically just said, we don’t want to do that right now. We just want to kind of just come in hard with the existing rules and just basically say that everyone is breaking them and this is basically not allowed, which is a strong stance to take. And I don’t know if it’s politically motivated or, as I said, a result of the FTX stuff, but it certainly is going to be challenging for, I guess, US based companies. But also it feels to me like the wrong move because it feels like this stuff is global pushes. It would be like pushing the development, the internet away in the 90s. It wouldn’t stop it happening. It just changes where it happens. So it’s difficult to see exactly what their end game is.
Matt Zahab
I’ve seen a bunch of tweets over the last couple of days about Coinbase just packing up and moving to Dubai or moving to Saudi Arabia or somewhere in the Middle East that obviously from a geographical standpoint, it’s perfect because you have the west and the east right, you have USA and China and everyone in between. It’s one of the only places on the planet where you can actually put in a pretty standard workday and still have touch points to everyone else on the planet without working absurdly late or early hours. Do you think this could happen? Do you think Coinbase ever could pack up and move?
Barney Mannerings
Maybe, I know what your choices, I guess, are to move to one place or have tried to have entities everywhere and try to be regulated in as many places as possible, I guess. But fundamentally, if the jurisdiction that you’re based in is going to basically say you can’t do this anymore, then I don’t know what choice they have. It’ll be interesting to see what they end up doing, how it all develops. But it certainly looks challenging out there.
Matt Zahab
In your 20 years experience in traditional finance, this weird of an event and more specifically the last sort of just three years in crypto with the ebbs and flows, the ups and downs, have you ever experienced anything like this or are there any sort of parallels to your background at TradFi?
Barney Mannerings
Not quite. Certainly traditional sort of investment banks and exchanges tend to be limited in jurisdictions. Certainly exchanges tend to be one jurisdiction Investment banks tend to operate like trading platforms, potentially in multiple jurisdictions, but they actually have unbelievable amounts of rules and checks and balances in between about where the funds are held and commingling them. And they’re different legal entities, so it’s really hard to do this kind of global thing. So in that respect, I’ve never seen anything quite like this, but there’s never really been an attempt to create these kind of global exchanges. Probably the closest parallel is maybe things like after the sort of financial crisis in 2008, a bunch of rules were created that effectively pushed proprietary trading out of investment banks. And so you sort of saw this activity just closing down everywhere, desks closing activity, closing investment banks changing their business model and you saw those people migrate to basically hedge funds. So again, it’s kind of like you try and stop this thing, maybe that makes the bank safer, maybe that improves some aspect of the industry, but actually the proprietary trading kind of carries on in hedge funds and wherever. And maybe you see the same thing here. Like it doesn’t work having these global exchanges based in the US. Because that is not going to be allowed. But the money in it, the number of people holding these digital assets globally, the need for people to trade it, it would be difficult to imagine the activity just stops happening. It’s just that the people doing it will figure out what they’re going to do next and where they’re going to move to, I guess.
Matt Zahab
A different place, touche. Let’s jump into crypto derivatives before we get into, well, I guess you Vega and crypto derivatives are all synonymous and tied to each other. But let’s start with a nice overview of crypto derivatives. I’d love if you could give a quick sort of 360 degree encompassing view of the present and future of crypto derivatives and then we’ll get into Vega and how you and the team are moving and grooving on that topic.
Barney Mannerings
Yeah, absolutely. So you’ve actually got two sort of related topics. One is derivatives on cryptocurrencies, so futures on the price of something like Bitcoin or Ethereum. And the other one is crypto asset settled derivatives. So actually I want futures on the price of gold or oil or US treasury bills or whatever, but I want to settle them in, say, USDT or dye or a stablecoin or even in Bitcoin. So they’re both kind of derivatives using crypto. One of them is talking about sort of expanding the existing system of kind of Bitcoin and different assets and stablecoins into also having derivatives of those things, which is an important sort of maturing step for that sort of crypto financial system. And the other one is talking about actually using crypto assets and blockchain to move forward all of finance to say actually these things that you used to have to trade on like the CME or the Liffey Futures Exchange in London or something like that and you used to have to be institutional. These things can start to happen on blockchains, they can start to be available to everyone. So you’ve got a bit of both. I think the main story in crypto right now is probably derivatives of cryptocurrencies, although there are some derivatives that mirror real world assets as well. And by far the biggest story in terms of trading has been the success of the perp in terms of like sort of perpetual futures on things like Bitcoin which are the most traded right now. And I think that sort of speaks to the fact that the crypto trading. Environment and financial environment right now is mostly speculative around crypto assets and it’s mostly people trading positions in those crypto assets rather than doing kind of other financial activities, which I think is something that over time will stop being the only thing people use it for, but is a big part of it right now.
Matt Zahab
How far out are just building on that topic, how far out are we until the speculative sort of gong show that is currently taking place concludes and actual applicable utility is sort of present in the market and just in day to day activities? I know it’s a tough and loaded question, but how far?
Barney Mannerings
It’s an interesting one and people it’s starting to happen. So you see things like compound treasury starting to happen. But actually it goes back to the first question you were talking about the way regulators act, how much clarity they give versus whether they sort of regulate by enforcement, how confident other people in the economy feel interacting with blockchains and crypto assets. Some of that’s down to the platforms, down to the actors, down to the quality of the protocols and products and assets. But some of that’s also down to how the regulatory situation unfolds and how that confidence can grow.Because if you have an extremely strong regulatory regime, which is clear, if people know what is legal to do and then they know how it gets audited, how it gets accounted for, how it gets taxed, and if that’s all set out clearly and there are no surprise random regulatory enforcement against companies that have worked with the regulator since whenever in the public companies then it’s much easier to imagine launching those things and saying hey, you can get this like futures product that you use as a small business. You can actually get it cheaper on a blockchain based product or something at the moment. It’s like the sort of how do do you convince those small businesses and those other users who need access to financial products that it’s a good idea for them to use a blockchain based product, when what they discover is that even the best looking platforms that always try to be compliant sometimes get randomly sort of sued with massive enforcement. So part of it comes down to that clarity and certainty on regulatory stuff because you’ve just got a normal people don’t want that kind of risk hanging over what they do, right? Part of it comes down to that and part of it comes down to the maturity of things like Compound, treasury, things like Vega itself, all these different platforms, stablecoins DEXs, even like the fees, like once you get L2s and fees are cheaper, then it’s easier to see people using the Ethereum based stuff. So all that stuff matures and gets better and better. That will be one side of the equation. But the reality is, until there’s clarity for users and they don’t feel they’re at risk and they don’t feel they might be breaking the law or something might disappear up from under their feet for both the technical and regulatory reasons. Until that clarity is there, it’s going to be difficult to make big inroads. But I do think certainly in most of the world or a good portion of the world, Europe, Asia, other places that’s coming. Not sure if it’s coming or not in the US.
Matt Zahab
Wow, it’s tons of things to unbunk there. Another topic Barney I’d love to jump into, and this is more selfish over anything else. I’d love to get a better understanding of how derivatives, more specifically crypto derivatives, are priced out. And again, I’m sure this is probably a six hour long question, but if you could sort of give us the TLDR too long, didn’t read the spark or cold’s notes version of the answer, I’d love that really. Just how do you and the team price a derivative? And I’m sure there’s hundreds of signals and important things that go into the algo, but if you could just give me the most important ones, that’d be a treat.
Barney Mannerings
It’s actually much simpler than that. We don’t price them. What we do is we create a market. So we create a protocol that creates a marketplace and the marketplace prices it. So in the same way that the orders on an order book price a spot product, the same happens for a derivative. The bit that requires all the algos is actually the risk management. So with derivatives you have margin and leverage. So that means you can go bankrupt. Like effectively you can with if you just hold a Bitcoin, you can hold it forever until it goes to really close to zero or until it goes to really high. And you’re never going to be closed, right? You’re just going to hold Bitcoin. It’ll be worth more or less.
Matt Zahab
You can’t go underwater.
Barney Mannerings
Yeah. Whereas if you take, say, 5X leverage on HODLing a Bitcoin derivative, then if you lose 20%, you get to zero and you have to be closed. You have to be liquidated. Now, figuring out how much capital I should be able to put up and how much leverage I should be able to take, so that effectively I don’t cause risk for the network like someone else. I need to get liquidated, but I haven’t given the protocol or I haven’t given the exchange enough money. So now I need to be liquidated, but I have no money and someone else is owed money by me. Like figuring out that number, that’s where the algos come in and that’s where you look at the volatility and stuff, because that’s the key bit is making sure that someone doesn’t sit there thinking, look at this, I made loads of money. And then it turns out, actually, they made loads of money off who doesn’t have any, and that’s the problem. So that’s where the algos come in. But actually the pricing is just you use order books, you use AMM curves, whatever you want. We use order books initially, we’ll have hybrid AMM curves in future. And the pricing comes from the market, the participants, the market makers, the other people with orders, just expressing their view about the price, just like it would in any other spot market.
Matt Zahab
Interesting. The thing with derivatives, I feel like this is an area where a lot of the junior or less experienced traders can really get crushed because they’ll watch some YouTube video on derivatives. Most likely standard traditional finance derivatives, and how the average Joe or Josephine does have infinitely more upside and downside than just a traditional trade. I feel like sort of the degeneracy trail giving an analogy for drugs. It starts with maybe a cigarette and then weed and then some worse things, and then leading all the way down to something terrible like heroin. The trading is probably you trade a couple of stocks, maybe you get into currency, then you trade options and then at the very end of the spectrum, I feel like crypto derivatives might be there. Again, this is coming from someone who’s not a professional trader, but would you say that statement is accurate in any capacity? And how do you teach people?
Barney Mannerings
I think there’s a nugget there, yeah. And I think the way I think of it is a bit like skiing, right? So the problem is people go, hey, look, that a really cool run to go down. It’s steep and it’s got trees and it’s narrow.
Matt Zahab
Double black diamond.
Barney Mannerings
Yeah, double black diamond. Right? But you need a bunch of skills to do that safely and you need to know what you’re doing. And so actually, knowing your level of skill, you probably want to start on the, like the blue or whatever the lower one is. The problem is that a lot of people it’s the same as with gambling, right? People with gambling, people see they make one success, they bet on a horse race and they’re like, oh, I can make money, so I’m going to bet more and then I’m going to make more money. And eventually that goes wrong. And trading derivatives or anything really is like gambling if you don’t really know what you’re doing. And by taking leverage, you can exacerbate both the gains and the losses. And I think the problem is that some people like to talk about it like, oh, yeah, you can just win bigger, but actually you can lose. Not only can you lose bigger, but you can lose much more easily, right? Because you look at a price chart, even if it goes up, it doesn’t just go up, it goes up via going up and down. And what that means is that if you go too leveraged, even if you’re right about it going up, like one of those downs is going to liquidate you and wipe you out before you get to make all the money from being right. So there’s quite a lot of risk in trading derivatives. You can use derivatives for things other than getting leveraged, right? You can use them to get access to things. You can’t otherwise trade sort of synthetic assets. So you can use them without much leverage and that’s probably relatively safe.
Matt Zahab
Like what?
Barney Mannerings
If you look at things like spread betting or contracts for difference, they basically give you Synthetic exposure to an asset that maybe you can’t actually trade. Or you could trade futures on a token that’s totally locked and not tradable as spot yet, but you could trade futures on its price. You could trade any of these things with no leverage and then it’s no more dangerous than trading it as spot. The problem is when you take the leverage and the problem is a lot of people probably shouldn’t take the leverage. And I would say, like, one of the core things about crypto is kind of like everyone gets to play it’s equal. It’s like the internet, it’s opened or you get your keys, you can do it. But on the other side of that, just because everyone can, doesn’t mean everyone should, right? Like everyone who gets onto the ski lift can go down the double black diamond run, but most of the people who get off the top of that ski lift should not go down the double black diamond run. And I think all of us have a real duty to educate people and not be like, hey, yeah, you should just all trade derivatives or you should just all take loads of leverage. We should actually be like, you probably shouldn’t trade derivatives. If you’re just looking at this for the first time, the last thing you should probably do is just randomly start trading derivatives. Like, you should understand why you’re doing it, you should understand the risk you’re taking, you should understand the platform you’re using. You should be very cautious because the reality is that otherwise you’re probably gambling and you’re probably going to lose. And we actually just end up in a situation where we would never ever tell anyone or do any kind of marketing that suggests anyone should trade. We will always just talk about, we built this software, it does this, you can use it to do this. If this is the kind of thing you like doing, be aware that’s risky because there’s no way, unless you know someone as a professional trader or you understand the background, there’s just no way you can responsibly tell them you should be trading these things. Right? It’s not really what drivers are for. Yeah, they should be available to everyone. Yeah, that can be useful. But also there’s risk, so people have to weigh that up for themselves. And in crypto, we like to trust people to take their own view of those risks. And some people like to take big risks degen take big risks YOLO into stuff that you don’t fully understand. But, you know, you might lose that and you’re okay with that. And if that’s you, then that’s fine, but we just it’s really irresponsible when you see people kind of just encouraging people to just start trading with, like, move this leverage slide, or take 25X leverage on most crypto coins is crazy. They’re volatile enough as it is.
Matt Zahab
That’s one of the governing body and gaming commission of the government/crown corporation based entity in Ontario, which is the province of Toronto. It’s called OLG, and they run all gambling stuff, and their slogan is know your limits and play within them. Or know your limits and play within it. Something along the likes of that. I love that line. One thing, you mentioned it a couple of times, and I’ve heard of this before, and this is totally on me. I should have done my research, but use the word synthetics or synthetic, what does that refer to? Like, what does that mean in regards to finance?
Barney Mannerings
Yeah. So synthetic means something that’s kind of artificial. Right? So in terms of finance, what it means is that you get the financial outcome of owning something without actually owning it. Right? Let’s say you’re interested in the price of oil. Now, one way you could speculate on the price of oil would be to buy a bunch of drums, like, go buy some oil and store it in your front room, like next to the TV. Right? I mean, you could do that. You could put a couple of grams worth of oil next to your TV and drums, but there’s a lot of reasons why that’s not the best of ideas. Quite aside from the noxious gases coming off the top, it’s going to take a bunch of space and be messy. So actually, the thing you really wanted to do maybe was to say, I have an opinion about the price of oil in the future, perhaps. And so actually what I wanted to do was just find a way to say if I was to buy ten gallons of oil now, I would like to be able to get the financial payoff for buying ten gallons of oil now. And when I sell that in a month’s time, I’d like to make the gain I would have done had I bought that oil. Derivatives allow you to do that. They allow you to basically, futures and Perps, they allow you to exactly that. So the same with Perps, right? So when you get a Perp on Bitcoin. On like BitMax or something like that. You don’t actually own any Bitcoin, you just own a contract, a product with BitMax that says this is equivalent to one Bitcoin in terms of financial payoffs, basically. So if one Bitcoin goes up by 20%, your position’s value will go up by 20% and you’re going to make that money. But you never actually owned a Bitcoin. Even in their exchange wallet, you didn’t own a Bitcoin, let alone in your own wallet. And that’s with digital to assets like Bitcoin. The only real use of that is the fact you can do it with leverage and margin, because otherwise, why not just own a Bitcoin? But with other things, it can be much more difficult. Like if you want to get hold of gold and be exposed to the price of gold, or you want to get hold of stocks of some country and you actually want to be exposed to the price of Vodafone shares in the UK, how are you going to construct that? If you’re in Asia and you want exposure to that, maybe you can get that share, maybe you can’t. Maybe you have to get a different broker account, but maybe a derivative product will let you get synthetic access to that and that gets you have the same position without needing to actually work out how to own stocks in another country. Or you can do it for property as well, like real estate portfolios. The other cool thing is you can do it for stuff that you can’t even sell at all. You can get exposure to synthetic exposure to the average price of a house in London, and you can say, I think that’s going to go down. So I’ll take a short position on the average price of a house in London. I think everyone’s going to move out. And obviously, you couldn’t buy a small portion of the average house in London, but you could get that synthetic exposure and you could construct that trade. So that’s what we mean by, say, synthetic. We basically construct an artificial exposure to the price of something without actually having to own that thing.
Matt Zahab
That was a lovely description. Thank you for that, Barney. We got to take a quick break and give a huge shout out to our sponsor, the show PrimeXBT. And when we get back, we are going to take a deep dive into Vega and huge shout out to you and the team who just launched the Alpha Mainnet which was launched on May 10. But huge shout out to PrimeXBT. PrimeXBT offers a robust trading system for both beginners and professional traders. It doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT is also running an exclusive promotion for listeners of the Cryptonews Podcast. After making the first deposit, 50% of that deposit will be credited to your account that can be used as additional collateral to open positions. The promo code is CRYPTONEWS50. That’s CRYPTONEWS50 all one word to receive 50% of your deposit credited to your trading account. Again, that is CRYPTONEWS50 all one word to receive 50% of your deposit credited to your trading account from PrimeXBT. And now back to the show with Barney. Barney let’s jump right into it, some Vega 101 talk here. You guys just deployed Mainnet on Alpha Mainnet on May 10 and that is really just powering the purpose built blockchain for DeFi applications, anything derivative related, permissionless market creation, you guys, you do it all, we’d love to see it. Before we get into it, I’d love if you could give our listeners a quick sort of deep dive into Vega and what you guys are doing over there.
Barney Mannerings
Yeah, absolutely. As you said, we recently made the release and the validators on our network deployed that. So right now the Alpha Main node is running and people are for the first time trading for real on this network that uses the Vega software. Vega itself is basically our answer to how to make good quality, like really real world useful kind of professional quality. Derivatives and other trading available on blockchain. And when we started Vega, we started with this idea that we actually really wanted to get past that kind of speculative only crypto bros or whatever, just trading back and forth with their coins and into making useful products. And when we did that I use my experience building things like exchanges and working with traders to say what is it traders really need? And you look at it and it’s pretty obvious if you’re trading on centralized exchanges and comparing that to the decentralized exchanges, you kind of have this really high latency of multiple seconds between blocks or even minutes. You have really high fees, you have these kind of gas fees that are also very volatile. So sometimes trading on Uniswap can cost hundreds of dollars. You also have things like the kind of AMM curve rather than limit order books. So the ability to express the prices that you want to trade at using things like orders is difficult. And so you have all these different things which are kind of not particularly ideal about using general purpose blockchains like Ethereum for trading. And so we said well how do you fix this? And the answer is you basically build an app chain, a special purpose chain that’s designed for trading. And that’s what Vega is, it’s a chain where we said we’ll have a fee model that wouldn’t make any sense for non trading applications, but is exactly the same fee model that you’d see on a normal exchange, exactly the same fee model that traders are used to, and it’s a fee model that means you can predict the cost of trading. So we have a trading optimized fee model, we have trading optimized latency, it’s sub 1 second latency. So you see everything updates in real time, everything moves really fast. When the price moves, the price on Vega moves. So we designed that and we basically just designed every aspect of this chain to solve the problems of decentralized exchanges, can paired to centralized exchanges and to try and create professional quality derivative products. Now, as you said, we’re at the alpha maintenance stage. It’s the alpha. It’s kind of like don’t really trade on this unless you know what you’re doing type thing. It’s kind of like if you are interested in know what you’re doing, we want you to play. We don’t want people to take risk, we don’t want people to start using it for anything serious, but it’s kind of we’re learning how it works, we’re refining. So we’re at that early stage. It looks really good so far, what we’re seeing, but in terms of proving that it’s secure, proving that it’s robust, proven that it works really well, we’re very at the beginning of that journey, but Vega is there and it’s designed to basically give you that centralized exchange, sort of optimized experience, but on a decentralized exchange. And then the final thing that’s really exciting about it is on most exchange is certainly most sunclosed changes. Even a lot of DEXs, the company or project behind it is the ones who decide what you can trade. They’re the ones who launch markets, they’re the ones who do deals with liquidity providers and decide who the LPs are and the market makers. And so they still control a lot. We’re kind of the opposite, much more like something like Ethereum it’s completely open. What we gave people was a bit of software. They deployed that to a chain and at the start there was nothing. People in the community added assets to the bridge, to those ERC20 Ethereum assets could be traded with on Vega. People in the community created and proposed markets, and people in the community actually came and used the protocol to commit liquidity and become market makers. So that means that these markets that exist on Vega are completely the product of community work and they’re rewarding community members for doing that. And that’s all happening without our intervention and without our control. And what’s exciting about that is that opens up to the community the ability to innovate on markets and create what they want to trade.
Matt Zahab
Wow, you guys do a whole lot tons to unbunk there. When you first went on that spiel, Barney, you spoke about a bunch of the pain points, which I loved, that sort of both retail and institutional investors tend to have all the time in crypto. Of all the ones that you discussed, which ones do you think is the most important for let’s stick with the retail investor and then we’ll get into the institutional. But again, all the things you just listed, I’m trying to think of the unfortunately, way too many times I’ve been on Uniswap or a decentralized exchange and I’m literally in my mind, I’m like, are you really about to execute this trade knowing that slippage is at 2% or 3%, you know what I mean? It’s bonkers to make a trade knowing that you’re losing three full ticks. It’s crazy.
Barney Mannerings
Yeah. So knowing you can’t put a limit order in and you’ve just going to take that slippage is one of the biggest pain points. The other one, especially for retail users or smaller traders, is going to be the fees. I’ve seen people literally go, I wanted to buy this coin, so I want to buy like $500 worth this coin, and I paid $300 in fees on Ethereum. And you’re kind of like, okay, that’s fine, you really wanted that coin or whatever. But in the real world, where people are used to paying a fraction of a cent to do stuff, the reality is you’re not going to convince people to move over to Uniswap or anything else. If the fees for the average retail transaction are 70% of the size of transaction or even 10%, no one pays a 10% fee. I think that it’s just hugely necessary to get that fee down to something much more manageable and much more predictable. And then, as you say, things like the slippage, things like the ability to place an order so you can actually say, like, I’m willing to trade up to this price, and then that order can sit on the order book, and maybe it trades all the way. Maybe it only partly trades, but actually you get control over that. So those things are like probably the most important parts.
Matt Zahab
Yeah. Interesting. To my knowledge, on your platform, it seems like you guys are appealing to both retail and institutional investors when creating a platform like Vega and launching Alpha Mainnet. And obviously when the full on version of Mainnet is launched, what are the differences and things to consider between retail and institutional investors?
Barney Mannerings
Yeah, I think retail is obviously a very wide spectrum, as is institutional. Retail goes from whales, who are deploying millions of dollars worth of something, but actually want to trade with a very simple front end, to like people in their bedroom who are really into it and doing all the charting and technical analysis, but only trading a small amount. So there’s a huge range on the retail there and there’s a huge range on institutional. The biggest thing probably, with a lot of institutions is their desire to integrate with APIs and their desire for, like data, information audit, trails, risk management. So if you’re an institution, you’re probably going to trade their own API, probably going to have your own front end, you might even have Algos, you’re going to have risk systems, and you’re going to want to extract data from the chain or from a database so that you can evaluate risk and run compliance and everything else. So institutions tend to want all of that kind of stuff. Retail, it tends to be extremely driven by UX. So people who are not spending all of their time, they want a good UX, they want a good wallet UX, they want a good trading UX. And maybe for some people that’s a UX, like Uniswap. Maybe for others it’s something more like trading view or finance or whatever. But different people want different things. But having it to be easy to use and familiar is very important for those people. And so there are differences on both sides there. And then obviously, there’s lots of things that actually overlap. People want good data, they want responsive UIs, they want low fees. They want lots of depth and liquidity. They want to see a large volume, because even if you’re doing small trades, seeing that lots of people are trading, there’s lots of liquidity there. Like, regardless of whether you’re doing big size as an institution or smaller size, like, seeing those things is helpful. So I think our goal as designers of the software of the protocol and also front end software people can use as well, is to make the software work as well as it can have the right UX, but also to make sure that the protocol we design incentivizes through the protocol itself, these things, it incentivize people to commit liquidity. It incentivizes low fees, incentivize all those things. So if we do a good job there, then when people start interacting with it in the community and creating markets, what you’ll find is that those markets will be attractive for people to trade on both sides. And if we do a bad job, then the protocol will fail to make that work, and then things will sort of look bad and feel bad and not be good to trade on.
Matt Zahab
Touche. What’s next for Vega? What are you guys shipping next? What’s on the go? Give us some breaking news here on the Cryptonews Pod Barney.
Barney Mannerings
Yeah, so there’s a few things that are coming up. First, there’s a couple of quality of life things like adding stop loss orders so you can manage risk better. Big thing, which I’m very excited for, it’s maybe like a month away in an alpha release that you’ll be able to use is the browser wallet. So you’ll just be able to add Vega to Chrome or Firefox or favorite browser, Brave or whatever. And then instead of having to download a wallet, you can just add it there, and then you can use that to sign your transactions and manage your wallets on Vegas. So that’s going to be a huge improvement. Then we’re adding some improvements for, like, LPs and people who commit liquidity and how that works and making it easier to understand and easier to manage risk. And then probably the big things we’re going to launch will be spot markets and perpetuals. So at the moment, we have cash settled features, which are kind of like the simplest derivative product. We’ll add spots so you can actually swap assets for other assets. And we’ll add Perps, which are at the moment the most popular crypto blockchain based derivatives and crypto derivatives. So all of those things will be added over the coming sort of three or four months. But first up, and most exciting probably, is that browser based wallet, because the onboarding experience and user experience will just sort of 10X improvement from where we are today.
Matt Zahab
I love that. Barney, I appreciate you coming on, man. This was a lot of fun. You taught me a lot today. And I got some homework to do. I got to giddy up, and I learned some new words, too. Well, not new words, but I learned some new words in different contexts, which is lovely. So appreciate you coming on. Also, what kind of mic are you using? You sound crispy as hell.
Barney Mannerings
Shure MV.
Matt Zahab
Nice. Yeah, mine’s at home and just shout out the parents doing some house setting right now, so I have my road set up, my away game set up right now. But Barney, truly a great episode. Really appreciate you coming on. Before you go, can you please let our listeners know where they can find you and Vega online and on socials?
Barney Mannerings
Yeah, you can find Vega on vega.xyz on the web. You can find it on @vegaprotocol on Twitter, and I’m @barnabee with 2 e’s at the end, so you can find me there. You can also find much of the team and the community hangout on the Vega Discord, which is linked from the website of vega.xyz.
Matt Zahab
Amazing. Barney, thank you so much. Really appreciate it. Can’t wait to have you on for round two. And super pumped for you and the team. Appreciate it.
Barney Mannerings
Thanks, Matt. It’s been great to be here. Look forward to coming back, perhaps when we launch Perps or something like that.
Matt Zahab
You got it. Folks what an episode with Barney Mannerings, Co-Founder of Vega Protocol anything permissionless, market creation and DeFi related and crypto derivative related DeFi applications. You name it. Barney and the team are doing it. Go check out Vega. Huge episode. Huge shout out to Barney and the team for making this happen. To the listeners. Love you guys. If you enjoyed this one, and I hope you did, please do subscribe. It would mean the world to the team and I. Speaking to the team, love you guys. Thank you so much for everything. Justas my amazing sound editor. Appreciate you, as always, and to the listeners. Love you guys. Keep on growing those bags and keep on staying healthy, wealthy and happy. Bye for now and we’ll talk sooner.
