Arthur Hayes - the man who founded one of the most successful exchanges, introduced the trend of leverage exceeding 3x, and paid the price for mocking the KYC system and refusing to comply with the rules dictated by the USA.

Biography

Full name: Arthur Hayes.

Date of birth: 1985.

Place of birth: Detroit, Michigan.

Parents: His father worked at a factory, and his mother was a manager at General Motors, typical representatives of the middle class in the USA.

Arthur spent his childhood shuttling between Detroit and Buffalo as his mother, Barbara, did everything possible to get him into the elite private school Nichols School.

After graduating from Nichols School in 2004, Hayes managed to get accepted into the Wharton School of the University of Pennsylvania.

2008-2010

After successfully completing university, in 2008, he obtained a Bachelor's degree in Economics and Finance.

In the same year, Arthur moved to Hong Kong for an internship at Deutsche Bank. There, he worked as a trader in synthetic equities and served as a market maker for Deutsche Bank's ETFs.

Deutsche Bank is Germany's largest financial conglomerate in terms of employees and assets.

After returning home, he enrolled in the Deutsche Bank graduate program, which provided him with an opportunity to go to London.

Later, Arthur got a job at the same bank in Hong Kong, but at that time, the bank was facing significant financial losses amid the economic crisis and initiated massive layoffs, resulting in 22-year-old Arthur earning only half of what he had expected.

He stayed in this position for a while just to survive.

2011

Later, in 2011, he joined Citigroup.

Citigroup is one of the largest international financial conglomerates.

It is part of the "big four" banks in the United States, along with Bank of America, JPMorgan Chase, and Wells Fargo.

The bank manages assets with a total value of over $1.8 trillion.

Citigroup is the primary dealer of U.S. Treasury securities.

In his new role at the company, Hayes became a Delta One trader and served as the head trader for Asian ETF offerings at Citi, as well as traded index futures, index swaps, and customized baskets.

After 2 years, he resigned from Citi and ventured into freelancing.

Arthur Hayes and Bitcoin

2013

After leaving Citigroup, Arthur became interested in investing in Bitcoin ($BTC), which he first learned about in April of the same year. Initially, he engaged in arbitrage between different spot exchanges and Bitcoin derivatives. With experience in this field, Hayes realized the need for Bitcoin derivatives trading.

BitMEX from idea to product

Taking this idea into action, in January 2014, he started working on BitMEX. This trading platform serves as a platform for trading Bitcoin derivatives ($BTC). His partners in creating the BitMEX exchange were Ben Del, a computer scientist from Oxford, and Samuel Reed, an American programmer.

Before working on BitMEX, Ben Del developed high-frequency trading systems for JPMorgan Chase, and Samuel Reed specialized in rapid web application development. After 11 months of development, they launched the BitMEX trading platform, which has since become the most popular derivatives exchange for retail investors.

2014-2015

During the first year after its launch, the cryptocurrency exchange BitMEX did not enjoy significant popularity, and the income from trading fees barely covered the server expenses. In October 2015, Hayes decided to make a radical change to BitMEX's operation by increasing the credit leverage limit from 3x to 100x. And this change proved immensely beneficial for the company, as trading on the platform suddenly came to life!

"Trading without leverage is like driving a Lamborghini in first gear: you know it's safer, but that's not why you bought it," Hayes described the innovation in the BitMEX blog.

As the cryptocurrency industry experienced a boom, this change greatly helped BitMEX.

2016-2019

In 2017, the company had to expand and hire 30 new employees to cope with the surge in activity.

By 2018, BitMEX had become a trading platform for significant transactions with large sums: the daily trading volume could reach several billion dollars.

The co-founders of the exchange had different attitudes towards the success and sudden change in financial status. For instance, Reid preferred to stay low-key and, despite being a billionaire, continued to use public transportation and lead an unassuming lifestyle. On the other hand, Hayes didn't mind showcasing his achievements and preferred to play the role of a financial nonconformist.

During the summer of 2019, astronomical amounts were passing through BitMEX daily. In late June, the company announced a new record: the daily transaction volume on the platform was estimated at $16 billion.

Criminal Undercurrent

On June 29, 2019, Arthur published the following tweet: "$1 trillion in trades within a year, the statistics don't lie. BitMEX is not something to joke about. Nouriel, see you on Wednesday."

Nouriel Roubini, an economics professor from New York University and a staunch opponent of BitMEX, was the target of his tweet.

In July 2019, they met at the Asian Blockchain Summit and engaged in a verbal duel on the forum's stage, later dubbed "The Tangle in Taipei".

Roubini accused Hayes and BitMEX of regulatory evasion and fraud, claiming that the exchange's creators profited from fees and maintained a liquidation fund using assets from bankrupt traders.

Responding to a question about choosing the place of registration, Hayes said that the only difference between American and Seychelles authorities was that the former were more expensive to bribe. When asked how much Seychelles authorities cost, he replied, "One coconut."

During his speech, Arthur Hayes displayed extreme self-assurance and showed clear disdain for authorities. Perhaps, this behavior contributed to his self-sabotage.

The Great Crypto Heist

A few weeks after the summit, Roubini published an article titled "The Great Crypto Heist." In it, he drew attention to the potential dangers of offshore exchanges and their systematic violations of laws, with BitMEX being the primary target.

Roubini accused the exchange of being interested in its clients losing money and alleged that the company used internal trading desks to front-run traders' actions and profit from liquidations.

What caused problems with the law for Hayes?

In the fall of 2020, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil lawsuit against BitMEX and its founders for operating an unregistered trading platform and for non-compliance with the Bank Secrecy Act, Know Your Customer (KYC), and Anti-Money Laundering (AML) requirements.

KYC stands for "Know Your Customer," a procedure for verifying the identity of users.

AML stands for "Anti-Money Laundering," which is the prevention of money laundering activities.

Arthur Hayes, along with Samuel Reed, Ben Delo, and Greg Dwyer, were also accused of conspiracy and intentional evasion of establishing, implementing, and maintaining an Anti-Money Laundering (AML) policy. Criminal charges were brought against Hayes and his colleagues, with each of them facing up to five years of imprisonment.

According to the lawyer, the accusations typically involve evidence of criminal activities such as fraud, credit card theft, terrorism financing, etc. However, in the case of the lawsuit against BitMEX, there was no such evidence. Laurel Loomis Rimon believes that this action by the U.S. authorities is a message to the entire crypto community: "You must understand that this industry falls under our jurisdiction."

In reality, U.S. law does not prohibit unregistered exchanges like BitMEX from selling leveraged contracts to U.S. retail clients. However, according to the law, such contracts must be settled within 28 days. One of the most popular products of the exchange, the perpetual swap, has no expiration date, allowing traders to keep positions open for an indefinite period. Therefore, the financial instruments offered by BitMEX violate this requirement.

Outcome of the legal proceedings

In February, he pleaded guilty to intentionally failing to implement an Anti-Money Laundering (AML) program by not introducing a Know Your Customer (KYC) system, which allowed unverified users to conduct tens and hundreds of millions of dollars through the exchange.

On May 20, 2022, in a federal court in New York, a verdict was reached in the case of Arthur Hayes, the former CEO of the cryptocurrency exchange BitMEX. Hayes was sentenced to 2 years of probation and 6 months of home confinement. BitMEX was ordered to pay $100,000,000 to regulatory authorities. Hayes, Reed, and Delo were each fined more than $10,000,000.

"The defendant chose to use his influence to promote a vision of the crypto industry that directly contradicted the law and aimed to undermine government regulations. He regularly criticized and ridiculed KYC requirements and made it clear that he was not interested in complying with them," prosecutors said.

In this article, you will learn all the details of the latest update and the consequences for the project and the market as a whole.

On August 17th, an announcement is being released stating that OpenSea is removing all mandatory royalties from all NFT collections, giving users the option to use 'optional fees' - meaning users can choose to pay royalties at their discretion.

What was the motive behind this decision?

It's quite simple: the marketplace couldn't handle competition in an open field. For years, OpenSea enjoyed a monopoly and the team believed they had grown into such a massive project that competition was no longer a concern.

However, blur_io happened. At the moment, Blur holds about ~70-75% of the entire NFT market, while OpenSea holds ~15-20%. Over the past year, the situation has changed drastically, and OpenSea has lost approximately ~40-50% of the market. Big love to SeaLaunch_ for a Dune!

By removing the obligation to pay mandatory royalties, OpenSea is attempting to attract users back through the price difference between NFTs and users' net spending. One of the key investors, mcuban, immediately voiced his opinion, calling their actions a massive mistake.

But there's one aspect: In February of this year, Blur rolled out an update in which collections that OpenSea adds to the blocklist receive full enforced royalties.

This means:
• A collection that is "exclusively" moved to Blur and "boycotts" OpenSea;
• In return, it gains a guarantee of full royalty payment from all Blur users;
• And Blur will promote it on their social media.

For collections, this is a win-win situation.

What are the consequences for OpenSea?

Well, it's clear that projects will ditch this marketplace and switch to Blur. The reason is simple: no matter how much trading happens, creators won't earn a real % of income, since most traders and enthusiasts just won't pay royalties.

In most collections, royalties are practically the only source of income. Building additional income streams takes time and resources. That's why royalty income is so valuable.

For instance, yugalabs (BAYC, MAYC, Otherside) has already announced that starting from February 2024, they will completely cease support and interaction with OpenSea and OpenSea Port. This means that all their collections will be removed from this marketplace.

There's a speculation that Yuga Labs, precisely against this backdrop, will launch their own marketplace for their ecosystem, with the payment currency being the $APE token. Yuga's collections make up a significant portion of OpenSea's trading volume, this is quite possible!

Conclusion

To me, their actions look like a pre-death agony. They simply don't understand how to operate in the realm of intense and powerful competition posed by Blur.

It seems that everything is heading towards the sunset of the OpenSea era, and if they don't have someone on their team who can untangle the mess they've created, we might expect the project to die in the near future.

Dragonfly was founded in 2018 with the goal of assisting cryptocurrency teams in achieving global innovation and adoption. Dragonfly likely provides resources, expertise, and connections to help crypto projects expand their reach and impact across different regions of the world. The company might offer guidance on navigating regulatory environments, building partnerships, and gaining access to new markets. Keep in mind that my knowledge is based on information available up until September 2021, so there might have been further developments or changes since then.

Let's take a look at the top investments:

• May 2018 - Starknet - Seed;
• October 2018 - dYdX - Series A;
• May 2019 - agoric - Seed;
• June 2019 - Avalanche & NEARProtocol - Seed or Private;
• September 2019 - zksync - Seed;
• August 2020 - 1inch - Seed.

As well as Element_Market, 0xMantle, axelarcore, DuneAnalytics, Consensys, DeBankDeFi, Galxe, 0xPolygonLabs, Aptos_Network and hashflow!

DragonFly's analysts grasp market trends, investing early in projects and aiding their multi-year development. If teams perform well and maintain a steady development pace, the VC readily participates in subsequent investment rounds:

• ZkSync (4 rounds),
• Near & Dune (3 rounds).

2018-2021 – 71 investments.
2022 – 63 investments.
2023 - 12 investments.
In 2022 alone, DragonFly invested in 63 projects, which is only slightly less than all their investments from 2018 to 2021 combined. This truly reflects the market's euphoria!

Which projects from DragonFly's portfolio are worth paying attention to?

prtyDAO

This platform facilitates group crowdfunding for NFT purchases.
Token $PARTY confirmed, just host parties and join to others.

Element_Market

The pioneer community-driven aggregated NFT marketplace. 10 Networks, token confirmed $ELE.
Trade in ETH - https://element.market/invite?ref=EO1E

DuneAnalytics

A robust tool for blockchain research, providing capabilities to query, extract, and visualize extensive blockchain data. Dune makes public blockchain data accessible to a wider audience, unlocking its potential for various applications.

Brian is one of the key figures in the cryptocurrency world of the early 2010s, as he witnessed the birth of this industry and became involved in popularizing blockchain technologies worldwide. Additionally, he was one of the first to elevate his project to the status of a Unicorn!

Biography

Full name: Brian Armstrong.

Date of birth: January 25, 1983.

Place of birth: San Jose, California.

Parents: Both parents were engineers.

Brian had a passion for entrepreneurship from a young age. He was a frequent visitor to the principal's office as he sold candies brought from home on the school playground.

In high school, he became interested in programming. "I was a geek who read Java books," Armstrong recalled. However, even in school, he started earning decent money by creating websites for small businesses in his hometown. To avoid distractions, he made an arrangement with a neighbor and worked from his garage. As he grew older, he made extra money by reselling used computers.

University years

2001

In 2001, Armstrong enrolled to study Computer Science and Economics at Rice University in Houston, Texas.

During his studies, he worked as an intern at IBM for four months and at Deloitte and Touche for five months. However, what mattered most to him was his own business.

He and his dorm mate, John Nelson, provided services to fellow students: they negotiated reservations of venues in bars for parties and shared the discount that the bar owners gave them as people who brought customers to their establishments.

Here are a couple of interesting facts about this educational institution!

– The university has a very rich history and played a significant role in the development of the space industry, contributing to the establishment of the NASA Space Center in Houston.

– On September 12, 1962, John F. Kennedy delivered a speech here announcing the decision to launch a manned mission to the Moon.

– The university is among the top educational institutions in the USA, consistently ranking in the top 20.

2003

Armstrong and Nelson founded the website University Tutor, an aggregator of tutoring services.

In those years, the internet was not as developed as it is now, and a significant portion of clients called the startup, perceiving it as a regular recruitment agency. They had a telephone set up in the founders' dorm room.

"When we had a party going on, we had to disconnect the phone," Nelson recalled.

Armstrong served as the CEO of University Tutor until May 2012 when he founded Coinbase.

Eventually, University Tutor was sold for an amount 21 times its annual revenue, as Nelson disclosed, without revealing the buyer or further details of the deal.

2005-2006

Brian obtained a double bachelor's degree in Economics and Computer Science in 2005, and then a master's degree in Computer Science in 2006.

The Emergence of Cryptocurrency Ideas

After completing his education, Armstrong decided to move to Buenos Aires, Argentina. "I decided that since I had never been to Latin America, it would be a good idea to go there for a year and work remotely. It was an adventure," he explained.

While there, he witnessed hyperinflation and started contemplating ways to protect himself from it. Later, he came to the conclusion that one of the best tools for that would be cryptocurrency.

The breakthrough came in 2010 when he was visiting his parents in San Jose. Armstrong stumbled upon the "Bitcoin Whitepaper," a document published two years prior, where the creator of Bitcoin explained the principles of cryptocurrency.

It was around Christmas time, and his mother came into his room, saying, "The whole family is gathered downstairs, come join us." But he got so engrossed in reading that he stayed in his room and finished it.

He bought bitcoins for $1000 when 1 BTC was worth $9. After some time, the value of the main cryptocurrency dropped to $2, but Armstrong still believed in the future of online money and did not sell anything.

Cryptocurrency prices remain treacherous, unpredictable, and highly affecting Coinbase, especially when prices fall, causing cryptocurrency transactions to freeze and the exchange to lose commissions. However, former employees described Armstrong as a resilient guy, whose mood rarely fluctuates with the highs and lows.

In May 2011, Armstrong continued to lead University Tutor while simultaneously working at Airbnb.

Back then, the startup had only 35 people, and he was responsible for fraud prevention and payment processing, which allowed him to learn about payment systems in dozens of countries where Airbnb operated.

Armstrong received several arguments in favor of cryptocurrencies.

Firstly, traditional money transfers were complex and expensive:

1. High fees;

2. Lengthy delays;

3. Lack of transparency.

"We tried to send money to Uruguay and never knew how much of it would reach the recipient. I wanted an open financial system in the world that stimulates innovation and freedom," said Armstrong.

Secondly, he witnessed how, at the request of the US authorities, Airbnb instantly ceased operations in Cuba. Armstrong concluded that cryptocurrencies enable trading services and goods with less risk when governments cannot easily intervene. Airbnb returned to Cuba only in 2015.

Working evenings and weekends, Armstrong developed a smartphone app that allowed buying and storing bitcoins. However, it was unreliable due to weak phone security, and transactions were slow due to limited mobile computing power. Nevertheless, the app gained popularity.

"I realized we needed to create a reliable cloud service – that's where the future lies," explained Armstrong.

The Beginning of Coinbase Journey.

In June 2012, Armstrong resigned from Airbnb and co-founded Coinbase together with Fred Ehrsam in his apartment in San Francisco.

Fred Ehrsam

Ehrsam became a fan of computer games in school, then studied computer science at Duke University in Durham, North Carolina. However, he ended up working in a completely unrelated field, becoming a currency trader at Goldman Sachs.

Feeling bored in the office, he would explore the internet for interesting things after work. When he learned about Bitcoin, Ehrsam instantly fell in love with the new money. He bought his first cryptocurrency from his phone as soon as he discovered it, even while taking a bath.

During that time, the primary trading platform for cryptocurrencies was the Japanese exchange Mt. Gox, which had significant transaction delays and occasionally fell victim to hackers.

One of the first hacking attacks on the Mt. Gox exchange occurred on June 19, 2011. The attacker forcibly bought $BTC from the exchange's customers at a reduced rate, acquiring around 2,000 coins for only 1 cent each, while the pre-attack prices were around $17.

Observing all this, Ehrsam realized the need for a simpler and more reliable way to buy and sell cryptocurrencies. Through a Reddit thread, he connected with Armstrong, and together they decided to create their own cryptocurrency exchange, which they launched in October 2012.

Thanks to his experience at Goldman Sachs, Ehrsam was able to establish relationships between Coinbase and banks.

In 2018, Ehrsam stepped back from the operational management of the cryptocurrency exchange to start a new business venture - Paradigm Operations, an investment fund specializing in crypto startups. However, he still serves on the Coinbase board of directors to this day.

From idea to startup.

The startup received $150,000 in investments when it entered the Y Combinator business incubator program. Private startup investor Harry Tan also invested $300,000 in Coinbase, but we'll come back to that later.

In 2013, Coinbase secured $5 million from Union Square Ventures and another $25 million from venture capital firms Ribbit Capital and Andreessen Horowitz, known for their connections in the business world. Then, in January 2015, Coinbase became the first cryptocurrency exchange to receive direct investments from a major financial institution, attracting new clients, including the New York Stock Exchange and several banks. Draper Fisher Jurvetson also invested $75 million in the cryptocurrency exchange.

However, Coinbase's success can also be attributed to the fact that it adhered to the ideals of cryptocurrencies.

Bank or not a bank?

Security keys

Coinbase could have had another co-founder. While creating the app for buying bitcoins, Armstrong often sought advice from a cryptocurrency enthusiast and British programmer, Ben Reeves, who had successfully launched an online cryptocurrency wallet called Blockchain.info in 2011, which is still in operation. However, when it came to creating Coinbase, they had different views on the mission of Bitcoin.

The main point of contention was whether the cryptocurrency exchange should have access to the security keys (passwords) that allow owners to confirm their ownership of bitcoins. Armstrong believed that owners should have the ability to recover their keys with the help of the exchange, as there was a significant risk that they might forget or lose a 64-character password and lose access to their funds.

Reeves argued that centralized data storage contradicted the spirit of cryptocurrencies. Armstrong decided to go his own way, parting ways with Reeves, but this decision made Coinbase more user-friendly for beginners.

Bank transfers

Coinbase purchased an office for its headquarters, seemingly being the complete opposite of a traditional bank both in essence and spirit. However, in reality, Coinbase behaves like a bank.

1. It uses bank transfers to accept and withdraw funds from its customers.

2. It stores its assets (digital keys) in digital wallets.

3. It can boast insurance from Lloyd's.

4. Coinbase has over 40 security personnel, including a veteran of the Iraq War, who assess risks related to physical intrusion and online hacking.

Security, licenses, legality.

Security became another competitive advantage for Coinbase, especially after the stories involving the Japanese Mt. Gox or the Canadian cryptocurrency exchange QuadrigaCX.

QuadrigaCX customers were unable to access $150 million after its founder traveled to India and unexpectedly passed away in December 2018. It turned out that he held all the keys. The affected parties' lawyers even demanded the exhumation of the body to verify if the QuadrigaCX founder had indeed died or had absconded with the money, substituting another body at the cemetery.

If you're interested in this story, I recommend watching this video and reading this article.

Coinbase's services may cost customers more than many competitors, but unlike its competitors, it doesn't operate in the murky world of offshore finance. Coinbase has obtained licenses for money transfer services in various US states. Moreover, as soon as a special license for working with cryptocurrencies was introduced in the state of New York, Coinbase obtained it, in addition to its existing broker's license.

Decentralization ideas are not so crucial if you can earn hundreds of millions by cooperating with the government...

Bitcoin was conceived as an antithesis to the financial system, yet Armstrong collaborates with government regulators.

The company has over fifty employees whose duty is to ensure compliance with regulatory requirements.

The cryptocurrency exchange detects signs of money laundering and submits 1099-K reports (and since last year, 1099-MISC reports) to the U.S. tax authorities.

The future of Coinbase?

Coinbase can generate significant profits as its fees can reach up to 3.99%.

The number of Coinbase users has significantly increased following the recent bull rally in all markets, and currently, the exchange has around 50 million active users. The exchange's net income for 2021 amounted to approximately $3.1 billion. However, as mentioned earlier, when cryptocurrencies decline in value, user activity and, consequently, commission revenue also decrease. Coinbase is actively seeking other avenues to reduce this dependency.

A couple of years ago, Coinbase obtained permission from Visa to issue debit cards linked to cryptocurrency accounts. The exchange also launched its own cryptocurrency, USD Coin ($USDC), which is pegged to the U.S. dollar.

After the $UST depeg and various rumors surrounding $USDT, the capitalization of Coinbase's stablecoin increased by 6-7 billion dollars (~10-15%).

Coinbase also offers paid cryptocurrency custody services to companies. After Emily Choi was appointed as the Chief Operating Officer, the exchange started investing in other businesses. Currently, its portfolio includes over fifty companies whose businesses are somehow related to cryptocurrencies. For instance, Coinbase holds a stake in the Chinese company Amber Group, which teaches artificial intelligence to trade cryptocurrencies.

Why Coinbase matters more than you think?

Coinbase became the first public cryptocurrency exchange with its shares listed on NASDAQ.

In January 2021, Coinbase started selling its shares on Nasdaq Private Markets. While at the end of 2018, after a venture funding round, the cryptocurrency exchange was valued at only $8 billion, its valuation reached $54 billion in January 2021.

In early February of the same year, the platform sold several more batches of shares, with the last one being sold at a price of $373 per share. This raised the company's valuation to $100 billion.

At that time, there was a possibility that Coinbase would go public with the highest valuation since Facebook's IPO. However, in mid-February, the company stated that, based on recent deals, its valuation was approximately $68 billion.

Coinbase chose a direct listing as its way to go public, bypassing the traditional IPO process. Unlike an IPO, in a direct listing, the company does not issue new shares; instead, existing shares held by investors and employees are sold on the exchange. This helps to reduce costs associated with investment banking services.

How much did the investors earn?

As I mentioned earlier, let me elaborate on Harry Tan.

He managed to invest $300,000 in Coinbase in 2013 and acquired each share for approximately $0.15. At the time of the listing, his investment was valued at $2.4 billion.

Harry Tan declared that his $300,000 investment in Coinbase was the best of his entire career.

As you may recall, Union Square Ventures invested in the cryptocurrency exchange at a price of $0.20 per share, turning their initial investment of $5 million into approximately $8 billion.

Ribbit Capital also acquired shares at $0.20, and their profit ranged from $5 billion to $7 billion.

The venture firm Andreessen Horowitz, or a16z, invested in Coinbase at a price of $1.00 per share, and their earnings from this investment amounted to approximately $7.5 billion.

The biggest money is made by funds you haven't even heard of and investors you haven't even seen.

Backpack is the next generation Solana wallet that brings xNFTs.

1. Please introduce yourself.

   

My name is Anton, I am Community Manager in xNFT BackPack and Mad Lads projects.

2. How long have you been in the crypto and what brought you here?

   Came to crypto in 2017, I started to get maximum activity at the end of 2021 after seeing a couple of interesting articles about the sphere and opportunities here, earlier I was busy with my main IRL job.

3. Where did you start, what were the first projects on your radar?

   

It's actually quite hard to remember anything specific, because there was a huge information noise from all cracks: IDO here, retrodrop there, flip here, buy this shitcoin here. 

I tried everything I could, and it did not lead to any result. 

After a series of failures I did not give up and continued to explore projects, and for this purpose I made a bot that monitored the tweets of projects and sent me notifications, it was thanks to this bot that I found xNFT_Backpack.

By a lucky coincidence I managed to get into the then still closed community and I immediately liked very much how open the team was in communication and their background, how they saw the future of the project and how they were developing. Thanks to them, I got to know more about the Solana ecosystem and learnt how to separate the seeds from the chaff.

4. How did you come to work in web3?

   

By the time I got into the closed BackPack community, I had a realisation that I was more interested in being part of a community of ecosystem builders than hunting for drops and rewards.

I just kept counter-tweeting and making the best memes and videos in the community for Backpack Twitter.

5. How did you get into backpack?

   In September 2022, the most active members of the community received job offerings and I of course accepted.

6. What was your portfolio at the time of your "employment"?

   All my luggage is videos and content I made for the project, you can check it out on my Twitter profile or the Backpack discord museum.

7. What are your responsibilities?

   – Standard moderation + discord automation (Dyno);

   – Content creation (tutorials for youtube, memes for reels and twitter);

   – Filling the gitbook;

   – Conducting various events inside discord (quizzes mostly);

   – Helping developers from time to time.

8. How do you communicate with the project team, do you have a working chat, team calls to plan future goals?

   There is a group chat and we hold a meeting once a week on Google Meet.

9. How does the project team contact a user in order to recruit a person to their team?

   It varies, it depends on how the person got into the team.

   For example, I was contacted via Discord, one of the developers was hired because he was very productive working on the Backpack repository, he was probably contacted via Telegram or Twitter.

10. Were you given a contract so that you were officially considered a member of the project team and were "legally" protected?

    I was not given a contract.

    It is worth realising that this is not the same as working for Google or an American company in the general sense. This is a start-up, after all, and you have to realise that it is a dynamic environment.

11. What are your payment terms and job requirements? If under an NDA, please provide a range, for example, $1000 - $2000.

    2000$ - 3000$ per month.

12. How do you receive your salary? Is it paid in stablecoins, Solana, or to a bank account?

    I receive my salary in $USDC (USD Coin).

13. What advice would you give to people who want to work full-time in web3 and increase their chances of getting into a top-tier project?

    – Find something you want to specialize in, something where you can be in the top 25%.

    – Improve those skills and create value for the project that other developers can't provide.

    – Don't be afraid to communicate in English, even if you need to use a translator.

    – Learn how to join communities faster than others.

    Small blitz.

    1. What stands out the most to you in the world of cryptocurrencies?

    There's so much happening every day; it's hard to pinpoint one specific thing. It seems like a new paradigm is set almost every week. In general, my belief in an independent financial system has only strengthened after experiencing sanctions and moving to a new place. I was able to settle in without much trouble, and that left a lasting impression.

    2. A project that surprised you.

    Recently, Bonk was an outstanding case that showcased the speed and scalability of the Solana network. Another one I can mention is the new Solana client from Jump - Firedancer.

    3. A project that disappointed you.

    Perhaps, FTX, and to be more specific, Alameda. The ordeal that the Backpack team went through in the last two months after the collapse says a lot, as even those who were inches away from the epicenter couldn't fathom that SBF was behind it all.

    4. Your personal discovery or a future trend that others currently overlook.

    xNFT as a technology for tokenized code. In reality, the dApps in Backpack are just one of the potential use cases for this technology. Let's see where it leads.

    5. A problem that most projects have, but many fail to notice.

    Terrible tokenomics, especially in play-to-earn projects, is something that many people are lazy to study and, consequently, overlook.

    6. Is there a person who serves as a role model for you in the crypto space?

    I don't like seeking idols, but let the answer to this question be Vitalik Buterin.

    7. An inspiring quote.

    "Blockchain technology is more than just money. It's a new way of thinking about how the world operates." - Andreas Antonopoulos.

SolWorks is a small team of enthusiastic developers who develop useful software.

• SolApps - A mobile friendly application directory for the Solana ecosystem.

• SolToolkit - The Swiss Army knife for Solana devs. Typescript utility library.

• Sujiko Protocol - Derivatives DEX for NFT perpetual futures. 2nd place in Solana's biggest hackathon to date.

• SolDisperse - Bulk SPL token distributor with built-in retry handling.

• Footpath - A fully customizable NFT whitelist application process with Discord and Twitter verification. Used by Sujiko.

  I was able to chat with the project's funder - Zhe and ask him some interesting questions!

  Interview.

1. Please introduce yourself, what is your name, how old are you, what is your education?

   My name is Zhe, 33 years old, Computer Science. I am a developer by profession (CTO for SMEs).

2. How long have you been in the crypto world and what brought you here?

   

I’ve been in the crypto world since 2014 following Bitcoin. I started mining BTC with my dad. I then ended up setting up my own ETH mining equipment. Watched the DeFi space take off. After SBF took over Sushi, I found Solana and never looked back.

3. What project inspired you to plunge into the development of your own project?

   

I am a developer (CTO for a SME) by trade. I love to build software — I built a proprietary trading engine that is connected to several CEXs and DEXs and provides liquidity 24/7. Drift and Mango Markets provided a large amount of inspiration and guidance when it came to starting development for Sujiko.

4. Is there a person you look up to when developing a project?

   

   Armani Ferrante.

5. How did the idea of creating SolWorks come about and who was at the origin?

   Two things I found hard were:

   • onboarding into the space in terms of projects - hard to grasp the different projects and their purpose, which projects are reputable, the features and risks of each projects + it was hard to find verifiable links;

   • onboarding into the space in terms of development - setting up a local developer environment but more importantly, Solana programming concepts and constraints.

     

   I ended up brainstorming a number of problems that needed solving:

   • Onboarding

   • Development tooling

   • NFT derivatives

   And that’s how SolWorks formed.

6. How did you assemble the team and how did you start, how many people are on the staff at the moment?

   The team started off as just myself but is now mostly early supporters.

   

6 members in the team currently. Team members are:

• Myself, Zhe - Founder/Lead, core developer, UI designer

• Ro - Graphic Designer

• Hotdad - Community Manager

• Jake - Moderator

• Swallow - Moderator

• Dogs - Moderator

We are in the process of hiring 2 new team members for our Social Media Intern role and Content Writer & Communications Manager role. We are a very small team so our structure is very flat.

7. What is the most difficult thing in developing and creating a project?

   With Solana in particular, the most difficult thing I found was getting my head around the Solana programming model — how to approach implementing an idea like lending.

8. SolWorks consists of: SolApps, SolToolkit, Sujiko, SolDisperse and Footpath, isn't it difficult to work on 5 projects at the same time, will this affect the quality?

   We ruthlessly prioritise our time based on the most impactful changes across all our projects so we keep development momentum and most importantly, keep our users happy.

9. We have paced ourselves sensibly with how we have structured our incremental approach to building our products. We also do not want to limit the scope of what we can develop as a team.

Small blitz.

1. What is your best memory about crypto?

   Deploying my first program ever on Solana.

2. The project that surprised you.

   Backpack.

3. The project that disappointed you.

   Balloonsville.

4. Your personal discovery or future meta that no one notices at the moment.

   The next billion users will be onboarded through seamless integration with their current user experiences on the web. I feel this will come in a combination of hardware integration (SMS) + identity authentication + decentralized frontends + move-2-earn + decentralized communication platforms.

5. The problem of most projects that many do not notice.

   Building a variety of revenue streams in order to build a balance sheet and sustain the project as a business.

6. What do you think makes some projects stand out from the rest, what should young developers focus on?

   Focus on:

   – Building your own discipline and knowledge (review existing codebases).

   – Shipping a proof of concept.

   – Listening to feedback and iterating.

   – Building a community (small and engaged is much better than large and disengaged).

7. Quote that inspires you.

   Success is not measured by what you accomplish, but by the opposition you have encountered, and the courage with which you have maintained the struggle against overwhelming odds.