Cardano RealFi AMA Recap
Jun 18, 2022
On June 7th Blueshift was a guest on Cardano RealFi. The Cardano RealFi Twitter Spaces are hosted by Subcritical and the purpose of the channel is to provide important information with regard to the Cardano ecosystem and Cardano projects — to the broader Cardano community.
Subcritical’s guests were Igor Mikhalev and Igor Struchkov who are a part of Blueshift’s core team. The Spaces were very interesting so let’s dive right into the transcription!
Alright, so if you want to talk about Blueshift a little bit and then how launching on Milkomeda was for you.
For us launching on Milkomeda was a strategically important move and it worked out quite well. If you look into the dominance of Blueshift and the stats, for example on DefiLlama, you’ll see that we are the number one closely followed by OccamX in terms of the total value locked.
The strategy worked quite well and we’re quite pleased with the end result. To date, we have created some very nice on-ramps in terms of other side chains and other L1 chains that we’ll be targeting. And just to recap, the strategy was twofold. Firstly, it was based on the innovations that Blueshift brings into the marketplace, the liquidity portfolio based way of attracting liquidity and managing liquidity. And the second part of it was our first-mover advantage. Because the Milkomeda ecosystem at that time was quite small, there wasn’t a player like ourselves that could bring that execution power and strategy behind the project.
Once again, the first-mover advantage plus the innovations that come from our unique liquidity portfolio based approach.
It’s been awesome to see the amount of innovation that’s been happening in Milkomeda and then bridging over a lot of assets and things like that. And then I think a lot of the things that people like about Blueshift is the portfolio based kind of outlook where you can own more than just one thing.
Yeah surely, I’m actually quite pleased with the support that we got from people around the portfolio idea, right? So people picked it up quite nicely and it’s truly something that’s revolutionising the way people look at DeFi and DEXes.
And then what kind of plans does Blueshift have coming up? And I know there was some stuff you wanted to talk about that you were introducing.
Yeah, so we have several plans around the actual roadmap. We have truly planned in terms of bringing our Community to the next level in terms of the multiple tiers of Community ambassadors and so forth. We have certain plans in terms of the token price, supporting it, and making sure that it grows.
Yeah, I guess if you could talk a little bit about DeFi 2.0 because I know people are still interested in that.
Yeah, so DeFi 2.0. The way we define it is a more user-friendly DeFi revolutionised by this liquidity portfolio approach. Similarly, as we saw index funds and ETFs, in general, are changing the world of traditional stock investment and making a traditional approach where you have different brokers and fund managers sitting out there and trying to actively select and handpick stocks for you.
An Idea like this was nicely moved forward and wrapped into an algorithmic approach, something that ETFs have been doing for a couple of decades.
So similarly, we’re trying to change it and say that, well, there is no need for you as an individual investor to select and invest in individual liquidity pairs if you bring liquidity to a certain DEX. But what you can do instead is you can contribute to a portfolio based on your risk-reward expectations. So you can stake only one token if you want. Or you can stake multiple and by doing so you’ll own several tokens that will be taken care of for you. And if at some point you want to withdraw your liquidity, you’re able to withdraw either one or multiple tokens that this portfolio has, so you are effectively diversifying your risks and you’re investing in the multitude of tokens handpicked by our DAO instead of investing in them one by one. So in a nutshell, what we see as DeFi 2.0 applied to DEXes is additional safety and additional user-friendliness when it comes to investing.
Yeah, that definitely sounds great. I know a lot of us want additional safety when it comes to investing, especially messing around with DeFi. And then I know there’s some new APR stuff going on with your platform.
Yeah. So we looked at multiple options when it comes to rewarding our community. In general, our ecosphere is to make pool contributors or people that help our protocol by either staking or building or exchanging, or maybe doing additional marketing for it, or doing ambassador management stuff. So our idea is to make sure that they own tokens proportional to their merit.
We have several milestones when it comes to liquidity and there are three pools that every user that contributes their liquidity to our protocol is entitled to. So one of the pools will be without any conditions imposed on a certain person, once they want to harvest their rewards from staking, the 2nd pool will be unlocked when the protocol reaches higher TVL and the 3rd pool will be unlocked when the protocol has reached 500M in TVL. We defined it so that it’s based on milestones and it’s based on people’s contributions to the protocol.
The fees accumulation in those different buckets is made so you can see from the workings of the protocol, what you’re exactly entitled to in terms of the value and volume, and once the milestone has been achieved, you can claim those tokens and this way we will basically stimulate TVL, which is one of the core metrics behind the DEX.
Yeah, I know a lot of people pay attention to TVL a lot. I mean it is a good indicator obviously of how many people are in the system and you know using it. So it’s definitely something to look at. And it’s great that you’re rewarding people that are providing that because there is risk. You know, with any kind of liquidity provision.
Yeah, absolutely. We acknowledge that and we want to make sure that we share the reward. Give out the reward without killing the protocol, same as you saw in some of the, let’s say, sad examples of the recent past.
When there is an inflation of tokens and people start selling them and you know at first sight it looks like it’s comfortable and it’s interesting. But before you know it the price goes down because of the massive inflation, so we don’t want to have this.
And then when it comes to your roadmap, I mean, it looks like you’ve been following it pretty well. Like I’ve seen you doing the bridging of BLUES tokens, right? And then there are a couple other things you’re working on, so I guess if you want to talk about what’s upcoming right now and then maybe what we can kind of expect over the year. Perhaps our other guest, Igor Struchkov could tell us more about this?
While we’re waiting for him to come up, I guess if you want to talk about your team a little bit, I don’t think you introduced yourself. I know a lot of people probably already know who you are, but if you want to, go for it!
Yes, absolutely. So my name is Igor Mikhalev, I’m based in Amsterdam and I have been active in the space of DeFi and blockchain for over 6 years. I have been with the Boston Consulting Group for let’s say the past four and a half years.
Focusing on the growing competency of BCG around crypto and DEFI as well as I also ran my own projects. So Blueshift was born as the result of collaboration between MIT, one of my friends, an ex-MIT guy, who is now building a collaboration between BCG and Firmshift.
Firmshift is the company that was building the actual protocol, so we’ve been working on it for a while.
I ran large, let’s say corporate blockchain types of initiatives as well as much more exciting DeFi types of initiatives like this one, which is now the most important community & open-source initiative that I’m running at the moment.
All right, and then can you talk a little bit more about the rest of your team?
Yeah, so I am the CEO of the project, then we have Sebastian Kortmann, who’s a Professor at Amsterdam Business School and also a director of Amsterdam MBA. He is the one running our strategy and ecosystem development.
We then have Alexey Lukashin who is based out of St Petersburg and he’s a director at the supercomputer facility that takes care of different types of AI based simulations with regards to the work that we’re doing. So he’s acting as COO.
Igor Struchkov is our CTO and is a seasoned professional who worked in various types of blockchain projects as a hands-on developer and the professional that is basically driving development with engineers and architects on a daily basis.
Then we have Xena who is our marketing director, she joined very recently and is based in Barcelona. We have other people as well like Chucky who is our community ambassador manager so he’s taking care of various tiers of the community experts that are standing up for us and explaining how Blueshift works as well as what the innovations are to the broader community.
Igor Struchkov, Igor Mikhalev, Subcritical and the future of Blueshift
In terms of the roadmap we have a lot of milestones in our near future!
We have already launched the smart minting system that you already discussed here that allows us to give higher APRs to the users without too much inflation of BLUES tokens, which is a very innovative feature.
What we are working on right now is a new UI for adding liquidity to Blueshift portfolios which will make it significantly easier for the users and will help users add liquidity in different proportions including single-sided liquidity provisioning without price impact.
This will be launched in about a week and also right after this we will add the possibility to bridge Cardano native tokens and other tokens from Cardano to Milkomeda directly inside the Blueshift UI so it will be even easier for the Cardano community to directly take their Cardano native tokens as well as other tokens and invest them Into Blueshift portfolios, you will be able to do this within our UI without leaving the application.
Then there will be several major updates like stablecoin portfolios that will give better AMM algorithms for stablecoins.
We will have a smart liquidity provider referral program.
Likewise, we are working on better analytics UI and charts for the Blueshift application, as well as on a deflationary mechanism for BLUES that will allow BLUES holders to exchange their BLUES tokens for the protocol fee that is already accumulated in the protocol.
Adding to this, decentralised portfolio management and the general DAO management of the protocol.
Yeah, these are the milestones for the next three or four months.
That definitely sounds great. So with these Cardano native tokens coming over, are there plans for people to vote on portfolios to happen? You know there’s a lot of new DeFi products and stuff like that will be coming out after this June hardfork, so I’m just curious if there’s some kind of portfolio getting set up for all those.
Yeah, that’s the idea. The Blueshift DAO will be able to vote on portfolios’ composition and the tokens listed in the portfolios as well as their weights.
And all this will be done with the help of professional analysts that will help via the DAO.
Yeah, that’s definitely great to see. Like a good use of a DAO — deciding on these portfolios matters and things like that, and all that very soon — in the next three to four months. I guess you were saying Q3 right? For a lot of the DAO stuff. This means a lot of this will start getting implemented soon!
I know the stable coin portfolio. I’m sure people are pretty excited about that, especially with the kind of news that we’ve had recently with some of the stablecoins having some pegging issues and things like that. So it will definitely be great to be spread between a lot of those.
Exactly, so that’s actually a really good example of how it helps, because if somebody would have been invested in our stablecoin portfolio, there is no way one could lose all, but only a fraction of their holdings.
Yeah, and then at this point we’re about halfway. If anybody wants to come up and ask some questions to the Blueshift team, go ahead and request and we’ll get you up here.
And then I’m not sure if Igor wanted to go ahead and introduce himself a little bit. I know we had a little bit of talk about you, but if you want to talk more about your background, you can go ahead and do that.
Yeah, sure, so basically I come from a computer science background.
I have about 20 years of experience in software development and management of software projects.
For the last four or five years mostly I have been focusing on blockchain technologies and distributed ledger technologies.
And we had several projects together with our partners and also a commercial development project. And now the Blueshift project is of course the most important and the most interesting result of all the previous years of work.
It’s great to see that we don’t just make some software, but we are really moving forward… the technology, the industry…we are making new solutions that we hope will make the DeFi space better for all users. We’re looking to create a DeFi hub that will give everybody a chance to have fair profits and fair financial services.
Yeah, no, definitely when it comes to you know, DeFI and especially crypto in general, we’re all about, you know, giving the power back to the people who actually are providing all this.
It’s great to hear that you both seem pretty involved in Blueshift still, even though there’s a lot going on right now.
Yeah, the company and community that’s able to not just operate in the space of pure crypto, but also can go further and connect traditional so-called CeFi with benefits that are enabled by decentralisation.
So centralised business models for traditional financial institutions and how we can interface what they have now in terms of Community portfolios with payments-related mechanisms with larger more established players.
We want to create a vehicle for investments and training and the kinds of services adjacent to that in the world of pure DeFi, but also we want to influence in a good way the world of traditional finance by what we have. Because we believe in decentralised business models, and especially this innovation that we bring with the Community portfolios.
So if you join it and you link it to the world of traditional finance, we can make things more innovative as well cheaper with regards to things like payments or asset management or tokenization.
So we’re always exploring this space and looking for synergies and ways to collaborate with the existing incumbents.
Community Q & A
Uh, yes I tuned in a bit late and I heard you talking about making the tokenomics model deflationary. So I was just wondering which mechanisms Are you using for making that happen?
We have several mechanisms, some of them are already working, but the main mechanism will be launched in about a month.
This mechanism is called surplus auctions, which are more or less similar to what we have in Maker DAO. So the idea is that all the protocol fees that we take from swap operations, which are relatively small. It’s about 0.05%. But it’s always accumulating and this protocol fee will not be taken by somebody, but it will be used in the near future on special auctions where every BLUES token holder will be able to exchange their BLUES tokens for this protocol fee.
This means the more protocol fee we accumulate, the more trading volumes we have — the more BLUES tokens will be exchanged for the protocol fee and get burned. Consequently, the total supply of BLUES tokens will be lower after each auction. This will support the constant growth of the BLUES token price.
Good evening everyone.
For quite some time I’ve been studying Blueshift and I love the portfolio management mechanism. The strategy is a nice one, so I’m planning on providing liquidity on the DEX but if you don’t mind, I have not done this before, do you have an insider tip? Which beginner strategy do you recommend?
Well, I would say that you can start simple so you can focus on a portfolio with the highest APR. However, think about the risks associated with tokens in that portfolio. So although it’s being curated by us and our DAO there are still inherent risks and rewards.
Focus on that.
Also what you want to do is with the tokens that you get from staking liquidity in this specific portfolio, you want to also put them in an automated yield pool, and I think that will get you the best risk-reward ratio.
I can also add to this — a small life hack…if you open our portfolios page on Blueshift you will see that each token in each portfolio has its target weight as well as its current portfolio share. So if you find tokens that have the target weight higher than the portfolio share, then you can add these tokens as a single-sided liquidity provisioning without any price impact.
For example, you can now add ADA to the Blueshift index portfolio without price impact, so this gives you a very convenient way to add liquidity and also our new easy liquidity provisioning UX that will launch very soon will give you advice on the possibility to add liquidity without price impact.
Hey, so my first question would be…
When can we anticipate the possible integration of Blueshift to Arbitrum?
I think that’s the next line of action with regards to integrations to other chains.
So how soon can we anticipate that?
Secondly, I wanted to find out if the upcoming UI will allow users of the DEX to be able to connect to their Cardano native token wallet directly from Milkomeda to the Blueshift app.
Yes, so the first question was about Arbitrum and the answer is that we are now planning. Of course, expansion of Blueshift to other EVM compatible blockchains and Arbitrum is one of the priority goals for us.
We are not only limiting our plans to Arbitrum, so in this year we plan to make launches on several EVM compatible chains. This will depend mostly on our Marketing strategy and on partnerships that we will have on these blockchains. Because technically, we can connect any EVM compatible blockchain to Blueshift!
And the second question was about connecting Cardano wallets to our UI. If I got it right.
And the answer is yes — in the next UI release.
We will add the possibility to bridge tokens directly from Cardano to MIlkomeda using our UI and this will be done by connecting your Cardano wallet to our UI. That is what we are working on now. It will be live very soon!
I have got a quick question in terms of just conceptually understanding the tech.
I’m kind of a visual person and I came from traditional finance in terms of stocks in the stock market and index funds.
Are Liquidity portfolios similar to ETFs such as the S&P 500 in terms of the concept? Is that the same thing or are there small nuance differences that give Blueshift a little of an advantage or a disadvantage?
Yeah, I think it’s a great question, so let me start on it.
It is almost the same with the difference in the mechanics of choosing which stock or in this case which tokens get added or removed from a certain portfolio. So whereas in the case of index funds that are sort of straightforward rules, sometimes it’s just top 500 or it’s like all the green ones and so forth. In our case, it is a more sophisticated choice done by means of our DAO
Our DAO employs community based portfolio managers which are people who can analyse properly in terms of which tokens need to be added to a portfolio, or removed.. So I would argue that this looks like an advantage.
Igor, would you like to add anything on top of this?
Yeah, just a small addition that Blueshift portfolios have an advantage over the original indexes that they also have portfolio fees that add additional profits for investors, not just the market growth of the assets.
Oh yeah, exactly, it’s a little bit like dividends on your index funds, which is something not currently available in the world of index funds.
Right and then I was curious if you wanted to talk about the micro SPO thing that was going on. I thought that was pretty cool.
Yeah, So what we’ve done is we’ve said “well as we are Cardano based, we are a cardano native token, we want to go deeper and use Cardano native infrastructure architecture and software”.
Right, so based on this we said “we want to go out there and do what we can for the community of Cardano.” We’ve done this by supporting small stake pool operators, and we will continue to do so.
So we’ve been choosing them on the basis of the societal impact that they make, and on the basis of their position and their contribution to the ecosystem of Cardano as well as the goals of Cardano that were set out by Charles Hoskinson
Basically helping them with marketing and filling their stake pool. It went quite well because they got quite some traction and they improved their business opportunities quite a bit!
Yeah, definitely great to see projects reaching out to these small pools because I know a lot of them have been struggling. I’ve seen a lot of pools retire recently. You know? I mean, that’s just kind of the way it’s going to work out right? It’s a lot of marketing and things like that too.
And circumstances come up, but it’s definitely great to see projects trying toget some delegation sent their way.
Is there a way for these small pools to reach out to you?
There is a way to reach out to us. They can talk to our community managers on any of our channels and we will consider them.
Yeah, maybe if anyone wants to talk a little bit about what features they miss or think is going well or not going well, that would be super valuable to hear or just general thoughts on the industry right now. What can we do to make your life better or easier?
Is there currently a protocol on any other blockchain that is your kind of I don’t wanna say competition — but something of that sort, that you’re using as a model or is this the first of its kind that you came across?
Yeah, there are several protocols that in some ways compete with Blueshift. Of course we always look at Balancer and also we look at Powerpools, which are like the closest to our idea but again — separate. If we combine them then we get something like Blueshift.
As soon as we evolve and the idea evolves, we will see more ideas looking more or less similar to ours and we need to monitor all this and try to always be better to always make more features and so on.
Uh, yeah, I have a question
So I see that some portfolios are powered by let’s say Celer multichain and I think the most recent one is nomad. So I was wondering if you have any plans for the future, will you be adding more portfolios and things like that?
Yeah, Of course, these partner-powered portfolios are a very strong idea and a very strong source of liquidity in the initial phase of the protocol.
In other words, we will continue to work with our partners and to attract new partners. These initiatives make attractive APRs on their portfolios which then attracts more liquidity.
Also what is very interesting is that we are planning competitions that liquidity providers can participate in and this will be ‘team-based’. Every portfolio as a team will compete for liquidity with other portfolios to earn more APR on the farms. I think it will be very interesting. So just stay tuned and check out our announcements on our social channels.
I love the take behind Blueshift. I’ve also added Blueshift to my watch list on Coinmarketcap and for some time now it has been reaching new all-time highs.
So I’m looking at the question of why does the price go up and what do you think is the reason behind this?
Firstly, it’s important to understand that the price of BLUES is hedged by over 10 million in different assets that you see now spread across our protocol and other protocols. So in portfolios where BLUES is participating as the token that is interfacing other portfolios to enable cross portfolio swaps, other tokens are acting like a hedging instrument for BLUES, to keep its price.
Then as we talked about the smart minting approach, the approach assures as low as possible inflation. So then most of our tokens, I think over 90% — are currently locked and it’s not possible for the Community, the developers, the partners, or anybody else to do anything with those tokens. That scarcity is also likely the factor that drives the price further up.
And surely it’s linked to ADA. You can see that ADA is performing quite well in the current market despite the recent dip. So if this is going all right for ADA, and ADA will be going up, BLUES automatically will be going up as well — because they are inherently connected assets.
In other words, there are multiple tailwinds for BLUES to keep up the trend.