The Future of Margin Lending in Crypto with Tom Bean & Kyle Kistner of bZx

By definition, margin lending is not fully collateralized. Some sort of mechanism is necessary to ensure that lenders receive their full principal, with interest, even under unforeseen circumstances. In crypto, one way to handle this is with tokens. So, what would that look like? Why are some margin lending protocols proposing a kind of ‘insurance fund’ to safeguard lender capital in the case of a black swan event?

Tom Bean and Kyle Kistner are the cofounders of bZx, the first decentralized margin lending and trading platform on the Ethereum mainnet. Tom serves as the startup’s CEO, and Kyle is Chief Vision Officer and Operations Lead. Today, they join us to share an end-to-end overview of the bZx protocol, explaining how it is fundamentally different from dYdX.

Tom and Kyle also discuss how margin liquidations work on the network and how bZx incentivizes liquidators. Tom offers insight around the startup’s new Fulcrum product and how it improves the user experience, and Kyle describes the product roadmap moving forward, most notably bZx’s new integrations with Augur and Ethfinex. Listen in to understand why bZx is sticking with the token model for monetization and otherwise keeping the platform open and rent-free — and learn about the protocol’s first big governance proposal for token holders.

Today’s Topics

[0:48] How Tom and Kyle each got into the crypto space and came to partner on bZx

[6:11] The fundamentals of bZx as a margin lending and trading protocol and the projects that inspired Tom and Kyle

[8:08] An end-to-end overview of the bZx protocol

[12:31] How bZx is fundamentally different from dYdX

[17:00] How margin liquidations work on bZx + how the network incentivizes liquidators

[20:32] The advantages of the bZx incentive structure over other networks

[22:01] How bZx is addressing liquidity risks via front-running as a feature

[24:41] bZx’s new partnerships with Bancor and Ethfinex

[26:05] How bZx is using on-chain DEXes to solve the oracle problem

[28:19] How bZx introduced iTokens and pTokens to improve UX + how their Fulcrum product takes the next step in simplifying the process to loan or margin trade

[37:08] The bZx product roadmap re privacy and scaling + working with wallet providers to integrate iTokens

[41:33] bZx’s first big governance proposal for token holders

[46:45] How the bZx team thinks about the possibility that BZRX could become the majority of its ‘insurance fund’

[49:57] The value in bZx focusing on governance this early in their history

[51:49] bZx’s intention to stick with the token model and keep the platform open and rent-free

[54:53] Tom and Kyle’s thoughts on monetizing the B2B aspect of bZx

[56:38] The challenge around community-directed funds + bZx’s system of allocating tokens to a development fund

[59:46] Why bZx’s ‘insurance fund’ isn’t subject to regulations

[1:02:27] How Tom and Kyle realized that cross-chain asset lending was not their problem to solve

[1:03:54] bZx’s interest in UX designers, user experience researchers, product managers, and solidity developers