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- [00:00]
A
I think also on chain technology is just at a point where it's just better, right? Like if you trade on lighter, it's faster, it's cheaper and it's decentralized and verifiable and more secure than centralized players. Like I think Telegram integration is a good example because their their product is actually centralized but they would still rather use defi rails underneath meaning lighter than centralized rails.
- [00:25]
B
Hi everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shinobi. First, we'll take a quick word from the sponsors who make this show possible. This episode is brought to you by Kape, America's Privacy first mobile carrier. Same premium service you'd expect from any other carrier, but designed so your number, your location and your data actually stay yours. Get 33% off six months at Cape Co Unchained. Fidelity has been investing in blockchain since 2014. They're not wondering if digital digital assets will shape the future. They're hiring the talent to help ensure they do. Explore opportunities today@crypto.fidelitycareers.com Fidelity is an equal opportunity employer. Today's guest is Vlad Novikovsky, founder and CEO of Lighter. Welcome Vlad.
- [01:20]
A
Glad to be here. Thank you.
- [01:23]
B
Just a heads up everyone. Unfortunately Vlad was not able to be in a quiet place. We will do our best to mute the external noise. Robinhood chain had a big announcement last week and it's already showing promising metrics and Lightr was a part of that announcement since your perp Dex is powering perpetual futures directly into Robinhood wallet. This is a big deal since now Robinhood's retail traders, except for certain jurisdictions, including the US will have easy access to decentralized perks. Robinhood was an investor in your round last November. Was this part of the plan from that time? And just tell us generally how the deal came together.
- [02:06]
A
Yes, yes. Well, I joked with the team. This deal is 12 years in the making, or 25 years if you look at another way, because I went to high school with the Robinhood founder. We were the two lads at our school. And 12 years ago I was an early advisor to Robinhood, which had just, I think their corporate name before that was actually Cash Cat. Right. They had just become Robinhood and we're getting their waitlist. So I've kind of known their team and I've been, you know, involved a bit at that point. But then as, as you mentioned late last year, they participated in our last equity round before we launched the token. And you know, we've actually, I think, talked about doing something with them for a while. A lot of things had to come together for, you know, for the tech to work for Robinhood chain to go live for kind of perps to become something that's interesting to customers in the Robinhood ecosystem. So, yeah, I would say this partnership started a lot earlier than just that equity round. And yeah, we're very excited about it. And it's also kind of the first step of what we hope will be a deepening level of partnership.
- [03:25]
B
And what are the deal terms? Is there a revenue share?
- [03:30]
A
Yes, so the revenue is shared. 50, 50. The 50% that goes to us is kind of immediately accrued to token holders for buybacks, as is 100% of the revenue for Lightr.
- [03:43]
B
Okay, and how does this product differ from LiDAR's own app?
- [03:50]
A
Well, for one thing, as you mentioned, it has a unique front end access through Robinhood Wallet, which for many customers they can bring if they have our, if they already have the Wallet app, they can use it seamlessly. But also if they have Robinhood core app, they can fund that the Wallet with USDG start trading perps if they're in the area that has the jurisdiction for it. I mean, also it'll, it'll be like a different mix of markets, but it'll be settled or it is settled in USDG stablecoin, I think we've already seen like some of the markets that folks are interested in to trade are, you know, more, more stocks, you know, tokenized stocks, some memes as well. So it'll be a different customer base, different mix of markets. One thing that's interesting on the back end, there's high level of interoperability between Robinhood chain and Lighter. And so like a market maker can actually quickly move capital around between the two lighter domains, as we're calling them. And that creates a lot of advantages as well.
- [04:53]
B
Right.
- [04:53]
A
Because the market maker cannot participate on both and in a much more efficient way than if they were just like, you know, I don't know, trading on one exchange on Salon and another exchange on Ethereum or something like that.
- [05:03]
B
Oh, interesting. Okay, I wasn't aware, but I guess since USDG is the quote asset on Lighter and. Sorry, and the Robinhood app on Lighter, then like, doesn't that create a little bit of fragmentation anyway? But you know, with your main app.
- [05:25]
A
So, yeah, fragmentation is interesting to think about. Like, I think it's not as black and white as that. Right. Because if it's on the same underlying chain, which is Ethereum, you know, Robinhood chain also on top of Ethereum, like, you know, the liquidity is very quick to move around where market maker, you know, can participate on both and quickly provide liquidity to order books on both and kind of hedge across the two. So obviously it's, it's not as consolidated as if it were on one instance, but it's a lot less fragmented than like two completely separate instances, like one on Ethereum, one in stock. A lot of. Right, so, so it's, it's a lot closer to being consolidated than to being fully fragmented.
- [06:12]
B
Okay. Yeah, I guess, I guess circuits work
- [06:14]
A
to kind of move capital around.
- [06:16]
B
Okay. Yeah, I guess it's more that it creates a little bit of friction for the market maker.
- [06:23]
A
Yeah, but just a little bit, not a lot.
- [06:25]
B
Okay. And so I have to ask for my largely American audience. So this perps product is available in Europe, but when do you expect that this offering might be rolled out in the us?
- [06:38]
A
So we have been in the process of working with CFTC on, you know, a license for decentralized perps in the US and that license would cover both lighter zone front end and brokers like Robinhood plugging into it. Like right now, if you look at the Robinhood US product, you know, the first, you know, for stocks they obviously plug into US exchanges, but for prediction markets, you know, they're plugging into Kalshi which, which has had a license for prediction markets a long time. But basically the components that need to be there are the integration itself, but also the license necessary. And we're very, you know, involved with CFTC on, in that process. No one has that kind of license yet. Right. But we, we think with how innovative this CFTC has been and how, you know, what the process with that we're going through has looked like, we expect that to happen, you know, in, in a relatively, you know, short time frame. And then, then, then we'll be able to open it up to open up both lidarcore and Robinhood will be able to plug into lidar from their US app too.
- [08:01]
B
Okay. Yeah. And I'll ask you a bit more about that in a moment. But let's go back to the USDG issue because, you know, as we talked about, that's the quote asset on LiDAR and Robinhood chain. And I imagine that the usage of that brings some interest income to Robinhood since they are one of the corporate partners of usdg. But you know, going back to what we said about the market makers, I would imagine that usage of that also creates friction just for users because USDG is not as liquid as USDC or usdt. And you know, as we talked about, market makers would have to probably charge a little bit more, I would imagine, to quote against usdg. I also would think that it creates a little bit of risk for the venue because if USD pegs, then it could cause liquidations. And yeah, you could protect against that by hard coding the value at $1. But doing that also creates its own problems. So how do you account for these issues? So that having USDG as the quote asset is also a good deal for traders?
- [09:17]
A
Sure. Well, for one thing, the market makers there, there might be reasons why they would be less aggressive on, you know, in the Robin Hood instance, but there are a lot of reasons why they would be more aggressive. Right. Because they know they're getting a high percentage of the flow they're getting is retail flow. That's the flow ultimately they want like so. So they're going to balance that out. Right. And kind of run the calculations on their side how they manage the risk. I mean, there are risks they have to think about at the same time. Their rewards they have to think about. Right. And the reward of being on top of something like Robinhood chain is that you get a lot of retail flow, which is their bread and butter. So you're right. The risks to consider here, you know, from our perspective, in the long run, we want to support a variety of stable coins as collateral on lighter core as well. I mean, we think USDG can be collateral unlighter core, as would other stable coins. There be some, you know, the risk model would involve some haircuts when liquidation happens, but you know, that's all of that can kind of be factored in to the risk model. So. So I guess from our perspective, you know, we're, we're building the core infrastructure. You know, some stable coins may be treated by market makers in different ways, but ultimately like the vision we're building towards is that you can use any major stable coin as collateral. You can also use Ethan's collateral, BTC as collateral and tokenized stocks as collateral. And they're going to be some, you know, the liquidation model will account for that, the way, in the way it measures risk. But ultimately that gives customers the widest choice of products to use.
- [11:08]
B
Okay. You also recently announced an integration as the perp Dex on Telegram wallet. And I wondered how that deal came about and how it's been performing for you. If you have any numbers to share, that would be great. I actually couldn't find any. So I'd be curious to know how that's going to.
- [11:28]
A
Well, if you go to. We recently released something that shows kind of all of our integrations. It's called Lithub, right. Like GitHub but with an L. And it should actually be pretty easy to find where we show all the integrations in terms of partner attribution revenue. The Telegram one is right at the top there. It's done very well, I guess if you compare it to, I mean, we don't focus on competitors as much, but it's just a data point. If I think one comparison to this is kind of builder codes and hyperliquid. And so out of all of those, you know, they have many different integrations, as do we. The Telegram one. There's only one builder codes on, on hyperliquid that has had more revenue or that has had more volume than our Telegram integration task. So. So Telegram is right at the top of our list. And it's. It would have been number two, you know, if you compare it to the kind of builder codes list. So it's pretty good. We'll see where Robinhood ends up. It's only been, you know, hasn't even been first week yet. But yeah, Telegram 1 has done very well and they were very happy that they picked us as the partner.
- [12:42]
B
Okay, great. All right, so in a moment we will be talking about just the massive competition we're seeing in perps. But first we'll take a quick word from the sponsors who make the show possible. If you hold crypto on your phone, your biggest vulnerability isn't your wallet, it's your carrier. AT&T. Verizon and T Mobile have been breached again and again. And SIM swaps are still one of the easiest ways for attackers to drain accounts. That's where Kape comes in. America's privacy first mobile carrier, same premium service, but Kape rotates the identifier on Your Sim every 24 hours, deletes your call and text metadata after a day, and protects against SIM swaps with a 24 word recovery phrase that only you control. You also get two middle to end encrypted secondary numbers for banking and signups, so you stop handing your real number to every app that asks go to Cape Co Unchained and use code UNCHAINED for 33% off your first six months. Fidelity has been researching and investing in blockchain since 2014, long before it was a headline. And they're hiring crypto and defi professionals to join their team and discover what's next. In finance, Fidelity is looking for people with fresh perspectives from different backgrounds. Whether it's tech UX or product design. Whether you're crypto savvy or crypto curious, as long as you have the passion to make a real impact at a company striving to make finance accessible to all. Explore crypto careers at Fidelity today and make the decision that could change your future for the better. Visit crypto.fidelitycareers.com to learn more. That's crypto.fidelitycareers.Com Fidelity is an equal opportunity employer. Back to my conversation with Vlad. So there's a huge competition for the perp space that's shaping up here in the US Kalshi now has its bitcoin pervs. Coinbase is now cleared to route US customers to their bit perps. Kraken now has CFTC regulated perps in the U.S. coinbase also has its own perpetual style futures that are just long dated futures. DYDX also just launched Arcus which is a stock token plus per perps Dex and that's also on Robinhood chain. And meanwhile we've actually, you know, while this is shaping up, we've actually been seeing that on chain perp volumes are falling a little bit while RWA perp volumes have been hitting all time highs. And then if we sort of, you know, look back and kind of see how lighter has been doing during this period. The top volumes in lighter were actually during kind of the points farming period. So. So I'm sure you have been thinking so much about how to compete in this space. Tell us a bit about your plans.
- [15:38]
A
Yeah, I mean I think, just to clarify, like I think RWA persps are also on chain, right? So I think it's true that perps on crypto native assets haven't set, haven't seen as much growth in volume the last six months whereas perps on RWS assets have. But all of that is on chain, right? Like the growth that we've had with other OVAs and growth that competitors like Trade XYZ have had, that's all on chain. So I, I think the thesis of on chain growing relative to centralized, like I think that thesis has definitely played itself out. I mean when we started building lighter like on chain perks were 1% of the overall market. I think now it's between, depending on how you look at it, between 10 and 20%. So you know, so I think there's that, I think also on chain technology is just at a point where it's just better, right? Like if you trade on lighter, it's faster, it's cheaper and it's decentralized and verifiable and more secure than centralized players. Like I think Telegram integration is a good example because their, their product is actually centralized, but they would still rather use defi rails underneath meaning lighter than centralized rails. So now of course there's a lot of like legacy reasons why different platforms want to keep doing things, you know, not move to new technologies right away. But I think overall, like if you zoom out, the ratio of decentralized, decentralized is moving and I think more and more folks are understanding the value of the tech. I will now to your other point about like RWAs versus crypto native, you know, crypto native assets in general, there's been a lull there, right? Like we can talk about why that's happened but like if you look at btc, if you look at eth others like they're kind of down on the year. RWAs, on the other hand, there's tons of stuff going on between you know, like AI and you know, geopolitics that there's like tons of activity there. That's. So there are these market cycles. We expect by the time we get into Q3, Q4 that'll correct itself back to closer to where it was last year. But, but yeah, we, we do go through these market cycles, but I think that's, that's separate from the point that like more and more trading is happening on chain.
- [18:03]
B
Okay. And I heard you say on the roll of that tokenized stock on grass Robinhood chain will now be collateral that traders can use on later. But first of all, I don't think that's in place yet. Is that correct?
- [18:16]
A
It's, it's not in place in the first week of that product rollout, which I think is, is reasonable. Right? Like you don't want to have that kind of risk. You know, like when you roll out a new chain. I mean think about Robinhood, you know, the ambition of what they're doing, right? They roll out a whole new chain, bunch of products on top of it, new forms of collateral. So that's all going to happen in the weeks to come.
- [18:40]
B
Okay. So that in and of itself also feels like it will carry some liquidation risk due to the fact that tokenized stocks in the underlying could have dislocations in the price because equities don't trade 24 7. So how does that work on the back end? Like what do you need to put in place that would from unfairly getting hurt, right?
- [19:04]
A
Well, they do trade 24. 7 on, on lighter. They're you know, obviously liquidity.
- [19:10]
B
No, but I'm talking about the underlying.
- [19:13]
A
The underlying as well. Right. The tokenized stock would be traded 24. 7 too. So the perp and, and the spot assets would be traded 24 7. I mean the liquidity in the middle of the night would be less than, you know, right in the middle of market open. I think we can agree on that. But yeah, basically, essentially the liquidation model like lighter or, or let's say Bitcoin. Right. If you're trading the liquidation fee is 1%. Right. If, if your collateral is stable point. If you're trading your collateral is position fee may not be 1%, it could be higher. That's that to, to kind of account for the risks involved in using that as collateral.
- [19:59]
B
So you're saying that's if the, if the collateral is tokenized stocks.
- [20:04]
A
Yes. Same thing as if the collateral was, you know, Solana or something. Right. So maybe the liquidation fee in that role will be, you know, 2% or 2.5. And that's where kind of these risk models come in. But, but ultimately, you know, the LLP and the, it's equivalent on the robot chain trade these, these assets and then you know, like, like that's like the LOP collects the liquidation fees and then uses that to protect customers when liquidations do occur. As we know in October 10th, we've had the best performance in terms of the least amount of ADL's and liquidations. And so we, we think our risk models are pretty good. Obviously they'll stand test of time and we'll, we'll see how they play out with various forms of collateral. But, but yes, I mean it's not, it's not going to be the same exact. It's not like you can just say okay, like 1% liquidation fuel just work for any form of collateral. You have to price the risk of that collateral into that as well.
- [21:09]
B
Yeah, yeah. Because like obviously on weekends it would be much more thinly traded. All right, so I know you have to run in a little bit, but let's just talk about how you were recently appointed to the US's CFTC Innovation Advisory Committee. And I noticed the LIT token is issued from a Delaware C corp. So it sort of feels like these are somewhat strategic moves. What do you feel like might be a way for Dexs or other defi protocols with tokens to find a regulatory path onshore.
- [21:41]
A
That's right. So as I mentioned earlier, the CFTC leadership under Chairman Selig and his team in the Chairman's office as well as a lot of the staff, they are very forward looking, right. Like they want to make innovative products available to US customers. They've already done it with centralized perps starting with Cal and from us coming from Defi World, that may not seem like a big deal, but if you look at it from the world of D.C. like there have been no new products like that in 10 years that, that the CFTC approved and they did. Right now they're working on decentralized perps with us and others figuring out, you know, honestly, some of these same questions we're discussing now, right? Like how, how, how are different forms of collateral treated? How do ADL's work? And yeah, we expect this pathway to end in a good place, I mean separate from the process of lighter working on a license. You know, I'm happy to serve kind of on this broader committee which helps the team at CFTC think about on chain trading more broadly as well as things like prediction markets and even other things like agentic trading and AI. Right. So we're gonna have the first meeting of the committee soon. I'm sure there'll be a lot of fireworks there. Right, because it'll, it will be mixed. Some of the folks of Shot 5 will be there too, as well as some of, you know, some of our partners, like founder of Robinhood. And as it relates to tokenization, I mean that's really more purview of sec. And so I think SEC is working on questions like, you know, kind of when are token securities, Right. Like how is that all going to work on chain kyc? I mean, I think that's a little bit orthogonal to what the CFTC is working on, which is really more around leverage and risk and you know, matching buys and sells fairly and all that. So anyway, we're, we're, most of our time is spent with cftc, but we're also to the extent that it's helpful providing input to others in D.C. whether it's Senate, Congress or other agencies.
- [23:58]
B
Okay, well Vlad, as far as I understand, I think you have to run. It's unfortunate we didn't get to all the questions, but we'll just have to have you back sometime. But thank you so much for coming on Unchained.
- [24:09]
A
Absolutely. Great to be here and yeah, I would love to be back. Apologize about the audio issues this time.
- [24:15]
B
Yeah, no worries. All right everyone, thanks so much for joining us and we will catch you next week. Bye now. Nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed on the show. For more disclosures, visit Unchained Crypto.com.
- [24:49]
A
Sam.