Insights on the future of Orca: an AMA with the co-founders
Highlights from Ori and Yutaro’s recent AMA with the Orcanautical Community!
The following is a highlighted summary of the recent AMA with Orca co-founders Ori and Yutaro on 22 January 2022, featuring notable questions and answers.To watch a recording of the AMA, tune in to our Youtube channel here.
Access to this AMA was gated to members of the Orcanautical Community — if you’d like to gain access to this exclusive group of Orca users, nab yourself an Orcanaut NFT and check out the Orcanautical channel on our Discord!
Ori — It’s a pretty exciting time just now with so many announcements coming out. Everyone wants to know what is coming next for Orca, so we thought we would come on and talk to you guys directly about what is coming up. I am focused on all the non-technical aspects of Orca, such as strategy and marketing. My background is technical, I designed the UX for Orca, but today Yutaro will be answering questions.
Yutaro — I am one of the co-founders of Orca along with Ori, currently I am essentially the engineer lead, we have a team of 6 engineers including myself. I set the technical roadmap, including whirlpools and decentralized governance, along with Ori. I was heavily involved with Ethereum before Orca — several years of experience of layer-1 development.
Yutaro — In terms of price, we would really like to say, the price action is out of our control in a real sense. One reason for that is Orca itself has fairly low liquidity, and we are not market makers for Orca pools ourselves. Also macro events tend to affect the price for low liquidity tokens like Orca. Structurally, Orca is intentionally not a security, through the eyes of any three-letter agencies in the USA, in that sense our focus is setting the roadmap and building the Orca DEX.
More generally, crypto is volatile by nature, it can be stressful for investors when the price dips. However, I believe that while in crypto you can see irrational price action, over the long term, say 2–4 years, prices tend to converge towards rationality — where fundamentals really matter. Also that’s the reason why with Orca it is important to focus on adoption and building a good product.
Ori — Yes, our focus here is building you a go-to DEX that will be able to make Orca the place to go whenever you want to swap two tokens on Solana.
Yutaro — Regarding the roadmap. The big project we have been talking about, which is now just a few weeks out from launch, is Whirlpools.
Whirlpools is an implementation of a concentrated liquidity AMM, as found on UniSwap v3. Whirlpools will still be an AMM liquidity model, but instead of being forced to provide liquidity across the entire price range, which is capital inefficient, liquidity providers can choose a specific price range to provide liquidity in. Users can withdraw or reposition their liquidity when price moves outside their designated range.
Concentrated liquidity is a key next step for Orca; in the next 3–5 years concentrated liquidity will become the norm for AMMs, Orca wants to capture the market through early adoption.
If I am a trader on Orca why do I care about concentrated liquidity?
Yutaro — Traders interested in trading in the Solana ecosystem ultimately care most about execution, i.e. “can i buy or sell what I want at the best price possible”, for that concentrated liquidity AMMs will provide the best price for the widest range of tokens.
Do you happen to have a plan for the community to be more involved in your current project or upcoming projects?
Yutaro — Of course, the next step is to get Whirlpools out first, because concentrated liquidity AMMs are the future and it is critical to capture the market. Next initiative after that will be decentralized governance that will see a prioritization of community involvement.
Ori — The governance project is known as Atlantis, internally — we want to get the community heard even more than it is today, and get more incentive-optimized than we are today. We will share more details soon, after whirlpools are released. Going forward we will also see community listing, permissionless pools, to allow people to list whichever tokens they like on Orca. It is exciting that people can create not just standard pools but concentrated liquidity pools for any tokens they desire.
There was DeFi Summer and then there was the August/September rush to Solana, but since [then] a lot of crypto has capitulated. What do you see as a potential event that will drive the next wave to DeFi and/or Solana?
Yutaro — Great question, I’m excited about the eventual involvement of institutions in DeFi. So looking at the long arc of crypto, institutional involvement is new and drove appreciation 2020–21. So far only involved in BTC, Ethereum and Solana, at the fringes — but we haven’t seen DeFi tokens yet adopted. Regulatory uncertainty is a cause, so from an institutional perspective at the moment there is regulatory, if we believe that DeFi will be how a lot of institutions do their financial activities, then institutional adoption of DeFi tokens and protocols must follow. I see this as a big inflection point for the future — whether this will happen in this cycle or the next I am unsure.
What further utility is planned for Orcanaut NFTs?
Yutaro — We have a few ideas in mind. One we can share now is early access to things — we believe Orcanaut holders should have early access to things, even if we are just beta testing them. Whirlpools is something where we want to give Orcanaut holders early access.
Ori — I just want to add that we do not have any plans for Orcanaut to be staked to receive money. It will not be something where we give direct financial utility to holders. I see it as a ‘fan item’. When having an Orcanaut you are part of an elite Orca crew and get early access to AMAs and maybe new products. Obviously we leave options open for different things in the future; they are not something I would buy hoping for a direct airdrop or staking. That is not really the spirit of Orcanauts.
As we all know, there are many attacks on the Solana Network. What solutions do you have to protect assets?
Yutaro — Great question! One thing we keep in mind is even if the Solana network slows or halts the assets on Orca are still protected and will never be moved without your permission. The biggest risk is if you have leverage, borrowing money on a lending protocol, but Orca is never leveraged. All trading is effectively spot trading on Orca, it may be inconvenient to be unable to trade but your assets are still safe.
In terms of the slow downs, hopefully it is known there will always be technical hurdles for the Solana Team to overcome, it will not always be smooth sailing. This is true for all emergent blockchains. We built on Solana because we believe in the quality of the team and its engineers — they have a top tier team in terms of technical experience and quality. In terms of technical challenges faced for Solana, none of them are fundamental flaws that cannot be solved.
The biggest challenge is probably dealing with the accounts’ stake size bloat and the risk of that becoming bigger than a few hundred gigabytes but that is a risk all blockchains are dealing with.
Does Orca hire interns? I want to be part of the Orca team.
Yutaro — We do not actively hire interns. Right now we have an engineering team of six. It is currently optimal, any larger and it would have to be split into multiple teams. Doors are never completely shut, however, and we are always open to applications.
Ori — I really like our team, the way we work is as a completely distributed team, we are spread across different timezones, allowing ongoing progress. Seeing growth has been really rewarding.
How can we as a community help you improve the project more?
Yutaro — Community involvement, just talking to people in our Telegram and Discord channels. It is easier to track and use Discord, easier to hear suggestions. Making suggestions for improvements is very useful, as are thoughtful comments on tokenomics. We’re very open to helpful comments about tokenomics, there is lots of iteration in broader crypto, so there is space for tokenomics: take xSushi with Sushi Swap, and all the tokens started by Curve; talking about those models in thoughtful way and providing suggestions of how things may or may not fit with Orca is useful.
Are there novel features in Whirlpools that go beyond Uniswap V3?
Yutaro — Yes, but I want to save some of them for nearer to the actual launch. In terms of what we can talk about now, we have so much more data on how people will actually use concentrated liquidity pools, and that allows us to optimize. I remember when UniSwap v3 was first announced it was very radical and hard to predict how it would actually be used or a framework for profitable use. We have data now that will allow us to constrain the design space and optimize for certain things. Let me just say I am very excited for the announcement.
Another thing I would say, if you have ever provided concentrated liquidity for UniSwap v3, you will know repositioning is very expensive, which limits the amount of things you can do as a provider. With Solana that becomes less of an issue, it is much easier and cheaper to reposition, which opens up the design space in terms of what we can do.
Ori — Yes, it also opens up a great opportunity for liquidity providers to learn the skills necessary to profit from concentrated liquidity and people can even try it out for just a few bucks a time, which is a huge change.
What is the main technical challenge that has kept other Solana AMMs from being able to implement ranges for LPs so far, and do you think they are close behind?
Yutaro — Concentrated liquidity AMMs are relatively complicated as far as smart contracts go, it will push the limits of the Solana VM. The Solana VM’s main constraint is the 200k compute budget limit, we found with swaps it can hit 200k compute budget fairly quickly. I tried another beta concentrated liquidity AMM, a month ago, it hit the compute budget limit on Devnet so they were clearly experiencing this issue. The solution is the optimisation of code, which is showing success. Other projects are also working on this challenge and reviewing their work they seem close.
Ori — Just to add, if you spend any time around Solana Dev Space you hear a lot of talk about the challenge of the compute budget. Yutraro has experience of building on Ethereum giving him a balanced approach to building efficiently. Even if others adopt concentrated liquidity, a lot of nuances mean that another project launching concentrated liquidity won’t necessarily be as robust as Orca.
What is your take on L1 competition? Do you think grants from competitors like NEAR will draw builder talent away from the Solana ecosystem?
Yutaro — We bet on Solana early on, because we saw that there were fundamental differences, allowing Solana to build technically moat, not just a technical moat but a moat in terms of developer and user adoption.
Solana doesn’t use the EVM allowing developers to build things impossible on other chains. [It’s] hard for other chains to replicate because with Solana everything has been built from the ground up in a thoughtful way.
Short term, over 2 years, there will be a lot of competition from other L1s. A reason for this is so many L1s with huge treasuries — it is easy to pay money to get developer adoption, this is similar to the yield farming craze, during DeFi Summer — where DeFi itself boomed across the board then protocols found themselves with big treasuries to provide incentives for their own protocols, this is why we saw so many altcoins for Alt AMMs and DeFi protocols. When the dust settled, the winners emerged.
The same will happen with L1s — 6–18 months of fierce competition, once dust settles, I expect to see Ethereum and Solana as the top two competitors. Who will be on top of those two is hard to say. I fully expect Etherum to be around, but I expect Solana to be in a very strong position, even two years from now.
What is your favorite Japanese whiskey?
Yutaro — I don’t drink Japanese whiskey, now I hardly drink. When I was younger I drank more Irish whiskey like Bushmills, but I would definitely drink Japanese Whiskey if I was given in.
Ori — My personal observation is that Yutaro really likes Yebisu beer.
How important is community activity to you in general?
Yutaro — Extremely important. The community shapes Orca: the brand, the image we have is literally shaped by the community through feedback. I really felt this when I met people in person at the Solana conference in Lisbon. Ultimately this is a community governed project, and will continue to become more community governed, that is our priority in 2022.
Did you raise capital?
Yutaro — Yes, we raised capital, closed Sep 2021, raised $19.6m and sold a little less than 10% of total supply. No tokens were sold before or since.
[Correction: The total amount raised was $19.025 million, slightly higher than the amount shared in the press release due to minor changes that happened post press release.]
Ori — A fair amount to preserve the position of our community. We feel good about securing investors like Polychain, Placeholder, Three Arrows among others as well as the community investors.
What do you think about GenesysGo’s SCC model since you’re a developer and NFT “creator” like them… and do you want to go surf down in Newport sometime? I’ll bring the soft tops and wetties no worries.
Yutaro — Interesting, first thought, to be honest, is it seems like a potentially clever/dangerous way to skirt regulations by using an NFT almost like a fungible token in a way that is security-like. It has attracted a lot of attention — it has clearly done a great job of marketing GenesysGo and building a community around the project. It is a good product with good service. Using NFTs to bootstrap a community is a great idea, similar to the ICO model, or something security-like. We see fairly often the difference between NFT and fungible tokens starts to blur, it is getting harder to tell the difference.
Would love to surf in Newport. I’m not a good surfer; I only surfed the first time last year, so not a good surfer, but down to surf some more.
Great AMA, thanks. How can we contribute as developers?
Yutaro — I encourage you to look at [our] typescript SDK. We tried to write it in a way that is easy to use and we are always happy to spitball ideas, in terms of what can be built. To be honest, if developers want to contribute, potentially you should wait for 3–4 weeks. There may be a new SDK-like thing that is innovative and brand new and will allow developers to build first of its kind product on a new foundation. So keep an eye out for announcements from Orca in the next few weeks for new SDKs to play with.
Ori — A new hackathon may be coming to Solana. Orca would definitely be involved and would be happy to give prizes for good implementations on the new SDK we have been working so hard on, shout out to Scuba and Atamari, who you can find in the integrations channel; they are very responsive so do ask them if you have any questions.
Any integration with Serum order book to tap into the system’s liquidity?
Yutaro — Right now aggregators on top of Orca will aggregate orders between DEXs in Solana, that will continue in terms of direct partnership or direct routing from Serum, I do not expect that to happen — other aggregators will do that best. We will focus on building the best AMM on the Solana ecosystem.
Any collaborations planned with other teams or NFT projects?
Yutaro — Cross promotion is a great way to promote across communities, a great way to work. Regarding NFTs, I would love to see more NFT partnerships, and would love to work with more philosophically aligned projects. We launched Orcanauts with a specific mission in mind, how can we get more awareness for DeFi education and so we would love to work with other projects working in the same way.
I understand that Orca is a charity ecosystem, but won’t bigger and better partnerships yield larger charity work?
Ori — We are not really a charity ecosystem, even though we make donations. We are ultimately an AMM but proud of our donations and ethics, particularly with Aflatoun through the Orcanaut NFTs and the impact it will have on areas of the world with poor access to information. We also have the Orca Impact Fund which has been collecting fees since launch — accumulated over $1m — that is focused on climate change and sustainability.
Our community voted to donate the first round of donations through this fund to a non-profit called the Ocean Conservancy in fall last year. We’ll be sharing more details on the charter of the Impact Fund, how these funds will be used, and generally how we think about effective altruism on the Orca team in the near future.
We hope you enjoyed this AMA — to keep ahead of our latest announcements and releases, be sure to follow us on our Twitter!
Disclaimer: Any forward-looking statements contained in this post are based upon believed reasonable assumptions and plans, though there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.