Host: Blair Zhu, Brand Director of Mint Ventures
Special Guest: Master Splinter, the Head of Development of BendDao
Youtube: WEB3 Founders Real Talk with BendDAO
Podcast: WEB3 Founders Real Talk with BendDAO
Blair: Hi everyone. Welcome to Web3 Founders Real Talk. I’m here with Splinter today, the Head of Development of BendDAO. We will tap into some insights and expertise from his own journey in Web3. Welcome, Splinter!
Splinter： Hey, hi Blair, thanks for having me.
Quick Intro of BendDAO
Bliar: Well, can you give us a quick introduction of yourself and BendDAO as well?
Splinter： So…me myself, my friends call me Splinter, I’m based in Europe and at BendDAO, I’m working on prototypes, I do UI and UX design, and also lead the development of our platform. I’ve been working in the industry for more than 20 years now.
Being an 80s kid, I grew up with the digital evolution from, let’s say day-one. While I was working in Web2 as a developer or designer, I worked with companies from all kinds of fields: tech companies, financial, social, cultural, telecom and more…
When I learned about crypto, after a couple of months of intense researching and learning about history, trends, different Layer 1, the protocols built on them, and also getting into it as an investor and user.I couldn’t think about anything else but blockchain and what it can bring for the future.
I started connecting with my peers who were also interested in this new trend and also met a lot of people worldwide, then I joined my first blockchain startup in 2016-17, 17, and that’s when I completely left the Web2 space, and I’ve been working in Web3 since then.
In the last couple of years, my focus, or rather our team’s focusis Decentralized finance.
BendDAO isour latest and current project, which we started building more than a year ago. The protocol went live and has been running safelyfor more than 7 months now. I think it’s more than 7 months now.
The main goal of BendDAO is to provide liquidity to blue-chip NFT holdersand it’s the first decentralized peer-to-pool NFT-based liquidity protocol. NFT holders are able to instantly borrow ETH from the pool by using their blue-chips as collateral, while the ETH lenders or depositors provide the liquidity and earn passive income in form of interest. There’s no repayment date, you can repay at any time, and the interest is calculated and changing with each new block, so that’s the main ides. But on top of that, we’re constantly adding new features for our borrowers and lenders.
Inspiration Source of BendDAO Team
Blair: Thank you for sharing your background and also those BendDAO introductions with us. Let’s just dive deep into our conversation today, so like you just mentioned, it sounds like you are really infatuated with blockchain, Web3. And we can see the collision of DeFi and NFT has opened up a lot of possibilities to empower NFT liquidity. BendDAO is definitely emblematic of that and BendDAO, as far as I know, was launched in late 2021. As the first decentralized peer-to-pool NFT liquidity protocol, what inspired your team to develop the project and why did you firmly believe in blue-chips projects in the first place?
Splinter： We’ve all been through the ICO boom(Initial Coin Offering), and participated in many since it was a great opportunity to make insane profits later on. We learned about GAS and the GAS wars going on at that time, where you had to raise your GWEI for your transaction if you wanted to come true and actually get the company’s token. And later on there were more GAS wars, for example, the Cryptokitties GAS wars, where the Ethereum network got congested to the amount that no other transaction went through anymore since everyone was minting these Cryptokitties NFTs.
Later on, NFTs really went off, and we noticed again that there were high GAS fees being paid for transactions on Opensea, Looksrare, and other NFT marketplaces. There was a lot of volume and traffic, which was much higher than, for example on Uniswap. So, we got ourselves some NFTs, the OG Cryptopunks, Bored Apes, Azukis, and some others that had a huge community behind them. We didn’t quite understand why someone would pay such a high price for a NFT, which at that time we saw just as a JPEG, but of course, we wanted to be part of it since you could not miss the trend, it was going viral on all socials, mostly Twitter and in the private Discord channels.
Then came the moment we tried to sell them to make some profits. We listed them on Opensea but we waited and we waited and waited and it took weeks or even months before our offer was accepted and we sold one.
At that time the idea was born.Why is there no product like AAVE, where you can instantly borrow by depositing some ERC-20 tokens as collateral, but instead using your NFTs as collateral. After all their value could be measured by their floor price, very similar to the price action in ERC-20s. So… we started digging and studying all the protocols and invented or let’s say developed the BendDAO protocol. And here we are, with this unique product, influencing the whole industry.
Why did we believe in NFTs and blue-chips you asked? So I see it as modern art, it has a great impact on our culture, bringing together people from all backgrounds, financial, IT, gaming, art, and culture….. As we know, all art in humankind is still being collected. This not only goes for paintings or sculptures, but also Cars, Watches, Land and Buildings, Photos, different tools and Artifacts, and so on. It’s like owning a piece of history. And usually the older it is, the more it’s valued. You could get a Piccasso for let’s say hundred dollars back then in his lifetime, but today, even his less popular works are worth hundreds of thousands of dollars, and with each year and each sale, they’re worth more.
So I firmly believe NFTs are like that. It’s the cultural aspect, that will drive the value to increase with time. And the fact that you can easily prove it’s an original and that you’re the real owner, which makes it even more cool. And also, which I guess not yet but soon will be most important, NFT compared to classic art has much, much more utility. Let’s not forget about the ongoing race for the first big Metaverse, where you will be able to utilize your NFTs in this new virtual world, being avatars, land, in-game artifacts, clothes or “Skins” as they call them in the gaming industry… it will all come together some day. So I’m really excited to be part of it and see what the future will bring.
The Daily Ritual of BendDAO Team
Blair: Wow, very impressive. I would say NFTs are enabling many more people to get into space to see the beauty of the industry, and we heard a lot of progress has been made on BendDAO, like collateral listing, buy NFT with down payments. Also, you guys are about to launch Bendearn, ApeCoin staking very soon, right?
So, what’s your daily ritual look like to maintain such consecutive progress? It sounds like you guys are doing really well by launching a bunch of products even under the market like now.
Splinter： So our daily routine I would say we all of, are a little bit of workaholics. We manage our private life and our work life. So yeah, we’re constantly adding new features or sub-products, improving the interface for BendDAO.
A while ago we introduced the Down Payment purchase of an NFT, which basically allows buyers to buy an NFT, even though they don’t have enough funds to do so. They can deposit a partial payment of the listed price and get an instant loan for the remaining amount. They obtain ownership immediately and can then take some time to repay the loan.
After that, just recently, we have deployed the Buy offer update, so now you can not only buy the NFT for the listed price, but you can offer the seller a reasonable lower price and if he accepts, right? You get it much cheaper.
One of the big strengths of our protocol is… that you can still use your NFTs to claim airdrops and all the other utility it provides, even though it’s locked as collateral for your loan. Currently, we’re working on two major things.
One is the Open APIs and SDKs, to provide other projects and developers all they need to integrate BendDAO into their own platforms or even develop some new exciting projects utilizing the power tools and, of course, the available liquidity of BendDAO. We’re looking forward to sharing it publicly soon and seeing how it will add to our expansion.
The other update we’re currently working on is ApeStaking. We all know YugaLabs and Horizon are about to launch the staking of ApeCoin together with Bored Apes and Mutant apes, even adding a fourth pool for the Bored Kennel Club. There will be 4 pools, one for staking ApeCoin, two for staking Bored Apes and Mutant Apes, and a fourth one will be paired altogether.
We’re developing protocols, that will enable our users to co-stake with others. So our borrowers will use their collateralized NFTs instead of the originals to stake with, which rises the safety aspect and enhances the utility. And they won’t need ApeCoin to do so. They will stake them together with other ApeCoin holders, and share the rewards they receive.
For example, I have a Bored Ape, used as collateral for my loan, but I don’t have ApeCoin tokens. I will be able to create a pairing listing, any of the pools(BAYC, MAYC and BAKC), set up my conditions for the staking, and find someone that doesn’t have the required NFT but has ApeCoin he wants to stake. So they can agree to stake together and share the rewards.
Challenges that BendDAO Encountered
Blair: That’s a lot of work and that’s definitely some unique features that we have never seen before. You guys are a bunch of workaholics for sure. But is there any challenge or resistance you have to overcome during the process? Especially under the bear market, the project probably will face more challenges. Are there any takeaways you can just share with other practitioners?
Splinter： Sure, we constantly hit on challenges, and I’m happy to say we’ve overcome them all by now.
There was this biggest one: we were going viral for weeks. Everyone was talking about us, but not in a positive, more in a negative way and spreading FUD in a negative way. Big accounts were saying we’re a threat to the NFT market and that BendDAO could harm it and so on…
So what happened… there was this sudden drop in the market, not only very bearish on the prices of ERC20 tokens, but it also significantly and suddenly brought down the floor price of all NFTs, of course, also all the blue-chips supported in BendDAO. And since we use the floor price of the Collections to calculate the Health Factor of our user’s loans, the loan amount compared to the floor price wasn’t 30-40% as we lent out, but rather 80, 90%, and more. So our mechanism triggered loans to go into Auction and the borrowers had to repay parts of their loans to keep the NFT ownership.
The panic was spreading fast, which also caused the ETH lenders to withdraw their deposits from our lending pool, so we had no liquidity left. You can imagine, we had more than a couple of sleepless nights, engaging with our community 24 X 7, looking for a solution to this sudden issue.
And as a DAO we did great. We were engaging the community and they voted on lowering the liquidation threshold and extending the liquidation period window, which, after it was voted for, we did, and it resulted in saving a lot of NFTs in loans from being liquidated. As the word about this spread, the lenders gained back our trust and started depositing their ETH back into the pool. After all, the APR in BendDAO is still very appealing, compared to other staking providers.
In the future, I believe we’ll be addressing such challenges in the same way. Listening to our community and users, working closely with them, and trying to plan and execute our development following the right path, setting or adjusting the parameters of the protocol, in a manner that will be benefiting all the actors in our ecosystem. The borrowers, the lenders, the liquidators, and the stakers.
So yeah, we’re ready for the Bull market.
Marketing wise we want to spread awareness about BendDAO, attract more users, and with that more liquidity. Our vision is also to integrate BendDAO in other projects in the industry, let’s say “make it an irreplaceable part of it all”. We’re constantly working on our open APIs and SDKs, we’re open-sourcing our code, which allows other projects to integrate our solutions into their own as X2Y2 did with our downpayment.
I believe we’ll be adding more NFT collections to be used as collateral and basically keep innovating and improving. Following the market and the trends is part of our daily routine. Not missing any airdrops for our blue-chip holders, like we now work on the ApeCoin staking. For example, we need to keep being agile and quick with building and releasing new instruments and features, staying in constant dialog with our community, and responding to their needs and ideas as well. I think we’re doing pretty well in that manner because that’s how we think a DAO should work.
How to Capture Marketing Insights
Blair: Yeah, I’m so happy you guys made it from the previous liquidation crisis and you guys did a really good job because it was really hard. Everyone started doubting you guys. I think that’s the beauty of entrepreneurship because you just encounter challenges and try to solve them. Sometimes you just have to bite the bullet, then you will be fine. So my next question is how to capture the marketing insights to develop something really game-changing product that’s really gonna fulfill users’ needs, since we all see that there are some builders, who probably only get very little traction after launching their product, so how to get things right?
Splinter： That’s what I’ve been talking about, in Web3 it’s all about trust and community.
The main difference between Web2 and Web3 is, of course, the decentralization and trustlessness, it’s permissionless and there’s also the anonymity aspect if you want. There’s no middleman who could decide in favor or against, like banks and centralized exchanges, that can prevent you from accessing your funds. It’s all open-source, audited, clear, and transparent about what the protocol does, and what the logic is, and nothing can change that. It will always go the way it’s planned. I think that’s the most beautiful part of blockchain and Web3.
Then we have all the passive income options, with much higher returns than those offered by centralized banks. Which is very appealing to investors.
For example with BendDAO, you can earn rewards, even though you don’t have any NFTs. First of all, you can deposit your ETH into the lending pool and earn interest. Then you can provide liquidity on Uniswap by staking BEND token and ETH, getting fees from them, but then you can also deposit the LP tokens you got on BendDAO and again earn extra interest, and you can also lock your BEND for a longer period. You get veBEND in exchange with, which gives you voting power.
I don’t know if our product fit the PMF – Product-Market-Fit. It’s hard to measure, there are a lot of metrics to take into account. But yeah, I would say BendDAO has great potential to achieve PMF(Product Market Fit) if it didn’t already. We’ll stay true to our vision, work on it and expand in an organic way. If I wouldn’t firmly believe we can not only stay but also influence and change the DeFi space, I probably wouldn’t be here. Just getting up every day with a positive attitude, doing our job and dreaming of realizing those ideas. Yeah, it’s fun.
Advices for Newcomers to Web3
Blair: Yeah. So first would be social listening, trying to figure out the needs from the community and always keep up with a trend, trying to listen to what they really need, and exactly you just mention that keep the low barrier, try to engage more users even if they do not have any NFT. So try to improve adoption. Those will be the answers. So what kind of advice would you give to someone who’s trying to become an entrepreneur or simply get a job in Web3? Are there any actionable tips for them?
Splinter： I can share my view.
If you want to build something, you have to find a problem you have as a user because if you have it, many people might have it as well. Connect with people with the same vision and know how you find a solution for that problem, and start building your product as well as your community, it’s quite the winning recipe.
Of course, if you’re new and don’t understand it well yet, you’ll need to dig deep for a while. I think we all went through the same process of getting into crypto and Web3. A lot of reading, researching, knowing about the history, about the trends, then learning about all the different blockchains, layer ones, the smart contracts, etc… we’re in it for about 7 or 8 years by now, and some of our team members even more, but we’re still learning so much every day. You have gotta stay in the loop, be focused, and how do they say? …you have to trust the process.
Blair: Yeah, it’s gonna be a really steep learning curve, at least when I got started. I think that would be a challenge for everyone since Web3 can be much more competitive than Web2 because Web3 is an emerging industry and there are a lot of things going around. Every single day there are a lot of ideas, innovations, and hypes. You just have to embrace all those challenges and all those reading and do a lot of research, but luckily, we have everything online now: podcasts, websites, they are really good. So I would say it’s really perfect timing for all those new beginners to learn more about Web3.
Future Managements of Liquidation Crisis
So now let’s just move on to the next topic and since we talk about a lot of things about BendDAO, how we encounter the challenges, and also NFTFi space is definitely wild and booming and we’re seeing many entrepreneurs still dedicated to building their projects in these sectors, such as the Sodium and LalmaLend, but it’s still very nascent I would say. So, since we talked about challenges earlier, BendDAO may have to put so much effort to make through the previous credit crunch. Is there any takeaway from there, and how do you plan to manage the liquidation crisis in the future since it’s still under the crypto winter, and NFT market would be very hard to bounce back very much, even among those blue-chips projects or even among those reputable collections?
Splinter： The liquidation crisis that is behind us was a great test and we learned a lot from it.
I want to point out that the liquidation of loans in BendDAO and the collateralized NFTs is not the same as you’re maybe used to from trading ERC-20s with leverage on centralized exchanges, where you lose all your stake if the price action goes against you.
With BendDAO, once your loan is in auction, any user can bid to repay your loan, it can even be yourself from a different wallet. Also to redeem a loan once in auction, it doesn’t require a huge amount of ETH, you can just save your loan by partially repaying and so extend the period of your loan.
Not like trading with leverage and getting liquidated without a warning. You can actually sign up for our notification system, which will send you emails about the Health Factor. And it will notify you when your loan enters the auction state. So you have time to handle it. In theory, if a reputable NFT is in an auction, the previous owner could even end up with profits.
I don’t believe the DeFi space will just crash… On the contrary… I think it will expand even more, and gain more adoption, more smart people are getting into it day by day, the user base is also growing, and the younger generation loves it, it’s a great investment opportunity but also a lot of fun. History is being written as we speak.
Our goal is to make BendDAO an irreplaceable and leading element in this industry and market. We’re fully transparent, you can follow our daily planning and development process on deWork. Through Immunify, we’re inviting bug hunters and whitehats to help us find any flaws in our product, which we then reward as agreed by the community and BEND holders who are a big part of the governance.
So we think a trend as strong as Web3 is now, as well as NFTs, will just keep getting more attention in the eyes of the public and become more and more popular.
How to Balance the Interests Between Different Parties
Blair: Yeah, sounds like a really solid plan, and you just mentioned that BendDAO has definitely adjusted a few parameters to release more liquidity by dropping liquidations for collateral and even shorten the auction period. It would definitely boost the lender’s confidence in some way, but it may also cause much hastier NFT liquidation. So how to balance all those stakeholders’ interests in this game because there are a lot of parties you have to take care of?
Splinter： We can’t know what’s coming, but regarding what we’ve already been through and what we’ve learned from it, I believe we will not change our ways. We’re monitoring our data a lot, working on calculations and even predictions of different possible scenarios that may play out. I’m confident we’ll manage to follow our vision and our roadmap. At the end of the day, we want all actors using BendDAO to benefit from it.
If a situation emerges, where any of our user types are not benefiting, or in danger, we will run the numbers, connect with our holders and community to find the best solution possible for it, and implement the changes needed to resolve it. Like we have done so far.
We want to build a product like Aave and Binance, but combined. We’ll keep on expanding, integrating with more projects, inventing new useful tools, building up the liquidity that we provide, and just keep breathing with the blockchain world as it evolves. Day in, day out. My take on this is “go with the flow, but be prepared for anything”.
How to see the Futures of NFTFi
Blair: Yeah, I mean it must be really hard to keep everyone happy in this game but yeah, very glad to see you guys have such comprehensive tactics. Social listening is always the key. So here’s my last question. Although the Market Cap of NFT is higher than last year a lot, liquidity does not really follow. How do you see these challenges or probably you’ll see them as opportunities, so what do you see in NFTFi’s future?
Splinter： That’s a good question, I don’t know. Let’s have a look.
Our Total Value Locked currently is over 70 thousand ETH, with over 30 thousand ETH available to borrow, and about the same amount worth of NFTs used as collateral in loans. We support 8 blue-chip collections, which are almost a hundred thousand unique NFTs to be used as collateral.
The deposit APR of ETH lenders is attractive, we just need to spread more awareness about the product. You can bid on auctions and might get the NFT at a great discount. We have the First Bid Bonus Reward, which the bidder receives if the borrower repays or redeems his loan. So that’s also an interesting opportunity to make some profits. We’ve managed to survive all the challenges and the bear market. We’re now slowly but surely getting into a healthier market as you mentioned.
I believe we have a unique product that the NFT space really needs, and we will keep building and spreading the word about BendDAO. We’re still a young start-up and growth will come organically.
I don’t see a reason why we can’t reach a billion-dollar market cap eventually. The NFT Finance sector will grow in the future, it’s inevitable… and so will BendDAO.
Blair: Yeah, we will see. That’s a very compelling story, and that’s also a very practical solution. Well, it’s very thrilling to see BendDAO has been progressing very well with really clear footprints and practical solutions to everything and consecutive business line launching. We will love to see many more adventures in the near future on BendDAO. Thank you for sharing your view with us today. I really appreciate your time, thank you, Splinter.
Splinter： My pleasure, my pleasure. Thank you!