January 5, 2026 • 48 mins
Summary
In this conversation, Peter Abilla interviews Kevin Kap, co-founder of WCM, a capital-efficient trading venue. They discuss the origin of WCM, the identification of market inefficiencies, and the importance of capital efficiency in trading. Kevin explains the role of their unique risk engine, the integration of spot, perps, and lending, and how WCM aims to educate users and simplify trading strategies. They also touch on the significance of building on MegaETH and the collaboration with RedStone Oracle, as well as the current stage of WCM and future plans for user engagement.
Takeaways
WCM aims to create a capital-efficient trading venue for users.
The risk engine is designed to minimize liquidation risks.
User education is crucial for understanding new trading strategies.
WCM integrates spot, perps, and lending into one platform.
The team is focused on gathering user feedback through interviews.
Building on MegaETH allows for lower gas costs and faster transactions.
WCM is positioned as a new category in trading, combining exchange and prime brokerage features.
The platform is currently in a private alpha stage, with plans for user onboarding.
RedStone Oracle plays a vital role in the functionality of WCM.
The goal is to make trading accessible and profitable for all users.
Sound bites
"It's like a new category."
"We need to do user interviews."
"We're always looking for feedback."
Chapters
00:00 Introduction to WCM and Its Origins
06:53 Identifying Market Inefficiencies
10:28 Understanding Capital Efficiency
15:02 The Role of the Risk Engine
18:10 WCM: A New Category in Trading
21:48 Target Audience and User Experience
24:40 The Early Days of Omi and Its Impact
25:01 Understanding WCM's Unique Value Proposition
27:04 The Journey of Building on MegaEath
28:12 Choosing the Right Blockchain: L1 vs L2
34:13 The Role of Redstone Oracle in WCM
36:17 User Interviews: A Key to Product Development
40:06 Educating Users on New Trading Concepts
41:58 Current Stage of WCM and Future Plans
44:51 Engaging with the Community and Getting Involved
Follow me @papiofficial on X for upcoming episodes and to get in touch with me.
Watch these interviews and subscribe on Youtube Block by Block Show.
See other Episodes Here. And thank you to all our crypto and blockchain guests.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Today on the Block by Block, I'm joined by Kevin Capp, co-founder of WCM, World CapitalMarkets.
Kevin and his team have been building a capital sink, a trading venue so capital efficientthat liquidity naturally flows into it without any external incentives.
Kevin, welcome.
All right, thanks for having me on the show.
So you guys have been uh pretty mysterious, but you're part of the mega mafia or mega ETHmega mafia ecosystem and um have some notoriety and have a lot of respect because of that.
(00:33):
uh In this interview, we'd love to get into WCM, what it is and what you guys are up toand how the audience can participate eventually as you guys uh roll out into um some
public test net or where you allow people to participate.
uh But maybe if we could begin with kind of tell us the, I guess the origin story of WCM.
(00:59):
Like what problem did you see that led to the creation of WCM?
Right, so actually it's a bit interesting.
It's kind of like there's like two sides of that story.
So even though we're very public about what we do in Tve recently,We were actually one of the first Mega Mafia teams in the first offsite in Berlin, more
(01:20):
than a year ago now, with all the other Mafia 1 teams.
And that was such a great experience, actually.
And it's when I realized that working with Xu Yao and Nomic and the rest of the Mega Eastteam was something that I really wanted to do.
(01:43):
How this started is I used to be a trader.
I worked at a prop shop.
was trading, I was like fully on chain.
We'd like beta hedge on exchange, but most of the like, let's say alpha I was finding wason chain.
And I really wanted to build something because I didn't like trading to be honest.
(02:04):
um And I spent like two years trying to figure out what I'd built.
um And I like played around with me making some games and um at one point I sort ofdifferent sort of, but I...
ended up like, when Megadeth came out, there was a time when like, there was all these L2scoming out and it was like a bit cringe to make an L2.
(02:29):
um And the reason why is they were all the same and they're all like OP stack or maybelike the arbitramons or there's some margin, there's like very small differences between
each one.
And because of that, you would see like a token would launch, it would go to zero, theecosystems kind of day off and.
The reason why I thought Meggith was worthwhile is because when I, to me it's obviouslylike the sort of like final step in like what L2 should look like.
(03:00):
Which is like, you you make some trade-offs on, on.
having like a single sequencer and just beefing it up like crazy.
And I mean, that can scale, right?
And as we're seeing now that Minion is coming up, like we have a better idea of like whatthat actually, the performance that would look like.
And it's everything they said it would be, which is great.
(03:23):
And I think it's kind of the only way in which you can really have like uh a true Dex ison Megan Eave.
And we can go into that later.
umBut the start is that I was like, wow, OK, this is an environment in which we can, the
space for creativity was open in a way where it wasn't before.
(03:49):
It's like, let's think about what we would design if we had no gas constraints.
If we didn't have to worry about gas costs, if the chain is super fast, et cetera.
And.
That's the sample we came from.
originally I was building a, originally it was Teco and it was gonna be a lending market.
And the idea was that um lending needs to be under collateralized because that's how itworks in real life.
(04:17):
And in many ways crypto is like slowly becoming a reflection of the real world and likeyou can't have like actual like financial system with under collateralized uh lending.
um And so we were building that.
As we were building that, though, we realized that um it's not possible to just build thisof risk engine and then integrate other stuff, other protocols into it.
(04:43):
You have to build each part of the protocol.
if anything you want to do with the risk engine, with the lending market, anything thatyou want to connect to, you have to build it yourself.
umAnd at the same time, met my other co-founder, around that time I met my other co-founder,
soon to be co-founder, uh Lucas.
(05:03):
And he was building the same thing, but under a slightly different thesis.
um His idea was, so he built a derivatives exchange previously and sold it.
And then he started working on a...
what is now called WCM, but for now will remain unnamed.
(05:25):
And they started from the standpoint of, we built a derivatives exchange.
What would it look like for a perfect exchange?
And what they figured out was like, OK, there's this arbitrage between lending market,between the spot, sorry, between the ETH perp.
or perps in general, perp funding rates, and lending market on chain.
(05:50):
The biggest one being Aave.
That delta tends to be around 4%.
And how do you close that?
You need to be able to borrow money under collateralized in order to execute a basis tradethat will close that arbitrage.
And that was what's it called.
(06:11):
That was like the original vision.
was like, all right, like how do we make on that side, how do we make this the mostcapital efficient exchange possible?
um And to this day, like there's no cross margin between spot curbs and lending in partbecause it's super difficult to build all three.
Like there's many different startups that are building spot clubs.
There's many different startups that are building spot curbs and there's many differentprojects that are building uh club lending markets and they've raised millions and
(06:39):
millions of dollars and we've done all three.
um with under like 500k.
So um then we came together and then now we have WCM.
So that's kind of like the origin story.
Now it takes kind of a special mindset to identify these really subtle kind ofinefficiencies in the market.
(07:02):
And then coming up with a product solution and then you built a project around it.
And then now you guys have, you know, this product that you'll, you know, that will belaunching.
Like what led you, I guess what, you know, for you and your co-founders, like what led youguys to even like see these subtle inefficiencies in the market?
(07:22):
Because it'sIt's hard for most people to see, but you saw something, there was a there there, you
created a product out of it, and then now you guys have WCO.
Right, well, we're traders.
So I used to trade at a prop shop.
My other co-founders used to run a hedge fund.
Well, it was a prop shop, then they converted to a hedge fund, and now they're working onthis.
(07:45):
But that's it.
We're just in the market.
Yeah, trying to find out.
I'm trying to figure out how to make better trades.
This is kind how you find these insights.
And so uh as a trader, you've built this product for traders.
Is that the right assumption?
Like that's the target audience?
Yeah, yeah, definitely.
mean, like some of our angels, like the main complaints they have about changes likehyperliquid is that there's no cross margin.
(08:11):
There's no cross-ponement between spot and perps.
And that's kind of important because it means like, if you want to do a basis trade, forexample, and I keep coming back to the basis, but because it's like the simplest trade
that I can think of.
And so that like benefits massively from a what's it called, like cross margin.
(08:33):
And on hyper liquid, we do basis trade, you have to split your money between two differentaccounts, which means like, instead of using the one collateral, um, to back multiple
positions, you have to split them up and that reduces your, your, let's say you're getting10%.
That means that now you're spending 10 % across two different things.
So really now you're getting 5 % across like the total position size.
(08:56):
So these differences in like, uh, think people talk a lot about capital efficiency.
They they don't really like internalize.
like it just means more money.
You just make more money and that's what WCM was made to do.
It was created to just make our users earn more money.
Earn more money when they're right, lose less money when they're wrong.
Yeah.
(09:18):
I love that.
I don't think most people, I think most people are going to say, wow, yeah, I want I wantto be part of that.
That sounds amazing.
For hyper liquid, doesn't cross margin kind of address what you're describing, though, itprovides some level of capital efficiency, but I guess not enough for
So sorry, so let me be more specific.
(09:39):
um HyperLiquid has cross margin between perp positions.
So that's good.
But they don't have cross margin between perps and spot.
And they certainly don't have cross margin between spur pops and lending.
So um if you buy spot uh ETH and you short the perp,you know, those are two different positions and the risk engine isn't aware of it.
(10:02):
So if you're like leverage three X, let's say on the ETH perp and the price moves 30%,even though on like on hyper liquid itself, have the other side of that tree that also
moves 30 % or whatever, let's say they're equally sized, right?
Then you would get liquidated.
(10:22):
Well, on our exchange, you wouldn't get liquidated.
And this is important because it means that like, you you can just do less with yourmoney.
That's pretty awesome.
Let's get into WCM.
right now it's being positioned as like the most capital efficient trading venue incrypto, something like that, right?
uh Maybe unpack that for us and like help us understand capital efficiency because peoplekind of throw that word around, right?
(10:45):
But if we can formally define that and like what it means to the trader.
Mm-hmm.
what it means to the trader is that you can open more positions with a lower risk ofliquidation.
I see, right?
So, uh again, I'll revisit this ETH example because it's like, I think that is the easiestto kind of understand, um which is that you can buy spot ETH, short that same amount of um
(11:18):
ETH.
And our risk engine Atlas understands that because you have zero net market exposure,because these two positions are the same amount, no matter how leveraged up this per
position.
So if you have $100, you can open up $100 spot buy and $100 short at the same time withthe same collateral.
(11:42):
And so technically, this is leveraged up a lot because you also have this lag.
But the risk engine knows that you're not really levered up because you have um these arecanceling each other out.
And so when you do this, you're able to then go to this very low risk position.
The risk engine knows that.
(12:02):
So the risk engine says, OK, on this very low risk position, you can leverage this up, upuntil 50.
not actually infinity because there are like restrictions, like there are liquidityconstraints, but you can leverage up, let's say on our exchange currently anywhere between
like 40 and 50X.
So you have these leverage positions and you can leverage up that leverage position,another like 40, 50X.
(12:26):
And now on any other exchange, um you would not be able to do that because the exchangewill just liquidate you.
umNow, when there's not cross margin and when there's just uh spot and perp separately, you
can still do a basis trade.
You just introduce leverage.
(12:46):
And when you introduce leverage, then as the prices move away from each other, you have torebalance these positions.
And as you rebalance the positions, then you take little tiny losses.
um Now, when we used to work at the prop shop, we used to do a lot of like, uma lot of what's called AMM LPing.
(13:08):
And we wanted to hedge out our, we wanted to hedge those positions out.
In order to hedge those positions out, you like short on exchange.
And as the price is moving, um you have to keep rebalancing your shorts so that you don'tget blown out.
um And also so that it actually tracks the price.
And as you do that, you're incurring, you're getting a haircut every time you move thatposition around.
(13:34):
And for that reason, we would only be able to really open uh LP positions.
I we didn't have, I guess, the most sophisticated quants, if it wasn't above 30%, 40%, itjust wasn't worth even looking at.
um Which means that's kind of ah how much APY you're subtracting over a year, which iskind of a lot, um especially considering the basis trade right now.
(14:00):
mean, Athena is yielding 8%.
umSo you could see how that makes a massive difference.
um Like if Athena was using, here's a better example.
If you grabbed Athena's in total, like deposits, all of their deposits, and you put itonto WCM with the same capital that Athena is producing 8%, they would be producing around
(14:24):
like 32%.
And that's the difference of capital efficiency.
It's like, would you rather 8 % or would you rather 32 %?
And that's because of the integration between perps and spot and lending.
Yeah, it's because you can borrow to lever up the basis trade.
(14:46):
There's a lot of other interesting trades that are downstream of the ability to do that,that we can get into, but they're a bit more complicated and a bit more niche in the
expression that you want to have on the market.
It sounds like the special sauce here is this risk engine that you're describing that kindof almost prevents liquidation or it's like liquidation aware.
(15:12):
Can you tell us a little bit more about that?
Sure, yeah.
So our risk engine is what makes WCM um WCM.
So the risk engine does like, ask a simple question.
um It looks at your portfolio and it asks, okay, what are these positions worth?
(15:35):
um What is each individual position worth?
And what is each individual position worth in the worst case scenario?
So and because I think I see on the timeline a lot of people talk about um the differencesbetween like lending and perps and how like even though like both are like like leverage
(15:58):
positions liquidation works very differently.
But our risk engine really views it as kind of it's like uh it doesn't have to becomplicated.
It's just like how much is this worth.
That's a simple question.
So there's like.
So the risk engine, each asset has, let's say, some coefficient.
And it's so coefficient based on liquidity and some coefficient based on just what's itcalled, volatility.
(16:23):
How much do we think this asset can move um before?
um we can liquidate it.
um And so we use these two values to create a sort of risk coefficient.
And then each position then also has a risk coefficient.
So for example, like if you have ETH um and you lend it out, this is pretty low risk.
(16:43):
So this only cuts like, let's say 2 % off of the um available margin that you have.
um And so, you know, if you were, if you have, if you buy spot ETH and then youopen up a per position.
That per position has some risk score, depending on how big it is compared to yourportfolio.
(17:05):
But you can do that.
And then if there's, if you still have like 4 % of your net asset value that you can use,then you can go to the lending market and you can deposit the ETH there as well.
So you can do like all three types of actions.
You can engage in all three their markets.
um with the same collateral as long as um the positions aren't like, you're not doinganything crazy with the portfolio.
(17:32):
As long as it's the risk engine understands that like, okay, like this is safe based onlike the risk assessment we've done.
this feels like, I can't think of another, uh, really project that kind of is doing whatyou guys are doing.
Um, you know, you've got perps, you've got lending, you've got spot, but there are verykind of separate products.
(17:54):
Um, almost separate projects even, right?
Um, but you've got all three, like in one, and it feels like it's a kind of like a newcategory.
Um, tell us like your thoughts around that because as a new category.
It's quite exciting that you could borrow in order to lever and then you've got the kindof exposure to spot and perps.
(18:17):
It opens up such a new, it's a brand new design space that I haven't seen before.
Yeah, so this is the thing.
It's like, I hate calling it an exchange.
It is an exchange.
In my mind, I think of more about it as an exchange plus a prime brokerage, because aprime brokerage connects you to the exchange and then let you lever up on whatever you're
(18:38):
doing.
saying exchange plus prime brokerage doesn't sound very sexy.
I think the biggest confusion is like, think sometimes they tell people that we do spotgroups and lending and they assume that it's kind of like a sushi situation where it's
like these three disconnected products.
And like, just like forking Aave or bento box and, you know, launching a club andwhatever, it's like very different than like having it all connected by the risk engine.
(19:06):
um The sort of like...
Yeah, actually, think Dex Design is going down two paths.
There's two viable paths.
I think one of them is dark pools.
I think there's a lot of literature that shows like, or the current literature is thatdark pools are like improve liquidity when they occupy around like 30%, 40 % of a market.
(19:37):
And after that trails off.
And I think there's like other really interesting things like Aster that are working onthis.
um And the other thing is like capital efficiency maxing.
And I think we're the only people that are actually doing that.
um I've seen some other like pitch decks um that have said that they're trying to, thatthey're going to do spot curves and lending.
(20:00):
um And usually like where they fall off is thatthey end up doing everything as like clubs, sorry, not as clubs, as like pool-based.
Pool-based is just cooked.
Like the only reason why AMMs exist is because no one wants to provide liquidity to somelike illiquid shit coin.
And that's fine.
(20:21):
Like they have a use case for that.
But for like real trading, it's like, doesn't make any sense.
And the same goes for lending.
If you're doing the basis trade, you need to be able to like actually knowum What is the lending rate that you're paying so that you know like So you can better
understand like okay.
How much money is this gonna make me?
(20:43):
Of course like the perp funding rate is invariable But having both of these be variable isnot ideal at all Especially if you're like trying to like do this do this trade um
When we think about the audience that you guys, that WCM would be really appealing to.
We think of traders as kind of like this generic term, right?
(21:05):
But there's obviously various kind of personas within the trader archetype.
uh I do a lot of trading on hyperliquid.
I'm primarily short on hyperliquid.
um But I'm not sophisticated enough to...
to do the kinds of strategies that you're doing, for example, or that WCM provides, whereyou borrow and then you can do spot and then also perps at the same time.
(21:30):
It's like, I wouldn't know what to do.
And so for like a trader that's, and I'm guessing probably most traders are probably likeme, where it's like, we want to participate and we make decent money, but we're not like
sophisticated enough.
Is that?
like the market that you're not necessarily focused on or do you provide like educationalinformation so that they can learn these types of strategies that are like really
(21:57):
beneficial?
Yeah, so we want to make it extremely easy for a user to benefit off of all of the likeyou should be able to like slam your forehead on the keyboard and Make money on WCM.
That is our goal So we have like a strategies page where you like does execute the basetrick for you Like it's just a slider you move it up.
(22:20):
It's like you want to make more money.
Yes, and then you move it up over hereand then you click a button and then it gets done for you.
We're working like making vaults where a vault manager would and like manage the positionfor you for an extended period of time.
So I'm curious, like how did you find out about hyperliquid?
I don't know.
I wasn't in like the initial airdrop, but I just heard about it from a friend.
(22:44):
And then I, I'm, I'm kind of a big shorter.
It's really kind of embarrassing, but I love the short.
Um, I, I'm, I'm long crypto, but I'm also long on like making money.
And for some reason, like shorting is just works for me.
yeah.
And that's, that's really it.
And then I got involved with this project called Infinex and then they integrated,Hyperliquid recently, it's Cain Warwick's project.
(23:08):
And so I've been really kind of doing a lot of shorts there.
So I don't know, I've just kind of just been around.
I see.
Okay, so I found out about hyper liquid.
I was curious as to what the reason but I've got a hyper liquid because I was looking forwhere to park my USDC and like to get the best yield um and hyper liquid in maybe like
(23:34):
January 2024 December 2023 had incredible yields.
It was like, excuse me.
I remember the first time I looked at it at the HLP vault was yielding 130 % APY.
It was so high, was like, there's no way this is definitely a scam.
And I left.
(23:56):
So I didn't deposit, I just like went to go fuck off, do whatever.
I was like, I'll check back on this in a month.
I come check back on it, it's 80%, the TVL is higher.
And I'm like, okay, like this might not be a scam because it's actually going down at arate that makes sense.
um So then I deposited money into it.
(24:19):
And then I see like, I mean, the yields were still pretty good.
think it was like, it came out like 60, 70 % or something for a while.
And then the yield was actually accruing and I was like, okay, okay, this is great.
Then it started trading on the exchange.
And so what brought me in was seeing this ridiculous number.
I mean, I remember like, oh, I don't know if you remember ohm from last cycle.
(24:42):
Yeah, okay.
You remember when the APY was not in the screen.
It was like outside of the screen at first.
And I was like, this is insane.
And I watched it go from like, I watched it 10x.
I watched it 10x to like 200 million.
And I remember being like, fuck, like I'm like, I'm an idiot.
Like, why did I?
Why did I not buy this?
(25:03):
And then I bought it.
And then I watched it 20x to four billion.
And the API is looking at it.
But that big APY number is like, you look at it and you're like, this is scam.
And then if it actually works, you're like, wow, I'm an idiot.
I need to use this product.
I need to use this.
I need to buy the token.
I need to do whatever.
And I think that's, to me, that's kind of the advantage of WCM.
(25:27):
If you go in the UI right now and you move the thing, it's like,and you move the slider up on ETH, it's offering two, it's like, we're basing it off of
current rates, right?
So the AFUI on the levered basis trade is, I don't know, 300 % or something at times.
And you look at that, I can't imagine a user looks at that and they're like, this is not ascam.
(25:51):
They will definitely think this is a scam, but...
Some people who are more willing to take on the risk of the exchange will come on.
They'll use it.
The APY will slowly start to come down.
Other people will come in as APY and they'll be, oh, OK, this is fine.
And then this is how we get the ball rolling.
And this is the main, this is kind of like, we're giving, it's like this trade, could justrun it as a hedge fund or as a prop shop, right?
(26:19):
But in doing that,we would make a lot less money in the long run because this could instead be used to
bootstrap an exchange.
And the bootstrapping part of an exchange is the hardest part.
Once you have enough traders on there, then it kind of does its own thing.
And obviously, you see different exchanges go up and down.
regardless, to answer your question, then,Like, how do we expect like regular users or users like you to use this is I'd like you to
(26:42):
come on and accept the free money that we're going to give you.
It's not actually free money, right?
But it's like this arbitrage that exists that hasn't been closed.
And that, you know, people will feel it's too risky at first because of counterparty risk.
(27:04):
But eventually they'll see that it's not a scam and that it's like, oh, this actuallyworks.
And then they'll come on and they'll use it and you'll get some APYs.
And then eventually you'll start using it just to do all the things you're doing onhyperlabel.
And maybe you start, maybe like you read the educational materials you create and you'relike, oh, I can actually use these other trades.
And then you start doing that too.
And that's the hope.
(27:24):
And then obviously we'll like do all the other go to market stuff.
We'll do like Twitter and points and whatnot.
Yeah, I love the positioning.
mean, you know, closing the inefficiency gap, like that speaks to a lot of like peoplethat are more logical, but then like, you know, earn like make free money speaks to like
everybody, right?
All right, let's go back to like, as you guys were evaluating, so you have, you identifieda problem or an opportunity that you could take advantage of, you built WCM.
(27:55):
What, tell us.
kind of like the journey that led to, on which chain should we build this on?
And what led, like what are the thoughts that you and the team had that made you decidethat MegaEath was like the right home for WCM?
So, so we actually released an article kind of about this, about L2s, but I'll quicklymake a note on L1s, which is that the reason we haven't deployed an L1 is because there's
(28:26):
an inherent contradiction that every L1 has, which is that, you know, the people who holdthe token, aka the founders, the team, investors,
like the people who buy the token because they believe in it, like the community, I guess,they all want the token to go up.
(28:46):
And if the token goes up and gas is denominated in the token, then the chain becomesreally expensive.
I started using Avax in like 2021 because it was super cheap.
And by the end of 2021, it was extremely expensive.
In fact, it was at times like...
(29:10):
Actually, no, was never as expensive.
No, I think it was almost as expensive as Ethereum mainnet at that time.
I remember paying like 50 bucks for transactions when the network was really congested.
you can't have a club if there's a high gas cost.
They just don't work because gas cost is the spread.
(29:34):
And there's actually something more important, which is insight that I had when...
We were talking to a major exchange about, let's say, some sort of partnership.
And one thing that was super interesting is that we spoke to, let's say, their mosttrusted market maker.
(29:56):
So this guy is moving massive size.
And one of the insights was like,One of his insights was that hyperliquid was able to be successful and it grew so fast um
because it's not a real DEX.
It's just like they made it decentralized enough that um you don't have to slap KYC onthere.
(30:16):
um And there's zero gas.
Market makers don't have to pay gas.
And so it's really easy for people who are market making on sex to just move over tohyperliquid because they don't have to change their market making scripts.
And the cost of changing these market making scripts is extremely high.
umAnd so these mark these and like sex market makers are most of the market.
(30:41):
They're like uh more than 90 % of market making is done like on sexes.
And these guys are moving size and they just don't give a fuck enough to like spend allthis money to rewrite their scripts to account for gas.
And Meggys is the only place that I know of.
(31:02):
um that where gas costs will be so low that we as WCM will be able to subsidize marketmakers.
And so we're talking to market makers right now and all the market makers we're talking toare sex market makers.
They're not DeFi market makers or I mean, we're talking to DeFi market as well but likethe people that we wanna partner up with are sex market makers.
(31:22):
um And it's because these guys are very good.
They're very good and they're used to moving like tons of size.
um But they'll only be able to operate on an exchange where gas is subsidized.
And this word is actually also really important.
Our gas costs are like 10x cheaper than like every other club.
(31:45):
Whether you look at Kuru, whether you look at GTE, obviously, hyperliquid, there's no gascost.
But these are the two main ones that I can think of that are on chain and that you canactually look at.
um and we're 10x cheaper.
And that's just because like my CTO has been coding for like, how many, like 40 years.
(32:08):
Like he's been coding almost longer than, like longer than I've been alive, almost twiceas long as I've been alive.
And he's just extremely cracked.
uhcan do very low level, I don't even have the words for it.
He's just very good, right?
And so, and because of this, we're able to subsidize.
(32:29):
If we were 10x more expensive and Omegi, would we be able to subsidize?
I don't know, maybe, but um 10x cost is huge, right?
um But it's not just that, it's not just the, the gas cost is extremely important, that'sone part.
um The second part is the speed.
um Now,Speed matters up until a certain point.
(32:52):
so Binance is like, I think like 10 milliseconds uh latency, 10, 15 milliseconds latency,something like this.
um MegaETH is like the same.
I don't think MegaETH could be much faster.
I don't think it needs to be.
um Again, like.
Speed matters to an extent.
(33:13):
And really, when people think about speed, they're thinking of high-frequency trading.
And really, what they should be thinking more is speed in the context of high-frequencytrader versus high-frequency trader, as opposed to the exchange itself being fast.
Although, of course, it has to be fast to a certain uh extent.
So three reasons why it shows, Maggie, or four reasons, right?
(33:37):
No, like it's using ethos gas.
So there's no um like weird incentives between the token and gas prices to gas is supercheap.
um Three, like it inherits the security of Ethereum.
We're very Ethereum aligned.
I've I've existed my life on Ethereum and we all have on the team.
(34:02):
And fourth is the speed.
um We need to be comparable.
to every centralized exchange.
And if we're not, then we won't be able to succeed.
And that makes sense.
And it sounds like a really thoughtful approach that you guys took as you evaluated L1sand L2s on which to call home for WCM.
uh Tell us about uh the role.
(34:25):
I know that you guys are users of RedStone Oracle.
Tell us about that and the role RedStone plays.
And also, what's it like working with the RedStone team?
Mm-hmm.
Yeah.
Well, I mean, simply put, you can't have a Perps DEX without an Oracle.
So, like, the whole thing just goes to zero without RedStone.
(34:47):
So we need a RedStone.
And RedStone is obviously super fast.
And it's like on MegaETH.
It's the main Oracle that we use.
So, I mean, simply put, it's just like we need it.
So thanks.
But...
In terms of working with the team, it's very good.
(35:07):
I mean, they responded extremely quickly.
um Whenever we request things, they get back to us.
uh It's really good.
Like uh recently we requested, we wanted to test out, so we do user interviews on thefront end to test out the front end because I'm saying make a better front end.
And also to get bit weird because there's like different markets and like figuring out theUX for that is like tricky.
(35:31):
um And so...
One issue we were having is like the exchange looked weird because we only had ETH andBTC.
And so we thought like it was really throwing off users as they were trying to use itbecause they're like, there's only two things.
And so we're like, okay, well, we need more assets because.
And so therefore we need an Oracle for that.
(35:52):
And so I went into a group chat with RedStone and I asked them and in like a week or two,like uh we had these Oracle set up for us on testnet.
um So that was super helpful.
And it's little things like this that like really help that maybe super bullish both onRedStone and on like MegaETH ecosystem in general, like everyone's super helpful.
(36:12):
m And that really helps development.
Yeah, make a better product.
That's awesome.
Let's talk about the user interviews.
like you speak like a product person.
I don't know your background, would love to hear more about it, but in crypto, you don'thear a lot of people talking about user interviews, which is really unfortunate because we
(36:35):
need more of that.
And I think part of it is because there's just not a lot of consumer facing products incrypto.
I guess what led you to uh care enough aboutdoing these user interviews and then taking their feedback to improve the user experience.
Tell us what that feedback loop looks like and for WCM.
(36:56):
Mm-hmm.
Yeah.
Okay.
I mean, I'll go through the process first.
mean, I go on Twitter and I look up Clobs, Dex, MegaEath, uh WCM.
Like, I use these keywords and I press search and then I find people that are interestedin things that are related to us.
And I look at their profile.
(37:17):
I see what they care about.
I message them, hey, I saw you were talking about this.
This is what I think.
they respond, I say something, then I'm like, hey, do you wanna do a user interview?
And usually they say yes.
The hit rate is like surprisingly high.
And everyone in and I to be thankful to like the MegEath community in general.
I've met so many people in the community and they've all been very helpful.
(37:41):
And...
It's all people that are surprisingly knowledgeable about exchanges and are true users.
So if there's any other users out there that want to look at the exchange, please contactme on Twitter.
um I think we just copy and paste Binance um or Bybit or whatever.
(38:05):
It would look good enough.
It would look great.
And people would use it.
And if you're familiar with if you're normal, whatever.
The issue is that it doesn't really make sense because we have spot-perps and lending.
uh I guess the lending is the part that throws it off because Binance also has like perps,right?
um But we really were like, all right, like how do we, like we could just add in like alittle tab and it's like, well, that feels complicated because you can also do something
(38:31):
called like bundle positions where you like, where you can basically like, uhadd in an infinite amount uh of positions and execute them all in one um transaction.
And this is beneficial because you cut that gas cost by like 90%.
But also because sometimes you want to execute things at the same time, atomically.
(38:55):
um And so figuring out, OK, how do we make it really easy for users to do this thing thatdoesn't exist anywhere?
else was kind of like the driving force behind this.
And just generally, I think there's always room to be improved.
There's tons of things on the hyperliquid UI that I just don't like, that I think isconfusing or annoying or whatever.
(39:18):
And they've done a great job.
They've simplified it, right?
In a way that's really nice.
I know.
I've used all these different exchanges.
And there's different things that I like in each one.
And I have a personal preference, obviously, but like...
I think a good product is really built when you talk to a ton of people, you test it out,and you see what do people like the most.
What is the easiest thing to do?
(39:39):
um Yeah, there's also, again, like out, so the concept of like margin is a bit differenton our exchange because it's always cross margin.
And, you know, right now we don't have like isolated positions.
You have to kind you have to create a new account.
So it's like trying to get into the user's mind, like how risk works on the exchange issomething we've.
been very focused on um just because it's so new and odd.
(40:03):
And for that, we need to do user interviews.
Yeah.
And just on that point, user-in-user is great, but on that point, education is really,important.
What are the plans there to educate your potential users?
Because having spot perps and lending as a unified product is very new.
(40:27):
And you're going to have to educate people a lot about it.
Yeah, that's one of the feedbacks we received.
so different users have sent us like a a, one thing I always, like, I start off theseinterviews by asking them like, just like, what are they doing now?
And then like, how do you know what you're doing?
So for example, like the way Binance does it, they have like some like risk or whatever.
(40:54):
And, you I mean, you just go to the, you click the thing, you go to the docs and thenthere's like a very long page that explains all the math.
behind how they're calculating how much margin you have.
And you can read that and then really understand on a deeper level what's happening.
um We are working on docs right now.
(41:18):
On the exchange, there's a good page that says stats.
And you can view um all of the risk parameters of each specific asset as well.
And so,Like all the information is there.
It's just like, have to just like be much better about um explaining it to users and likeputting it together.
(41:39):
By Maynard, we'll have all of this uh ready.
We're a lean team.
There's only four of us.
So.
that's pretty amazing.
um Right, so I signed up and I'm on this massive, really long waiting list.
um Tell us what stage WCM is in right now.
It feels like it's private beta, right?
Or something like that?
Private alpha?
(42:00):
yeah, kind of.
mean, so the code base is done and it was actually finished in April and we've done anaudit already on it.
And so we could go live tomorrow if we needed to.
um But what we really just focused on is making the UI better.
(42:21):
So it's like, we started, it's like first smart contracts, then the UI.
and then social media.
so I've been focused on social media.
My co-founder, Lucas, has been focused on the UI.
He's having user interviews and just iterating on design.
ah But really, at this point, it's mostly just aesthetics.
ah Yeah, it's mostly just aesthetics.
And then we're building vaults as well.
(42:42):
ah But that doesn't need to be there day one, I don't think.
It will be, but regardless.
Yeah.
You know, as we're talking, I think I need to introduce, I don't know if you know KaneWarwick, but I think I need to introduce you to him because this is exactly the kind of
product that he would want inside of Infinex.
Infinex is, if you're not familiar with it, it's like a super app, but it's, it's really awallet, but it's a, it has like a section of applications where it's like one click and
(43:10):
you're inside the app and, and you don't have to like sign in again.
It's you're already in there and then all of your assets from Infinex is already kind ofshows up in your portfolio.
Mm-hmm.
And so they're building kind of like this like supply side.
So the supply side is going to be like all these applications inside of their app.
And then the demand side, obviously, are like people that need to use these applications.
(43:31):
But I can see him being very, very excited.
But one thing that they've done that I think is really interesting, um which goes back tokind of user interviews, they had a bunch of like early users like me just journal uh
every day, like how we use Infinix.
Mm-hmm.
I just, you know, just journaled on paper.
(43:51):
Like here's what I did today.
And this is like what happened.
And then they took all that information after about two weeks of journaling.
And then it's now they're using that to improve the product.
Just an idea.
uh I know that's, that's, you know, as a product person, that's like been very helpful forthem.
um But I think I need to, you know, after this, let's talk.
(44:11):
I need to, I think, introduce you to him.
I would love to see WCM inside of Infinix.
That would be amazing.
Yeah, definitely.
Yeah, that'd be great.
Cool.
Well, um so how can people get involved other than like signing up for the wait list?
Because this is pretty exciting.
I would love to try the product out.
I'm already a pretty active, know, perps trader, but I don't know how to, you know, useperps and spot and lending at the same time.
(44:40):
And so that's like, would, there's a learning curve and I would love to get going on that.
How could people learn and I guess participate uh other than just like in waiting?
submitting their information in the waitlist.
Yeah, so we've been slowly, we've been slowly, what's it called, rolling out the, we'vebeen slowly rolling out like more information about WCM.
(45:04):
So you can go to our Twitter page, WCM underscore inc.
Alternatively, if you really wanna use these change now.
DM me.
I respond to all of my Twitter DMs.
I check it uh at least like twice a week.
So if I don't catch you like the first time, I try to always respond within a week.
(45:24):
um Unless you just say, hey, don't message me just hey.
Just say, hey, like I want to check out the exchange.
I'll ask you a couple questions um and then we'll go from there and you'll have access toit.
um It's open to everyone.
uh It's open to everyone who DMs me.
(45:46):
um And yeah, we're always looking for feedback.
like the, yeah, anyways.
No, that's cool.
I chuckled because I get DMs that say like, hey, can I ask you a question?
And it's like, yeah, just ask the question.
Awesome.
(46:11):
Well, Kevin, this has been so fun.
uh And I love hearing innovation in crypto.
This is not a criticism on crypto at all, but.
You don't, I see a lot of like copy pasta, but like innovations like WCM, you don't see alot of that.
And it's really exciting to see that you guys, you you've identified a problem in thespace.
(46:32):
You've created a product that addresses that problem.
You've productized it by almost like vertically integrating, you know, like perp, spot andlending.
And that's like such, so beneficial to traders.
And I'm like really excited for you guys and for.
for more people to learn about you.
And I could, I really can see like you guys taking off and doing really, really well.
(46:55):
So thanks for taking the time to speak with us and I'll be sure to share all of thehandles and all of your information and the show notes.
Cool.
Thank you, Kevin.
Yeah, thank you.
See you.
Today on the Block by Block, I'm joined by Kevin Capp, co-founder of WCM, World CapitalMarkets.
Kevin and his team have been building a capital sink, a trading venue so capital efficientthat liquidity naturally flows into it without any external incentives.
Kevin, welcome.
All right, thanks for having me on the show.
So you guys have been uh pretty mysterious, but you're part of the mega mafia or mega ETHmega mafia ecosystem and um have some notoriety and have a lot of respect because of that.
(00:33):
uh In this interview, we'd love to get into WCM, what it is and what you guys are up toand how the audience can participate eventually as you guys uh roll out into um some
public test net or where you allow people to participate.
uh But maybe if we could begin with kind of tell us the, I guess the origin story of WCM.
(00:59):
Like what problem did you see that led to the creation of WCM?
Right, so actually it's a bit interesting.
It's kind of like there's like two sides of that story.
So even though we're very public about what we do in Tve recently,We were actually one of the first Mega Mafia teams in the first offsite in Berlin, more
(01:20):
than a year ago now, with all the other Mafia 1 teams.
And that was such a great experience, actually.
And it's when I realized that working with Xu Yao and Nomic and the rest of the Mega Eastteam was something that I really wanted to do.
(01:43):
How this started is I used to be a trader.
I worked at a prop shop.
was trading, I was like fully on chain.
We'd like beta hedge on exchange, but most of the like, let's say alpha I was finding wason chain.
And I really wanted to build something because I didn't like trading to be honest.
(02:04):
um And I spent like two years trying to figure out what I'd built.
um And I like played around with me making some games and um at one point I sort ofdifferent sort of, but I...
ended up like, when Megadeth came out, there was a time when like, there was all these L2scoming out and it was like a bit cringe to make an L2.
(02:29):
um And the reason why is they were all the same and they're all like OP stack or maybelike the arbitramons or there's some margin, there's like very small differences between
each one.
And because of that, you would see like a token would launch, it would go to zero, theecosystems kind of day off and.
The reason why I thought Meggith was worthwhile is because when I, to me it's obviouslylike the sort of like final step in like what L2 should look like.
(03:00):
Which is like, you you make some trade-offs on, on.
having like a single sequencer and just beefing it up like crazy.
And I mean, that can scale, right?
And as we're seeing now that Minion is coming up, like we have a better idea of like whatthat actually, the performance that would look like.
And it's everything they said it would be, which is great.
(03:23):
And I think it's kind of the only way in which you can really have like uh a true Dex ison Megan Eave.
And we can go into that later.
umBut the start is that I was like, wow, OK, this is an environment in which we can, the
space for creativity was open in a way where it wasn't before.
(03:49):
It's like, let's think about what we would design if we had no gas constraints.
If we didn't have to worry about gas costs, if the chain is super fast, et cetera.
And.
That's the sample we came from.
originally I was building a, originally it was Teco and it was gonna be a lending market.
And the idea was that um lending needs to be under collateralized because that's how itworks in real life.
(04:17):
And in many ways crypto is like slowly becoming a reflection of the real world and likeyou can't have like actual like financial system with under collateralized uh lending.
um And so we were building that.
As we were building that, though, we realized that um it's not possible to just build thisof risk engine and then integrate other stuff, other protocols into it.
(04:43):
You have to build each part of the protocol.
if anything you want to do with the risk engine, with the lending market, anything thatyou want to connect to, you have to build it yourself.
umAnd at the same time, met my other co-founder, around that time I met my other co-founder,
soon to be co-founder, uh Lucas.
(05:03):
And he was building the same thing, but under a slightly different thesis.
um His idea was, so he built a derivatives exchange previously and sold it.
And then he started working on a...
what is now called WCM, but for now will remain unnamed.
(05:25):
And they started from the standpoint of, we built a derivatives exchange.
What would it look like for a perfect exchange?
And what they figured out was like, OK, there's this arbitrage between lending market,between the spot, sorry, between the ETH perp.
or perps in general, perp funding rates, and lending market on chain.
(05:50):
The biggest one being Aave.
That delta tends to be around 4%.
And how do you close that?
You need to be able to borrow money under collateralized in order to execute a basis tradethat will close that arbitrage.
And that was what's it called.
(06:11):
That was like the original vision.
was like, all right, like how do we make on that side, how do we make this the mostcapital efficient exchange possible?
um And to this day, like there's no cross margin between spot curbs and lending in partbecause it's super difficult to build all three.
Like there's many different startups that are building spot clubs.
There's many different startups that are building spot curbs and there's many differentprojects that are building uh club lending markets and they've raised millions and
(06:39):
millions of dollars and we've done all three.
um with under like 500k.
So um then we came together and then now we have WCM.
So that's kind of like the origin story.
Now it takes kind of a special mindset to identify these really subtle kind ofinefficiencies in the market.
(07:02):
And then coming up with a product solution and then you built a project around it.
And then now you guys have, you know, this product that you'll, you know, that will belaunching.
Like what led you, I guess what, you know, for you and your co-founders, like what led youguys to even like see these subtle inefficiencies in the market?
(07:22):
Because it'sIt's hard for most people to see, but you saw something, there was a there there, you
created a product out of it, and then now you guys have WCO.
Right, well, we're traders.
So I used to trade at a prop shop.
My other co-founders used to run a hedge fund.
Well, it was a prop shop, then they converted to a hedge fund, and now they're working onthis.
(07:45):
But that's it.
We're just in the market.
Yeah, trying to find out.
I'm trying to figure out how to make better trades.
This is kind how you find these insights.
And so uh as a trader, you've built this product for traders.
Is that the right assumption?
Like that's the target audience?
Yeah, yeah, definitely.
mean, like some of our angels, like the main complaints they have about changes likehyperliquid is that there's no cross margin.
(08:11):
There's no cross-ponement between spot and perps.
And that's kind of important because it means like, if you want to do a basis trade, forexample, and I keep coming back to the basis, but because it's like the simplest trade
that I can think of.
And so that like benefits massively from a what's it called, like cross margin.
(08:33):
And on hyper liquid, we do basis trade, you have to split your money between two differentaccounts, which means like, instead of using the one collateral, um, to back multiple
positions, you have to split them up and that reduces your, your, let's say you're getting10%.
That means that now you're spending 10 % across two different things.
So really now you're getting 5 % across like the total position size.
(08:56):
So these differences in like, uh, think people talk a lot about capital efficiency.
They they don't really like internalize.
like it just means more money.
You just make more money and that's what WCM was made to do.
It was created to just make our users earn more money.
Earn more money when they're right, lose less money when they're wrong.
Yeah.
(09:18):
I love that.
I don't think most people, I think most people are going to say, wow, yeah, I want I wantto be part of that.
That sounds amazing.
For hyper liquid, doesn't cross margin kind of address what you're describing, though, itprovides some level of capital efficiency, but I guess not enough for
So sorry, so let me be more specific.
(09:39):
um HyperLiquid has cross margin between perp positions.
So that's good.
But they don't have cross margin between perps and spot.
And they certainly don't have cross margin between spur pops and lending.
So um if you buy spot uh ETH and you short the perp,you know, those are two different positions and the risk engine isn't aware of it.
(10:02):
So if you're like leverage three X, let's say on the ETH perp and the price moves 30%,even though on like on hyper liquid itself, have the other side of that tree that also
moves 30 % or whatever, let's say they're equally sized, right?
Then you would get liquidated.
(10:22):
Well, on our exchange, you wouldn't get liquidated.
And this is important because it means that like, you you can just do less with yourmoney.
That's pretty awesome.
Let's get into WCM.
right now it's being positioned as like the most capital efficient trading venue incrypto, something like that, right?
uh Maybe unpack that for us and like help us understand capital efficiency because peoplekind of throw that word around, right?
(10:45):
But if we can formally define that and like what it means to the trader.
Mm-hmm.
what it means to the trader is that you can open more positions with a lower risk ofliquidation.
I see, right?
So, uh again, I'll revisit this ETH example because it's like, I think that is the easiestto kind of understand, um which is that you can buy spot ETH, short that same amount of um
(11:18):
ETH.
And our risk engine Atlas understands that because you have zero net market exposure,because these two positions are the same amount, no matter how leveraged up this per
position.
So if you have $100, you can open up $100 spot buy and $100 short at the same time withthe same collateral.
(11:42):
And so technically, this is leveraged up a lot because you also have this lag.
But the risk engine knows that you're not really levered up because you have um these arecanceling each other out.
And so when you do this, you're able to then go to this very low risk position.
The risk engine knows that.
(12:02):
So the risk engine says, OK, on this very low risk position, you can leverage this up, upuntil 50.
not actually infinity because there are like restrictions, like there are liquidityconstraints, but you can leverage up, let's say on our exchange currently anywhere between
like 40 and 50X.
So you have these leverage positions and you can leverage up that leverage position,another like 40, 50X.
(12:26):
And now on any other exchange, um you would not be able to do that because the exchangewill just liquidate you.
umNow, when there's not cross margin and when there's just uh spot and perp separately, you
can still do a basis trade.
You just introduce leverage.
(12:46):
And when you introduce leverage, then as the prices move away from each other, you have torebalance these positions.
And as you rebalance the positions, then you take little tiny losses.
um Now, when we used to work at the prop shop, we used to do a lot of like, uma lot of what's called AMM LPing.
(13:08):
And we wanted to hedge out our, we wanted to hedge those positions out.
In order to hedge those positions out, you like short on exchange.
And as the price is moving, um you have to keep rebalancing your shorts so that you don'tget blown out.
um And also so that it actually tracks the price.
And as you do that, you're incurring, you're getting a haircut every time you move thatposition around.
(13:34):
And for that reason, we would only be able to really open uh LP positions.
I we didn't have, I guess, the most sophisticated quants, if it wasn't above 30%, 40%, itjust wasn't worth even looking at.
um Which means that's kind of ah how much APY you're subtracting over a year, which iskind of a lot, um especially considering the basis trade right now.
(14:00):
mean, Athena is yielding 8%.
umSo you could see how that makes a massive difference.
um Like if Athena was using, here's a better example.
If you grabbed Athena's in total, like deposits, all of their deposits, and you put itonto WCM with the same capital that Athena is producing 8%, they would be producing around
(14:24):
like 32%.
And that's the difference of capital efficiency.
It's like, would you rather 8 % or would you rather 32 %?
And that's because of the integration between perps and spot and lending.
Yeah, it's because you can borrow to lever up the basis trade.
(14:46):
There's a lot of other interesting trades that are downstream of the ability to do that,that we can get into, but they're a bit more complicated and a bit more niche in the
expression that you want to have on the market.
It sounds like the special sauce here is this risk engine that you're describing that kindof almost prevents liquidation or it's like liquidation aware.
(15:12):
Can you tell us a little bit more about that?
Sure, yeah.
So our risk engine is what makes WCM um WCM.
So the risk engine does like, ask a simple question.
um It looks at your portfolio and it asks, okay, what are these positions worth?
(15:35):
um What is each individual position worth?
And what is each individual position worth in the worst case scenario?
So and because I think I see on the timeline a lot of people talk about um the differencesbetween like lending and perps and how like even though like both are like like leverage
(15:58):
positions liquidation works very differently.
But our risk engine really views it as kind of it's like uh it doesn't have to becomplicated.
It's just like how much is this worth.
That's a simple question.
So there's like.
So the risk engine, each asset has, let's say, some coefficient.
And it's so coefficient based on liquidity and some coefficient based on just what's itcalled, volatility.
(16:23):
How much do we think this asset can move um before?
um we can liquidate it.
um And so we use these two values to create a sort of risk coefficient.
And then each position then also has a risk coefficient.
So for example, like if you have ETH um and you lend it out, this is pretty low risk.
(16:43):
So this only cuts like, let's say 2 % off of the um available margin that you have.
um And so, you know, if you were, if you have, if you buy spot ETH and then youopen up a per position.
That per position has some risk score, depending on how big it is compared to yourportfolio.
(17:05):
But you can do that.
And then if there's, if you still have like 4 % of your net asset value that you can use,then you can go to the lending market and you can deposit the ETH there as well.
So you can do like all three types of actions.
You can engage in all three their markets.
um with the same collateral as long as um the positions aren't like, you're not doinganything crazy with the portfolio.
(17:32):
As long as it's the risk engine understands that like, okay, like this is safe based onlike the risk assessment we've done.
this feels like, I can't think of another, uh, really project that kind of is doing whatyou guys are doing.
Um, you know, you've got perps, you've got lending, you've got spot, but there are verykind of separate products.
(17:54):
Um, almost separate projects even, right?
Um, but you've got all three, like in one, and it feels like it's a kind of like a newcategory.
Um, tell us like your thoughts around that because as a new category.
It's quite exciting that you could borrow in order to lever and then you've got the kindof exposure to spot and perps.
(18:17):
It opens up such a new, it's a brand new design space that I haven't seen before.
Yeah, so this is the thing.
It's like, I hate calling it an exchange.
It is an exchange.
In my mind, I think of more about it as an exchange plus a prime brokerage, because aprime brokerage connects you to the exchange and then let you lever up on whatever you're
(18:38):
doing.
saying exchange plus prime brokerage doesn't sound very sexy.
I think the biggest confusion is like, think sometimes they tell people that we do spotgroups and lending and they assume that it's kind of like a sushi situation where it's
like these three disconnected products.
And like, just like forking Aave or bento box and, you know, launching a club andwhatever, it's like very different than like having it all connected by the risk engine.
(19:06):
um The sort of like...
Yeah, actually, think Dex Design is going down two paths.
There's two viable paths.
I think one of them is dark pools.
I think there's a lot of literature that shows like, or the current literature is thatdark pools are like improve liquidity when they occupy around like 30%, 40 % of a market.
(19:37):
And after that trails off.
And I think there's like other really interesting things like Aster that are working onthis.
um And the other thing is like capital efficiency maxing.
And I think we're the only people that are actually doing that.
um I've seen some other like pitch decks um that have said that they're trying to, thatthey're going to do spot curves and lending.
(20:00):
um And usually like where they fall off is thatthey end up doing everything as like clubs, sorry, not as clubs, as like pool-based.
Pool-based is just cooked.
Like the only reason why AMMs exist is because no one wants to provide liquidity to somelike illiquid shit coin.
And that's fine.
(20:21):
Like they have a use case for that.
But for like real trading, it's like, doesn't make any sense.
And the same goes for lending.
If you're doing the basis trade, you need to be able to like actually knowum What is the lending rate that you're paying so that you know like So you can better
understand like okay.
How much money is this gonna make me?
(20:43):
Of course like the perp funding rate is invariable But having both of these be variable isnot ideal at all Especially if you're like trying to like do this do this trade um
When we think about the audience that you guys, that WCM would be really appealing to.
We think of traders as kind of like this generic term, right?
(21:05):
But there's obviously various kind of personas within the trader archetype.
uh I do a lot of trading on hyperliquid.
I'm primarily short on hyperliquid.
um But I'm not sophisticated enough to...
to do the kinds of strategies that you're doing, for example, or that WCM provides, whereyou borrow and then you can do spot and then also perps at the same time.
(21:30):
It's like, I wouldn't know what to do.
And so for like a trader that's, and I'm guessing probably most traders are probably likeme, where it's like, we want to participate and we make decent money, but we're not like
sophisticated enough.
Is that?
like the market that you're not necessarily focused on or do you provide like educationalinformation so that they can learn these types of strategies that are like really
(21:57):
beneficial?
Yeah, so we want to make it extremely easy for a user to benefit off of all of the likeyou should be able to like slam your forehead on the keyboard and Make money on WCM.
That is our goal So we have like a strategies page where you like does execute the basetrick for you Like it's just a slider you move it up.
(22:20):
It's like you want to make more money.
Yes, and then you move it up over hereand then you click a button and then it gets done for you.
We're working like making vaults where a vault manager would and like manage the positionfor you for an extended period of time.
So I'm curious, like how did you find out about hyperliquid?
I don't know.
I wasn't in like the initial airdrop, but I just heard about it from a friend.
(22:44):
And then I, I'm, I'm kind of a big shorter.
It's really kind of embarrassing, but I love the short.
Um, I, I'm, I'm long crypto, but I'm also long on like making money.
And for some reason, like shorting is just works for me.
yeah.
And that's, that's really it.
And then I got involved with this project called Infinex and then they integrated,Hyperliquid recently, it's Cain Warwick's project.
(23:08):
And so I've been really kind of doing a lot of shorts there.
So I don't know, I've just kind of just been around.
I see.
Okay, so I found out about hyper liquid.
I was curious as to what the reason but I've got a hyper liquid because I was looking forwhere to park my USDC and like to get the best yield um and hyper liquid in maybe like
(23:34):
January 2024 December 2023 had incredible yields.
It was like, excuse me.
I remember the first time I looked at it at the HLP vault was yielding 130 % APY.
It was so high, was like, there's no way this is definitely a scam.
And I left.
(23:56):
So I didn't deposit, I just like went to go fuck off, do whatever.
I was like, I'll check back on this in a month.
I come check back on it, it's 80%, the TVL is higher.
And I'm like, okay, like this might not be a scam because it's actually going down at arate that makes sense.
um So then I deposited money into it.
(24:19):
And then I see like, I mean, the yields were still pretty good.
think it was like, it came out like 60, 70 % or something for a while.
And then the yield was actually accruing and I was like, okay, okay, this is great.
Then it started trading on the exchange.
And so what brought me in was seeing this ridiculous number.
I mean, I remember like, oh, I don't know if you remember ohm from last cycle.
(24:42):
Yeah, okay.
You remember when the APY was not in the screen.
It was like outside of the screen at first.
And I was like, this is insane.
And I watched it go from like, I watched it 10x.
I watched it 10x to like 200 million.
And I remember being like, fuck, like I'm like, I'm an idiot.
Like, why did I?
Why did I not buy this?
(25:03):
And then I bought it.
And then I watched it 20x to four billion.
And the API is looking at it.
But that big APY number is like, you look at it and you're like, this is scam.
And then if it actually works, you're like, wow, I'm an idiot.
I need to use this product.
I need to use this.
I need to buy the token.
I need to do whatever.
And I think that's, to me, that's kind of the advantage of WCM.
(25:27):
If you go in the UI right now and you move the thing, it's like,and you move the slider up on ETH, it's offering two, it's like, we're basing it off of
current rates, right?
So the AFUI on the levered basis trade is, I don't know, 300 % or something at times.
And you look at that, I can't imagine a user looks at that and they're like, this is not ascam.
(25:51):
They will definitely think this is a scam, but...
Some people who are more willing to take on the risk of the exchange will come on.
They'll use it.
The APY will slowly start to come down.
Other people will come in as APY and they'll be, oh, OK, this is fine.
And then this is how we get the ball rolling.
And this is the main, this is kind of like, we're giving, it's like this trade, could justrun it as a hedge fund or as a prop shop, right?
(26:19):
But in doing that,we would make a lot less money in the long run because this could instead be used to
bootstrap an exchange.
And the bootstrapping part of an exchange is the hardest part.
Once you have enough traders on there, then it kind of does its own thing.
And obviously, you see different exchanges go up and down.
regardless, to answer your question, then,Like, how do we expect like regular users or users like you to use this is I'd like you to
(26:42):
come on and accept the free money that we're going to give you.
It's not actually free money, right?
But it's like this arbitrage that exists that hasn't been closed.
And that, you know, people will feel it's too risky at first because of counterparty risk.
(27:04):
But eventually they'll see that it's not a scam and that it's like, oh, this actuallyworks.
And then they'll come on and they'll use it and you'll get some APYs.
And then eventually you'll start using it just to do all the things you're doing onhyperlabel.
And maybe you start, maybe like you read the educational materials you create and you'relike, oh, I can actually use these other trades.
And then you start doing that too.
And that's the hope.
(27:24):
And then obviously we'll like do all the other go to market stuff.
We'll do like Twitter and points and whatnot.
Yeah, I love the positioning.
mean, you know, closing the inefficiency gap, like that speaks to a lot of like peoplethat are more logical, but then like, you know, earn like make free money speaks to like
everybody, right?
All right, let's go back to like, as you guys were evaluating, so you have, you identifieda problem or an opportunity that you could take advantage of, you built WCM.
(27:55):
What, tell us.
kind of like the journey that led to, on which chain should we build this on?
And what led, like what are the thoughts that you and the team had that made you decidethat MegaEath was like the right home for WCM?
So, so we actually released an article kind of about this, about L2s, but I'll quicklymake a note on L1s, which is that the reason we haven't deployed an L1 is because there's
(28:26):
an inherent contradiction that every L1 has, which is that, you know, the people who holdthe token, aka the founders, the team, investors,
like the people who buy the token because they believe in it, like the community, I guess,they all want the token to go up.
(28:46):
And if the token goes up and gas is denominated in the token, then the chain becomesreally expensive.
I started using Avax in like 2021 because it was super cheap.
And by the end of 2021, it was extremely expensive.
In fact, it was at times like...
(29:10):
Actually, no, was never as expensive.
No, I think it was almost as expensive as Ethereum mainnet at that time.
I remember paying like 50 bucks for transactions when the network was really congested.
you can't have a club if there's a high gas cost.
They just don't work because gas cost is the spread.
(29:34):
And there's actually something more important, which is insight that I had when...
We were talking to a major exchange about, let's say, some sort of partnership.
And one thing that was super interesting is that we spoke to, let's say, their mosttrusted market maker.
(29:56):
So this guy is moving massive size.
And one of the insights was like,One of his insights was that hyperliquid was able to be successful and it grew so fast um
because it's not a real DEX.
It's just like they made it decentralized enough that um you don't have to slap KYC onthere.
(30:16):
um And there's zero gas.
Market makers don't have to pay gas.
And so it's really easy for people who are market making on sex to just move over tohyperliquid because they don't have to change their market making scripts.
And the cost of changing these market making scripts is extremely high.
umAnd so these mark these and like sex market makers are most of the market.
(30:41):
They're like uh more than 90 % of market making is done like on sexes.
And these guys are moving size and they just don't give a fuck enough to like spend allthis money to rewrite their scripts to account for gas.
And Meggys is the only place that I know of.
(31:02):
um that where gas costs will be so low that we as WCM will be able to subsidize marketmakers.
And so we're talking to market makers right now and all the market makers we're talking toare sex market makers.
They're not DeFi market makers or I mean, we're talking to DeFi market as well but likethe people that we wanna partner up with are sex market makers.
(31:22):
um And it's because these guys are very good.
They're very good and they're used to moving like tons of size.
um But they'll only be able to operate on an exchange where gas is subsidized.
And this word is actually also really important.
Our gas costs are like 10x cheaper than like every other club.
(31:45):
Whether you look at Kuru, whether you look at GTE, obviously, hyperliquid, there's no gascost.
But these are the two main ones that I can think of that are on chain and that you canactually look at.
um and we're 10x cheaper.
And that's just because like my CTO has been coding for like, how many, like 40 years.
(32:08):
Like he's been coding almost longer than, like longer than I've been alive, almost twiceas long as I've been alive.
And he's just extremely cracked.
uhcan do very low level, I don't even have the words for it.
He's just very good, right?
And so, and because of this, we're able to subsidize.
(32:29):
If we were 10x more expensive and Omegi, would we be able to subsidize?
I don't know, maybe, but um 10x cost is huge, right?
um But it's not just that, it's not just the, the gas cost is extremely important, that'sone part.
um The second part is the speed.
um Now,Speed matters up until a certain point.
(32:52):
so Binance is like, I think like 10 milliseconds uh latency, 10, 15 milliseconds latency,something like this.
um MegaETH is like the same.
I don't think MegaETH could be much faster.
I don't think it needs to be.
um Again, like.
Speed matters to an extent.
(33:13):
And really, when people think about speed, they're thinking of high-frequency trading.
And really, what they should be thinking more is speed in the context of high-frequencytrader versus high-frequency trader, as opposed to the exchange itself being fast.
Although, of course, it has to be fast to a certain uh extent.
So three reasons why it shows, Maggie, or four reasons, right?
(33:37):
No, like it's using ethos gas.
So there's no um like weird incentives between the token and gas prices to gas is supercheap.
um Three, like it inherits the security of Ethereum.
We're very Ethereum aligned.
I've I've existed my life on Ethereum and we all have on the team.
(34:02):
And fourth is the speed.
um We need to be comparable.
to every centralized exchange.
And if we're not, then we won't be able to succeed.
And that makes sense.
And it sounds like a really thoughtful approach that you guys took as you evaluated L1sand L2s on which to call home for WCM.
uh Tell us about uh the role.
(34:25):
I know that you guys are users of RedStone Oracle.
Tell us about that and the role RedStone plays.
And also, what's it like working with the RedStone team?
Mm-hmm.
Yeah.
Well, I mean, simply put, you can't have a Perps DEX without an Oracle.
So, like, the whole thing just goes to zero without RedStone.
(34:47):
So we need a RedStone.
And RedStone is obviously super fast.
And it's like on MegaETH.
It's the main Oracle that we use.
So, I mean, simply put, it's just like we need it.
So thanks.
But...
In terms of working with the team, it's very good.
(35:07):
I mean, they responded extremely quickly.
um Whenever we request things, they get back to us.
uh It's really good.
Like uh recently we requested, we wanted to test out, so we do user interviews on thefront end to test out the front end because I'm saying make a better front end.
And also to get bit weird because there's like different markets and like figuring out theUX for that is like tricky.
(35:31):
um And so...
One issue we were having is like the exchange looked weird because we only had ETH andBTC.
And so we thought like it was really throwing off users as they were trying to use itbecause they're like, there's only two things.
And so we're like, okay, well, we need more assets because.
And so therefore we need an Oracle for that.
(35:52):
And so I went into a group chat with RedStone and I asked them and in like a week or two,like uh we had these Oracle set up for us on testnet.
um So that was super helpful.
And it's little things like this that like really help that maybe super bullish both onRedStone and on like MegaETH ecosystem in general, like everyone's super helpful.
(36:12):
m And that really helps development.
Yeah, make a better product.
That's awesome.
Let's talk about the user interviews.
like you speak like a product person.
I don't know your background, would love to hear more about it, but in crypto, you don'thear a lot of people talking about user interviews, which is really unfortunate because we
(36:35):
need more of that.
And I think part of it is because there's just not a lot of consumer facing products incrypto.
I guess what led you to uh care enough aboutdoing these user interviews and then taking their feedback to improve the user experience.
Tell us what that feedback loop looks like and for WCM.
(36:56):
Mm-hmm.
Yeah.
Okay.
I mean, I'll go through the process first.
mean, I go on Twitter and I look up Clobs, Dex, MegaEath, uh WCM.
Like, I use these keywords and I press search and then I find people that are interestedin things that are related to us.
And I look at their profile.
(37:17):
I see what they care about.
I message them, hey, I saw you were talking about this.
This is what I think.
they respond, I say something, then I'm like, hey, do you wanna do a user interview?
And usually they say yes.
The hit rate is like surprisingly high.
And everyone in and I to be thankful to like the MegEath community in general.
I've met so many people in the community and they've all been very helpful.
(37:41):
And...
It's all people that are surprisingly knowledgeable about exchanges and are true users.
So if there's any other users out there that want to look at the exchange, please contactme on Twitter.
um I think we just copy and paste Binance um or Bybit or whatever.
(38:05):
It would look good enough.
It would look great.
And people would use it.
And if you're familiar with if you're normal, whatever.
The issue is that it doesn't really make sense because we have spot-perps and lending.
uh I guess the lending is the part that throws it off because Binance also has like perps,right?
um But we really were like, all right, like how do we, like we could just add in like alittle tab and it's like, well, that feels complicated because you can also do something
(38:31):
called like bundle positions where you like, where you can basically like, uhadd in an infinite amount uh of positions and execute them all in one um transaction.
And this is beneficial because you cut that gas cost by like 90%.
But also because sometimes you want to execute things at the same time, atomically.
(38:55):
um And so figuring out, OK, how do we make it really easy for users to do this thing thatdoesn't exist anywhere?
else was kind of like the driving force behind this.
And just generally, I think there's always room to be improved.
There's tons of things on the hyperliquid UI that I just don't like, that I think isconfusing or annoying or whatever.
(39:18):
And they've done a great job.
They've simplified it, right?
In a way that's really nice.
I know.
I've used all these different exchanges.
And there's different things that I like in each one.
And I have a personal preference, obviously, but like...
I think a good product is really built when you talk to a ton of people, you test it out,and you see what do people like the most.
What is the easiest thing to do?
(39:39):
um Yeah, there's also, again, like out, so the concept of like margin is a bit differenton our exchange because it's always cross margin.
And, you know, right now we don't have like isolated positions.
You have to kind you have to create a new account.
So it's like trying to get into the user's mind, like how risk works on the exchange issomething we've.
been very focused on um just because it's so new and odd.
(40:03):
And for that, we need to do user interviews.
Yeah.
And just on that point, user-in-user is great, but on that point, education is really,important.
What are the plans there to educate your potential users?
Because having spot perps and lending as a unified product is very new.
(40:27):
And you're going to have to educate people a lot about it.
Yeah, that's one of the feedbacks we received.
so different users have sent us like a a, one thing I always, like, I start off theseinterviews by asking them like, just like, what are they doing now?
And then like, how do you know what you're doing?
So for example, like the way Binance does it, they have like some like risk or whatever.
(40:54):
And, you I mean, you just go to the, you click the thing, you go to the docs and thenthere's like a very long page that explains all the math.
behind how they're calculating how much margin you have.
And you can read that and then really understand on a deeper level what's happening.
um We are working on docs right now.
(41:18):
On the exchange, there's a good page that says stats.
And you can view um all of the risk parameters of each specific asset as well.
And so,Like all the information is there.
It's just like, have to just like be much better about um explaining it to users and likeputting it together.
(41:39):
By Maynard, we'll have all of this uh ready.
We're a lean team.
There's only four of us.
So.
that's pretty amazing.
um Right, so I signed up and I'm on this massive, really long waiting list.
um Tell us what stage WCM is in right now.
It feels like it's private beta, right?
Or something like that?
Private alpha?
(42:00):
yeah, kind of.
mean, so the code base is done and it was actually finished in April and we've done anaudit already on it.
And so we could go live tomorrow if we needed to.
um But what we really just focused on is making the UI better.
(42:21):
So it's like, we started, it's like first smart contracts, then the UI.
and then social media.
so I've been focused on social media.
My co-founder, Lucas, has been focused on the UI.
He's having user interviews and just iterating on design.
ah But really, at this point, it's mostly just aesthetics.
ah Yeah, it's mostly just aesthetics.
And then we're building vaults as well.
(42:42):
ah But that doesn't need to be there day one, I don't think.
It will be, but regardless.
Yeah.
You know, as we're talking, I think I need to introduce, I don't know if you know KaneWarwick, but I think I need to introduce you to him because this is exactly the kind of
product that he would want inside of Infinex.
Infinex is, if you're not familiar with it, it's like a super app, but it's, it's really awallet, but it's a, it has like a section of applications where it's like one click and
(43:10):
you're inside the app and, and you don't have to like sign in again.
It's you're already in there and then all of your assets from Infinex is already kind ofshows up in your portfolio.
Mm-hmm.
And so they're building kind of like this like supply side.
So the supply side is going to be like all these applications inside of their app.
And then the demand side, obviously, are like people that need to use these applications.
(43:31):
But I can see him being very, very excited.
But one thing that they've done that I think is really interesting, um which goes back tokind of user interviews, they had a bunch of like early users like me just journal uh
every day, like how we use Infinix.
Mm-hmm.
I just, you know, just journaled on paper.
(43:51):
Like here's what I did today.
And this is like what happened.
And then they took all that information after about two weeks of journaling.
And then it's now they're using that to improve the product.
Just an idea.
uh I know that's, that's, you know, as a product person, that's like been very helpful forthem.
um But I think I need to, you know, after this, let's talk.
(44:11):
I need to, I think, introduce you to him.
I would love to see WCM inside of Infinix.
That would be amazing.
Yeah, definitely.
Yeah, that'd be great.
Cool.
Well, um so how can people get involved other than like signing up for the wait list?
Because this is pretty exciting.
I would love to try the product out.
I'm already a pretty active, know, perps trader, but I don't know how to, you know, useperps and spot and lending at the same time.
(44:40):
And so that's like, would, there's a learning curve and I would love to get going on that.
How could people learn and I guess participate uh other than just like in waiting?
submitting their information in the waitlist.
Yeah, so we've been slowly, we've been slowly, what's it called, rolling out the, we'vebeen slowly rolling out like more information about WCM.
(45:04):
So you can go to our Twitter page, WCM underscore inc.
Alternatively, if you really wanna use these change now.
DM me.
I respond to all of my Twitter DMs.
I check it uh at least like twice a week.
So if I don't catch you like the first time, I try to always respond within a week.
(45:24):
um Unless you just say, hey, don't message me just hey.
Just say, hey, like I want to check out the exchange.
I'll ask you a couple questions um and then we'll go from there and you'll have access toit.
um It's open to everyone.
uh It's open to everyone who DMs me.
(45:46):
um And yeah, we're always looking for feedback.
like the, yeah, anyways.
No, that's cool.
I chuckled because I get DMs that say like, hey, can I ask you a question?
And it's like, yeah, just ask the question.
Awesome.
(46:11):
Well, Kevin, this has been so fun.
uh And I love hearing innovation in crypto.
This is not a criticism on crypto at all, but.
You don't, I see a lot of like copy pasta, but like innovations like WCM, you don't see alot of that.
And it's really exciting to see that you guys, you you've identified a problem in thespace.
(46:32):
You've created a product that addresses that problem.
You've productized it by almost like vertically integrating, you know, like perp, spot andlending.
And that's like such, so beneficial to traders.
And I'm like really excited for you guys and for.
for more people to learn about you.
And I could, I really can see like you guys taking off and doing really, really well.
(46:55):
So thanks for taking the time to speak with us and I'll be sure to share all of thehandles and all of your information and the show notes.
Cool.
Thank you, Kevin.
Yeah, thank you.
See you.
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