Host: Blair Zhu, Mint Ventures
Special Guest: Josh Fraser, Co-founder of Origin Protocol
Youtube: WEB3 Founders Real Talk with Origin Protocol
Podcast: WEB3 Founders Real Talk with Origin Protocol
Blair:Hey everyone, welcome back to Web3 Founders Real Talk, we’re here to bring you a very candid conversation with visionary founders who are revolutionizing the industry through blockchain, decentralization, and cutting-edge technologies. Without further ado, let’s welcome the Co-founder of Origin Protocol, Josh, to the show today! Welcome, Josh!
Josh: Hi, thanks for having me on.
Blair:Would you mind telling us a little bit about yourself and Origin Protocol?
Contents
Background Story & Products of Origin
Josh: Sure, so I’m Josh Fraser, one of the two Co-founders of Origin Protocol. We’ve been building space since 2017, originally launched with a vision to build all sorts of different types of decentralized marketplaces on the blockchain and extend our focus on two different verticals: DeFi and NFTs.
On the NFT side, we have a protocol called “Origin Story”. We’ve had a lot of top record-breaking sales in the NFT space, starting with LAU at 11.7 million dollars, which really brought NFTs into mainstream consciousness. And that unlocked doors for us to work with all sorts of mainstream musicians, artists, celebrities, people like Paris Hilton, big brands like SpaceX, and the endless goes on. Today, we work with projects like Pudgy Penguins but use the Origin Story platform to power the NFT Marketplace.
On the DeFi side, we have a couple of products that are really focused on helping you earn money in DeFi without all of the hassle that’s typically associated with yield farming in crypto. So we have Origin Dollar, which is a yield-bearing stablecoin pegged to $1, you can just hold it in your wallet, and the yield is delivered directly to your wallet. And we just launched… a week and a half ago, we launched a new product called Origin ETH or OETH, which basically does the same thing, except instead of helping you stack more dollars, it helps you earn more ETH. And so we think of it as the easiest way to earn. You can just buy it, hold it, watch your balance go up, and just in the last week and a half, two weeks, we’ve already seen 13 and a half million dollars flow into OETH yields.
Right now, it’s yielding about 11.5 percent APY on your ETH, so obviously pretty attractive rates with all of the same. So security and guarantees that we have from Origin Dollar, which has been around for years and battle-tested with hundreds of millions of TVLs. So pretty exciting stuff is going on on both sides of our business and excited to share more about it with you today.
Blair:That’s really impressive. Would you mind telling us a little bit about yourself as well? How has your crypto journey been so far?
Josh: Yeah, I got into… I got into computers really early, so I started playing with computers since I was 10 years old. My dad bought me an Apple 2E computer and a basic programming book, and I’ve been hooked ever since. So I’ve been playing with computers for a long time, building stuff on the Internet for a long time. Got my first exposure to Bitcoin in 2010, read the Bitcoin whitepaper, Ethereum, Digg.com, or Hacker News, one of those sites, downloaded some mining software, and started mining Bitcoin on my own laptop. Back then, you could actually do it. I think it took me 7 hours to mine a block, and I got 50 Bitcoin reward for doing it. But it was making my computer overheat, and I couldn’t get any actual work done.
So I was like, “Cool, I’ve got Bitcoins. Whatever that mean? Time to turn this off and go back to real work.” Listen to me, there was no exchange, there was no price, there wasn’t… this was long before Bitcoin pizza had happened. But you know, I thought it was a very interesting idea. Fast forward to 2017, when stuff started really heating up, and I was like, “Where did I put that laptop, right?” When I found the laptop, Bitcoin was still there, and I still have those 50 Bitcoins today.
But that really got me back in the space, started looking at Ethereum. My Co-founder kept nagging me, “Hey, you gotta check out Ethereum, you gotta check out Ethereum.” I finally did. And when I did, it was one of those aha moments of… I don’t know what we’re gonna do with this, but this unlocks a whole new class of problems in computer science that have never been solvable before, around how we do Trusted Computing. And very quickly went down the rabbit hole, wanting to learn more about how stuff works. Playing with that, you know, actually started writing some smart contracts and trading, and just getting into space. And then, you know, decided to jump in full-time, and at this point, you know… I want to spend the rest of my life working in crypto. It’s the coolest thing I can imagine working on.
Blair:That’s super cool. I especially like your Bitcoin mining story, and you’re definitely one of the early adopters and pioneers. Since you mentioned that Origin Protocol was established in 2017, you guys are definitely able to survive multiple cycles.
We are just wondering why did you guys establish your project in the first place, given that you’re giving a shot in DeFi and NFTs? So why did you guys want to expand the branch of your business to the DeFi space along with NFTs? What kind of elements?
Initial Purpose of the Attempts in DeFi and NFTs
Josh: Yeah, it’s interesting. So we were building decentralized marketplaces, and we started by thinking of… how can we build things like Uber or Airbnb on a blockchain? In 2017, there was a lot of stuff that hadn’t been solved yet, around how we do identity on the blockchain, and how we do private transactions. People don’t want to publish their real-time location on a mutable blockchain for all time. We didn’t have a whole lot of options around Layer 2, so gas fees… paying tens of dollars or hundreds of dollars to do something… paying for transactions that cost more than the transaction itself doesn’t make sense, the cost of the transaction is only 10$, you spend more on gas than on the transaction itself. So there were a lot of problems we hadn’t figured out yet, and all of them are being fully solved to this day.
And so while we built a prototype that was up for you to use, we weren’t seeing a lot of adoption. There were a lot of core pieces that hadn’t been figured out. And so we said, you know, we started looking at how do we… what type of marketplace can we build where we don’t need to worry about the online, offline component, where everything you’re doing is on-chain. And so that’s why we started looking into NFTs and started looking into DeFi.
And we set up two experiments, and we said, let’s do the NFT project, let’s do this idea we have around the stablecoin. Maybe one of these two things will work, probably we’ll both fail. But let’s just… you know, we’ll have two different shots on goal here to see if anything works. And then, to our surprise, both of them took off, right? On the one hand, we did the 3LAU sale of the day of 1.7 million dollars. And then the other experiment quickly grew to $300 million in TVL. So we’re like, okay, we weren’t planning to have two competing products, but I don’t know which one to kill because they’re both doing too well. So that’s how we ended up having products in both of these very hot verticals in crypto, sort of an accident that we end up where we are today. But I guess it’s mostly a good thing. We’ve had both of our products experience so much success.
Blair:Yeah, I mean that’s definitely a really smart move that you decided to give a shot to the two sectors, and congratulations on all those latest progress. I’m just wondering, have you encountered any challenges or resistance since there are a lot of Web3 entrepreneursthey will find this industry very dynamic, I would say, so there are a lot of risk elements that could occur. And what’s your recipe to share with everyone else? Is there any insight you’d like to share with them?
Challenges & Resistance
Josh: I mean, there are always challenges whatever you are working in crypto or elsewhere. Being an entrepreneur goes from failure to failure without losing enthusiasm, and you just have to keep going, you have to be persistent and resilient. So yeah, of course, there have been numerous challenges we’ve faced.
Macro conditions are a big one, where just in the last year, how many different blows has the space endured, right? From 3AC and Luna to FTX collapse, and the number of scams and things going on, and then all of the regulatory crackdowns and attempts to ban crypto or ban stablecoins. The challenges around, you know, we have a yield-bearing stablecoin, and who could have predicted that the Fed would be raising the rate? And now, you know, the rates you can get holding your dollars in a bank account would be higher than what you can get, and I would not have predicted that. So, of course, there are always unforeseen challenges that come along.
And now, you know, the rates you can get holding your dollars in a bank account would be higher than what you can get, and I would not have predicted that. So, of course, there are always unforeseen challenges that come along.
I mean, your job as an entrepreneur is to just roll with the punches and figure out how to, you know, where you need to adapt, right? And so, while we’re seeing a lot of headwinds on Origin Dollar, where we’re seeing regulatory crackdowns, we’re seeing really hard-to-find, get a competitive API. We have issues with, you know, whether some people don’t like Tether because there’s a lot of that, you know, we used to pegged by Tether (USDT), USDC, and DAI, and they all have their own challenges, right? Some people hate Tether, and some people hate USDC or think it got a regulatory risk. DAI has its own challenges with some of the moves that governance has been making lately.
And so, while we’re facing all those challenges on the stablecoin side, there’s a lot of headwinds, a lot of tailwinds for us on the Ethereum side, and so that’s where we’re sort of adapting… we’re saying, “Hey, a lot more opportunities on Ethereum. Liquid staking derivatives are really hot right now. There are a lot of opportunities. We’re only seeing a small percentage, I think 14-15 percent of all Ethereum is staked today, compared back to 70-80 percent for most Layer1 like Solana or our competing change, so a lot of room to grow, right? We see Ethereum staking… it’s gonna double, triple, quadruple maybe 5x in the amount of Ethereum, but stake… that’s just a huge market for us to be in. And one thing that we all want is more yield, right? And so there’s always going to be demand for new ways to put that ETH to work. Everyone, you know, no one says I have enough. Everyone wants more, and we’re here to help give people a safe way to stack ETH on top of these.
Blair:Yeah, I mean definitely, sometimes we just have to bite the bullet and be really strategic and selective on this trend. Speaking of yield, let’s just talk about your product a little bit today. Would you… we are all aware of, following the Shanghai upgrade, there were numerous projects that are actually venturing into the DeFi sector, they’re trying to capture as much liquidity, as much traction as possible. And you mentioned that you recently launched the Origin ETH. Is there any specific strategy that Origin Protocol has, and can you also give us a walkthrough of Origin ETH and how it looks?
Strategies of OETH Applied
Josh: Sure, yeah! So the way you mint OETH (Origin ETH) is by depositing either ETH or any of our supported LSDs. So today, Lido staked ETH, Rocket Pool-ETH, and Frax-ETH so you deposit that end, so what you’re doing is you’re stacking yield on top of yield, so you’re getting that base rate that comes from LSDs. I’m interested in how we can actually put that to work in DeFi, to earn additional yield, and so there are multiple ways you can do this in DeFi.
AMMs like Curve or Uniswap, Balancer, these are, you know, if you’re holding a basket of assets, you can facilitate the trading between them. So we’re seeing a lot of trading between these different types of assets, and of course, you can earn trading fees every time both change hands. We haven’t turned that on yet. Actually, we have more for Compound, Aave, all of these are sort of available as far as the strategies we could tap into for lending.
So lending would be another opportunity for yield, people want to lend out their staked ETH, and you can earn yield on that, and we can help facilitate that. And then all of the reward tokens issued by these DeFi platforms, automatically get harvested, swapped, and reinvested back into the protocol to earn Compound interest. So that’s basically what you’re doing. You’re taking your base yield from LSDs, stacking on top of your trading fees or your interest, stacking on top of that all of the incentives that these different protocols are offering, so you’re layering yield on top of yield. If you’ve done yield farming yourself manually, you know how much of a pain it is and how expensive it can get with the typical flow is.
Say you have an asset, stake it in a farm, you come back a couple of days later, you harvest your rewards, it’s some random coin, you take that and swap it on Uniswap into the asset that you’re trying to grow. Then you really pause of that back into the strategy again to earn more yield, and then you have to repeat this process over and over again. And when you actually do math on how much you spend on gas, you’ve spent hundreds of dollars on gas. And maybe your yield isn’t actually that great unless you’re massive wealth and have tens of millions of dollars to play with.
What both Origin Dollar and OETH do is give you access to the kinds of yields that big whales is able to get, but you can get the same yields as they are without having to pay the gas cost or do more work to maintain the position. So the cost of maintaining a pool amortized tens of millions of dollars, but you’re still getting the benefit. You’re still getting the same yields without having to do any of that work. So it’s really the easiest, least hassle way to put your dollars or put your ETH to work in space.
Blair: Yeah, definitely. I mean, I find DeFi could be a little bit overwhelming for new beginners because there are definitely barriers and the ultimate goal is to make the whole product more intuitive and handy for them to use. And I can tell that’s the mission of Origin ETH. Let’s dive deep into the Origin ETH mechanism.
When it comes to the yield sources and allocations for Origin ETH, which can be minted through a couple of collaterals like ETH and other LSD assets, what kind of strategies are in place? Basically, you guys are trying to decentralize the whole LSD market and even Ethereum as a whole. There’s a constant struggle with Lido being too big and it may become a potential risk for the ETH system. So is there any strategy or what do you think of that?
Insights of the Competitive LSD Sectors
Josh: Yeah, I think there are a lot of people concerned about how much power Lido has and what happens if we experience a major slashing event on Lido. That can be really bad for the entire ecosystem, so there are definitely concerns about that. Long-term, we’d love to intervene in the LSD market ourselves and not just be an aggregator, but actually help increase the diversification of the nodes. At a minimum, we are giving people access to a basket of different assets, and this can really help.
When USDC depegged, we saw that OUSD held up well. All of the strategies we put in place to protect the vault in case of a depeg worked well. OUSD was earning 45percent APY and then came back stronger than ever without de-pegging to the same levels that you would have if you were just holding USDC. So diversification can really help, and all of the same strategies and security features that helped save OUSD are already baked into OETH. So you’re getting diversification, and if we see a slashing event on any of the supported LSD, you’re going to have the benefit of at least dampening the effect and minimizing the amount of loss you take from that, and hopefully turning it into a profitable event for the protocol as well.
Blair: Would you also mind sharing your long-term goals in this sector? Because there are definitely a lot of players in this niche, and I think we somehow feel that, other than Lido, there are a lot more opportunities. There is a lot more market share we can grab. Would you mind showing us a little bit? Do you guys maybe set up OKR thing or how to penetrate the market in the near future？
The Long-term Goal of Origin in LSD Sector
Josh: Sure, there are a few things that are on our roadmap, obviously. We want to continue investing in a protocol in new ways of earning yields. So right now, the main strategy is AMO, which is on Curve, benefiting from the protocol buying CVX tokens, vote-locking those, voting for more emissions to our pool, and then harvesting those to return to the holders of OETH. And so that works really well, but we want to expand beyond that. So we’re looking at other AMM pools for all of the supported assets, expanding to Balancer and Aurora and that ecosystem, looking at doing stuff with Uniswap and LP in there from the protocol standpoint.
Across all of this, the user experience is just the same. You don’t have to do anything, just hold it and watch your balance go up,the easiest way to earn.
When we look at where the space is going and the things that excite us, there are real opportunities. We’re interested in things like the SSV Network, distributed validator infrastructure. It’s like a multi-sig for validators, where right now if a validator messes up signing a transaction, we can get slashed, and obviously, that’s bad for the holders of any liquidity staking tokens as they will take that loss directly.
But with things like the SSV Network, what you’re doing is multiple validators that have to sign that transaction before it actually gets processed. It gives you kind of the same security guarantees as a multi-sig, where you’re going to have three out of four people who are online or answer the question correctly. Everything’s okay, right? So you have a little bit more fault tolerance where you can have a server go down and nothing bad happens. So I think that’s something that makes a lot of sense. We’ve seen multi-sigs obviously have very wide use across the ecosystem, and it makes sense to have that at this foundational layer as well.
Another area we think is really interesting is EigenLayer and re-staking. Ways that people can take the ETH they have locked up in validators and put it to work in other ways. How can we actually use that ETH to secure over networks as well, whether it’s alternate Layer1, Layer2, or things like Oracle Networks? Ways that you can then stack additional yield on top. And as this EigenLayer re-staking protocol comes online, you know we’re excited to be there on D1-building that into OETH, just to stack that additional yield on top as well.
Blair: Thank you for sharing that! I guess my next question would be since we mentioned Lido, and we mentioned the LSD sector, and I feel in this current landscape of LSD, and now we’re talking about LSD-Fi as well, those projects like Lido, Rocket Pool, and even Frax Finance, they have this first-mover advantage because they have established their protocol pretty early on. And even though we have new players and new projects emerging, and since you guys launched Origin ETH this month, we have to say it’s actually a pretty rapidly competitive environment nowadays. Even the narrative is pretty nascent, and we got a bunch of players already.
Well, what kind of key features would you like to take as unique differentiators compared to other competitors? Because I do know, technically speaking, correct me if I’m wrong, those people, they’re not… like Lido, Rocket Pool, they’re not like your direct competitors, I would say.
Competitive Edge of OETH
Josh: Yeah, exactly. We’re not competitors at all, and the reason is we’re helping them, right? We’re helping grow their TVL. We’ve already grown their TVL just by bringing in new users and more ETH staking to try to get into OETH. So we’re helping them, and as we grow, it will help our partners grow as well.
For users, it’s not competitive either. You don’t have to choose between rETH or OETH. You can do both, right? You can take Rocket Pool ETH and deposit it into OETH, and then you stack the yield on top. So what’s great here is that we’re not competing head-on, we’re partnering with them. Just last week, we had a Twitter Space with Frax, with Lido, with Rocket Pool, and they saw it too. We’re partners, and we can help them grow, just like they can help us grow as well.
Blair: Yeah, I mean, because you guys are more like second-order derivatives on top of this LSD. So yeah, I guess for users, they’re just gonna compare the yield, that’s all they’re gonna do. And they’re probably not gonna deep dive into the mechanism. But yeah, it’s just good to hear that you guys are in hands in this sector and this ecosystem together.
Well, my next question is, given how volatile and how fluctuate the market could be, and also you guys are seasoned, experienced entrepreneurs, given that you established a project back in 2017, and we are aware that not that many players were able to survive. So, well, sometimes we were just thinking that… do you think users would really appreciate relatively stable yields? Because sometimes the staking yields may fluctuate significantly along with the market cycles. Is there a demand for hedging the volatility of staking yields, or is it something that Origin would also consider in the future roadmap?
Possibility of the Demand for Hedging Volatility of Staking Yield
Josh: Possibly, it’s certainly something… I think there’s some demand for. I’m not sure how big it is, but for us, our goal is to make OETH as ubiquitous as possible. We want to ensure that it’s integrated into every DeFi platform and that every protocol is pairing with OETH instead of ETH on exchanges and DEXs everywhere. That’s going to be a long road to get there, but it makes a lot of sense, right? Why pair with ETH and have millions of dollars idle on Uniswap if you could pair with OETH and earning instead? That’s the future we see, where OETH is integrated everywhere that you are using ETH is used today.
And then from there, people will naturally build these experiments, the next order derivatives, where you can do things like hedge out volatility if people are wanting a fairly stable yield. In this case, I think OETH is probably going to be relatively stable. I wouldn’t expect it to always outperform LSDs, as that’s kind of the basis of what our worst API should be, and then we’re going to stack some on top, and it will go up a bit in a bull market and down a bit in a bear market. But it’s not going to be something yield in between, like triple-digit to single-digit. It’s going to be relatively stable, and we don’t expect it to have wild swings.
Blair: Yeah, we will see. I mean, there are going to be a lot more new innovations in LSD and LSD-Fi. And I’m pretty glad that you guys stepped in because you have all that expertise, and it will definitely make the whole sector, make the whole new narrative even more mature.
Now, let’s talk about LSD overall because it’s definitely one of the newest innovations in the DeFi sector, and we certainly need some new hype. It’s always like that in the crypto space, where we are constantly chasing and wanting to lead the trends. LSD does exactly that. It not only boosts yields for investors but also enhances liquidity, improves capital efficiency, and stabilizes the network. It sounds like a win-win situation for every stakeholder.
With multiple players entering this field, it becomes significant to address various issues that may have been overlooked in this niche, such as the potential security risks or market volatility that projects like Lido may face. Considering this, what is your vision for the future of LSD? Do you believe it will be the main driver for the next bull run, or how do you perceive its path moving forward?
The Vision of LSD
Josh: Yeah, I think we’ll see LSDs becoming the base layer, where no one will want to have raw ETH sitting around not earning yield, right? We’ll start using derivative tokens like OETH as a replacement. So if you borrow money from me and we need to settle up later, I’ll send you OETH instead of ETH, and you’d prefer to receive OETH because it starts earning for you as soon as it hits your wallet. And you don’t have to battle, just become kind of your expectation of…. all the ETH you have is growing and earning more, versus having it sitting in this non-earning state.
I believe we’ll start seeing that across the entire DeFi space, with a wide range of applications. While Lido currently has a big lead, other players like Frax are quickly gaining market share. We’re happy to ride along with whoever takes off and provide additional yield on top. We’re sort of happy whoever wins as long as we can kind of along for riding and help do our part to increase yields.
Blair: Well, got it. This is I guess this is going to be a really tricky question given that you have your engagement in DeFi and NFT, so which sector you would think may drive another major adoption cause we…I mean we do witness how crazy it was in DeFi summer. And even for NFT, there were a lot more major brands, mainstream, media they were talking about. It was just becoming a buzzword for a while. Which sector you will think may help us to drive more awareness to have another, you know…, to kick off another market cycle?
The Next Diver for Bull Run: NFT Vs DeFi
Josh: Yeah… it’s a good question. You know, I was sure it was gonna be DeFi. It seemed very obvious to me that this would be… why wouldn’t everyone want us, right? The ability to take out a loan, don’t have to talk to a banker or sign any paperwork, it’s just obviously a good idea, why wouldn’t everyone want that? But to my surprise, I think NFTs have done more for bringing mainstream adoption and awareness of crypto, you know, seeing Paris Hilton on… you know, go on TV and what Demi Camelon talk about Origin and what she’s doing with NFTs, I was like ‘Wow’. Her audience, the people she can reach, is so much larger than what we can tap into just with DeFi alone. Now, that said, NFTs are falling out of favor in the mainstream, and so what does the next wave look like? I have no idea. It is really hard, it’s really hard to predict. Will it be DeFi? Will it be NFTs? Will it be something else that doesn’t exist yet? It’s really hard to say.
Blair: Yeah, definitely. I mean, we’ll see. The market will tell us, and also, well, Mint Ventures, we were being really bullish on DeFi, and NFTs as well. So I guess we’re on the same boat, and we can just see how it goes. Thank you so much for your time, and thank you so much for the insights. It’s been really illuminating, and I’m pretty sure everyone will learn a lot from this episode.
Thank you again, thank you so much for your time, Josh.
Josh: Thank you, this is a lot of fun. Thanks for having me on.
