Learn & Earn: Fulcrum Margin Trading Platform & the new BZRX tokenomics
bZx’s Co-Founder Kyle J Kistner: “We are aiming to become the Uniswap of lending”.
In this “Learn & Earn” campaign, we have the pleasure of talking to Kyle Joseph Kistner — Co Founder of bZx Protocol. Kyle will introduce you to one of DeFi’s most popular margin trading platforms — Fulcrum, explain the tokenomics of bZx’s new BZRX token and how you can participate in Governance and earn rewards.
Remember to answer the quiz here after reading this article to have a chance to win 20 USDT!
Hi Kyle, thank you for taking the time to join KyberSwap’s interview! Can you tell us what you did before crypto and how you got into crypto?
It’s a pleasure! When I was in High School, I got interested in a forum centered around reverse engineering a game called Diablo II. I made friends in this community, and many of the members later went on to be involved with Bitcoin. Around 2011, when I was an undergraduate, I started reading about Bitcoin and blockchain and becoming fascinated. Later, when Ethereum came out, I was finally in love. During graduate school, I did vaccine research, and when I finished, I decided to plunge into blockchain full-time. Though I didn’t have much money at the time, the fact that I had been familiar with the space for years was an asset, and before I knew it a syndicate composed primarily of my former associates sprung up around me. In a flash, the capital to bootstrap bZx was born.
Can you describe what Fulcrum is? How did you come up with the idea for it?
Fulcrum is a DeFi margin trading platform, the only one of its kind. It’s the only platform that allows you to take out leveraged trades on a wide variety of assets straight from your wallet. You can also lend your assets to earn yield. The seed of the idea was simple: we saw that margin lending was possible on Bitfinex and other exchanges, and that it earned lenders considerable yields. I thought, “why doesn’t someone decentralize that?” I started playing with various ideas about it and talking to my friend Tom Bean about developing the idea. From there we started iterating on it technically together.
What are the benefits of decentralized margin trading (compared to centralized)? Why are there so few projects that provide margin trading on the DeFi space?
The biggest benefit is the ease of use. With decentralized margin trading, you can do everything straight from your wallet without worrying about withdrawal and deposit times. The other benefit is that over time open-source, decentralized software can prove its security in a way that centralized exchange hot wallets cannot. The simple answer for why there are so few others offering trading is that it is technically difficult. Margin trading has many components, including requiring a fully functional lending/borrowing protocol, which makes the barrier to entry higher.
Seems like margin trading & lending would complement decentralized exchange services really well! Does Fulcrum have plans to partner with the major DEXes?
We do. We have a major DEX that we are working with to provide native, whitelabel margin trading services. We also have our own plans in this area.
What are the new and interesting upgrades you have for Fulcrum 2.0?
The protocol has been optimized, reducing gas costs by over 50%. Beyond that, we released a new tokenomics and governance model that has gotten people quite excited. We are currently working on upgrades we’re very excited about like permissionless listing, security mining, and limit orders.
Can you tell us more about the BZRX token and how bZx’s new Governance works?
The BZRX token is a governance token. The governance structure is a liquid parliamentary republic. There are three representatives that compose parliament. The three addresses with the most tokens staked to them are the parliament members. Those representatives appoint the executive. Parliament members are empowered to propose and pass proposals through a majority vote. The executive, which is appointed by a unanimous vote, must either ratify or veto the proposals. One of the first proposals that we anticipate will be passed will allow for fees generated by the protocol to be shared by token holders.
The BZRX token has been released in the midst of a “Liquidity Mining” and “Yield Farming” craze. The concept allows crypto holders to earn rewards by passively parking their tokens in different protocols. The bZx protocol is taking a slightly different approach by directing rewards toward active users. Borrowers who pay fees to the bZx protocol will get 50% of their fees returned to them in the form of vBZRX tokens. Additionally, during the first month, 0.5% of the BZRX token supply will be disbursed each week in the form of vBZRX to users based on the quantity of fees generated during that week, with further disbursements determined by governance. This is intended to bootstrap activity on the protocol by compensating early adopters for the risks they bear.
This means that anyone who executes a trade, opens a loan, or keeps a loan open, will begin to accrue ownership of the protocol.
BZRX token holders who stake using BZRX LP tokens will receive a larger proportion of protocol fees than holders who stake using BZRX tokens. This is because fees are distributed proportionally between the indirect BZRX LP staking pool and the direct BZRX staking pool. Staked BZRX LP tokens are assumed to represent the entire unstaked BZRX supply so will nearly always receive proportionally more fees per token. Only in the highly unlikely event that 100% of all BZRX tokens are staked will the reward shares be equal.
What about vBZRX? How does it work and are there any advantages or limitations for them?
They represent shares of the BZRX currently locked in our vesting contract. The governance system allows the BZRX inside the vesting contract to be staked, allowing vBZRX holders to participate in governance and fee sharing. If you are looking to participate in the protocol long term, vBZRX is a more affordable way to profit. The big limitation is that the fees vest over time instead of being immediately accessible.
In short, vBZRX have the following benefits:
Vesting
- Holders accrue BZRX internally as they vest and can claim anytime
- The tokens vest over 4 years with a six-month cliff.
Fee Sharing
- The vesting tokens earn fees that vest simultaneously with the tokens that earned them.
- Vested fees can be claimed anytime.
Voting
- Vesting tokens have 50% voting power compared to BZRX.
What are your future plans? Are there anything new from Fulcrum that we should look forward to?
Keep an eye out for our permissionless listings. We are aiming to become the Uniswap of lending, allowing users to borrow, lend, and margin trade *any* asset.
Thank you very much for your time Kyle!
