Interview with PerlinX: The Asset Liquidity Engine
PerlinX aims to provide market access to all for trading real-world assets through decentralized liquidity pools and minting synthetic assets.
Team dExplain talked to Darren Toh, Perlin’s Co-Founder, just as they launched PerlinX V2 which enables users to mint the platform’s first synth asset PxUSD with UMA Protocol.
Could you briefly describe Perlin’s mission, and what the project means to you?
Our mission is to bridge legacy financial systems and products to DeFi and democratizing market access for all. We’re focused on helping to create more efficient, equitable, and open marketplaces and economies that can benefit everyone everywhere. And we’ve just launched PerlinX V.2, making us the 1st project in the world to enable synth asset minting based on UMA Protocol – so we’re now one step closer in the grand vision.
As far as we understand Perlin is building in three segments: DeFi, ICC (International Chamber of Commerce), and Carbon markets. Could you explain the use case for PERL tokens in each division?
Those 3 segments actually all fit neatly together under our vision to bring real-world assets and capital to DeFi. While we’re definitely a DeFi-focused project, our roots as a team have always been in both traditional trade finance and carbon markets. And as the exclusive blockchain partner of ICC, which represents 45 million companies in over 100 countries, we’re confident of achieving real-world impact at scale.
Currently, PERL can be used as both a liquidity and collateral asset. You can stake PERL to provide liquidity to the PerlinX platform and receive incentives in PERL and BAL rewards for doing so (UMA rewards coming soon too!). Or you can use PERL as collateral to create synthetic PxAssets. PxUSD is the 1st synth we’ve launched, mainly because it’s so easy for people to understand. More asset types are coming soon based on community demand, including PxCarbon so traders can more easily get exposure to a rapidly growing and uncorrelated asset class, which is currently opaque and highly illiquid.
With this foundation, we’re also working to enable enterprises to access trade finance at significantly lower and competitive rates by removing intermediaries and letting liquidity providers provide funds directly to borrowers. The trade finance crisis now facing the world because of COVID-19 is helping to accelerate making this a reality working with ICC and global commodities traders.
We note that over 70% of PERL tokens are stored on Binance. Do you believe this is a problem, or will future staking initiatives draw tokens from CeX to DeFi?
That’s only the current circulating supply but it makes sense since Binance is the primary centralized trading platform for buying and selling PERL right now. This will change over time as the amount of PERL grows from the current ~6%. With the launch of V2 and synth minting, we’re confident the staked amount will grow substantially.
Any plans to get listed on other high profile exchanges?
You understand that we can’t really comment on exchange listings.
PERL recently went through a token upgrade in August, to add functionality to operate as a DAO. How do you see the transition towards decentralized governance happening? Such as, when will you release a voting UI for community proposals?
In addition to the DAO functionality, there were a few other reasons for the contract upgrade:
- Increase decimal places of PERL from 9 to 18 to maximize compatibility with DeFi protocols integral to PerlinX, such as UMA.
- Remove the Pause function in the PERL token code. Removing this will ensure Perlin cannot be stopped in the future and is suitable for DeFi
- Enable an inflationary monetary policy and programmable incentives.
This is all part of our goal of moving responsibly and safely towards a decentralized governance model. UI for community proposals and voting will definitely come as we move forward.
The token upgrade also implemented an inflationary economic model, many crypto investors enter the industry to avoid inflation. What would you say to them to ease their worries?
This isn’t correct – we have a fixed supply model. We haven’t moved to an inflationary model and all PERL liquidity incentives are being paid out of our treasury fund. There’s no plan to introduce inflation at this point and we would never do so without consulting extensively with all token holders and the broader community.
Regarding DeFi, there is a common problem with Ethereum where for small/mid-size portfolios gas fees are higher than staked rewards. Do you have any plans to move to a Layer-2 solution or maybe you’ve considered migrating to another blockchain?
Yes since layer 2 solutions currently look like the best way to save users’ gas fees while we all wait for ETH 2.0. We’re looking at all the scaling solutions out there, such as Matic, xDai, OVM, loopring, starkware, and other scalings. However it’s too early to tell and we are working with partners like REN, ThorChain, UMA, and others to provide guidance on our ultimate decision.
Are you working to gain more exposure, such as plans to be listed on various DeFi trackers (DeFi Pulse, CMC, Coingecko)?
Yes, we’re currently listed on CMC yield farming, Dapp Radar, YieldFarmingTools, and more. We’re currently working to be listed on more trackers. If your users are using some trackers that we’re currently not listed on, feel free to send us a suggestion here.
Back in March you stated: “that the postponement will have no impact on your trade products”. Regarding ICC, what’s the current state of ICC TradeFlow product?
We continue to work with ICC and other major industry partners like Trafigura to further develop TradeFlow and advance digitization of all global trade and finance. The devastation and disruption inflicted on global trade networks by the pandemic crisis are making this increasingly urgent for the industry. There’s wide recognition that solutions like TradeFlow are now critical to help restart and rebuild all cross-border trade.
PerlinX is simply our way of providing immediate value for community and PERL holders. Our trade products continue to be a key part of our long-term vision.
In October 2019, you launched a digital blockchain ship registration system, the International E-Registry of Ships (IERS). Is this product being used?
Because of the relatively small size of this market and very slow adoption by the maritime industry, this one has been put on hold for now.
For people who are not familiar with carbon commodity markets, could you explain the current problems faced by the industry and how Perlin can be the solution?
Climate change policies and initiatives around the world are failing. None of the UNFCCC and SDG commitments made by nations are being achieved. The pandemic crisis is further diverting attention from urgent climate action. Carbon credits as an asset class are also fragmented, complex, illiquid, and largely non-fungible despite increasing five-fold to a total value of USD $215 billion in just two years. This has hindered the development of more efficient offset markets needed to support carbon projects and mitigation efforts, despite strong continuing expansion in global institutional and retail demand for offset credits.
To address this, Perlin has co-founded the ICC Carbon Council with ICC and AirCarbon Exchange as a business-led consortium for carbon markets to reach tipping point adoption. With AirCarbon as the platform, Perlin as a carbon supplier and trader, and the ICC as the global connector and convenor for trade, the Council is committed to a market-based approach to build deep and liquid carbon trading markets that encourage funding and investment. This partnership will harness the power of digital technology to accelerate innovation, and inspire real, concrete climate action. As society moves towards a carbon-constrained economy our technology coupled with the ICC’s reach will accelerate carbon offset adoption by eliminating market friction.
Given the global pandemic, what’s the current progress on your active negotiations with carbon exchanges?
The pandemic has definitely created more obstacles as carbon projects struggle with lock-downs, travel restrictions, and is diverting people’s attention from urgent climate issues. But as a tech-based project, we’ve been well-positioned to get things done remotely – so it’s more difficult to get things done in the carbon world but not impossible.
We understand your change in roadmap required new legal frameworks to remain regulatory compliance, we assume this was due to the launch of DeFi products. Is that assumption correct? Are there existing legal frameworks that allow businesses to license DeFi or you had to draft one yourself? What does the process look like?
Yes, we worked closely with our legal advisors to ensure everything that we were doing in the DeFi space was compliant with relevant regulations. The regulators are still catching up with the rapid innovation we’re seeing in DeFi, but projects can still rely on established legal principles to make sure they’re operating within the law. But every project needs to consult their lawyers based on their unique and particular activities so there’s no simple answer to this.
From our point of view, Perlin’s ability to provide “complementary legal framework” could prove to be invaluable. Could you elaborate on how this works?
This is actually a misquote – the “complementary legal frameworks” we mentioned in our post refer to the work of governments around the world to adopt laws that recognize and efficiently regulate new digital systems and documentation in relation to global trade.
Some of our readers are entrepreneurs and business owners, from your experience, what advice would you give them for registering a DeFi focused company?
A week in DeFi is like a year in the normal world. If you want to get into DeFi, do it quickly and do it now. There’s no room for hesitation in this space. Move fast, break things and iterate fast – or risk being left behind.
Currently many DeFi protocols are launching with 100% anonymous teams, legal wise, what is your opinion on this approach?
It’s totally understandable based on legal concerns and possible regulatory risk – e.g. regulators pass bad laws that stifle innovation and potentially go after founders. We’ve worked closely with our lawyers at every step so we’re confident enough to be an open and transparent team.
How big is the team? How many of them are engineers? Who is the new CTO?
Our team is ~20 right now and mostly developers. Our senior devs are taking the lead right now but we’re still searching for an outstanding new CTO to lead the technical vision and implementation. We also have very talented advisors and partners from projects like REN, Thorchain, and UMA to help while we search.
How did institutional investors react to Kenta Iwasaki (CTO) taking time off? Does he retain any role within the organization?
There was obviously some initial concern but ultimately I think token holders understood the reasons for his leaving. It was an amicable parting and we wish him all the best, but he is no longer part of Perlin.
What happened to WaveLet? Will it be used in the future or is it abandoned?
Wavelet is postponed indefinitely. We are focused on DeFi and PerlinX.
Could Perlin use Polkadot technology in any way?
Yes. Polkadot’s strength is that it’s easy for projects to build on, and their strong developer community. However as mentioned earlier, we are still in the midst of exploring different ways to solve the scalability issue (including layer 2s or shifting to another blockchain).
When can we create synthetic assets?
PerlinX V.2 now launched allows you to mint synth assets – the first is PxUSD. Check out our blog to learn more and start minting, staking, and earning incentive rewards today!
What’s next for Perlin, will you be publishing an updated roadmap?
We are focused on building while we wait for the market to become more positive. A basic roadmap is already up on our website. More detail will be coming as we progress towards PerlinX V 2.1 and beyond.
Do you intend to encourage liquidity in Uniswap?
It’s being actively explored.
Can we expect any important partnership announcement?
We’ve just announced our partnership with UMA Protocol for synth asset minting and joint liquidity incentives. Others will be coming as we roll out more DeFi products on PerlinX.
That wraps up our interview, thank you for your time. Is there anything else you want to share with the community?
BUY. STAKE. LOCK. EARN. MINT. PRINT. Repeat. If you don’t already understand what this means, jump into our community discussions or blogs and we’ll happily teach you!