Polaris：无对手方风险赚取黄金、ETH和BTC收益 | DeFi 前沿

But I think the yield trap is something that we face in DeFi altogether at the moment. There was even a recent conversation about lowering issuance—staking issuance for ETH. People were saying, basically, that you would kill Ethereum DeFi if staking rewards were dropped. That shows that we are completely relying, as a DeFi industry, on Ethereum staking rewards to fuel ETH-yield assets.

And then if you look at other stablecoins, we're also relying on many other external sources. Whether that's TBOs, whether that is other forms of IBWAs, whether that's the basis trade. We're sort of renting this yield, or relying on external third parties that we have no control over. I think that's the yield trap we face: we're relying on people who are not within DeFi—or maybe they are within DeFi, but we don't have pure control over them—to provide yield for DeFi. If we need to increase these yields, we have to take on more risk.

1. Why Ethereum and Polaris are mutually self-reinforcing

Polaris is going to be a new yield layer powered and collateralized by ETH. We're going to learn how you can earn, borrow, and spend freely with no counterparty. Robert, before we get into Polaris, let's talk about the relationship between Polaris and Ethereum. You mentioned that Polaris and Ethereum are almost mutually reinforcing in a way, so I'd love to learn more about why you think Ethereum needs a protocol like Polaris. Why do you think Ethereum's long-term success is tied so closely to a strong CDP protocol?

Good, thanks, guys. Thanks for having me.

Yeah, CDPs are very important for ecosystems, rather than a traditional stablecoin that is, say, fiat-backed or backed by another asset. Traditional stablecoins bring $1 of value from outside onto the chain and basically increase the TVL, or the economic size of that chain, by $1. When you have a CDP, you can have $1 of ETH, and then you can amplify the on-chain TVL.

When we think about Ethereum, what gives it value is that it's a store of value, a protector of value, and also a creator of value. Thinking about a mutually beneficial protocol for Ethereum is something that can encompass that and then amplify it with additional value that can be used for economic activity on the chain.

On the other hand, Polaris, as we'll discuss throughout this conversation, is very closely tied to Ethereum. Ethereum's success results in Polaris's success, and ideally, if everything goes well, Polaris's success is very beneficial for Ethereum and should provide a lot of success for the asset and the Ethereum ecosystem.

2. What’s “the yield trap” most decentralized stablecoins run into?

One thing that I kept seeing throughout your docs is this phrase called the “yield trap.” Can you explain to people what the yield trap is? You allude to most decentralized stablecoins eventually running into this thing you call the yield trap. But what is it?

Yeah, I think it actually goes beyond just decentralized stablecoins. They have their own issues around scaling that we've seen, but I think the yield trap is something that we face in DeFi altogether at the moment. There was even a recent conversation about lowering issuance, like staking issuance for ETH. People were saying, basically, that you would kill Ethereum DeFi if the staking rewards were dropped. That shows that we are completely relying, as a DeFi industry, on staking rewards to fuel ETH-yield assets.

If you look at other stablecoins, we're also reliant on many other external sources, whether that's T-bills, whether that is other forms of IBAs, whether that's the basis trade. We're sort of renting this yield, or relying on external third parties that we have no control over. I think that's the yield trap we face: we're reliant on people who are not within DeFi—or maybe they are within DeFi, but we don't have pure control over them—to provide yield for DeFi. If we need to increase these yields, we have to take on more risk.

That's essentially what we've seen over the last 9 to 12 months: risk is increasing, there are exploits, and a lot of these yield protocols seem to be facing issues. It's causing contagion, additional risk, liquidity risk, and all of these things that we've seen happening.

In terms of decentralized stablecoins, they've faced their own issues. Maker is a prime example of this, being unable to scale beyond ETH-borrowing demand with DAI and introducing USDC into the PSM. I think decentralized stablecoins have faced their own yield and scaling issues, but it's not just decentralized stablecoins. Essentially, every asset we have within DeFi now is reliant on someone else for the yield. If we want additional yield to give us that risk-adjusted return over what you could get off-chain, we don't have that without taking too much risk.

Yeah, we've been talking lately about the fact that RWAs on-chain are very likely to flip the total liquidity represented by crypto-native assets. We've lived for so long with this reliance on crypto-native assets to drive the DeFi economy on-chain.

I think it's still very important that we have a rich and healthy DeFi economy that relies on the most trustless collateral on Ethereum, which is ETH. I love that you guys are starting to think about that inflection point with Polaris.

3. How Polaris solves the yield trap?

If the problem is the yield trap, what exactly is Polaris as a solution? Maybe this is also a good time for you to walk us through the solution as it relates to pETH, pUSD, and the POLAR token. It might also be good to talk through pGOLD during this. Eventually we'll get to that, but that's a really interesting part of your story, as I understand it.

Maybe it's worth touching on the story of how we got here in the first place, because it's been a long time since people have had to innovate in this pure DeFi vertical. I think there have been some that have stayed very pure, like Liquity, and they've launched Bolden and V2, which are seeing some success now.

Beyond that, everyone else has sort of pivoted away from being completely on-chain and has started to incorporate other methods of scaling, or basically allowing people to tap into new markets. The biggest example of this, as I mentioned, was DAI introducing USDC into the PSM. Then there's obviously Aave, which has tapped the basis trade, and now they've introduced various RWAs into the backing of USDe. There's also Liquity, as I mentioned, which has tried different innovations while very much staying with the pure approach.

For us, the research and design of Polaris has really been a work in progress for around 2 years now. I've mentioned Liquity a few times in this conversation. We're closely associated with the team, and we've used them a lot for research and for understanding some of the issues faced by decentralized stablecoins that you really wouldn't understand without having first-hand experience.

I think that's what uniquely positions Polaris to build something that is in a great position to solve a lot of these problems. The 2 protocols that would understand these problems first-hand are Maker and Liquity. Essentially, those are the 2.

Maker has taken that direction with Sky and USDS, and that's very good—they're doing very well. But we have the first-hand experience that we can tap into while having new ideas and a new direction that we want to pursue to really solve these problems around generating the most risk-adjusted returns for DeFi.

Going into the different assets, at the core of this is pETH, which is our purpose-built collateral token. This is a collateral token that has been specifically created to be the most pristine and perfect collateral for a CDP protocol. We can go into exactly why this is later on, if you would like to.

Beyond this, pETH can now mint any over-collateralized asset that has an oracle price feed. The flagship will be pUSD, which is essentially a completely immutable, counterparty-free, over-collateralized, yield-bearing stablecoin that is over-collateralized by pETH. It has some very unique unlocks that you wouldn't see with any other CDP design, such as a variable interest rate, minting, and redemption. No other CDP has been able to have direct minting of the asset. Basically, as pUSD trades above its peg, arbitrageurs can mint 1-to-1.

What this allows us to do is essentially have a 1-to-1 expansion without the need for borrowers to step in and expand the supply. pUSD is a very interesting stablecoin that can expand and contract with market forces without the need for borrowers. Lastly, the POLAR token.

4. What is pETH? Why hold it instead of just ETH?

This is what we're calling our stewardship token. Robert, why don't we get into pETH a little bit more? What exactly is it, and why would somebody want to hold pETH instead of just plain old ETH?

Yeah. pETH is, as I said, the most perfect CDP collateral. The way that it's minted is essentially that native ETH is deposited into our bonding curve, and then pETH is issued as the receipt asset that is used within the CDP.

The way we're building the protocol, pETH and the bonding curve are a standalone product that is modular and has no reference to the CDP instances at all. It's purely just a bonding curve that is launched. The reason why you would want to hold this is that pETH itself can be broken down into 2 individual tokens that have very unique properties.

One is a token that represents this ever-rising floor price. There are dynamics of the bonding curve that I probably don't want to get too much into right now, but there is a feature where there is an ever-rising floor price that is mathematically guaranteed, and we're able to separate this token out into its own token. This token is a direct alternative to wrapped staked ETH or any sort of LST token.

Overtake [?] has been tweeting about this quite recently, saying that we need an alternative to staking for ETH yield. pETH itself will be able to be this alternative. We've specifically designed, modeled, and simulated the protocol with this in mind, so that pETH and its components can act and compete in this area.

Robert, we normally lose people when we start to talk about bonding curves. Could you do us a favor and try to dumb down what is driving us up or down along that bonding curve when you refer to it with pETH?

Yep. At a very simple level, you could think of it as a single-sided liquidity pool, essentially. ETH gets deposited, and then the bonding curve mints and burns pETH, which moves the market price up as more pETH is in circulation. If someone sells, they just sell back to the bonding curve. ETH is released at the current market price, and that pETH is burned.

5. The rising floor price of pETH, risks vs rewards

It's not like a Uniswap pool where you have a liquidity provider that has to provide a 50/50 pair of pETH and ETH. The bonding curve contract acts as one side of that market automatically.

For anybody listening to this, if you're a DeFi nerd, I encourage you to dive into the docs yourself. There's probably no way we're going to cover every single intricacy of the protocol on this podcast. If this is interesting to you, definitely go look at the docs and dive deeper into this.

I want to get into something else you said: this pETH, essentially, the floor price can never decrease. Whenever I hear things like this, I'm like, “Okay, wait a minute. Can that be true?” Then I start thinking, “What are the other trade-offs in a system like this?”

If we were to walk through what you see as some of the risks in this design—or if there's anything that's starting to keep you up at night—I know that when we first spoke about this a long time ago, you claimed that you've done more simulations on this protocol than on any protocol you've ever built. That was the claim at the time. Let's walk through some of the trade-offs and risks as well.

This protocol has been extensively simulated. We have a full Python simulation that can simulate thousands and thousands of scenarios, looking at historical ETH price data and black swans, and adding in obvious edge cases around that. I think the risks themselves are very well known to us. Of course, as with everything, there are risks, and one of the advantages of having this pETH collateral asset is that we can have features that aren't available on any other CDP protocol or decentralized stablecoin protocol and that have inhibited them from scaling.

Instead of introducing USDC as a PSM, we have now created pETH with this bonding curve. This bonding-curve asset will basically act as a PSM or allow this 1-to-1 minting while using only ETH as collateral. This is a huge advantage that allows us to remain completely counterparty-free and decentralized with only ETH as collateral.

However, to get there, we have to introduce the additional volatility of the bonding curve. This is something that users will have to be aware of when they are taking a debt position out against Polaris. There is this additional factor that you have to account for. If ETH is going down in value and there are outflows from the bonding curve, pETH will go down slightly more in value than ETH. That's just how it is.

In terms of how much this volatility impacts things, a doubling of the bonding-curve size results in a 10% price move of pETH relative to ETH. If we go from 5 million TVL to 10 million TVL, pETH will move 10% upward compared to ETH. But if you go from 10 million to 20 million, as you increase, it takes a lot more TVL to move the price.

During the initial phases, like every protocol, there is more risk because it's immature and there's a lot more volatility around the bonding curve. As we increase in TVL and absorb more ETH into the bonding curve, and as the protocol matures, this volatility dies down drastically. It becomes a very liquid market for ETH and pETH to trade, and very safe in terms of a collateral asset. That's one of the main risks.

Apart from that, there are the standard risks. Obviously, you can get liquidated, and there is oracle risk. We have created a unique 3-oracle-feed medianizer that can be hot-swapped by the stewards through our on-chain voting.

We want to build a protocol that lasts forever, but oracles are a weak point within DeFi. We don't know if the oracle providers we have today will be here in 30 or 40 years, when we potentially need them, and we can't make an immutable, solidified protocol that relies on oracle providers we can't change out in the future.

6. Why Polaris aligns with Ethereum's CROPS mandate

There's a custom-designed medianizer where we take the median of 3 sources. If one of these sources fails, it can go into a vote to swap it out and add a replacement source. This goes through a fully on-chain vote and a time lock, and then they're replaced.

We've thought about as many of these edge cases and risks as possible. We've got an extra risk audit coming up. Our CTO is going through and writing a big document about the risks that we see with the protocol now, and this will be published in the future, just so that everyone is aware of the risks that we add in.

Robert, I'm thinking about this as a user when you guys launch. With pETH, we've got this bonding curve, and anytime we talk about bonding curves, there's an incentive to get involved earlier, before the bonding curve ramps up.

I'm also thinking about pETH from a borrowing standpoint, being able to use that as collateral. Can you dumb down for me what I might be thinking about as a user in the future when Polaris launches, as it relates to this bonding curve? There's risk to getting involved earlier, but there's clearly a reward here. Why do you ultimately get into pETH earlier if you're strictly holding pETH? How might it also benefit me to get into pETH earlier if I'm going to borrow against it?

Yep. There are a few things we could break down, including the different users. For the DeFi-curious power user, I think definitely trying to get in early is beneficial in a few ways. Number 1, the amount of TVL it takes to double and increase the price in the early part of the curve is lower. As you said, it takes less to move the price, so you can get more upside in ETH.

This is all in ETH. In the early phases, the overall share that you can have of the ETH yield, as well as the stability pool earning yield on your stablecoins, will also be higher. As a yield play, it's also very beneficial to be earlier because you can have an outsized percentage of the pool.

Additionally, the yield will be high during the initial phases. We’ve got some very interesting go-to-market plans. There will be a free bonding phase where there’ll be a campaign or a listed participation, where wallets and communities are allowed to deposit in the early phases. There will be a small fee taken from this, which will then be used to bootstrap and pre-fund the yield that is paid to borrowers. As a borrower, there’ll be a huge incentive initially paid in pETH to borrow from Polaris, which then kick-starts the flywheel and drives things along.

However, if you’re not that DeFi-savvy or not interested in managing a CDP, we’re also very aware that the majority of users do not want to do this. They don’t want to take this risk and play around with it. I think about Polaris as not a lending and borrowing application or a CDP app, but rather as yield infrastructure for Ethereum. A lot of our users—or basically all of our users—will be accessed via channels.

I think this will be something that we really focus on for the go-to-market: meeting the user where they are now. There are a lot of earn apps and vault providers—everyone that already has distribution. I don’t think that we should try to compete with them to get users and eyeballs on our UI. The DeFi nerds will be doing that anyway, but for the average user who wants to be early and take part in this, there’ll be a lot of options for vaults that you can just deposit into. This will be managed on your behalf, and you can enjoy the yield, whether it’s on gold, USD, or ETH, without really having to worry about the underlying mechanics of a bonding curve and all of these complex things.

7. More core assets coming like GOLDp and BTCp

Robert, can we go back and touch base on a few of these different collateral assets outside of pETH? We talked briefly about pGOLD, and then there’s something else, I believe, which is pCHF, which I think is a Swiss franc, and then potentially pBTC. Maybe just walk us through what these different collateral assets mean to the protocol. I believe this is going to be a shared collateral base—is that correct?

Yeah, correct. The way that we think about expanding the protocol is that, in DeFi, everyone knows you’re going to get forked if you have an open-source protocol that’s interesting. So we’re aware of this, and we’re designing it so these forks are beneficial to us, the POLA token holders, and pETH as a whole. We want everything to be additive and synergistic to one another without having to think about all of these different possibilities and manage them ourselves.

When Polaris goes live, we will have pUSD and pGOLD. pGOLD will be an overcollateralized gold asset that uses the exact same smart contract. Essentially, we just change the oracle price feed. It has the same minting and redemption mechanics to facilitate and keep its peg. It has the same liquidation logic and borrower CDP design. It also shares in the same yield. So this will be a yield-bearing gold token that is overcollateralized by ETH, essentially held by pETH or by ETH within the bond protocol.

The beauty of Polaris is that we actually use incentives to incentivize the borrower on our collateral and on their debt, essentially. What that means is that you get paid in pETH on your collateral in proportion to the debt you borrow. What we can facilitate with this, essentially, is negative interest rates, which no other decentralized stablecoin can facilitate. Basically, any asset that we can think of is a possibility for us to mint using pETH.

pGOLD is a really interesting one. It’s on testnet at the moment, and we’re facilitating a negative carry against any other, as well as around a 3% yield on gold. The way that this could work—and I’ve already spoken to them about this—is you could buy P gold or excess gold, deposit it into Aave, borrow wrapped ETH, deposit it into Polaris, mint pETH, and then borrow pGOLD. You’ll actually make a positive carry on the ETH borrow from Aave, for example, and then you’ll also earn the additional yield on pGOLD, paid in pGOLD.

This will be packaged up into a vault, and it’s basically a gold yield-bearing carry trade. And you can you Pgold export token. Then we plan to roll this out with partners who would like to launch similar assets or similar strategies, or any sort of asset using the Polaris infrastructure. We already have a couple of teams that want to launch a euro and a Swiss franc. I’m in Australia, so I’ve got to talk to people about launching in Australian dollars as well.

All of these assets will be built on top of pETH using the exact same core smart contracts. Basically, there’s no development work at all for these providers to do. They just work on distribution, and they go to market in the jurisdictions they’re most familiar with that we may not be.

So it’s really a horizontal expansion across various assets, and then all of these assets use the one collateral token. The trading of this token generates yield for the entire system, which means that we can pay the borrowers. These borrowers can then facilitate a higher interest rate that they pay, which generates more yield, and basically the entire protocol can just swell with the addition of all of these assets.

8. Why GOLDp could be hugely popular

As you mentioned, pBTC is obviously one that we’re looking for someone who would like to launch. It essentially would be the most pristine, least-counterparty BTC asset that we would have in DeFi. So I think there’s a lot of opportunity here for people. They can make money from this—a big percentage of the interest paid by borrowers—for themselves as a fee. Ideally, they share it, or we’ve designed the protocol so that they will opt in to sharing a portion of the yield with the POLA token holders. From there, they can work on distributing this into their markets.

pGOLD is fascinating to me because anyone who is bullish on gold will tell you that there’s essentially no yield to earn out there except in DeFi. The real breakthrough as gold was surging over the last year was seeing the breakout interest in on-chain gold because of what DeFi offers.

When we look at pGOLD, this is—if I were to go to the Earn tab, which, by the way, we might have Robert screen-share here in a moment, because it would be helpful to see the app. There’s a stability pool for pGOLD. If I deposit that, there’s an estimated 3.1% APR, which—I don’t know if that’s based on real numbers—but that would be insane to earn on gold.

The pGOLD stability pool works the same way as the pUSD stability pool. You deposit pGOLD and earn borrower interest paid in pGOLD, plus liquidated pETH at a discount, except the debt being absorbed is gold-denominated. So I can’t imagine that this won’t command a ton of attention once it’s launched. I think there’s clear crossover for those of us who distrust governments and institutions that have historically failed us in terms of managing the money supply.

This is clearly going to appeal to a lot of folks like myself, and I think your co-founder has been very vocal about why gold was a great buy the past year. The only problem with it has been that I want to hold my gold on-chain. I don’t want to hold physical gold because it’s not easy to hold versus having something on-chain.

9. Polaris Testnet demo

But when you come on-chain, essentially everything you hold relies on a tremendous amount of trust. So what’s the point of holding gold as a hedge against all that you distrust if ultimately you have to hold something where you trust those same institutions to hold your gold, or the physical gold that backs it?

Robert, what do you think of screen-sharing for just a moment? Again, I’m referring to your testnet app. I think it’s beautiful, and for those of you who are more visual, it’s a great way to walk through how Polaris could work for you.

I think one of the unique features that we have, or the unique benefits of a fully on-chain protocol that doesn’t rely on any external inputs, is the testnet. We can have this as a very accurate representation of what we would expect on mainnet. We’ve basically simulated the launch that we plan to have.

This allows us to bootstrap at least the first 4–6 months of yield and also get a very good understanding and feel for how the protocol will work on mainnet. Because we don’t have any external dependencies and everything is self-contained, it allows us to get a very good understanding, test things out, and get feedback on exactly how the mechanics will work in a semilive environment.

But yeah, just to quickly walk things through. I don't know—we don't have a heap of time to go into the nitty-gritty detail. The figures that we see on the testnet now are very similar to what we expect to see in the initial phases of the protocol launch. So, as we look at our pUSD on the Earn tab here, without going into too much detail, this 9.5% is paid from borrowers who borrow pUSD. In addition to this, there will also be liquidation gains, like any other CDP protocol, that will be paid in pETH.

Although these are spiky, we don't really facilitate showing them on the UI here because they can obviously vary as positions get liquidated. This interest rate of 9.5% is variable. So, as pUSD trades above peg, the interest rate will decrease automatically as more pUSD is minted into the market. If pUSD trades below peg, then the interest rate will increase, and this is to incentivize people to repay their loans.

So, it's a variable, market-dependent interest rate that basically fluctuates. This is unseen in any other CDP protocol and is another unique feature that we have. In addition to pETH, the interest rate on pGOLD, which we were speaking about previously, also fluctuates. If people want to go short gold and borrow and sell gold, they can. It will just drive the interest rate up for those people who would like to save in gold.

The reason that we can facilitate these interest rates, and I think we briefly touched on it before, is that we essentially use the Curve trading fees, as well as some novel mechanisms for how the POLA token comes into circulation, along with all other trading fees that happen in pETH. All of the fees are accumulated, put into an incentive router contract, and then distributed to borrowers.

So, you can see here, you're actually getting paid to borrow in this: you pay an interest rate, and then you also earn a yield in pETH on your debt. Where that becomes super interesting is with something like gold: you can actually be paid more in the pETH incentives than what you pay in interest on the debt, which results in you basically getting a negative interest rate.

So, PCHEF, like all PBTC, any of these assets, we expect to see very, very low or negative interest rates. That's very good for ETH bulls who would like to earn additional yield on ETH. But for BTC or gold bulls who would like to earn yield on gold without taking on any kind of counterparty risk, these assets are immutable.

10. What is fpETH vs vpETH?

Hey, Robert, there are 2 more terms here that are referred to on the app. Can you just explain at a high level what vPETH is—V as in variable, maybe? There's also one, I think, that says fPETH as well.

Yeah. So, this is where it gets maybe a bit more complex. This is on the testnet. You can go through it, and it's got a nice explainer here. But this is probably the most important part about Polaris, and we haven't had too much time to dive into it.

Essentially, vPETH is the volatile part of pETH that trades above the floor price. This is the floor price that we mentioned earlier. This is mathematically guaranteed; it can never go down. It is an up-only part of the protocol, of the bonding curve.

We're able to split pETH, very similar to what Pendle does. We're able to split 1 pETH into its 2 components. So, 1 pETH is made of 1 component of the floor price, fPETH, and 1 of the volatile component, which is essentially everything that trades above the floor price.

Where this becomes interesting is that pETH is an up-only token that cannot go down in ETH value. It can only go up. It earns a yield as there is protocol activity. All of the trading fees, all of the conversions, all of these things happen every time someone arbitrages the peg of USDT, gold, PBTC, like all of these assets. They all drive this floor-price token higher in value in ETH terms, which is essentially like a yield. So, it's very similar to a wrapped staked ETH that just goes up in value in ETH terms.

This token here is what we're extremely excited about. If you're bullish on Polaris and you think that we're going to consume ETH into the bonding curve, vPETH gives you amplified exposure to that. If you're more of a passive investor who wants to hold something very similar to ETH staking, with extreme guarantees that it can never go down—there's no slashing, no withdrawals, and all of the good things that come with it—then fPETH is the token for you.

While we're still in this, I guess one quick thing to show you is this long-term view of fPETH, which is this up-only token. It will be very high in the beginning, and we've specifically designed the protocol so that, very similar to DeFi tokens, as there's more TVL, the yields come down. The pETH yield is 36% annualized on ETH—essentially, ETH yield. This will come down as the TVL increases.

But yeah, we're extremely excited about this token. I think it can become a huge sink for ETH and also really showcase how these novel mechanisms can benefit DeFi as a whole.

11. Stewardship, not governance

Yeah, Robert, one other thing I want to get to is that you guys seem to talk a lot about stewardship versus governance. I wonder if you can share your thoughts behind this and what you refer to as stewardship.

Yeah. So, stewardship was actually a term that our devs mentioned, which is unusual for devs to come up with something creative like this. We use it in the marketing, but I think it really showcases the protocol and how we think about things.

When people think of governance, they think of token voting over what color Ferrari the founder buys. Everyone votes yellow, then he says he likes red, and then everyone votes red, or something like that. Usually, governance is this theater where there are a few people controlling things, and it's over some design changes or whatever. There are a lot of different things that it encapsulates.

For us, the protocol is immutable. There is no upgradeability. There's admin keys. There is nothing that we can control after the fact, after it's live, apart from a few core parameters that have hard-coded upper and lower bounds.

Essentially, when we think of stewards, they steward the protocol and fine-tune these levers, or tweak these knobs, that allow Polaris to function across various market cycles. I think governance didn't fit because if you think of governance, you think of this full DAO governance that we've seen, which clearly doesn't work on a large scale.

We wanted to have something that was more toward the immutable side, but still in the middle. We have this immutable protocol with these levers that can be pulled, but there's no governance per se—no constant voting and proposals and all of that. They'll just be able to do this time-weighted, on-chain vote.

And this sort of leads into something you and I were talking a little bit about offline. Just to give more context, if you've been following Ethereum lately, Vitalik and the EF, the Ethereum Foundation, have really doubled down on this thing called CROPS, which stands for censorship resistance, open source, privacy, and security.

You were mentioning this as well, and I feel like these properties are very aligned with what you're building. Maybe you can just explain the connection that you feel your protocol has with CROPS as well.

Yeah. So, it's funny, actually: we weren't aware—I think no one was really aware—of the EF mandate coming out. But when it did come out, it was surprising that we were building right in the niche of what they were looking for.

I think people who are very purist, and maybe DeFi nerds like ourselves, remember the glory days of DeFi proponents trying these experiments that were open source, with immutable protocols that were really trying for decentralization. It was something that was exciting, and there was a lot of innovation, with people trying different things.

Then we moved away from that, and it became very business protected by SL licenses or closed source and all of these things. I think we drifted away from the core that we started with, or this sort of Cypherpunk ethos that we had originally.

When you have these sorts of closed systems, you have an unknown amount of risk that comes into them as well. So, I really see the 2 as coupled together: the more closed source or the more opaque, or the further we go from the CROPS vision, the more risk that comes into these protocols.

When we're building Polaris, we really wanted to make it defensible from the network effects that we can create as a protocol—not defensible by whacking a license on top of it and just trying to prevent people from forking us, or keeping things off-chain or closed source. For us, the immutability, the censorship resistance, no freeze function, and no counterparty risk are all core primitives that we wanted to make sure that we had within the protocol.

It aligns with our personal ideals, and if anyone knows my co-founder, TokenBrice, he is very vocal about this. I don't think we could launch anything that wasn't within this vision.

But then, as we think about the open-source nature of this, this is really why we built the bonding curve and the way that the incentive structure works for all of these different asset forks that come along. The moat is actually the network effects, and the more ETH that goes into the bonding curve, the larger and larger moat this creates for Polaris. That means that we are able to remain open source.

The bonding curve and PETH almost become like a public good for Ethereum. It’s this asset that isn’t controlled by anyone. There are no other stakeholders that can do things, so there’s no risk. I know Lido has 30% of the stake, and that’s a threat to Ethereum. We don’t want to have people tarring us as a threat to Ethereum. We are synergistic, and I think that can only be done with a CROPS protocol.

12. Closing

I think that building on Ethereum is perfectly situated for a CROPS protocol because you inherit the principles, the positioning, and the unique features that Ethereum has. It would not make any sense for us to build Polaris on any other blockchain that has counterparty risk or doesn’t have as much decentralization and censorship resistance as Ethereum. We’ve basically designed the entire protocol around this sort of acronym before it was an acronym that we were all well aware of.

Robert, before we close out, when do you expect that Polaris will launch? Also, anything you can share about whether there will be any future token auction or sale?

Around Q4 this year, most likely around November, I would say. We’ll be going for audits in another month or so, and then there’ll be a couple of rounds of audits. We’re looking to launch around November, I would say, at this stage.

In terms of a token sale, we’re just wrapping up our fundraising round at the moment. That is it until launch, so I don’t think we’re going to raise again prior to launch. Who knows after? We don’t really know. We’ll see what the market’s like and what our needs are.

Thank you very much for having me, guys. I look forward to bringing the best risk-adjusted yields to DeFi that we can. Very excited.