AMA Transcript: Pentoshi's DeFi Palooza — February 15th, 2021
When a physicist and a penguin sit down to talk about blockchain, NFTs, DeFi and the future of dCommerce, we better listen.
Crypto trader and OG Pentoshi held an AMA with our co-founder, Justin Banon, on Pentoshi's DeFi Palooza, on Telegram. If your goal is to learn more about Boson Protocol, our vision for a decentralized commerce ecosystem and how we're actually making that happen, read on.
/// Transmission begins here ///
JB: Hi, Justin Banon, Co-founder of Boson Protocol here.
Pentoshi: Hi Justin. A pleasure to have you with us.
JB: Thanks, great to be here.
Pentoshi: Our AMA with Bosonprotocol.io is live now. So Justin, tell us about yourself and your background in the industry?
JB: Sure.
Well, I started out doing a Physics degree at Imperial College London and somehow ended up working at Priority Pass, which a lot of you may know. At the time, they sold airport lounge visits using paper and plastic vouchers.
Early on, I had the opportunity to do masters in digital business and that led me to an idea that was novel at the time: “What if we digitise those vouchers in order to supply the growing demand for digital products?”
That turned out to be a great idea, because as MD, I grew the business from $50m to a digital platform generating $1Bn in revenue, and expanded into all sorts of products and services represented as digital vouchers
In Blockchain, I had the privilege of working as a strategy consultant with great projects such as DexFreight, Centrifuge, MakerDAO, and Ocean Protocol.
Pentoshi: From 50m-1b, talk about a moonshot. That certainly puts to bed concerns about leading a “norms-challenger” like Boson. So, what is BosonProtocol?
JB: Boson Protocol is a fundamental primitive which automates commerce using NFTs encoded with game theory.
So, the core of our technology is that we allow for the execution of transactions without centralized coordinators. We automate digital to physical redemptions by tokenizing commitments to exchange real-world Things (products and services) as Non Fungible Tokens (NFTs), which are governed by a novel sequential game.
The result is the elimination of centralized intermediaries and the minimization of arbitration, cost, trust and friction.
We want to give artists and builders — designers and makers — creatives and experts — curators and brands — direct access to their markets.
Pentoshi: There’s a lot to unpack here. But let’s start with the connecting to real-world commerce part which is probably as straightforward as it gets when it comes to explaining what Boson Protocol does. However, if you were to focus on a particular utility right off the bat, what would it be?
JB: Well, the primary utility is enabling commerce in a way which minimises trust, friction and cost of human intermediaries.
Think about how email has changed letter writing. We are not sending 10 times more ‘letters’ than with physical mail, we are sending 1,000 times at least.
We have seen time and again, that low cost and friction create a step-change in adoption.
Pentoshi: Yes. It does. We’re living one such moment in history with the whole DeFi movement now. Speaking of which, Bosonprotocol will be leveraging NFTs. Most of us likely associate NFTs with some abstract art on Opensea. How are you leveraging NFTs at Boson?
JB: Boson Protocol relies on game theory for devising the incentives that encourage good actors and penalize bad actors. We automate digital to physical redemptions by tokenizing a Buyer and Seller’s commitment to exchange digital value for a real-world Thing (products and services) at a later date. Commitments are made by depositing digital value into an escrow contract represented by a stateful non-fungible (NFT) commitment token.
The commitment token is an NFT which represents the unique commitment between buyer, seller and the state of the exchange mechanism.
Game rules and the final deposit transfer scheme are designed in such a way that coordinates transactions and incentivizes parties to behave fairly. Or, more formally, we say that: “subgame perfect equilibrium implementation corresponds to the honest behaviour of both players.”
Pentoshi: Does this mean users can transfer these vouchers among themselves, effectively creating a secondary market?
JB: Well, to do that and to disrupt closed marketplaces and unlock the full potential of DeFi we are leveraging ERC20 based “Thing Tokens”.
How this works is every Commitment Token can be purchased with a specific Thing Token. Because Thing Tokens are ERC20 tokens, they can be used across the whole DeFi infrastructure — you can think of these as “generalized Unisocks”.
This design pattern unlocks a wide range of possibilities, from leveraging DEXs like Uniswap or Balancer for price discovery and yield optimization to crowdfunding of future products via Initial Thing Offerings (ITO’s), think decentralized Kickstarter.
Pentoshi: “Thing Token”… that’s a thing… you’re probably unlocking much than the full potential of DeFi. You’ve won the meme wars too! “Give me a thing, token”
JB: Haha. Yes, it’s a powerful meme!
Pentoshi: So tempting to roll with this, but let me dial back to something serious — penalizing bad actors. What type of activity is likely to earn one such a label and by penalizing, what exactly happens to these bad actors?
JB: Well, the protocol incentivises buyers and sellers to go through with the transaction to an agreed-upon level of quality.
Deviations from this happy path result in slashing of commitment deposits.
We have one of the world’s top algorithmic game theorists (Dr Akaki Mamageishvili) working on this core mechanism as a live academic research project….
Pentoshi: Amazing. Taking the scientific approach rather than the usual patchwork path most tend to take. No wonder I’ve been hearing good stuff about the protocol from my more tech-inclined friends. However, disputes and commercial products are like rain and taxes. How does the system deal with this?
JB: Disputes are a major cost factor in e-commerce today.
Boson’s core exchange mechanism can be viewed as a decision support system which coordinates exchange, governs reversals and handles the main load of disputes. This significantly reduces arbitration cost and friction versus arbitrated protocols.
To ensure that the system behaves as intended we follow what our advisor Dr. Michael Zargham likes to call “evolving complex systems with guard rails”. This means in the beginning the system starts with some arbitration to ensure proper resolution of disputes, over time as the system evolves we can slowly remove the guardrails.
Pentoshi: Ah. That makes sense. You can’t anticipate everything right out the gate, nor can you toss everything into the wild at launch.
Still sticking to the technical stuff, Boson uses a proof of redemption model for its token issuance. Could you shed more light on how that works?
JB: “Proof-of-redemption” just refers to the buyer signing a message to confirm the redemption of the item. This is part of the exchange mechanism design and not connected to token issuance.
For our Token model we follow our advisor Trent McConaghy’s Web3 sustainability loops.
JB: $BOSON will be the native utility Token of the protocol and is used for DAO governance, staking and incentivising network participants.
Through a minimally extractive fee for coordinating transactions and trade on the web3 data marketplace, $BOSON captures value that can be reinvested into the protocol.
Pentoshi: Phew. There I was worrying if it was another blockchain consensus protocol to wrap my head around. Glad to see it’s much simpler than that. And speaking of $BOSON and governance: What are some of the things the DAO will be involved in?
JB: The DAO will be involved in funding and building what we call the dCommerce stack. Boson Protocol enables a swarm of specialist, composable dCommerce applications, to work in concert to unbundle existing eCommerce monopolies.
To kick-start this dCommerce stack, Boson is developing a library of developer tools and a number of reference applications including a decentralized marketplace for Things and a p2p reference application for real-world redemption.
Pentoshi: If we’re going to unlock DeFi’s full potential and unbundle existing eCommerce monopolies, then let’s talk about the elephant in the room; Ethereum gas fees. Will Boson Protocol be looking at L2 solution or other protocols to develop on?
JB: Yes, we are exploring layer 2 to find a solution to high gas prices. In our whitepaper, you can find a detailed description of how the Boson architecture could work leveraging rollups. Luckily we have an incredible team and so we are confident that this is a problem that we, and the wider Ethereum community, are able to solve over time.
Pentoshi: Makes sense to stay on Eth given how pervasive the ecosystem is at the moment, however, do you see a cross-chain/interoperable future for the ecosystem?
JB: Yes, absolutely. Our vision is to:
Enable a decentralized commerce ecosystem by funding and enabling the development of a stack of specialized applications to disrupt, demonopolize and democratize commerce.
We are pragmatic and agnostic on how we get there.
Pentoshi: That’s refreshing to hear. Opening up the community for further questions. Still have one or two more though!
There’s been much talk about allowing users to monetize their data without compromising privacy, but not much done in that field lately. What type of commerce data are you looking to monetize and how can one participate?
JB: Well, initially it will be ratings and reviews, product preference data. It is incredibly valuable for businesses to know what types of products you like and can enable much more relevant and rewarding experiences and choices for consumers. Data sharing is, of course, voluntary, self-sovereign and privacy-preserving.
Pentoshi: And what’s your roadmap for the rest of the year like?
JB: We are about to launch- in a month- a peer-to-peer app which enables the trustless trading of digital value for physical things. This will be used as part of our digital to physical art application in a couple of months time.
We then have an aggressive roadmap of protocol development including thing tokens which leverage Defi. Also powering up a rewards platform, a bridge to Web2.5/2 called Nifty Key.
Pentoshi: Exciting stuff. My final question would probably be one you’ve heard a million times now “wen token launch”.
Seriously though, would like to know if there will be any liquidity mining event or liquidity reward system
JB: We are planning a token launch for March.
We have a supply mining program which rewards actors for identifying and curating quality inventory.
Pentoshi: It’s been a pleasure having you with us, Justin. Has been very illuminating. Feel free to drop in any time
JB: Thanks for having me. It has been fun.
/// End of Transmission ///
Keen to learn more? Read our Lightpaper:
Let’s build an Open tokenized economy together.
- Find out more about us at www.BosonProtocol.io
- Check us out on Twitter.
- Join our Telegram discussions here.
- Want to dive deeper? Read our whitepaper.
Lastly, if you’re a decentralization enthusiast, please follow us here, on Medium. We will post frequently about our dCommerce journey and would love to hear your comments!
