Watch the video of this interview on Gamma Prime’s YouTube channel:
Interview with Mark B. Richardson (Product Lead at Bancor) and Korath Wright (Director of Capital Markets at Gamma Prime)
Korath Wright (Gamma Prime):
Okay, so having that marketplace of funds.
Mark B. Richardson (Bancor):
Yeah, a marketplace of funds.
Korath Wright:
It’s a challenge to have a high-value, good-UX marketplace of funds.
Mark B. Richardson:
Yeah, and also one that’s, you know, a market structured the way participants need it to be structured.
Korath Wright:
Yeah. Do you see any examples of that? I mean, that’s essentially where Dan was going — but where do you see that happening?
Mark B. Richardson:
Okay, well, let me give you an example. The liquid staking tokens — which are the wrapped versions you get for participating in a proof-of-stake consensus algorithm on any blockchain, right? ETH is proof-of-stake, Cardano is proof-of-stake, Radix is proof-of-stake, Sei is proof-of-stake.
There are lots of these types of liquid wrapped tokens available. And for some of them, rather than using a rebasing mechanism — which is generally incompatible with DeFi — they instead let the wrapped asset slowly appreciate in value over the underlying. It’s almost like the interest rate accumulates to the token.
Korath Wright:
Yeah, but then where does it go?
Mark B. Richardson:
Well, I mean, it’s always there. The block rewards from validating get accumulated into a vault, which means the token you hold, on a pro-rata basis, increases in value.
Korath Wright:
Yeah.
Mark B. Richardson:
But the actual number of tokens you can redeem for it goes up.
Korath Wright:
Oh, okay. So you are getting the gains.
Mark B. Richardson:
You’re getting the gains, exactly. Now — what if you want to create liquidity for that? There are a lot of legitimate reasons to do so: unbonding periods can take a long time, there might be a withdrawal queue, and people might want to swap their wrapped asset for the underlying on a decentralized exchange.
Korath Wright:
Okay.
Mark B. Richardson:
But for AMMs, the only way the price can change is if someone performs an actual trade.
Korath Wright:
Yeah, and changes that balance.
Mark B. Richardson:
Exactly. And that’s a very specific problem the conventional decentralized exchange space has faced with the emergence of LSTs — these are saturating assets people want exposure to.
So, being able to create a market that’s aware the underlying token (or the token being traded) is actually appreciating in value at a predictable rate — that’s something worth close attention.
And that’s essentially a mirror image of what it might look like to have a T-bill or similar asset, which also increases in value over time at a predictable rate.
Korath Wright:
Yeah.
Mark B. Richardson:
And so, a normal order book or AMM-style structure is fundamentally incompatible with that kind of asset.
Korath Wright:
Okay.
Mark B. Richardson:
And there are many of these assets. For example, insurance-linked securities behave this way — they have a specific, well-defined yield profile over time, unless there’s a catastrophic event that causes everything to be liquidated.
Korath Wright:
Right.
Mark B. Richardson:
So, if you want to trade those instruments, you need an infrastructure that understands the properties those assets have.
Korath Wright:
And for every asset, does that need to be specifically determined, or is there a flexible framework you can just plug anything into?
Mark B. Richardson:
It’s determined specifically for each asset.
Korath Wright:
Yeah.
Mark B. Richardson:
So, you need an infinitely flexible marketplace that can accommodate any asset, regardless of its properties.
Korath Wright:
Yeah.
Mark B. Richardson:
And that’s what we’ve been missing for a long time — and where my research has been focused over the last two years.
Korath Wright:
That’s fascinating. It makes me think of structured products.
Mark B. Richardson:
Exactly.
Korath Wright:
2.0.
Mark B. Richardson:
Yeah, exactly.
Korath Wright:
Because with structured products, you’re taking the risk and the reward, extrapolating them out, and rebuilding them however you see fit. This is like doing that — but with other properties as well.
Mark B. Richardson:
Yes. And once the paradigm of the protocol is determined, it becomes easy to identify which assets are fully described by it, which might be edge cases, and which might need further development.
Korath Wright:
Yeah.
Mark B. Richardson:
For the ones that are described, it’s actually more efficient to run them on a blockchain than on a conventional SQL-style centralized exchange. So, coming back to the Ethereum ethos of programmable markets —
Korath Wright:
Yeah.
Mark B. Richardson:
— we should really lean into that, because we can outperform centralized exchanges. And I think we’re about to.
Korath Wright:
Yeah. You think we’re hitting that tipping point?
Mark B. Richardson:
Yeah.
Korath Wright:
How many years do you think?
Mark B. Richardson:
We’re on the precipice.
Korath Wright:
So three years? Five years?
Mark B. Richardson:
In terms of technological capabilities, we’re right there.
Korath Wright:
Okay.
Mark B. Richardson:
Already here.
Korath Wright:
Okay.
Mark B. Richardson:
In terms of adoption — really hard to say. Nothing gives crypto more adoption than green candles, right?
Korath Wright:
Green candles.
Mark B. Richardson:
When prices go up, people suddenly become interested in using the technology. Bitcoin’s down 20% today, so that might scare the fish for a while.
Korath Wright:
It’s down 20% today?
Mark B. Richardson:
Today.
Korath Wright:
What happened?
Mark B. Richardson:
No one knows. But you understand what I’m saying — the technology will still be here. We keep building no matter what.
Korath Wright:
Yes.
Mark B. Richardson:
And whenever everyone’s ready —
Korath Wright:
— the market will be ready too.
Mark B. Richardson:
Exactly. When people arrive, we’ll be there — suit and tie — with a protocol that works for whatever they need.
Korath Wright:
I love it. I hope to be there right beside you.
Mark B. Richardson:
Yeah, absolutely.
Korath Wright:
I’m looking forward to it. Lots of interesting stuff coming out of Bancor — and a lot more to hear from you. Thank you for joining us, and thank you for speaking.
Mark B. Richardson:
You’re very welcome.
Korath Wright:
It’s great. I’d love to do a longer interview too — I feel like we could really dive in.
Mark B. Richardson:
I’m here until Thursday, so if you want to book something, I’d be more than happy.
Korath Wright:
Perfect. We’ll find a cool venue, rent a spot, and get set up.
Mark B. Richardson:
Great. Thank you so much.
Korath Wright:
Awesome, man. You’re fascinating to talk to. And that dinner the other night — I really enjoyed the conversation.
Mark B. Richardson:
Yeah, great.
Korath Wright:
Yeah.
Mark B. Richardson:
Thank you.
Korath Wright:
Your approach is unique. And honestly, we’ve got a lot of interesting people here — I’ve been enjoying it a lot.
Mark B. Richardson:
It’s a good crowd. I’ve met a bunch of people downstairs I hadn’t met before — and it’s been thrilling, honestly.
Korath Wright:
Does it tend to be a lot of the same people?
Mark B. Richardson:
You know, cryptocurrency conferences are a small and tight-knit community. I see a lot of the same faces year after year. But just today, there were two people I’d never met before — and we’ve both been around since 2016.
Korath Wright:
Oh, wow.
Mark B. Richardson:
Yeah, and it looks like there’s a lot we might not do together immediately — but we’re heading in the same direction. I’ve already made some great connections, and it’s only 12:30.
Korath Wright:
Oh yeah, it’s only 12:30. Well, it helps when you’re speaking.
Mark B. Richardson:
Yes, it does.
Korath Wright:
That’s interesting — and then they come up to you after.
Mark B. Richardson:
Thank you so much for that opportunity. It was a terrific panel — great guests, great moderator.
