Interview with Darren Camas | IPOR Labs
Interview with Darren Camas | IPOR Labs
- Interview with Darren Camas – 11 important answers about IPOR Labs.
- One of the best ways to better get to know a crypto project is to talk with that project’s founders and team members.
- DezentralizedFinance.com sat down with Darren Camas, Co-Founder and CEO at IPOR Labs to discuss the latest developments & news from IPOR and the importance of DeFi and open finance solutions for the whole crypto ecosystem.
IPOR Labs - The Heartbeat of DeFi
- About IPOR Labs: The IPOR Index and IPOR Derivatives products are initially being developed by IPOR Labs, a Zug-based firm specializing in derivatives software products. IPOR Labs was founded by veterans in financial markets, cryptocurrency, and blockchain expertise spanning protocol development, fixed income derivatives, quantitative finance, exchange trading systems, venture capital, and software development.
Question: Kindly introduce yourself and describe your Crypto journey and share the moment/reasons why you started to found IPOR Labs.
- Darren: I was lucky to start my journey over a decade ago running business development for one of the first global crypto exchanges which at that time all “crypto” was BTC only, and the space was obviously much smaller with likely fewer than 10,000 participants globally. Fast forward to 2022 and we are at a time when institutional investors have moved on from the “blockchain not bitcoin” narrative to embracing crypto as an asset class (and even subclasses). We now have good enough UI/UX to develop functional DeFi applications, but for this market to continue to grow it needs base protocols and tools which can be ported over from traditional finance and adapted to DeFi such as benchmark lending rates and interest rate derivatives which create the base for the global credit markets, and this is exactly what we’re building at IPOR Labs.
Question: Describe the IPOR use case and the value that you are offering to the Crypto and DeFi ecosystem? What problems are you solving with your service?
- Darren: First off, IPOR stands for the Inter-Protocol Offered Rate (or if you prefer the “Overblock” rate as it is sourced block over block in DeFi). If you come from traditional finance it is obviously a hat tip to the LIBOR upon which hundreds of trillions of deals were structured, and which was formally phased out as of last New Year’s Eve. IPOR is designed to be the base layer of the credit markets. At the base of any market are the derivatives, which help stabilize markets and offer opportunities to capture market inefficiencies which should help eliminate these inefficiencies over time.
- In the DeFi credit markets we have a wildly fluctuating cost of credit where rates could range from 3% to 30% in a single day. We see huge spikes when the asset spot markets show volatility such as the BTC drop in April and May of 2021 from 60-30K. However, we also see high volatility outside of these macro movements such as last October when ~$4b was pulled from major money markets. In the case of interest rate volatility, both lenders and borrowers face scenarios in which they are unable to manage risk given the lack of mature interest rate derivatives products. Here’s a writeup from our Chief Scientist about how the IPOR is designed to automatically adjust to such as scenario – read more: https://medium.com/ipor-labs/cream-exploit-is-aave-bank-run-an-over-reaction-77ebde45e52
- With the IPOR Indices, the market can view the real-time benchmark rates for decision making, and the IPOR based Interest Rate Derivatives (IRD) such as an Interest Rate Swap (IRS) to hedge their risk, arbitrage, or take a directional position.
The DeFi ecosystem needs benachmark lending rates and (derivatives) interest rates!
Question: How important are stablecoins and yield indexes for the crypto ecosystem?
- Darren: Stablecoins have become increasingly important for the crypto ecosystem. They are where many investors enter crypto sending bank deposits for stablecoin, crypto native projects moved almost completely away from raising funds in a fluctuating crypto like ETH in favor of stablecoin for better treasury management, and are increasingly becoming a productive asset through CeFi players as well as DeFi marketplaces such as AAVE and Compound.
Yield indexes are interesting as they show where players are going to farm or produce with their assets. In the IPOR case we are concerned with the pure stablecoin credit markets as they have a strong fundamental base given the securitized lending through over-collateralization.
Question: Tell us more about the IPOR Index and IPOR Derivatives.
- Darren: The IPOR Index, or better-stated indices, track the real-time interest rates across DeFi credit markets. Currently, the money markets are liquid short-term debt, essentially the spot rate. As we move to more liquid fixed income products in the space we can begin to establish future IPOR 1, 2, 3 months rates extending into the future one step at a time.
- The IPORs take a weighted average of different protocols from both the borrowing and the lending rates, essentially a mid-market rate. This differs from saying the now-defunct LIBOR which is always quoted as a base offered rate, with lending and borrowing quoted as LIBOR +x%.
- There are currently three different IPORs: IPOR USDC, IPOR USDT, IPOR DAI. Each stablecoin is treated as a different currency as they have their own unique rate behaviors. This also leads to some interesting arbitrage opportunities between stablecoin rates. In the future, the IPOR rates can include new stablecoins both asset-backed and algorithmic and the protocol has been designed in such a way that the indices can be sourced from and live in a multi-chain construction.
Question: Please describe your average target customers or users.
- Darren: On the most active DeFi platforms with tens of billions in activity there are typically no more than a few hundred daily active participants which mean the credit markets are driven by whale behavior. Besides crypto whales, we see many crypto native institutions active in the credit markets such as market makers who are often stablecoin borrowers, crypto VCs and hedge funds, trading firms, and CeFi participants looking for yield upstream.
Each one of these participants could use the IPOR IRS’ for the three primary purposes of hedging, arbitrage, or directional exposure.
- Hedging has two directions, with borrowers and lenders at opposite ends of a trade. We expect some of the trading firms with considerable stablecoin exposure to look for cross stable inefficiencies such as borrow DAI at 2.5%, lend USDC at 6% using IRS to lock in the risk. Directional exposure would typically be taken by momentum-driven traders. IPOR is not as much a retail play as interest derivatives are hard to comprehend even from finance professionals, but we expect IPOR IRDs to be embedded in structured credit products in the future as an invisible layer of the DeFi credit market.
Question: Can you introduce your team to the readers? What relevant experience do they have?
- Darren: I am honored and lucky to have such a talented team at IPOR Labs. Our current headcount stands around 15 with experts across every facet of the protocol from quant finance and software development, to tokenomics and community. We have 3 PhDs currently building IPOR, two on the quant side and one on the engineering team. Our engineering team comes from backgrounds primarily in enterprise software development led by Mario and Rav with 15 years each having built banking and insurance products previously. With the enterprise software background, we inherit security scalability and optimization as second nature which is paramount for development onchain. The product and production team is rounded out by Wookash who combines a background in economics with a decade of experience building software and CTO experience in venture-backed startups to translate financial primitives into smart contracts.
- We have four quants building and advising IPOR with backgrounds in fixed income, trading desks, with the most senior coming with over 20 years experience. This gives us hard-to-replicate knowledge and best guidance on how to replicate the best fitting models from a quant toolkit that matches the volatility of DeFi interest rates into an efficient AMM construct built specifically for IPOR.
- Our CSO and CMO are DeFi natives. Dimitar has advised multiple products and comes from a background in venture capital and crypto exchanges. He has his finger on the pulse of the cutting edge tokenomics and we’ve managed to stay far ahead of the competition in designing our token models.
- Our CMO Passytee is one of the most prolific memelords of crypto, having created videos such as Michael Saylor vs. Janet Yellen, or Cobie vs. Husky, and is also a DeFi power farmer and well respected in many communities.
Finally, I’m happy to welcome Sergej to the team as head of institutional BD. I’ve known and collaborated with Sergej since 2017 and as a seasoned crypto executive I am confident that his experience, knowledge, and network will be beneficial as IPOR is effectively spanning crypto, Decentralized Finance, and Traditional Finance markets, particularly in Fixed Income.
Question: How did you achieve your funding requirements, was it from a token sale exclusively, private funding, or were you granted?
- Darren: IPOR raised an oversubscribed seed round with a small set of well-connected angels in Q3 2021. We are currently in the process of closing our strategic and private rounds with a set of investors who have strategic value to the protocol across DeFi credit markets, traditional finance inroads, trading activities particularly rate exposure, and finally liquidity and governance. Follow our social media channels for this announcement to find out who is involved.
Question: Please share your mid-and long-term roadmap with our audience.
- Darren: The IPOR indices are already live on www.ipor.io where you can view “The Heartbeat of DeFi” as it rises and falls.
The smart contracts for the IRS have been submitted to auditors, with a public testnet foreseen at the end of April. From there we are on a countdown that is dependent a bit on the performance of the network and the AMM as we approach mainnet.
- From the launch of the mainnet we will go through a series of monitoring, improvement, and innovation as we look at the next derivative contracts, as well as a V2 of the IRS.
Question: What are you looking for at the moment (funding, talent, network, development, community building, etc.)?
- Darren: I’m looking forward to the community update of the instruments as well as the data from the testing. Once the product is in the wild it will be exciting to see the performance, to tweak the risk parameters, and fine-tune for the public launch.
- On the other side we are looking forward to what types of collaborations other builders will have in mind. We don’t see IPOR as a single product, but as a base layer for the credit markets. We’ve built it in such a way that we could foresee structured financial products using the indices and instruments to create not only fixed-rate products but other inventions we hadn’t thought of before.
Question: What do you believe is the next big thing in the Crypto, DeFi, NFT and Gamification ecosystem in 2022/2023?
- Darren: The market always goes through several hype cycles. The thing about hype cycles is that there’s always something there, even if a bubble bursts. Considering we’ve had huge corrections across all the mentioned markets I expect further iterations of the strongest protocols which survive the drawdowns and will survive due to community participation and sound tokenomics, as well as new challengers who get to learn from the mistakes of others.
- I expect a maturation of DeFi focused strongly on fundamentals such as protocol value capture, sustainable tokenomics, and interoperability to re-create traditional financial products, but also new constructs only possible with blockchain.
Question: How to get in contact with your team and your community?
- Darren: You can visit the website at www.ipor.io to get information about the project and documentation. If you want to interact with the community join our discord at https://discord.com/invite/bSKzq6UMJ3 and hang out with Passytee.
- We publish announcements and articles from time to time on Medium https://medium.com/ipor-labs, and last but not least follow our Twitter for the most up to date project information.
DezentralizedFinance: Thank you for your time and the great talk, it was really fun. Hopefully, we can repeat the interview in the future.
- Darren: You are welcome, thank you for the great chat and I hope you will enjoy the insights about IPOR Labs.
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- RISK DISCLAIMER: All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article’s content solely reflects the opinion of the writer, who is not a financial advisor. Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value, also to zero. Holding cryptocurrencies is very risky.