Speaker 1:

0:02

Welcome to the CoinGecko podcast. I'm your host Bobby Ong. Each week we will be interviewing someone from the blockchain industry to learn more about this fast moving crypto currency economy. If this is your first time listening, then thanks for coming. The CoinGecko podcast is produced each week to help you stay ahead of the curve. Show notes can be found at podcast.coingecko.com. I highly encourage you to join our newsletter where we send out top news in the crypto industry every Monday to Friday. Come back often and feel free to add the podcast to your favorite RSS feed or iTunes. You can also follow us on Twitter and Telegram at CoinGecko. Welcome to the CoinGecko podcast. For today's episode we have the honor of welcoming Sandeep Nailwal, co-founder and COO of Matic Network. Matic Network is a layer two scaling solution. It aims to bring scalable and instant blockchain transactions on Ethereum using adapted version of plasma with proof-of-state based side chains. Welcome on the show, Sandeep.

Speaker 2:

0:56

Thanks Bobby for having me here. Thanks CoinGecko for inviting me on this podcast. I'm very happy to be here.

Speaker 1:

1:07

Yeah. For the first question, we want to know a little bit about your personal story. How do you get involved in the blockchain and cryptocurrency industry? Following that, what made you start Matic Network after that?

Speaker 2:

1:18

Yeah, so before coming to Matic, I have a background in computer science itself and then I worked for Computer Sciences Corporation, one of the earliest software services firms from U.S. Right? So I was working with them for two years, and then I did my management also in information technology and computer science itself. And then I worked with Deloitte for a very small time, and then I was selected as the CTO and Head of Technology basically, for Welspun E-commerce. So Welspun is a $4 billion company in India. So I was the CTO of their eCommerce division. Right. So it was a small division, and, but was going very fast and all that. So I got a lot of exposure from there. Then I always, in my whole life, I've done multiple startups before, although like many of them were part-time startups, not like full blown startups, but entrepreneurship was high priority in terms of what I wanted to do. So I got out of my role at Welspun and then raised some money and then started something called ScopeWeaver, which was a B2B services marketplace, like it was a marketplace, you can think of it like an Alibaba or Amazon, but for services and it connected B2B partners. Like in India, you know that there are multiple service providers who provides services from you know, software development, from design to X, Y, Z. I do provide a platform where you have trusted and verified vendors who could do work for the clients who are looking for them. Because otherwise, you simply Google them and then reach out to them. You have absolutely no idea about the credentials and everything, and you go by their website. So I was doing that and that went well for one and a half years, but it was not actually scaling the way I wanted it to be. It was making decent money, but then it was not up to my satisfaction. And that was the time where I had started thinking that I wanted to do something which is really scalable, and that can only be enabled by some high-tech implementations or products behind that. So I started learning about artificial intelligence initially, but then I realized that it required a lot of knowledge of mathematics and everything, which sort of has an academic flavor to it, also. Then I stumbled into blockchain and at that time it was like, end of 2015 or early 2016. And then I, you know, I started reading Mastering Bitcoin, although I had known about Bitcoin, and in 2013, at one point I had also thought about mining Bitcoin, but I never really ventured too deep into it. But then I was reading Mastering Bitcoin, the, you know, the famous book from Andreas Antonopoulos, kind of the Bible to get into blockchain. Right. So I was reading into that and third or four chapters in, I realized this is really a big thing and why was I not focusing on it before? So that's when I started my work with blockchain. Initially I did some consulting and then from there I ventured into a lot of product development for various kinds of clients. And then from there I was also active on a lot of Indian Crypto communities at that time and we used to solve a lot of technical queries for people because many people didn’t know the technical stuff. And from there I got to be friends with the Matic’s co-founder, Jaynti and he was working on Plasma and all that. And then we, you know, got to talking to alot of funds and then initially collaborated on small-small stuff. But then later on we moved on to the urban seat. Once the CNB build the basic POC for a plasma MVP, I thought that this is something that we can really build together. And then we joined hands and then we started the Matic Network from there. So that, that's kind of the journey. Yeah, it's very interesting what you mentioned, about how you started out in the tech industry building something that you thought it was scalable, but at the end you realized, it was a lot of work and it's, it's not really scalable and you're looking for opportunities to build something that is scalable. I mean your story resonates quite closely with me when we started CoinGecko back in 2014, wanted something that is scalable and something that we can do and serve the global audience from where we are and, and it's interesting. Good thing was that, you know, before starting into Matic Network, I had almost putting like one and a half to two years into blockchain already, working on many, many products, providing consulting to some of the clients and building some products on my own and everything. And that gave me a lot of like, preparation before I really, you know, started out with building Matic Network. So yea, that was a good thing that worked out in favor of us.

Speaker 1:

5:43

Yeah, I agree. Like everything that you do from a young age, it adds up to your experience on what you can do in the future, so totally agree on that. So I have a question. So maybe you can help explain to our audience listening in, in your simplest, most nontechnical manner, what is Matic Network?

Speaker 2:

5:58

So basically, see, to understand Matic Network, you'll have to understand the scaling issues that the blockchains face. So you know, to give a very simple idea, that Bitcoin can process currently around seven transactions per second, right? And you know, Ethereum currently processes around 13 to 15 transactions per second. Especially for Ethereum where we are saying that Ethereum is the world computer, right? And you will do a lot of computation on Ethereum, programmable money, use cases and all that. So the scale is very very small and scalability hence, has been one of the biggest focus areas of all the development teams since 2017, when we saw the massive boom in blockchains and you know, people realize that blockchains were not ready for mass adoption because there's no scalability. So there have been multiple attempts to do scalability. Some of the ones are on layer one, like the bigger projects that you see, like EOS or TRON or Zilliqa blockchain. I would say there would be at least a hundred projects which started out building some sort of new blockchain including Dfinity, Polkadot and you know, Cosmos. All of these have been attempt at, you know, layer one or some sort of layer one area to scale a blockchain. And then the other kind of category of attempts is the Layer Two, where, you know, you actually try to scale a blockchain and a layer two. That means the layer one blockchain remains as is, it becomes like a settlement layer. And then you do fast and large scale transactions on layer two. So the prime example of Layer Two, you know, would be Lightning Network on Bitcoin, right? It's also a Layer Two scaling approach. Similarly on Ethereum, there have been also multiple Layer Two approaches. And then on Layer Two also, there are multiple categories, right? So there are two, three categories, I'll speak about two main categories. One has been state channel and the other one is the side chain or Plasma kind of category. So the state channel category also then you would have seen multiple projects like Raiden Network or Celer network recently, which is also a fellow Binace Launchpad project or Counter Factual or Connectx network. All of these projects are trying to achieve scalability using state channels. That's one category. The other category... and Lightning Network by the way on Bitcoin is also sort of a state channel implementation. And then on the second category as I said that is the side chain and plasma kind of thing. So we, the Matic Network is actually comes from this category which is, we talk about the side chain architecture, which is actually very closely tied with the layer one which is Ethereum. So why I’m mentioning that closely tied layer two is that, you know you have a lot of side chain, other side chain projects also like POS, there are projects like Go Chain, which only have a simple bridge with the Ethereum and then everything, every activity there, they have a separate consensus mechanism and everything. So there is one kind of side chains which are there. In those kind of side chain, what happens is that if you, once you move some assets from Ethereum to the side chain, let's say Go Chain or Xdai Chain or you know, your uh, let's say Go Chain or whatever, or even Loom network for example, all of these are simple side chains where they have a simple bridge and then you can bring your assets to the side chain. Once your asset is on the side chain, then there is no control of the main chain on that, on those assets. So you are actually at the complete mercy of the validators, which are there on the side chain, in this kind of scenario. What Matic Network comes from is that it's a Plasma-enabled side chain. So when we say Plasma, Plasma is a framework which basically in a very simple terms, you can think of plasma as two main features. One is that, as a user you control the assets, or the ownership of your assets is still defined by the Ethereum main chain itself. Like even if compare that to the earlier example I was giving for, let's say POA or Loom Network, where you take your assets from Ethereum via a bridge to the side chain and then the side chain has the full control of your assets. In case of plasma and in case of Matic Network, the ownership of the assets is still secured by the Ethereum main chain. That means even if the side chain goes rogue, you as a user can go to the main chain and say that, “Hey, these are my assets and I want to withdraw it from the side chain” and you can withdraw it from Ethereum itself. Second thing is called fraud proofs, where if some activity or some particular transaction or something has happened on the side chain, which is not as per the rules of the consensus, then using fraud proofs on the main chain, you can validate and challenge any particular transactions that are happening on the side chain. And also one more thing that, in terms of the proof of stake, the stake of these validators are residing on the main chain itself. Again, compare that to let's say POA or Loom Chain and all that, where the assets, the stakes of the proof-of-stake participants are also on their side chain. Like you know, if they control, a few participants control the chain, then they control everything. In case of Matic Network, the stakes are there on Ethereum. So if somebody is able to find a flaw and is able to challenge using a fraud proof and is able to prove, then he gets to slash these participants. So in summary, in very simple summary, what I'm trying to say is that Matic Network is a layer two side chain, which is very closely integrated with Ethereum main chain using plasma. What plasma provides is that it provides the ownership of the assets, which is determined by the Ethereum Mainchain itself and then the fraud proof, that means the proving or basically, the guiding or guarding the transactions that are happening on the side chain. So basically with Matics side chain, what you get is an extension of Ethereum itself. Like the security and the assets security that you get on Matic side chain is as good as Ethereum main chain itself, rather than relying only on the security of the side chain. So Matic Network provides you that scalability on the Layer Two, where you can do payments and on Matic side chain, we also support EVM, which means that it supports smart contracts. So on Matic side chain you can not only do the payments like, unlike Raiden Network which only supports payment, on Matic Network, you can, or the Dapp developers can build their smart contracts also. So that's kind of the differentiating factor of Matic.

Speaker 1:

12:24

Wow. I'm really impressed with the explanation that you gave. I mean for the longest period of time, I think this scalability topic is something that is really hard to understand. I like how you broke it down into the different layers, the differences between layer one and layer two, and between Layer Two broken it down into two major categories, which is the state-based channel and then, as well as the side chain-based category, which is on Matic Network. So, I think I a lot of people would appreciate this explanation on how you look at the scalability. I also read somewhere that there is also a Layer Zero scaling solution out there in the market.Maybe you want to explain a little bit about how this fit into an entire ecosystem of scalability?

Speaker 2:

13:06

Yeah, yeah, yeah. So Layer 2 for example, there are two main companies over there. One is Block Suite and another one like, recently upcoming is Marlin Protocol. So what these Layer 0 solutions are trying to do is that so when on the Layer 1 blockchain, let's say on Ethereum or Bitcoin and all that, when a miner actually mines a block or basically full nodes, you know, communicate with each other, they communicate using Gossip Protocol. So Gossip protocol is nothing but when, and let's say you and me and let’s say, five other people are the nodes in the network, how I communicate to the network is that I broadcast to everyone I'm connected to. And then you receive the block and then you broadcast to everyone that you are connected to. Similarly, everyone does that. And you can already see that there is a lot of redundancy and a lot of unnecessary work that is done over there, right. So some of these Layer 0 protocol, what they're trying to do is that they're trying to optimize these network level pass, on how these blocks travel between one node to another. So rather than, you know, I broadcasting to everyone, I simply pass it on to let's say Marlin protocol. And then Marlin network internally has a fastest path to lead from one node to another and then that delivers the packet from one node to another, with some redundancy, not the extreme redundancy. What it does is that the block propagation times reduce, right between, so one of the biggest problems, and one of the reasons of scalability of public blockchain is that block propagation time are large. Because let's say I'm transferring one MB of data from one node to another and if let's say I'm a miner, I produce a block and I'm broadcasting it to the two other miners, you know the blockchain has to make sure that all of the other miners also receive the block and then they have ample time to fight or to compete for the next block. Otherwise the miner, who knows the next block, he will keep mining the next block. Right? That is one of the reasons that the block size has to be kept as a stable size. But once these Layer 0 platforms, protocols are there they speed up this package transformation on the network layer. So understand these things like Layer 0 is actually network layer. Layer one is actually more like you know, as an analogic, consider it like an operating system layer. So you have network, then you have operating system like you're using Windows or Mac. So consider layer 1 or Bitcoin or Ethereum as the operating system. And then the Layer 2 can be an application level platform where you have some application on top of layer one. So that will be the simple description.

Speaker 1:

15:38

Yeah, yeah, totally makes a lot of sense. So talking about Layer 1 and Layer 2, I know Ethereum is currently undergoing a lot of protocol upgrades and especially towards Ethereum 2.0, we have sharding and all, this is, I believe a layer 1 improvement. So if Ethereum is doing all these things to improve TPS on Layer 1, like do we still need Layer 2 scalability solution or why should we still need Layer 2 scalability solution, even though Ethereum undergoing upgrades by itself?

Speaker 2:

16:04

So that's a very prominent question that people ask. So the main thing is that even if Ethereum 2.0 really scales Ethereum, that's actually going to help Layer 2. So let's imagine Ethereum upgrades scalability and is able to get, let's say a TPS of, let's say a hundred fold from here, or thousand fold so 13 000 transactions. Let's assume that that is there, like there are some ridiculous numbers with multiple shards and all that, but these shards will have problems with the composability but let's not go into that. Let's say that it is a thousand times increase in the speed of the network on Ethereum, right? So there will still be 13,000 transactions and Ethereum is looking to become the world's computer, right? Like where, the applications from the whole world will be created on this. The moment Ethereum has the scalability of let’s say, a thousand transaction, 10 times more, a hundred times more number of applications will be built, which will again eat up the entire bandwidth and then they will again be a scalability issue, which we'll need layer. Right? So it's all about supply and demand. Right now the supply of the transactions, think of it like a supply and demand for TPS, transactions per second (TPS) or the capacity. So the supply is very low. That's why the demand is already much bigger than supply. That's why you see, you know $1 or half a dollar transaction, gas fee on Ethereum. The moment the supply increases of the transaction bandwidth, the demand will also increase exponentially from there. And then again you will be in the same situation where you need the Layer 2 technologies to provide the scalability. So we are not worried about that way, that on Layer 2, there will always be a space for Layer 2 and we honestly believe that even with Ethereum 2.0 multiple shards, we believe that there will be some shards which will be really strong and secure and decentralized. The other shards maybe weak and decentralized, and then many applications will reside on one or two or maximum three, four shards. And then from there, people will still be needing Layer 2 solutions. So that's why we believe that there'll always be a need of Layer 2.

Speaker 1:

18:03

And you mentioned earlier just now that currently Ethereum supports about 13 to 15 transactions per second at its current implementation. At the moment, Ethereum supports about 13 transactions per second, once we have metallic network implemented, how many transactions per second can we expect to have on the Ethereum blockchain?

Speaker 2:

18:20

Yeah, so with Ethereum and Matic, to start with there will be around 6,000 to 10,000 transactions per second. And then with a single Matic chain that can easily be scale to 13,000 transactions per second. And then we can also add multiple Matic side chain later on to support even larger number of transactions that way. And actually many people don't realize that the architecture of Matic on the side chain where we have a POS chain and there are multiple side chains over there. The architecture of Matic is something like the Beacon Chain of Ethereum itself. Actually in terms of design, it's somewhere very closely resembles Ethereum 2.0 design also.

Speaker 1:

18:58

We are looking at roughly about 1000 to 2000 X increase in transactions per second once Matic Network goes live on the Ethereum blockchain. Is that right? Yeah, absolutely. Cool, so the next question actually is, does Matic Network only work for Ethereum or is it a scalability solution that also work for other Layer 1 blockchains?

Speaker 2:

19:17

See, in terms of our architecture, we can easily support other blockchains also. But right now that's not the focus for us. The focus for is Ethereum because Ethereum is by far the largest smart contract platform. It has a market share of I think 90% or even more than that. So we are not spreading our efforts into any other blockchains. Once any particular blockchain that you use, like really great traction over multiple years and has proven enough, then maybe we you can think of adding the layer on those. Actually that's very easy for us to do. But right now, we don't want to do it for now.

Speaker 1:

19:53

Yeah, it makes a lot of sense. So you mentioned earlier just now that Raiden Network is focused mainly on payments and Matic is basically supports smart contract. It can support any kind of applications. My question is actually, can you explain some of the potential use cases of Matic Network, basically which apps are best suited to make use of Matics technology?

Speaker 2:

20:14

Yeah, so we also see it in terms of three, four larger categories. One is, of course the payments side. Once you have like faster payments, we already have people like, you know, Incento is trying to build Venmo kind of application on top of Matic Network. Now they are trying to do something with gig economy, and then we have multiple payment related solutions like Bank.It and things like that, who are testing all multiple things. Then on the second category, we have games and that can be one of the biggest categories, games and NFTs. And recently like, people who have been following Matic, they know that many big games are actually moving from other blockchains like you know, Battle Racers moved from Loom Network to Matic Network and then there are other applications who are also currently, they are on multiple other platforms but they are looking to move from those platforms to Matic Network because of the simple things. The simple thing is that Ethereum is by far the most decentralized and secure smart contracting platform, and various developers moved from Ethereum to other various blockchain because of the scalability. But now, once you have that scalability on Ethereum itself with Matic Network, like why do you need Layer 1 solution? Because Layer 1 solution kind of grow with network effects, right? So there's absolutely no requirement of any of the Layer 1 protocols if you have security and decentralization on Layer 2. And one of the biggest reasons is that on Matics side chain, we support full-blown EVM Ethereum smart contracts. So if you have Ethereum smart contract built on Ethereum, you can deploy the same smart contract on Matic side chain. So it makes it very easy for the developers.

Speaker 1:

21:47

Yeah. The Matic Network solution is not yet live. I believe I read online on your website that the Mainnet is going live.

Speaker 2:

21:54

Yeah, yeah, yeah. So Mainnet is expected to be released by Q3. So that's the second category, like the gaming category. The third category which is improving and increasing very fast is the protocols. So many protocols, existing protocols like storage protocols or database on blockchain and things like that. They also need to do a lot of payments on the blockchains and some of them are actually looking at Matic Network because they had built on Ethereum to do their payments because they have to do large number of payments. And the last, last category I see is of real world applications, which I called for example Springroll, which is already deployed on Matic, which is actually kind of a LinkedIn on blockchain, right, provable profiles and everything on blockchain. So these are the four main categories which we are seeing in terms of the applications.

Speaker 1:

22:42

So, Matic Network is going live in March. You already have the dApps that will be using Matic’s solution when it goes live in Match, the Mainnet?

Speaker 2:

22:50

Yeah. We already are on Beta Mainnet and I think both, on Alpha Mainnet and Beta Mainnet, I think there are seven, eight applications already deployed. There are multiple others, I think around 30 to 40 applications which are currently building. And then once our Mainnet goes live, they will all be slowly moving on to the final Mainnet.

Speaker 1:

23:09

One of the key benefits that is mentioned on the Matic website is better UI and UX for users. How will the users get better UI and UX because

Speaker 2:

23:17

Two main benefits, that point of view is simply, one is that the transaction gas costs are really low. Like we have 100 of you know, what we have it on Ethereum. So basically in $1 of EV estimate conservatively, you can do around thousand transactions on blockchain. And then the other thing is that the turnaround time or the block confirmation times are very small. Like you have one to two second confirmation times. So you know, imagine using an application on Matic Network. Like you click a transaction, and just like it happens with your centralized applications today, like you posted a Tweet for example, if it is on Matic Network, it goes like within one or two seconds. So you know for the user experience that you get is as good as what you get on your current applications that the users are used to using. So these two are the biggest benefits.

Speaker 1:

24:03

So basically cheaper transactions and faster transactions for you as a user.So the next question actually is under utility of the Matic Token. So you have this Matic Token and what is the use case of Matic token?

Speaker 2:

24:15

Yeah. So the Matic token is it has two bigger utilities and it's like a pure platform token. So it is proof-of-stake token. So it is used for the staking. That's the biggest use case that on Matic Network side chain. As I told you that we have a PoS chain also. It's a highly decentralized side chain, where we have more than hundred validators chain. So they have to stake the Matic tokens in order to become validators, right. So the staking is the, is the main, you know, utility and the second utility is paying for the gas fee. Just like on Ethereum you pay the gas fee in Ethereum, on Matic side chain you pay in Matic tokens.

Speaker 1:

24:51

I guess from a user's point of view, if you use a dApp that makes use of Matic Network Layer 2 technology, you have to pay for each transaction that you make using a dApp, you have to pay Ethereum gas and also Matic gas. Is that right?

Speaker 2:

25:04

No, no, no. Once you are there on the Matic side chain, then you don't need to pay on Ethereum chain. Think of it like, maybe I didn't make it clear enough. So let's say you have some assets on Ethereum, let's say, you have 10 tokens, CoinGecko tokens on Ethereum. You take those tokens onto the side chain, your assets onto the side chain, you deposit one time on Ethereum. Once you deposit, then your tokens are there on the side chain, right? And then you know, you can do hundreds and hundreds of transactions and let's say after doing or playing multiple games, you are left with two tokens at the end and only when you want to withdraw it to Ethereum main chain, then only you would do a transaction on Ethereum. Otherwise you simply, all your transactions stay on the side chain. What side chain in the background, without abstracting it, completely abstracting from the user without telling the user and the backend. What is happening is that all the validators are doing the consensus on whatever is happening on the Matic side chain and putting a checkpoint. A checkpoint is nothing but a batch. You can think of it as a batch, batching of all the transactions that are happening on the side chain, on the Ethereum main chain, and that's how the scalability is coming. So think of it as thousands of transactions being batch in one transaction as a cryptographic group and being put on the Ethereum main chain. All right. That's how it happens. So we as a user, you don't need to pay Ethereum gas. You only need to pay Matic gas. And even for that, we don't want users to pay that gas fees. We think that how the current business model works, so for example, for CoinGecko, for using the CoinGecko website right, I don't need to pay ,you know, for the server cost. If I click on something, if I use to see something, I don't need to pay. You as a business from CoinGecko, you are, let's say renting servers from AWS or Digital Ocean or something like that, and running the site and paying for the server costs. And then your business model is built in, in a way that you know, you are able to get that cost back. Similarly in blockchains also we support meta transactions with the businesses will pay for the transactions. The users will simply install an app but simply use their email ID, create an account, where in the background that creates an address and everything. The blockchain will almost be like invisible from the users and then you can interact with the dApp, the way that they do. The user experience with the fast transaction is absolutely very good over there. And then only when users need to interact with the blockchain and they want to take control of their assets and everything they can go into advanced setting for example, and then check their address and all that stuff and then take control of their assets in their own wallets. Otherwise we believe that you know, all the gas fees and everything should be paid for by the business owners itself, and you are counted in your own business model as a server costs that you're paying for your application.

Speaker 1:

27:47

Yeah, that is interesting. Yeah. I was going to ask you like is it possible for the developers to actually pay for the gas fees on the Matic Network and I'm very glad to hear that developers, that business owners can pay for a gas fees for users because I think one of the largest pain points for users is, onboarding users into the crypto space is that, it's just going to be hard trying to distribute ETH or Matic token to users to pay for the gas to even use one of these applications. It should be as simple as possible for users to use an application. And as you mentioned, the blockchain should be in the background and nobody should know about it. So I'm very glad to hear that this is possible and I think once we get this done correctly then we should be prime for greater mass adoption, otherwise it's going to be really hard trying to get people to come onto the blockchain and crypto space these days. So is there a difference between Matic’s ERC 20 token and Binance DEX BEP2 tokens?

Speaker 2:

28:38

Difference? Yeah, I mean these ERC 20 token is the Ethereum token and Binance is the Binance chain token. It’s just that because we want it to be available on Binance DEX, cause Binance DEX still, if any DEX has a possibility to really go big, there can be a very high possibility that it can be Binance DEX, right? So, we had a very small supply of Matic committed as BEP2. So there's a simple bridge where you can go and you know, lock your ERC 20 and then create BEP2. And then similarly, if you want to convert BEP2 back to ERC20, you can simply bring back BEP2 and then take the ERC20 out of that. So then this actually, in terms of the token value and everything, there is no difference. It's one and the same token, the token is actually only ERC 20 token. There is a simple bridge where you can lock one Matic token and then create a BEP2 on Matic token and then vice versa.

Speaker 1:

29:33

Matic Network received an investment from Binance Labs and did an IEO on Binance last year. Do you want to share with us your experience going through the Binance Lab, and the IEO on Binance with us?

Speaker 2:

29:45

So Binance Launchpad is the main thing that we are associated with the Binance one. And Binance Launchpad did a very long evaluation for us. And then, you know, finally, and luckily we got selected and Binance Launchpad does a very, very heavy due diligence. As I told you already took us eight months because for the teams who are there, from like Silicon Valley or some other locations of Europe and all for them the due diligence maybe slightly less. Like me being from India especially, there was a larger kind of, a longer kind of due diligence and once the Binance team was very convinced of the product offering that we were doing plus the community work that we were doing and all the critical things required for the successful blockchain project, then we got selected and the experience with Binance Launchpad was very, very good and I think it's like Binance Launchpad is the best platform for doing the IEOs for any project, which is like an open truth to everyone. And in terms of the support that Binance Launchpad provides you by providing these initially, at the time of the launch, there was a lot of PR also, and Binance has the largest number of users. So you get kind of a global pedestal, where you can present to the global community and we have been very heavily benefited due to that. Community grew from 8,000 people to today, 30,000 people, where it's one of the biggest communities in the crypto space. Our Twitter following grew from two to 3000 people to now, 29,000 people almost, and even same on Reddit and all. So it gave us a larger platform and I think for any project which is looking to decentralize project like, which is looking to distribute its token to the public and all that, Binance Launchpad is the best place to be.

Speaker 1:

31:25

Yeah, I completely agree with you. I think the IEO trend was something that happened 2019 and of all the IEO platforms available in the market, I think Binance Launchpad was the best in place and I think for most teams, it works. it makes a lot of sense to get onto the Binance Launchpad. Other exchanges tried to replicate the IEO ecosystem, but they all are struggling. So I don't think anyone came even close.

Speaker 2:

31:45

Yeah. I think many of these other exchanges by bringing in very weird kind of strategies, like log in, log out this and that, many kinds of manipulation. Due to that, it killed off the IEO kind of wave, right, and created some of negative sentiment also because many projects on these exchanges initially launched and became like 20x and then went below the IEO price and stuff like that. I think due to that the IEOs got a bad name. But I personally feel that IEOs are a much better improvement on top of ICOs. Because imagine in terms of ICOs in 2017, it was very easy, simply create a website and then even if you don't have anything, just have some flashy white paper. Because I used to do consulting right, and I used to get all these offers from some random people on the internet, which even when you speak to, you realize that they don't know anything about blockchain. All they were doing is that put 10,000 50,000 rupee or $50,000 or $20,000 to some consultants, and then get some white paper and then publish it on the blockchain this thing, and do an ICO. And even, I used to think that there's a large number of scammers in the space right now just looking to do IEO. They don't want to build any product. They simply want to raise money and then slowly do something and move away with this money. And the IEOs, the biggest benefit is that you have the exchanges. If you are doing a responsible exchanges, the end users were going to participate in the IEO. They are at least protected by the due diligence of exchange, right? Because echanges or likely, larger exchanges, have a much better capability or doing a larger level due diligence, understanding the product market fit kind of things, and then the possibilities and the legitimacy of the team and everything. So I think IEOs are much better advancement on top of ICOs and right now the markets are bad but I think IEOs will be back and they will keep coming back because they are much better, way of doing crowdfunding.

Speaker 1:

33:40

I agree completely with you, I think IEO is a big improvement over what we had before in ICO and there were so many scammers. At least with the IEOs exchanges, they will do the first level of vetting for the users so there's less scam going around. All right. I'm going to ask you next on a question that affected Matic Network. So on the 10th of December there was a sudden drop in Matic token price, where the token price went from about 4 cents to about one cent in a matter of a few hours. This wiped out the 400% gain that Matic made in the previous two weeks. What happened on that day and what extra step did Matic team take?

Speaker 2:

34:11

That's one of the most unfortunate things that have happened to us because, even now, like we have a very high reputation in terms of our technology and everything. But then that one minute, actually that happened in one to two minutes in a single dump, the token price went 70% down and then improve from there a bit. But then because in this phase there have been many cases where the teams have been selling their tokens in the markets and things like that. And people like started anticipating this and then there was a lot of FUDing, also. Many people started going to our smart contract and saying that “Hey, Matic team is selling”, this and that, without calculating what they're looking at. Somebody saw let's say 1% tokens like 100 million tokens and he concluded that that's the 10% supply. But actually that 1.1% tokens were the investor lot, which we had already previously communicated, and then later on that person also apologized and all that. So what happened is that a lot of applications like for example, Battle Racers from Loom Network to Matic, there was other applications like Mints nick and things like that. There were multiple announcements, plus there was a speculation that Matic staking is going to come for which the Matic staking are currently going on and the Mainnet is coming and all that. So even in the bad markets Matic token initially started doing very well. Right. And then, the other thing was that we have the margin trading enabled on Matic, where you can borrow Matic tokens and then you know, take long or short positions on Binance and BitMex and many of the exchanges. Plus two, three weeks back to that we were also selected or we won a community vote for listing on FTX also, like the Futures Exchange. So I think there were a lot of leveraged trading options are also available. And then in a market where everything was flat, Bitcoin was actually going down and the whole market was in the downward slope, Matic token was doing really great even at that time. Like even in that two weeks where it become like 3 to 4x. Even before that it was doing well from the lows of the, of the rally and plus, of course we are backed by Coinbase. So there is a speculation on that also. So I think what started happening is that the upward movement of the token became really parabolic and many of these whales would have also, I don't know, like many people said, and because the volumes are also really, really huge, most of the times we had volumes which are bigger than Ethereum itself and which is kind of very, ironical. Matic token is having larger volume than any other, at times it's two to three times the volume. So I think that there were a lot of larger traders that got involved with Matic, with large amount of positions, trading Matic every day and things like that. And then once it started becoming, started going 3X or 4X from the starting point of that rally, of course it's very natural that many people will start shorting. But then the price stayed same for I think, one or two weeks. It stayed at the all time high. And I think due to that many people would have also started longing again that “Oh now this is not going to stop”, “This is the next Ethereum” and all that. You know how speculation works, right? So people who have bought the token, they start you know, shilling the token. So due to that, there were a large interest. And then uh, I think what some of these whales would have done is that they borrowed large amount of Matic tokens from the markets and they knew that by now, the large people are also longing on the Matic, the retail people, who've lost. They think that the Matic is not going down. It is going to maybe thousand Satoshi from there and many people have long, I think these people borrow a large amount of Matic tokens and dumped it into the market. Resulted in that there are two other things, right? So there are stop losses from people which start getting triggered. So imagine you had a stop loss, the price came down 30%, your stop loss gets triggered. Then that token also comes as a sell pressure into the market. Then other people who have done the longs using the margin borrows, they also start getting liquidated and their liquidation also results in Matic token being sold in the market at market prices. So that created catastrophic kind of a snowball effect, which you know, brought the price down in one stick. Like in five to 10 minutes, the price was down 70%. And then on the Twitter also it looked like a coordinated attack to us because on Twitter also, like around the same time, within like 10 minutes of this many, you know, FUD accounts started saying that Matic team is dumping and this and that and we were actually asleep. And the fun thing is that when I slept off that day, this all happened 45 minutes after I actually went to sleep. I was actually awake till 3:00 or 4:00 AM in the morning that day. And then I woke up in the morning with the distress call from, you know, my other co-founder who was luckily awake and he said that there is something that is happening and then I woke up and really saw this and then we started arresting the situation. I immediately went to Twitter and said that, let us see, and it will be very shortly clear that Matic team has no role to play in this. And then very quickly Binance team did an analysis at their end and they found out there is absolutely nothing from our side to deal with it and these are some large existing traders and their platform who have done the large amount of selling and all that. And they came in our support. From there all our partner projects who work with us, who know us, they know that Matic team is not dead. And the traders should also understand any intelligent or knowledgeable trader would know that if something, imagine if somebody was doing this, pump and dump, right. So what they do is that they pump or they increase the price to some extent and then slowly in two, three, four days and you can see that with many coins happening, which gain, let's say 100%, 150% in one week, you will see that in five to seven days they will slowly sell off everything and then the price will come back to the point where it was originally. But even if somebody is trying to do pump and dump, this kind of strategy, they will not do it in one minute. They are actually going to lose that 70%, like whoever sold in that candle, that 70% candle, they actually lost that 70% uptick, 40, 50%, 70%. So all the knowledgeable traders know but the retail people and whoever loses money, they want to point fingers at someone. But then the whole crypto community came in our support and the many projects came in our support. Many industry leaders, even from Ethereum side, Eric Connor and many other people like Ivan. They came in our support and the whole situation was arrested. And the surprising thing is that that kind of dump, that again came when the price went up and were stabilizing around 270 Satoshis. There was again a 13% dump, flash dump in one minute. Then one small one with 10 to 15 Satoshi one again came. But then slowly what happens is that with the free markets, both the sides of the trade get developed. So once people realize that, look, if something like this can happen, they will have the counter strategies to that. And any particular strategy cannot survive long enough in the market and that's what happened and now the price is absolutely stable and moving in a kind of organic manner. But yeah, for us it was a very tough time because the most important thing that we have is our technical reputation and in terms of retail community, many people started saying bad things. Only now with Coinbase because everybody knows that Coinbase has a very high level of due diligence and everything only now, you know, people are realizing that yes, there are people who are doing due diligence and there's absolutely no involvement from the Matic team side. So yeah.

Speaker 1:

41:17

Let’s hope that such an incident will not happen again. I'm very glad that you guys managed to come off pretty much unscatched and everything went out pretty well after that.

Speaker 2:

41:28

I would also say that for any small cap projects who have margin trading enabled, they should always alert the retail community. I personally also have started thinking that going forward anytime there is any exponential movement upwards or downwards, I will always alert the Matic community that, see that if you don't know how margin trading and leverage trading works, please do not get engaged with them because that's the only time when you lose money as retail traders. Yep.

Speaker 1:

41:53

Cool. You mentioned earlier just now that the Matic team is based in India. I believe that you guys are based in Bangalore? I just want to know like what is the crypto landscape like in India? There was a lot of news about India last year for example, like multiple times they were news report about the government of India banning Bitcoin. But also there are some positive news coming out where Binance made the acquisition to WazirX, large crypto exchange in India. So do you want to maybe like walk us through a little bit about how’s the landscape like in India these days?

Speaker 2:

42:23

So basically in India, the media has done a lot of sensational reporting over here, but there's absolutely no ban on crypto. You can buy or sell crypto over here, with P2P and all that. Only thing, because the speculation, the Indian volumes at that time back in 2018 used to be very, very big and Indian government wanted to curb the speculation and they rightfully did that. Because they were a lot of honest and innocent people were getting scammed. So what they did is that Indian, the Federal Bank of India RBI basically, they simply said that banks associated with RBI, like all the banks in India associated with that RBI, RBI simply said that “You will not support exchange accounts.” So only thing that is not allowed in India is that exchanges cannot have the bank account wherein they can provide on ramp, where you can deposit money and buy the crypto, sell crypto and withdraw money to banks. Because that is not allowed from the RBI banks. The other thing is only is that Bitcoin is not considered a legal payment. Like you cannot do, like I work for you and then you cannot pay me in Bitcoin, but you can buy Bitcoin as a commodity, as an asset. That's absolutely allowed. Even today, the RBI has made a statement from their side that Bitcoin is not banned in India. They have just recommended that it's risky so the retail people should be very careful about it. And we completely agree with the government of India on that because a lot of retail people in India do not understand the crypto markets completely and the retail people should not be given unlimited access to these speculative assets at this early moment. Till the time there is proper regulation, proper protection for the retail people to buy these risky crypto assets. So there's absolutely no ban in that sense. And things we do, hackathons all across India, all the top, even government own the technology schools in India, we do hackathons and all that, and things that are absolutely fine, and there are exchanges like as you rightly said that those who have a P2P network of payments, so you can actually buy and sell crypto using a P2P network. That means you don't deposit or withdraw from the exchange, you deposit to the peers, right, so I deposit in your account and then you transfer crypto to me on the exchange account. And there are two, three exchanges which are doing very well. WazirX is the there, CoinDCX is there and then BitBNS is there. All of these exchanges are doing absolutely fine. There is no ban as such on crypto in India and people are also anticipating that soon there will be a regulation which will provide the guidelines on how to go about crypto space in India.

Speaker 1:

44:56

That is very insightful on what is happening in India. Like a lot of us, we’re just clueless of what is happening in India. So thank you very much for explaining it. So one last question before you wrap things up. So if people are interested in finding out and following Matic Network, what's the best place that they can do to follow Matic Network?

Speaker 2:

45:15

See, the best place is our Telegram group. So our telegram group is at Matic network without anything, you know, because there are many scam groups also. We are 30,000 strong group and the same is our Twitter handle @MaticNetwork on Twitter. These two are the most important areas. If you want to follow Matic Network, you can be there and then once you come on Telegram you will find me very active over there. If you have any particular question, you can DM me. I respond all of my telegram texts and if you have any particular questions regarding Matic Network, you want to speak to the founding team, I'm there to speak with you, so yup. These two are the main platforms.

Speaker 1:

45:55

Thank you very much for joining us on the CoinGecko podcast. I'm very happy to have you on the show.

Speaker 2:

45:59

Thank you so much Bobby, and thanks a lot for providing me the opportunity to present before the large CoinGecko community. Hopefully we'll keep meeting and once we have more milestones to share, hopefully we'll do this sometime again, future also. Very, very happy and thankful to be here.

Speaker 1:

46:15

Yeah, likewise over here. Thank you very much. All right, that wraps up the show. Thank you for listening to the CoinGecko podcast with Bobby. If you like our show and want to know more, check out podcasts.coingecko.com or please leave us a review on iTunes. Do you have any feedback? Do drop us an email at hello@coingecko.com. Join us for more next week.

Disclaimer:

46:36

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