On the 18th November, Liquid Loans’ CEO Cristian Ulloa sat down with well-known crypto influencer Adam Stokes to discuss all things Liquid Loans, and how the protocol can help Pulse holders to never have to sell their most appreciating asset. Check it out!
Adam: Good day, viewers. I’m Adam Stokes. Welcome back to the channel, where today, we deep dive into Liquid Loans with CC. CC, thanks for joining us.
CC: Thanks Adam. Thanks for having me on.
Adam: It’s good to have you back. Our last video together got some great reviews, and I certainly learned a lot from you. But as I understand it now, you’re the CEO and founder of Liquid Loans. What is Liquid Loans, and how can people get involved?
CC: Very simply, it’s a protocol that we’re launching on Pulsechain. Context for it is that most people, when they want to actually extract value from their tokens, whatever tokens that happens to be, they generally sell the tokens. And so, what this protocol enables you to do is to actually borrow against your Pulse coin, and effectively extract value in that manner.
Adam: This is exciting to me, because look, I love the crypto, I don’t want to sell it, and I don’t want to sell it because, first of all, I don’t want to pay tax on the gains, but secondly, I don’t want to play the psychological game of selling something that either I sell it at a loss today to find that it goes up tomorrow, or I do sell in a profit to find that it goes up even further tomorrow. I’ve seen many examples of people borrowing against their crypto assets, but you mentioned you’re specifically doing this on Pulse. There’s a lot of hype around Pulse. Why did you choose Pulse?
CC: Simply because I’ve invested a fair amount in Pulse, so I sacrificed a fair amount of my tokens during the sacrifice phase for Pulse. And very selfishly, I thought, well, how am I going to extract value out of Pulse in the future, and I couldn’t see anything being sort of developed in that space. There’s a couple of projects that exist on Ethereum. We are effectively forking one of those, and that’s what we’re launching on Pulsechain. And motivation is primarily to extract value from Pulse, as it climbs in the future.
Adam: The timing of our discussion is quite good, in the sense that I’m being inundated with questions about Pulse. The first question is when does it launch, so we’ll get into in a second. But because you know so much about Hex, and you also know so much about Pulse, I want to actually just explore the background to Liquid Loans, in the sense that you said you built it for Pulse, but I’m still unclear why would this not go into other coins. Why only pulse?
CC: I think the answer to that is, typically when you look to create a protocol that allows you to leverage against your crypto currencies, the best currency to use is always the foundation currency for the blockchain that you’re using. So, the protocol that we’ve forked to do this on Pulsechain, effectively, did the same thing on Ethereum. And they chose that they’re only going to allow Ethereum as collateral, because typically that’s the primary token on that blockchain, and everything else usually moves around that. So, actually, the intent is it’s a hell of a lot more stable, you would expect, than most of the other tokens that surround that. And so, typically, that’s what we’re trying to do on the Pulsechain as well.
Adam: I sacrificed on Pulse, and many others did. Let me just wargame this with you. So, Pulse launches. I suddenly have, as example, $100,000 in Pulse token value, but I don’t want to sell that $100,000. How would I work with you to extract value out of it without liquidating my holdings?
CC: So, effectively, when you use the system, so using Liquid Loans, you create what’s called a vault. So, you’re using a smart contract. You basically provide your Pulse into a vault, and you actually mint yourself a stablecoin. So, the stablecoin is known as USDL, so you’re effectively minting that stablecoin as you provide your Pulse into the vault. So, that’s your own smart contract, and it’s effectively a process for you to mint the stablecoin, and then you’re limited to do what you will with that stablecoin.
Adam: In that example, I’ll take my $100,000 worth of Pulse, I put in your vault per se, then I get $100,000 worth of stable coins, is that right?
CC: So, there is collateral ratio, minimum collateral ratio of 110%. Another way of thinking about that is particularly, if you use an example of say borrowing against your home, there’s usually a value that you can borrow up to, so a collateral ratio works in the same way. So effectively, if you’re wanting to borrow $100 worth of USDL, you would have to lock up $110 of Pulse, so effectively, that’s your 110% collateral ratio. Anything that falls below that would see that your Pulse could potentially be liquidated, so the system does allow for other participants to liquidate you if your collateral ratio falls below 110%.
So, by and large, we would not recommend that you would want to borrow to that margin. We’d suggest that would be a hell of a lot more than that. So, anything below 150, we find that that’s quite risky, so you would need to be borrowing at a ratio of 150% or more, because as you know, cryptocurrencies fluctuate a lot, and so you don’t want to be in a situation where you could potentially be liquidated.
Adam: The example, I borrowed $100 off you in stablecoins, but I’ve put forward 110 worth at the time when I put the Pulse forward, so the Pulse of the time of me getting that loan is worth 110. And what you’re saying is if the Pulse price dropped, and it dropped too far down, it’s like a margin call, suddenly, you liquidate my position, and what, you take all of my collateral?
CC: Yeah. Effectively, you lose your $110 worth of Pulse, but on the flipside, you’ve actually extracted $100 worth of USDL. So, yes, there is a loss, but you’ve still secured your tokens.
Now, let’s just say for argument’s sake, that the price of Pulse kept going lower than that, so potentially, you could be in a situation where Pulse is really sort of bottoming out, you still get to keep your $100 worth of USDL, and it actually gives you an opportunity of buying back in. So, if you wanted to buy your Pulse back, you could buy it at a significant discount, because it’s actually going well below the collateral ratio. Again, personally, I don’t think that’s a good way of using the system. A better way of using the system is actually to have a much higher collateral ratio, so that you’re not in what’s called a risky situation, so that potentially you could be liquidated.
Adam: How far below are we talking about, if it dropped to 10%, 20%?
CC: If it drops below 110%, so even it went to 109%, at 109%, the system doesn’t automatically liquidate you, but your vault is up for liquidation. So, somebody else using the system could go in, and actually liquidate your vault. And the benefit for them doing that is, effectively, that there’s a margin between the value of your Pulse and what they would use to actually liquidate you. So, effectively, they make a gain on that liquidated Pulse. It effectively gets redistributed.
Adam: Now, what about the risk for you? So, as you as the central body per se, you put out all these loans, suddenly Pulse drops by a certain percentage. You’ve now liquidated all of these positions, but it’s down so far that there’s not much to liquidate any value out of it. All the people who have borrowed against you, they got their original 100 bucks, but now you’re selling all these Pulse tokens that are totaling, I don’t know, 10 bucks. You’ve now got a huge variation there. How do you, as a company, protect yourself from that type of situation?
CC: So, one thing that needs to be really clear, this is a protocol. In effect, the company isn’t sort of backing this. The collateral itself is what creates value in the USDL token. So, you’re using your Pulse to create or to use as collateral, and the system then generates a value for the USDL. So, this is a protocol that, once it’s launched, we don’t have any way of changing it. So, we’re not actually managing anything other than launching of the protocol on the Pulsechain.
So, as a consequence of that, the system is completely decentralized. It’s immutable, so there’s no admin keys. We can’t change anything once it’s launched. And the beauty of the system is it’s actually the community that actually uses the system itself. And so, what maintains the peg of the USDL is the collateral. And so, effectively, what happens is, as the collateral value drops, then typically your borrowing costs are going to be a lot higher.
Incidentally, I should explain that whilst you can borrow against your collateral, the borrowing fee ranges from 0.5% to 5%. So, the system will always try and balance itself out. So, the system’s always trying to get to an even state, so it’s never going to be in a situation where you’ve got a complete run on something, because the system will actually lock people out from redeeming, and so effectively what happens is it rebalances.
if you actually have a look at, it’s called LUSD, which is the actual stablecoin on Ethereum, it’s maintained its peg, I’d say, much better than a lot of the other algorithmic stablecoins out there. And the reason it does that is, by very nature, it’s actually using collateralized assets to maintain the peg of the USDL. So, this is unlike other algorithmic coins that the algorithm itself is trying to maintain the peg for the stablecoin. This is predominantly maintained by the asset itself. So, the collateral is made available. The system will always look to rebalance itself based on what’s happening to the value of Pulse.
And so, we have no part to play in providing the loan, other than the protocol allows you to self-manage your vault, so that if you find that, for example, you may start at a collateral level of 200%, and then the price of Pulse starts to come down, you’ve got an option. You can either start repaying your debt, or you can actually add more collateral to maintain your collateral level higher, so the system does allow you to do that.
The challenge would be if you had a significant downturn, then potentially, even if you start with a very high value, you could put yourself at risk. Now, I believe a risky position is anyone under 150%, you then start to create a situation where potentially, if there’s a lot of market movement, you could end up in a situation where you will be liquidated. But remember this, when you are liquidated, you’re only able liquidated to 110% of what it is that you’ve actually put up as collateral. So effectively, you’re still getting your USDL, but you’re only ever going to lose up to 110% of the collateral that you put in.
Adam: So, in a simplest term, you’re really only losing 10%, keeping all pegs equal. I know there’ll be price fluctuations, but if I give you $110, you give me $100 back, then we liquidate the position, I’ve lost $10.
CC: In a roundabout way, that’s pretty much what happens.
Adam: In the simplest term.
CC: Yeah, in simplest term, yeah.
Adam: First of all, I’m glad you called me on the decentralized component, in the sense that I gave you or your program the money, you don’t have my admin key, so you can’t take all my money, and run of to Mexico.
CC: Absolutely, no. And if you think about that this is what drew my attention to this particular protocol was because I really like it. Obviously, from being part of the Hex and the Pulse community, and a big believer in what Richard Heart espouses with regards to that. Admin keys, centralized, they’re the things that I didn’t want to have to deal with. So, for me, being in a position to say, “Hey, you know what, we’ve got something that the community is going to really value,” because the community doesn’t like the idea of projects with admin keys, it creates too much risk. It also is decentralized, so there’s no one central body managing this, and it’s immutable. So, once it’s out there, we cannot change it. It’s up and running, and effectively, it’s up to the community to maintain it.
Adam: The phase that you were talking about, you said 0.5% to 6%, is at one-off fee? Is that per annum?
CC: It’s a one-off fee, and it happens at the time of issuance, so if you take out a loan, and depending on the system start. So, by and large, the fee will be 0.5%, and that’s a one-off fee at the beginning. So, there’s no fee for you to actually repay the debt if you want to, so there’s no fees for that, but it’s just when you first take out the loan, there’s a 0.5% fee that’s taken off the actual collateral value at the time that you issue the loan. And there’s reasons for that, and we can go into that.
Adam: Let’s look at what the mega-rich do. So, this is not new to crypto, or it’s new to crypto in the sense that everything in crypto is new, but it’s not new in the financial space in the sense that the really big players, they have, as an example, a building in downtown New York. They don’t sell that building as it goes up in value, because if they do, first of all, they lose a building that’s always going up in value, but second of all, they’re going to pay a massive capital gain tax on it. So, what they do is they always borrow against this building that’s always going up in value. They’re getting tax-free money. They’re never really paying it back if they don’t need to, because the building is always going up in value, and the bank is comfortable that there’s enough collateral there.
Applying that to Liquid Loans, if we go back to the example that we’re using as our baseline here. I want to borrow 100 bucks, so I’ll give you $110 worth of value. Pulse keeps going up. Does that mean I never pay back the loan?
CC: Exactly. You never have to repay the loan. And to me, it’s exactly what we needed on something like Pulsechain, because my feeling is, at the very beginning, my expectation is that Pulsechain will be — there’ll be some significant fluctuations. So, couple of things to bear in mind is that we won’t be launching the protocol until a little bit after Pulsechain launches, just to allow Pulsechain to sort of find its price, and to actually provide a little bit more stability past the initial launch of Pulse. But once the protocol’s out there, then I expect.
My view is the sort of things that we tend to see a lot of, which is just so frustrating, is people feeling that they need to sell their crypto to extract value. And you probably would’ve noticed within the Hex community recently, the number of people selling their crypto, and let’s face it, people should be able to sell their crypto. There’s no issue with doing that. But if you don’t have to do it, and you can still extract value, then why on earth would you sell?
And so, for me, it’s exactly the analogy you gave, is you got a property that keeps appreciating in value, why would you sell your property to buy a car, for example? You wouldn’t do it, so what you do is you actually take out a line of credit. That’s effectively what this is allowing the community to do, is to say, “You know what, I never want to sell my Pulse. I want to be able to extract value, and I want to do that in a safe way that doesn’t mean that I’m going to place significant sell-pressure on Pulse, and potentially drive its value down.”
Adam: Like you said, people want to get value out of their crypto, but why would you want to sell it? But if I have something like Liquid Loans, you’re actually helping the entire Pulse community and the Pulse price. Now, correct me if I’m wrong here, because you’re creating an avenue for people to gain wealth of holding Pulse, but not liquidating that pulse, therefore driving the price down. So, in fact, what you’re doing is a double win for anyone who owns Pulse. A, you’re giving me access to liquidity, but B, arguably, if everyone’s doing Liquid Loans through you, you’re reducing the supply available to the market, therefore the price going up, if you consider that the demand was remaining consistent. Have I got that right?
CC: Yeah. So, it’s like anything, if you don’t sell it, then there’s not sell-pressure, so the price isn’t going to go down.
Adam: That’s right.
CC: And to me, the benefit for that is twofold. Really, the vested interest is, for me, I always felt and still feel that Pulse is going to be phenomenal. It’s a Richard Heart project. Tell me that it’s not going to be phenomenal, right? So, on that basis, you think, well, I want to eventually extract value from this, but I don’t want to sell it. I don’t want to sell it, so how can I avoid doing that? Well, take out a loan, do a Liquid Loan. Extract some value. Don’t sell your Pulse, and then regret it. It’s that whole analogy. Why on earth would you sell your Bitcoin to buy a couple pizzas? Imagine if the fellow that did that took out a loan against his Bitcoin to actually buy those pizzas, but he’d still have his Bitcoin, right?
Adam: And the pizzas.
CC: And the pizzas.
Adam: And a lot more money. Yeah, I see. So, let’s go into Pulse a little bit, because let’s face it, without Pulse, your project doesn’t exist. Is that fair to say?
CC: That’s fair to say, yeah.
Adam: Okay, so this actually instills more confidence, because you’ve got a lot of experience in the crypto space, you’ve done very well in Hex, and you’ve chosen to build everything around Liquid Loans based on Pulse. And on my last video on Pulse, we’ve got a disproportionate large number of views, because it showed me that a lot of people are interested in the Pulse project. So, let’s talk about the foundation of your project, which is Pulse. First question, when do you think this thing is launching?
CC: That’s a really good question. People are speculating all the time. And I can see Richard Heart tweeting birthdates and hours that he’s born. It’s like, oh my goodness. All I can say is the testnet has been launched. As you can imagine, people are developing on Pulse. There’s a number of tools that currently unavailable that need to become available. And my expectation is that you’ll say those things evolve.
I think Richard also put out a minimum viable product in terms of the launch of Pulse. So, the things that I would like to see, I want to see IDX. So, I want to be able to say the centralized exchange that we can actually use. I’d like the opportunity of trying it out. That would be one of the things that I’d like to see.
I’d also like to see some sort of bridge. We need to somehow connect to the Ethereum mainnet, so that’s not necessary from day one, but it would be nice to see how that’s going to happen in the future. And I know there were some discussions around potentially looking at a fiat on-ramp, but we’ve got some Easter eggs in that space, so there’s some work we’re doing in the background that hopefully we can look to that space.
Adam: In simple terms, there’s that launch date that we know of yet.
CC: Look, there’s a lot of speculations. So, for example, Richard’s got this massive party organized on the 2nd of December that if I wasn’t living in Australia, I’d probably be attending, but —
Adam: I was about to say, did you get an invite?
CC: I think the invitations went out, but it was up to you if you wanted to actually participate.
Adam: We can’t go anywhere. Still sort of locked down.
CC: So, 2nd of December, that’s happening. There was a hell of a lot of speculations, I think. The last tweet suggested that the time of his birth. I think Richard is having a bit of fun with this too. So, somebody suggested the 18th of November. And look, if it does, I will be surprised, but not completely surprised. So, Richard will always release it when he’s ready and when he feels he’s ready.
So, do I think it will launch this year? No, I actually think that we’ll be into next year before Pulse launches. And that may not be what people want to hear, but that’s just my honest opinion.
Adam: Look, I’d rather it’s launched properly, than launched hastily.
CC: Agree.
Adam: I mean, if you look at Ethereum as example, first of all, it had to fork from Ethereum Classic to a Ethereum, which was actually from Ethereum to new Ethereum, and then the original Ethereum, Ethereum Classic, so that was a bit of a mess there. Now, even with the Ethereum that they’ve got, they’re still going to an Ethereum 2.0, so you’ve got all these upgrades. So, on one hand, you can upgrade it later, but if you look at other projects where they do it properly from day one, I’m actually more comfortable with that.
So, I agree when Richard’s ready, and he says it’s ready, and he’s comfortable it’s ready, then it’s launching, and then it’s a nice shiny robust product. And we’ve seen that with Hex. He launched Hex when it was ready. It’s never had any downtime. It’s delivered what it said it would. It gave the million percent returns. Even though pulling back, it hasn’t drop out of the market, and it’s still looking strong.
But now still onto the, I guess, target metrics of Pulse, I know that there’s no answer on this, but because I consider you more knowledgeable in this area than myself and many people in the crypto space, can you give us a supply and price forecast?
CC: To be honest, the supply side is fairly straightforward. I think Richard always said, at the very beginning, that he was always going to use the Ethereum circulating supply at the time, and there would be 10,000X whatever that circulating supply was. So, do the maths on that, and that’s roughly what the supply would be. But because it went through a sacrifice phase, there was never going to be an exact amount, but I do recall Richard quite clearly stating that, look, there is a circulating supply for Ethereum, we’re going to 10,000X that. That’s the supply that we’ll start with, and there or thereabouts. So, I would argue that the supply is roughly around those sort of numbers.
Adam: Just on that, is the supply then fixed, or is it fluid like Ethereum is at the moment?
CC: That’s a good question. I honestly don’t know the answer to that. My suspicion however is that it’s going to be fluid, but I don’t know for sure.
Adam: That scares me a little bit. It did scare me with Hex.
CC: No, it shouldn’t scare you.
Adam: No, yeah, you’re right. And you told me this, brother, and that’s why I really want to explore this with you, because in the fundamentals, where I was really concerned about when Hex launched — if I can even go back a step. Years ago, when Ethereum launched, I didn’t like an unlimited supply, which is why I didn’t get into the ICO. I’m like, there’s no fixed supply, that’s nuts. But the Ethereum foundation proved that they could be trusted, and not just print it like a Federal Reserve as an example.
Then we go over to Hex, where first of all, we didn’t know the supply, because it’s how it worked with the screenshots and the referral bonuses, and everything leading up to Hex. And we can see now that the staking behind Hex, it took me a while to get my head around it, but now I get why that supply is fluid. That also makes sense to me.
But now, we’ve got another milestone in the crypto timeline with Pulse. And because it’s by Richard Heart, it’s of course, going to be like no other crypto currency, particularly as he’s forking everything on Ethereum. And just on that supply, you mentioned the supply of Pulse will be roughly whatever Ethereum is at the time times 10,000. But then we have all the ERC-20 tokens that will be duplicated or replicated on the Pulse network, which will be pHex as an example, pLINK or whatever an ERC-20 token is, will they be multiplied by 10,000 as well?
CC: I think there’s going to be a rebalancing, so they’ll come to the same sort of level. So, for example, let’s just say you had 100 LINK tokens on Ethereum, you will end up with 100 LINK on Pulsechain. And incidentally, the nomenclature for projects on Pulsechain won’t start with a P. It’s just whatever the token is. So, for example, LINK will be LINK, but on Ethereum, it will be eLINK. So, effectively, the nomenclature is going to it’s not eHex and pHex. It’s just Hex, and there’s eHex.
Adam: Right. So, is that just the way of saying we’re the primary chain here?
CC: Yeah. And we won’t dive into the Ethereum gas fee issue, because that’s a painful topic for a lot of people, but I honestly feel that, in time, I think a lot of people will move over to Pulse because of that, and that’s one of the driving motivators.
And to actually launch Pulse fully loaded, some people will learn about these things late, but they will learn about their tokens, and they’ll come over, and think, okay, well, I can do something with this. Bear in mind, however, that the value of those tokens won’t be the same, so whatever the value happens to be on the Ethereum mainnet doesn’t necessarily translate to the value on Pulsechain, but they’ll find a price, and they’ll find a price pretty quickly. And if you think about this, if people to decide to sell those tokens, it’ll put a lot of buy-pressure on Pulse, which again is a good outcome for Pulse or holders of Pulse.
Adam: The game theory behind this just blows my mind, because I was talking to Crypto7 on my channel a while ago, and I was trying to come up with an analogy or an example in history where everyone has migrated very quickly from one area to another, and the best I could come up with, and it wasn’t a very good, because it was on the spot, was migrating from the old landline networks to the internet networks, even if you’re doing VOIP. So, you’re still kind of like in a phone call, but instead of doing it on old analog lines, you’re now doing it on digital lines.
But a Hexican then actually left a really good comment, and he goes, “Well, another example that you might like to consider is when everyone fled from Myspace to Facebook.” Now, again, it’s not an exact analogy, because we’re building new information and value systems here, but it really got me thinking about Yahoo and Google and then Myspace and Facebook. And I use these examples because one of the arguments is that Ethereum is too big to fail, but no one’s going to use Pulse because we’ve already got Ethereum. And the same argument is consistent for Cardano, Algorand, when people say that there’s no way that anyone could come over to this space.
We’ve seen in history that network effect is not everything. We have seen that even if your Yahoo, that does not guarantee that you’re going to win. Even if you’re Myspace, that doesn’t guarantee that you’re going to win. So, certainly for myself, trying to I guess balance two opposing thoughts at the same time, I don’t allow myself to say, well, Ethereum is too big to fail, because that’s not the truth. But when we go onto the smart contract race, I want to get your insight on this. Is there only going to be one, or are they all going to coexist?
CC: I think they will coexist. I can’t imagine a day where only one will prevail. There may be a dominant player, but I think they will coexist. And I actually think it’s good for cryptos, in general, if there are a number of players, because it creates ongoing competition —
Adam: That’s right, yeah.
CC: So, I kind of like the idea of that. To talk about Ethereum, I think unless Ethereum deals with this excessive gas fee issue, which is just it’s ludicrous that you cannot transact on a decentralized exchange without spending inordinate amounts of Ethereum to transact. It’s killing a lot of projects that currently run on Ethereum.
Now, I cannot imagine any one of these projects not seriously considering Pulse, saying, you know what, they may be waiting. They may be waiting to see how Pulse goes, but I think there will come a time where they’ll go, “This is not good for our community to stay with Ethereum, unless Ethereum moves to a proof of stake.” Unless it moves into that environment, and addresses the gas fees, I honestly do not think it’s sustainable. Projects, particularly in the DeFi space, cannot sustain themselves on Ethereum. It’s just ludicrous the amount of gas fees they expended to transact on that at the moment. So, thank goodness for Pulsechain.
Adam: But what about this? I see that we now have a race, in this scenario, between Pulse and Ethereum 2.0. We know that we don’t have a launch date. Let’s just do some thought experiments here. Let’s say Pulse comes out with a launch date of 1st of January, but then Ethereum 2.0 launches on December 1st. Does that mean Pulse is dead?
CC: No. I think Pulse will continue to thrive, and largely because there will be a number of projects on Pulse. Obviously, I would like to have Liquid Loans as one of the predominant projects on there, but also, you’re going to have Hex, and Hex will thrive. Hex will absolutely thrive on the Pulsechain. At the moment, Ethereum is retarding what Hex can actually do, because of the crazy gas fee situation. So, honestly don’t see it stopping. I think Pulse will continue to perform.
Adam: But let’s say pulse didn’t launch then, wouldn’t Hex still have access to Ethereum 2.0, therefore less gas fees.
CC: Potentially, and it’s just one of those things. How long had we’ve been hearing about Ethereum 2.0?
Adam: Exactly.
CC: I mean, it’s been on the drawing boards for years. And I feel sorry for Vitalik. I think it must be incredibly frustrating, because I can’t imagine he would look at this, and say this is a sustainable model. He would be thinking, how can I get through this, and what’s causing a lot of the angst is the completely decentralized method of actually making changes.
Adam: Yes.
CC: And miners that have a vested interest to maintain your proof of work.
Adam: Yes, you’ve absolutely nailed it there. In the first instance, we spoke about in our first video when we were talking about Hex and Pulse, when we deep dive into that, we spoke about the advantage of having centralized leadership, such as Richard Heart, where he can say, “This is the plan, we’re going this way. If you don’t like it, you’re out.” Compared to Ethereum, you have to appease all these different parties, and it’s kind of a very bureaucratical and slow process, where things just are not getting done.
But the thing is with Ethereum and this Pulse race, my fear, as an investor to speculate, I just think Pulse makes perfect sense to me. We fork Ethereum. We take everything on the Ethereum network with us. We go from proof of work to proof of stake overnight. Everyone who’s already built on Ethereum, they don’t actually have to do anything. It’s just already replicated on Pulse. But to me, the big threat in all of this, to keep it balanced, is if Ethereum 2.0 launches before Pulse.
And in that instance, I acknowledge that you said platform such as Hex will benefit from Pulse, but in the scenarios and the wargaming that we’ve been doing, where we say like everything that’s already been built on Ethereum just migrates over to Pulse, that’s not going to need to happen. Even if it does happen, and someone says, “Hey, I’ve just replicated your entire network over here on the P network, on the Pulse network, and you’re operating on the Ethereum network, do you want to come over, “ it’s like, well, the fees are kind of the same, so it’s probably best that I not do any changes at all. Whereas if Pulse does launch first, and you say, “Hey, do you want to come over here where those thousand dollars gas fees, over here, they’re 1 cent. Do you want to come over here,” that will push it over there.
This is why I admire your courage. So, this is a big lead into you’ve taken such a big risk to do this. You’ve taken such a big risk because you have built something on a platform that hasn’t launched, and you’ve built it on a platform that is competing with the biggest smart contract coin on the market, Ethereum. So, on one hand, I’m like, wow, this guy is living on the edge, but on the other hand, I’m like, this guy believes in this. This guy is successful in the crypto space, successful in business, successful in life, and he’s taking all of his experience, and putting a significant amount of risk and trust into Pulse. You’re feeling pretty comfortable about this.
CC: I feel so comfortable, Adam.
Adam: Wow. To me, I’m getting like goosebumps in that, because I sacrificed heavily into the Pulse network. And let’s talk about the sacrifice for a second. When you take your money, and you sacrifice it, at least with an ICO, you’re getting some type of feedback when you put money into an ICO. When I buy in the exchange, I’m getting some type of feedback there. But when I sacrifice, I’m literally sending my money into the ether per se, and it just disappears. Now, there’s a kind of receipt, where there is a sitework, and look at it if I sacrificed Ethereum, but I couldn’t see it while I sacrifice, I think, Cardano and Litecoin and other coins. I didn’t get any record of that. So, on one hand, wow, that’s a lot of trust in Richard Heart, and a lot of belief in what he’s doing, but on the other hand, it also makes me feel more comfortable, because I wasn’t alone in doing this. A lot of people did this, and a lot of people sacrificed millions upon millions of dollars into this ecosystem. Tell me why you’re feeling so comfortable about Pulse?
CC: You’ve used the term or the word trust, and I just have a lot of faith in Richard Heart. I think he’s proven himself to me, and you probably would also admit, it’s a very smart and agile community.
Adam: Yes.
CC: And it’s actually a very respectful community, despite all the negativity that has surrounded, unfortunately, Richard in the past, I think a lot of that is starting to go away, because all of a sudden people are saying, “Well, hang on a second, Richard is still around, he’s still sort of promoting Hex, Hex hasn’t rug-pulled on anyone.” So, all of that negativity that sort of surrounded Hex at the beginning is slowly but surely just falling away. And whilst you’ll still get occasional sort of negative comments coming through, I think you’ll notice it’s a hell of a lot less than what they were in the past.
One thing I’ve learned about Richard is that he follows through on what he says he’s going to do, and that’s really important to me. So, I look at it, and I think, well, I have trust in Richard, because I’ve seen him, and he has demonstrated to me that he is a fellow that actually works hard, and actually delivers on what he says he’s going to deliver. And likewise, that’s the same situation that I can see with Pulse. So, everything that Pulsechain has actually stands for and what Richard stands for, I’m a big believer.
And as a consequence, and this is something that it even struck me harder, and you’re probably aware, Adam, that our team is quite a big team. There’s a number of people that are supporting not just myself. And there is another founder. I think you’ve met Scottish Dave, so he’s the other founder of Liquid Loans. But we also have a leadership team, and there’s a number of the guys there that have been doing an amazing job just helping to promote Liquid Loans. And in addition to that, we also have a Telegram group and an admin team. I think there’s about 22 or 23 admins at the moment that are doing a fantastic job just providing information to the community.
Now, why do I keep coming back to that? The community are actually the hottest markers for any new projects. So, Jesse, who you may have seen on a number of streams, he copped it pretty hard at the beginning in terms of all the technical questions that he was having to fill. And he did a fantastic job of being able to basically convince some of the smarter and the thought leaders within the Hex and the Pulse community that the value of Liquid Loans. And I think, for me, the community itself is very protective of the community. So, effectively, they’re quizzing all projects much harder than they would than an external mind. And to me —
Adam: Because it’s their brand as well.
CC: Exactly, and I love that, because they’re really really getting into the bowels of how does this thing work, what are the risks, what are the potential negatives that could come from this. And at every step, we’ve been able to address those things. So, for me, it’s good. I really like it. And the only thing now is we just need to wait for Pulse to launch.
As I said, there’s a number of things that I’d like to see on Pulsechain. And I’m sure that Richard has a plan. Actually, I would be very surprised if he didn’t have a plan in terms of the timing of this. But one thing I can say quite clearly is that we won’t be launching at the same time. There will be a delay before we launch, and that’s primarily just to allow that sort of craziness that I expect will happen in the first month or two. So, we just have to sort of play it by ear in terms of the timing. We’ll be ready to launch. We will be ready to launch, but we’ll delay the launch until we see Pulsechain settle down.
Adam: I’m just thinking, you know when Hex launched, so one of the biggest regrets for many people who got in early with Hex is that they sold early, and they sold early because, well, no one knew, and I don’t blame them. Particularly, if you’re sitting on $1 million worth of Hex, and it’s like, well, it’s week one, and I’ve got a million dollars. We’ve never had anything like this before, let me just sell it. And of course, later on, they would’ve had 2 million, and then 10 million, and then 100 million, and hindsight is 20/20.
But if we apply that exact same situation with Pulse, Pulse launches. I suddenly find I’m sitting on $1 million, and I’m like, “Oh, should I sell it now because it could crash?” I could in fact come to you, once you’re up and running, and saying, “Here are my coins. Give me some liquidity.” And I can’t lose them, because if the price starts to go up, I still hold those tokens, don’t I?
CC: That’s right. That’s exactly right.
Adam: But I’ve extracted liquidity out of it.
CC: That’s exactly right.
Adam: Now, I’m just going on more thought experiments. So, I see why you’re so confident, because now what happens is, I’m one person, but tens of thousands of people do exactly what I did. And they’re like, hey, CC over there has got this Liquid Loan thing. I don’t know if Pulse is going to go up or down, so let’s take some money off the table. I’ll give him my crypto, but well, I’m not giving it to you. I’m just looking it up in the code, so it’s still my keys, my admin keys in a smart contract, which is what this is all about. I take some money out, but I don’t lose my tokens. Now, if the price dumps, hey, I’ve already got some money. If the price pumps, now I don’t have to pay anything back, and I still have my money, and I’ve got the equity in those assets that are going up. But more importantly, if 10,000 people or 100,000 people have done exactly what I’ve just done, I’ve now just driven up the price of Pulse, because I’ve reduced the supply of Pulse available to the market, right?
CC: That’s right. That’s exactly right. Now, think about this, Adam. You take a position. You draw down some USDL. You can do a couple of things with that. You can actually provide —
Adam: Buy Pulse.
CC: No, you could actually provide stability to the actual system itself. So, we are hoping that people will mint USDL, and actually we’re incentivizing them to actually provide stability to the system. So, you can actually get a really good return on a stablecoin. So, effectively, I think the rates are going to be somewhere between 12% and 20%. Now, that’s pretty unheard of on a stablecoin, right? It’s a pretty good return on a stablecoin, but that’s one of the incentives that we’re providing to people that use the system.
The other thing though, and it’s bizarre, but you could certainly do this. Let’s just say that you collateralized to 300%, so effectively you give up $300 worth of Pulse, you get $100 worth of USDL. You take that $100, and on the Pulsechain, you go buy some Hex, and stake it for 10 years, or 15 years.
Adam: Why?
CC: Because you’re getting such a good return.
Adam: Yeah, I got it.
CC: Such a good return.
Adam: Yeah, but that’s just assuming that Hex continues to go up. Like, hey, when I say why, it’s not why would I do that to get a return, is why would I do it on Hex and not Bitcoin as an example, just because Bitcoin has more history. Sure, it might not grow as aggressively. I think I’ve already answered my own question, because I’m not going to get the 40% staking rewards.
CC: That’s exactly right.
Adam: You’ve trained me well since. You’ve trained me so well.
CC: Yeah, and look, it’s —
Adam: Sorry to interrupt. It’s just because it took me so long to get this, and it goes back to the Hex community. And I’ve said it before, and I’ll say it again. To be a Hexican, you kind of need this high level of thinking. And it’s not a supremacy thing. You really need this high level of thinking because it’s so easy to just go with what the mainstream was saying is Richard bad, Hex bad scam, and that’s a lazy way of going through. But if you just, as you pause for second, so hang on a second. If we stake here, and we got this return, and this is what’s happening with the supply, and this is what delay gratification is, and it’s acting like a CD, you actually need a high level of thinking to grasp that.
Well, first of all, you’ve got the foundation of the trust and the confidence. But now, exploring this with you, I’m really glad that we didn’t talk about this more off-camera, because I’m really enjoying exploring this and discovering this with you on camera, so the viewers can share this experience with me. So, as I lead into what is now an obvious question. At the time, it wasn’t obvious, but it now seems a bit silly, but I get what you’re saying. But on this rant about Hex, if I now go into Hex, if I go and buy Hex, there’s not going to be a pHex and an eHex, or is there? Do I get double the Hex after it’s already launched?
CC: I’ve got to be careful here. People get confused between a snapshot and a fork. They’re different things, right?
Adam: Yes.
CC: So, the language gets used. Look, I don’t get too hung up on that, but it’s a fork. So, there will be a block, and that’s when the system goes live, and whatever happens at that time that’s what gets duplicated over. So, for me, if you’re preparing for Pulse, you should have everything that you want to have on Pulsechain ready and sitting on the Ethereum mainnet. So, if you’ve got Hex sitting there, that’s absolutely fine. And my suggestion would be, for God’s sake, stake your Hex.
I know a lot of people is saying be liquid, be liquid. There’s no need for that. You can actually be liquid with shorter-term stakes, but at least you’re getting the benefit of decent interest rate return even if it’s for a short period of time. So, staking, for me, is it should be like the default position for people going to Hex. I see no value in maintaining liquid Hex, unless you’re trying to sell it, which to me, I have a longer-term view, and my expectation is Hex will continue to deliver. Yes, it’s had a bit of a pullback, and I think we’ve had a conversation around that. I expect it to continue to rise. But before the actual launch of Pulse, whatever you have on Ethereum mainnet, it’s an ERC-20, that will get duplicated over. So, once Pulsechain launches, all your ERC-20s will exist on Pulsechain. They won’t be prefixed by P. It’ll just be the token name on Pulsechain. The only thing that will have an E in front of it would be things like Hex, where it’ll become eHex on the Ethereum mainnet. So, the nomenclature is going to be a little bit different.
Adam: One thing that I’ve learned using Hex for a while now is that when you’re doing a small purchase of Hex, say under 500 bucks, the last thing that you want to do is a short stake. And I’ve discovered this just from trial and error. The last reason why you want to do a short stake is because of gas fees. If I do a short stake, I’m paying gas fees going in, and then gas fees going out, so it’s actually in my best interest, beyond all the other reasons of interest and delayed gratification, and price movement meter, don’t even worry about that stuff. Sure, that’s fundamentals, but it’s gas fees if I go in and out of these stakes.
Look, if I’m staking $1 million, and it’s $100 gas fee, who cares? But if I’m staking $500, and it’s a $200 or $500 gas fee, I’m paying 100% in just gas fees alone. And I’ve really learned just from getting in there, and using these ecosystems, that in fact, you do want to stake longer. Of course, you want to stake big, but you want to stake long, but you want to stay long for many reasons. But of course, to the outside, they’re saying, well, that’s a pyramid scheme, just stay in there so Peter can pay Paul. And it’s like, no, it’s not like that. It’s deeper than that. It goes a lot further.
I want to know more about Liquid Loans. Tell me more about your team.
CC: So, I guess just to start with, I’m the cofounder. We have what we call a leadership group, there’s a number of folks that are involved in that group. So, one of the fellas that has been quite visible, so he’s been out there promoting Liquid Loans for the team, is Jesse. He’s been out there are on a number of other YouTubes, promoting Liquid Loans. He, along with Toshi, so the two of them have actually done a number of YouTubes, but predominantly, it’s been Jesse on many more of them. We also have a CTO, Abra. So, these are people that are actually known within the community. So, that was the other thing that we had to make sure that these people were community members, and they have that vested interest in the token itself.
We also have a significant development team. There’s Krenol, who actually leads the development team. And there’s also Nemish, who actually does a lot of the visual work for us.
Actually, at the moment, we’re shooting a number of videos, so those videos will be made available through. At the moment, we’ve got a bit of a placeholder for the website, but there’s going to be a lot more content made available, and you’ll see a lot more Q&A sessions come through. I think it’s this Friday, I’ve got a number of video sessions for myself.
The other thing, and these are the unsung heroes for me, the admin team. There’s an admin team that actually provides a lot of the responses for people in the Telegram group. Those guys are fantastic. I mean, seriously, because they were answering these questions so often, I hazard to say that they probably know more about the protocol than I do, because they’re constantly getting all of these really tough questions. And these guys are doing a phenomenal job just responding to the community sort of questions that come through. And the Telegram group now, I think it’s close to 4,000, so it’s grown in size since we’ve started, and that’s largely been led by the team. And for me, that’s what’s making this really exciting for me, is that we’ve got a really good team coming together.
We’re about to add to the team. And I got to be careful, because I haven’t shared a lot of this with the rest of the leadership group. There is another fellow, another Aussie that’s going to be joining us very shortly, but he’s going to leading the way on a number of other initiatives that I think will actually add significant value to Liquid Loans, but we just have to hold out water on that one.
Adam: I’m curious, and you don’t have to go into the details. All these people working for you, are they doing it pro bono? Was there a centralized fund donated to you, or sponsored you? Where is the money coming from to keep on?
CC: Well, I can tell you, it’s putting a jade on my holdings and the other founders. So, at this point in time, it’s Dave and I that are actually funding all of what’s required. The rest of the team, as per most projects of this nature, there is a token allocation that’s provided, but that’s no different to advisers and team leaders being provided with token allocations. And look, the admins, just as I said, they’re the unsung heroes. They’re the guys that are really sitting in Telegram for a while, just responding to the various questions. And just seeing how professional they are in doing that just fills me with so much confidence. That, to me, is the group that they’re the unsung heroes for me.
Adam: It’s funny. It’s so easy for me to defend crypto, because I know it, but I believe in it. And from what I can hear from you is it’s the same with your team. They’re not only knowledge, but they believe in it, which of course gives confidence across the entire board. So, I’m sitting on the sidelines here. I hear about it. I’m already half invested in Pulse. Just say our viewers just want to invest in you, into CC, and into that Liquid Loans project, and they haven’t sacrifice with Pulse. They haven’t got any Pulse. They haven’t got any Hex. They just believe in you and your mission. Is there a way they can get involved?
CC: Yeah. So, what’s happening at the moment, we’re sort of putting the final touches to we’re going to be running a sacrifice phase. So, very similar to the approach that Richard took, but there’s going to be a bit of a twist. And the twist is more about acknowledging that people should benefit from delayed gratification, and that’s what I’ll say at this point, but the sacrifice mechanics we’re working through that. There will be some material communicated obviously. Out of respect, it will go to the leadership group first, and then I’ll share that with the admins, and then that will be shared with the Telegram group that’s been formed. So, for me, the mechanics will be through a sacrifice phase, not unlike what you’ve seen for Pulsechain.
Adam: And why sacrifice as opposed to ICO type of thing?
CC: I think a lot of that rest on the regulatory sort of regime. We will be launching this thing as a complete product. We’re not looking at doing anything about that. So, ultimately, once this launches, it’s finished, and it’s completely decentralized. And a lot of that is largely due to the regulatory sort of framework that we need to work within.
Adam: I now see the advantages of sacrifice over ICO or IPO or IEO setups. It makes more sense to me as a user. Initially, it looks more riskier if you don’t have any trust of belief in the founder or whoever is making the project, but let’s face it, with an ICO, even if they say, “Here’s your allocated tokens at ICO,” that still doesn’t mean anything. It’s not the allocation of tokens. It’s really the leadership of the people who are building the project.
CC: I’ll tell you the other thing that I noticed that’s very different to me is that we’re not delivering a hopeful product. We’re delivering a finished product, so big difference. And I think that this is probably my biggest frustration with crypto is, by and large, most projects even the ICOs that we speak about, you’re buying into something with the hope of it doing something, a hope that it’s going to be something valuable in the future. We’re not doing that. We’re delivering something that’s going to be usable form day one. So, for me, that’s the difference between something like Liquid Loans and some other projects.
Adam: You know what, that’s a key point, because it rug-pulls you. You saw it happened so much in 2017, during an ICO. It was fascinating time, because a company would forecast, we’re going to make $30 million a year, but suddenly, they just raised $250 million in an ICO, and it’s like well, listen, I’m not even worried about making the business now. Let’s just rug-pull, and just take all the money, and fly away. And that happens so many times.
Now, sometimes it was intentional, sometimes, it was not intentional, and sometimes, it was sort of halfway in between. But in any case, you’re dead right. In any ICO, IEO, IPO, you’re investing in a dream. Whereas, when you’re investing in a launched product, the product exists.
So, I need to know more about your competitors, if there are any. So, we’ve spoken about the positive side. Let’s balance this conversation. Who are your competitors, if any?
CC: I think, at this point, I can’t honestly say if we’ll have a competitor. So, one of the things that we’re hopeful for, Adam, is obviously the protocol speaks for itself in terms of the value you can derive from it. But the other thing that I think people starts to see value in is that we will have one of the first algorithmic stablecoins on Pulsechain. So, there’s quickly a significant level of interest just on that basis.
So, in terms of competitors, I’m not aware of any particular competitor on Pulsechain. Could that happen in the future? Yeah, absolutely. I do expect that there will be others that will come through. As you know, there’s a lot of other DeFi projects that are running on Ethereum, so I can’t imagine that that wouldn’t happen in the future on Pulsechain, but we’d like to hope that we’ve got an early advantage and all that.
And to be honest, before I embarked on this with Scottish Dave, we did a bit of research in terms of all of the projects that are out there. And as you know, a lot of the DeFi projects, the fundamental problem I had with them is they have admin keys, or they’re centralized. And I won’t shoot them down, because I think fundamentally, they’re doing a good thing.
BlockFi for example. Now, BlockFi is one example where, hey, it actually does provide a service, but you are taking risk, right? So, you kind of know that you’re handing over your keys. And to me, I just didn’t feel that that would work for me. And certainly, the community at large is just will not be interested in anything like that. So, we did a fair amount of research on various protocols that we could look at, and this one stood out for us, and thought, “You know what, I love it.” I love that it’s completely decentralized. There’s no admin keys whatsoever. Once it’s launched, it’s immutable. We can’t change this thing. So, that creates a risk for us, by the way. It’s a hell of a lot —
Adam: So, you want to make sure that code is topnotch and 100% tested, and then retested again.
CC: Yeah, and to that point, I just want to say a couple of things. Not only are we doing that, actually as part of the team, we’ve got a cyber security guy that’s actually looking at a whole range of issues that we need to make sure of, because I think whilst the code needs to be tight, the environment that you’re operating in also has to be quite secure. So, this cyber guy is doing work on that basis.
The other thing I was going to say is there will be a frontend to the protocol, but we’re also making it available for others to create a frontend, and so that creates the level of decentralization. And it actually reduces censorship risk on this thing. So, we’re not going to have any sort of potential bad actors coming in. So, the expectation is that that mitigates some of those things as well.
And whilst the code’s already been audited, we’ll actually be conducting our own audits on the code. So, even though we’ve tried to modify as little as possible, but there’s still modifications. And because you’re running on a completely different blockchain, even though, effectively, it’s based on the Ethereum mainnet, but probably more important it’s probably more aligned with the Binance Smart Chain, even though that happens, there’s still things that don’t quite work exactly the same way. So, you still have to go through a fairly rigorous audit process to make sure that this thing’s rock solid, because as I said, once this thing launches, there’s no going back, so it’s got to be absolutely locked tight. And we will invest appropriately to make sure that that happens.
Adam: Regulation, for me, the biggest threat to everything in crypto, irrespective of who you are, your project, or what country you’re in, it’s regulation there. How did you handle that? Have you got any late nights with the regulators?
CC: Thankfully. Look, it’s interesting, because I think you know that we’ve engaged a number of lawyers, to be honest. There’s one particular guy in Australia who I find is probably the leading lawyer in Australia. So, we’re working with him at the moment just to work through how we might be able to manage through some of the legalities that we’re hearing. So, he’s a good voice for us here in Australia. But we’re also working with a fairly large multinational firm, because we needed to make sure that what we’re doing is not going to cause us any grief down the track. So, yeah, there’s been a lot of sleepless nights, a lot of discussions with lawyers. I think we’ve got it. I think we’re at a position where we’re pretty happy with the way we’re going to do this.
As I said, I think the main thing is, particularly with the sacrifice phase and along the lines of Richard’s comments is when you sacrifice, you’re sacrificing. And there’s a really good video. Actually, one of the guys shared it with me recently, just around what the hell is sacrifice.
So, sacrifice, you effectively sacrifice in the hope that what you’re sacrificing will actually provide you with an improvement in the future. There is no expectation of work from others. So, what is sacrifice? You’re making a political statement around the state of DeFi. You’re also making a political statement around stablecoins, and the fact that so many stablecoins. There’s fractional reserves that are supporting stablecoins, and the fact that that’s going on. So, this is really a political statement. That’s not the way this should happen, and we should have decentralized stablecoins that are effectively we don’t have a situation where you can actually be rug-pulled by the provider of the stablecoin, right? So, we don’t want to be relying on that. And I believe that algorithmic stablecoins is the way of the future.
Coming back to regulation, I believe what I’ve heard form the SEC, for example, is that they’re not particularly happy with centralized finance. So, unfortunately, there’s a couple of great players on Ethereum at the moment that are under the pump because of their centralized nature of the stablecoins that they offer. And as a consequence, I think they’re being targeted.
I also believe, that in the future, one of the things that we’re trying to build is we’re trying to build a bridge to traditional finance as well. And so, whilst I think some of the banks will be very much resisting this, you would have seen recently, the Commonwealth Bank, and I know you have a particular view on that. And I share that view, but the reality is, organizations were allowed to change their minds, and they’re starting to see the writing on the wall, so I think that’s a good thing for crypto more broadly. But what we’d be looking to do is create a bridge with traditional finance.
The other compelling thing for me with Liquid Loans was my children turned to me, Dad, I want to buy a house, but I don’t want to sell my crypto. And so, for me, they will have their own allocation of Pulse, and also, they will have their own Hex. But ultimately, I don’t want them to sell either. And they don’t want to, but the banks won’t entertain lending to them if they want to use their crypto as collateral.
Adam: Exactly.
CC: Which is just nuts. And so, for me, we’ll build that bridge. So, the bridge will look something like this. The banks probably still won’t entertain the fact that it’s crypto, but they’ll be able to use that collateral and convert it or the mint the USDL, and then they’ll be able to take that to the banks to actually borrow and buy or purchase their home if that’s what they’re wanting to do. Banks may not want to entertain that, but I can tell you what, there’s a hell of a lot of mortgage brokers out there that would salivate at this, because they’ll be looking at this saying, “This is a way for me to actually facilitate a transaction for someone that I haven’t been able to facilitate in that past. So, as a mortgage broker, this is a really good outcome. People that actually want to do this and use their crypto this way, well, Liquid Loans provides that for people that have Pulse. And if they don’t, maybe that’s a good way in. So, people will start to use that. So, we’re very hopeful that the traditional finance world will start to cotton on to what this is all about.
Adam: But here’s what’s exciting. If they don’t, it doesn’t matter. Like it would be good to have them onboard. And if they want to come and play in the — I’ve been using this line a fair bit. I should probably stop using it, because it’s going to trigger some people. I say, if you want to come play with the grownups, you’re welcome to come over. You tinker along in your little steam engine over there. We’re over in flying vehicles. But we’re all inclusive, so you’re allowed to come over to this new world that is the new world of crypto and money.
And I like that you’re trying to bridge this gap between the new financial sector, which is us, and the old financial sector, which is the banks, but you can’t lose either way. If they come on board, fantastic, the big boys backing you one way or another. And of course, they’re trying to get their cut, but whatever. But even if they don’t, there’s enough confidence, enough liquidity, enough power, enough backing in the crypto space for us to do what we need to do anyway without these traditional financial sectors. So, I’m excited for you. This is good stuff.
CC: Yeah, I’m taking a very pragmatic approach, Adam. The purists would say, we don’t want anything to do with the traditional finance sector, and a big part of me sort of aligns with that, but the pragmatic in me says, “You know what, let’s try and create a bridge, let’s try and create a bridge.” Now, I don’t know how that evolves, but what I do know is that there’s going to be a lot of people that currently can’t benefit from their crypto that will be able to in the future.
Adam: The question for me in that situation is we’re prepared to synergize in the crypto space. The question is, are the banks prepared to synergize? Are they willing to take one step back to take many steps forward? Will they do everything in their power to hold a monopoly, or at least an oligopoly over everything money? Or will they say, in fact, the pie is a lot bigger, and although we’re going to give up some slices of the pie, the aggregate pie is much bigger, so we’re going to win anyway? And I hope they have the maturity, professionalism, and human decency to say, “You know what, we can let go of some control. We’re still going to be rich. We’re still going to make money. We’re still going to be the financial sector. We’re just not going to have complete control over everyone. We’re not going to be able to do all the bad things of the past,” which we’ve seen in the Royal Commission, we’ve seen in money laundering situations. For you in Liquid Loans and for us as customers, is this global? Like, does it matter which country I’m in?
CC: Yeah, anyone can use Liquid Loans, anyone. Anyone, anywhere can use Liquid Loans.
Adam: So, the mechanics of it is just be like — picturing this in my mind — you’ll launch the product, so Pulse launches. A bit later, you launch Liquid Loans. I say, well, I feel like getting a second Lambo per se. I custody my Pulsechains with you. I pull the money out, and I do what I want with it. When I pull the money out, this is the bit I’m getting stuck on. So, you’d give me USDL, which is a stablecoin. I’d take that stablecoin. I’d take that stablecoin, and then I do one of two things with it. I liquidate it in a traditional exchange for dirty fiat, correct?
CC: Correct.
Adam: Or hopefully, in the future, I go to the bank, and say, or even to the mortgage broker, or just to the free market, and I’d say, “I’ve got a $1 million worth of USDL, I want to buy that Lambo or that house.” Am I thinking right?
CC: You are absolutely right. As I mentioned earlier that we’re exploring some of those things, because I think the closer we can get to traditional finance, as in, I don’t want to have to navigate a number of different steps to actually get and to use my USDL. I want to be able to do that really really quickly.
Adam: That’s right.
CC: So, the easiest way of doing that is to actually have a fiat on-ramp with the bank or with an organization that allows you to come straight into Pulsechain.
Adam: I would put one exception to that, CC. I would say this. This is outside of your project. This is in the bigger crypto picture. Many of the outsiders who come in — I don’t want to call them outsiders, but newbies coming into the crypto space, they’re like, yeah, but how do I sell my bitcoin to buy a car. And I say, “Well, you just press the sell button.”
CC: You’re done.
Adam: Because remember, they’re super new. I say, in the first instance, you press sell, but in the second instance, don’t. Don’t sell your Bitcoin. And they’re like, what. But then we’ve got to go into all these other things, but I actually go a bit further. If I work for you, you pay me in Bitcoin. I’m not really interested in doing much work for you. Now, of course, there are definitely exceptions to this rule, but generally, I don’t need fiat, I don’t want fiat. I just want Bitcoin. So, in these markets, moving forward, I just see that step missing. I see it doesn’t need to be there.
Well, let’s stick Bitcoin as an example. I don’t need to go from Bitcoin to fiat to Ferrari. I just go Bitcoin, Ferrari. And for yourself, if you’ve got a recognized USDL, then why do I even need fiat? Why don’t I just use a USDL to buy the house or the car?
CC: Yeah, and I think that will all rest on how we can connect with traditional finance. And so, for me, it could be something along the lines of traditional finance saying, “Hey, we see that this is a stablecoin, and we understand how it’s created, and we’re comfortable with being able to.
So, for example, it could be — and I’m just thinking off the top of my head, but why couldn’t you create a smart contract with the bank? Potentially, you could do that. You could actually say, “Well, here’s my USDL. If we’re going to use that as collateral, then either you recognize it in its current form, and accept that that’s collateral.”
The challenge would be, however, Adam, as you know, is that if the collateral is used in any other way, mean you don’t actually have that collateral.
Adam: Yeah. I’m wondering, with the USDL, did you consider a different stablecoin? Why USDL?
CC: Because it’s algorithmic. It’s algorithmic, and it’s actually backed by the collateral itself.
Adam: Got you. Okay, yeah.
CC: And there’s none of this nonsense of —
Adam: A Tether. It’s not a Tether, where it’s just like, oh, we can’t even get the backing. It’s in Evergrande or not, or it’s in paper or it’s not, or it’s in whatever. You’re just saying just —
CC: This is a stablecoin.
Adam: On mathematics. It’s based on mathematics.
CC: Yeah, it’s based on math. You know who really provides value to this? It’s the community itself.
Adam: Yeah.
CC: It’s the community itself that does this. So, there’s none of this nonsense around fractionalized reserves and centralized bodies.
Adam: That’s right. And then, of course, you’re reducing inflation. The real issue I see with stablecoin and fiat, of course, is inflation. But once you start printing those things with no real collateral to it, it’s not linked to anything, well, we’ve now just created a fiat again. We just keep pushing all this money at. And I think what’s happened, when you’re looking at stablecoins, I think many people on the outside, and they rightfully say this. They say, well, hang on, you got all these stablecoins, they’re just printing money out of thin air in all the surface. That’s kind of true when you look at Tether as an example. I’m amazed at how many people get so defensive with Tether. Tether has admitted that they don’t have a dollar for a dollar, a dollar per token. They admitted that. That is no secret.
Now, the other thing with Tether is that they lied. And additionally, they said, we will always have a dollar to every token. And then along the way, it’s like, well, it’s not really a dollar, it’s just a piece of paper that we’ve got over here. But the irony of all of that, CC, is that Tether still survives. It still thrives, and it still moves forward. And we can still see companies quite happy to buy millions in it.
So, stablecoins, in the early days, were controversial. Now, I say that they most certainly play a very important part in the crypto ecosystem. But now that we’ve got something like USDL, I’m even more confident in stablecoins, because I don’t have to worry about someone doing something dodgy in the background. With your USDL, will it be open source in the sense that I can come in and have a look at what’s happening with the supply and where they are?
CC: Yeah, absolutely. So, effectively, you’ll be able to come in and have a look at exactly what’s going on with that. You’ll see exactly what the supply is.
Adam: Which will give the market more confidence.
CC: Yeah, absolutely. Part of our journey would be how do we continue to promote and grow this protocol. So, past the launch date, there’d be what comes back to the team, is how do we continue to evolve this. And as I said, whilst I align with the purist’s view, I’m also very pragmatic, or I’d like to think that I’m pragmatic, which means there’s a journey that we need to take that involves engaging with some of those players. So, long as the community is not hurt in any way, and that’s the premise for all of the work that we do, so long as there’s no injury potential for the community, then we’ll engage in conversations along those lines.
Adam: The other thing that sounds good to me is that looks like you’re an international community. This isn’t just Australian based. Is that right?
CC: That’s right. That’s exactly right. So, we’ve got folks in Singapore, and a lot of the development team are in India. We’ve got obviously folks in the US. There’s our team that’s going in Australia. And as much as the US guys are doing a phenomenal job, Aussie is like a punch above their weight, so it’s good. But a couple of the founders and one of the fellows that’s going to join us soon is Aussie, and will be leading the charge for us as well.
Adam: Mate, I feel good more so with the sacrifice I’ve made in Pulse, because beyond Pulse, I can see what you’re doing is going to make potentially me richer. It’s going to make me richer, because it’s going to give me more opportunities. It’s going to benefit the entire community. And we’re not saying it’s going to make me richer. I don’t actually mean that in a selfish way. I mean that as Pulsecan or Pulsitan or anyone who’s in the community, these types of projects, clearly, they benefit everyone. Everyone wins from this.
There are certain projects in life that it’s like a win-lose, or a kind of a win or a lose, but to me, this is like a win-win-win. It’s a win for Richard Heart. It’s a win for you. It’s a win for me. It’s a win for all the Pulsitans out there. I don’t really see any losers in this, except for maybe the banks, because now I don’t want to sell my assets to get a deposit, so I can then borrow more money from a bank. I just bypass all that, and go straight through you.
CC: That’s right. You may never need to go down that path. But the reality, Adam, is not everyone is mega-rich in crypto. And there’s a number of people that have done reasonably well, but is not lifechanging money wealth that they’ve created for themselves. It’s enough to actually do something reasonable with, but not enough to change their lives.
Now, my expectation is, if you’re involved with Pulse at the outset, it will lead to lifechanging role for you. I just can’t see any other journey if you’re backing Richard Heart. But I’d also believe, there’s a lot of smaller players that would like to actually leverage value from their crypto, and this is one way of doing it. And do it in a way that is nondestructive. It’s not going to create a problem for the community.
Adam: But here’s the thing. So, if you and I have $1,000 in crypto, that’s not really lifechanging for anyone in the first world, but it is for the farmer in India or Nepal.
CC: Yeah, that’s true.
Adam: And for those people, this is part of my passion for everything crypto, it enables two-thirds of the world’s population who don’t have any access to financial systems to have complete access to their systems. When we look at the project that you’re making, go back to the poor farmer in India or Nepal, or whichever third-world nation that you like to consider, where they’re doing it very difficult, and they want to get some money to upgrade whatever it is in their life, it’s all proportionate.
Like for me, if I want to upgrade for a bigger house, that’s my first world. But I feel like in a developing world, maybe it’s just getting a shelter. And if it’s in a third world, maybe it’s just getting a new piece of farming equipment. It doesn’t matter. If we’re all progressing along a financial timeline, a wealth timeline, if we can now offer these financial services that were currently or previously only available to the first world, to the rich, and even rich within the first world. There’s a lot of people in the first world who just simply cannot get loans. But when you have these new decentralized financial platforms, such as Liquid Loans built on Pulse, well, anyone can get involved.
CC: That’s right.
Adam: Just before we close off, based on everything that you described, if I’m going in to get some money out of you, I’m guessing it’s just the standard KYC, AML stuff.
CC: No. so, Again, once the protocol is launched, Adam, there’s no KYC. There’s nothing like that. This is just the protocol. Yeah, exactly, the individual. Well, there’ll be a frontend to the protocol, but there can be multiple frontends to the protocol. But you’re engaging with the protocol, and you’re minting your own USDL. We have no part to play in that. So, it’s up to you, or up to the user to do what they will.
Adam: CC, I’ve really enjoyed this. If people want to learn more about you, your team, your project, where can they find out?
CC: The Telegram group is probably the best place to start. It’s T.me/liquidloans. There’s about close to 4,000 people in that group now. They’re supported by, as I mentioned, the unsung heroes for us is the admin team that’s actually providing a lot of the support there, but that’s probably the best place to start.
Adam, I did mention we’ve worked through all of the mechanics for the sacrifice phase. There will be some announcements made. So, obviously, that will come through the website. So, the website is Liquidloans.io, so people wanting to know a little bit more about the technical nature of the project. On that site, at the moment, there is the whitepaper that people can download and have a readthrough, and that goes into a lot of the technicals around the mechanics of the protocol.
As I said, we will relaunch the site. The expectation is towards the end of the month, there’ll be a new site launched which will have the whitepaper, amongst all the other things around the team, what the plans are, how the protocol work. There’ll be a number of how-to videos, how do you do this, how do you do that. So, I think a lot of people will really value some of the contents that comes out of the website when it’s finally launched.
Adam: I’d leave links to all of those below. CC, I’m honored to not only learn from you, but to also share this journey with you, in the sense that, I think, if this works, you are creating history here, and I wish you all the very best. Thank you so much for joining me.
CC: Thanks for having me on, Adam. Thank you very much.
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