Hi, who are you and what is your background? Please tell us a bit about yourself.
Hi, I’m Peter and I’m the co-founder of Mangata. My journey in crypto starts from the very early Bitcoin days. It was very exciting times, we were all driven by the vision of personal freedom and autonomy and I see it is becoming more and more reality. When Ethereum came, it was an instant enlightening moment: that we can give this autonomy not only to people, but computer programs as well. And these programs then serve as a public infrastructure that connects the world.
Before Mangata, I was running the European dev studio Block Unison where we developed plenty of smart contracts on Ethereum for clients. Over time, we’ve seen many problems like MEV and the centralization of trading players. We asked ourselves a question: How we can prevent these issues? We could reform Ethereum, but that’s not possible. It’s already too big and conservative. It is hitting its limits of scaling and innovation. We needed to rethink and rebuild blockchain from scratch, so that has led us to follow Gavin and start building a Polkadot parachain.
What is your long-term vision for Mangata?
Mangata is the most capital efficient and fair DEX in the world. It is the best place to trade any token.
How will Mangata get an advantage against other already existing DEXs and how will that advantage be enough to become one of the dominant DEXs of DotSama?
Let’s start with a fact that most people are not aware of: Ethereum has a structural problem. It’s called MEV.
MEV is when nodes start selling out their own users to steal from them while they are trading. Malicious bots and miners taking up more and more block space. Other chains are being affected by the same phenomenon. Ethereum is already being eaten up by it with an estimated 1 billion dollars being stolen 2021 alone. If we do not fix this, it will cripple our ecosystem.
At the same time, most DEXes only build small improvements upon existing ones to get an advantage. If you put this into perspective with the systemic MEV problem, most DEXes clearly lack a long-term perspective. They seem to care more about quick money.
DeFi is broken and we need to fix it together!
We are doing this by building a chain from the ground up that is optimized for capital efficiency and fairness. We identify the big issues of DeFi and build solutions right into the chain (e.g. our Themis architecture). Substrate is the big enabler for this. It allows to change the rules of the game. Our Chain - Our Rules.
The result will be the realization of our vision: Mangata X as the fairest and most capital efficient DEX.
How will this advantage show for the average user? At the end of the day, traders want to get the best prices! Mangata X achieves this by a range of mechanisms that maximize capital efficiency: a No Gas Economy, preventing front-running and MEV that would steal your slippage and attracting calmer and more loyal liquidity with Proof-of-Liquidity and time-incentivization.
We aim to launch a bridge from Ethereum to Kusama very soon after the Mangata X launch. Mangata X will maybe be the first DEX to offer a native KSM-ETH pair. This will the floodgates between the ecosystems and fuel Kusama with new capital. Mangata X will allow permissionless creation of new liquidity pools between ERC-20 (Ethereum) and xTokens (Dotsama) and add a new layer of trading that wasn’t possible before.
With the launch of Picasso and its own DEX Pablo there comes a risk that the DEX market will be too saturated, especially when ambitious projects like Picasso are bringing their own liquidity layers. What would you tell people who think that Mangata will not reach the market share it needs to have to sustain its goals?
Short answer: Our tech and tokenomics will attract liquidity like light attracts moths.
DeFi needs bigger visions and it’s great that Composable/Picasso is bringing all the ideas together. What we share is that we both leverage Substrate technology, which is needed to deliver the next generation of DeFi products. Ultimately, we offer complementary solutions: The Composable Vision is to offer a cross-consensus liquidity layer to direct capital where it is best put to use. The Mangata Vision is to offer the best place to trade that capital.
You can see in TradFi there is a lof of space for different exchanges with different focuses and the same will be even more true for DeFi. The Pablo DEX will be an in-house DEX for the Picasso Parachain and likely be optimized for that purpose. Mangata X is playing a different game. Mangata X is not constrained to serve the business requirements of other products on the same chain.
Mangata X is optimized to be an open trading platform for everyone and every parachain in the Kusama ecosystem. It is a truly permissionless DEX where the market can decide what happens with tokens and liquidity. This freedom is what we believe will kickstart a lot of network effects.
Mangata is not going wider, but deeper. We are hyper-optimizing the tech around the single most important primitive in DeFi: Trading. In the end, we can observe one phenomenon to be true: With great capital efficiency comes great volume. We are building our tech with a long-term perspective in mind and are excited to see how our playbook will play out.
The APY of LPs correlates directly with the associated fees for a trade. With the low-cost approach Mangata is using, competitive APYs compared to other DEXs need to be generated via increased volume. What mechanism has Mangata planned to ensure that LP providers will get competitive APYs on their provided service?
That seems to be a misunderstanding. Our competitiveness on Mangata X stems from our No Gas Economy. Traders on Mangata X save money because they do not pay gas.
Liquidity Providers on Mangata X get rewarded with LP fees and liquidity mining incentives (which make up 30% of the final supply tokenomics). But not only that! We even have a third reward option for people who stake their liquidity in Proof-of-Liquidity (earning another 37.5% of the tokenomics chart).
Our Tokenomics are oriented around long-term growth of the ecosystem. Rewarding those that support the growth can be seen in the Tokenomics, which reward stakers and liquidity providers the most.
Besides a hard cap after 5 years, could you elaborate a bit more on how the token burn will be enough to limit the emissions Mangata will release so that the token price will not suffer from the same problems as for example Solarbeam (Price declined by 96%) who has buyback and burns mechanisms as well?
The issue that most DEX tokens have is that their only actual use is to serve as exit liquidity in a pool at the remote end of the network of tokens connected via liquidity pools. And maybe speculation on future utility.
We have thought about this a lot and made a few fundamental decisions that intend to create a favorable price dynamic for MGX. Our value formula to price a token is:
Token Price = Fundamental Value + Hype
Fundamental value is determined by the utility, which in the case of MGX is
- use in proof-of-liquidity and the resulting liquidity base layer
- algorithmic buy and burn
- treasury of reserves and DEX-owned liquidity * whitelist proof-of-liquidity pairs * liquidity mining incentives
MGX’s main task is to make the whole system more liquid. The best way to do this is to be very central and allow a lot of smaller tokens to be paired against MGX to avoid fragmentation and allow the deepest possible liquidity. The result will be that a lot of trade routes go through MGX make it actually useful for the whole system.
Next, algorithmic buy and burn: we say algorithmic, because the buy and burn happens with every transaction: a fraction of the exchange commission is used to buy & burn MGX. This acts as a token sink to remove MGX from the system and allow us to mint new rewards for nodes securing our network and liquidity providers, while still being hard-capped.
Lastly, our inflation model compared to other DEXes is rather moderate. We aim to have as many from the 1b MGX from the TGE as possible liquid initially to reduce price sensivity. The hard cap of 4b MGX is reached the earliest after 5 years. Price should easily be able to keep pace with network growth over that time period.
Anything you would like to share? (funfact, wisdom, statement, opinion, basically anything is fine)
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