DUO Network AMA with Wolf Crypto

Wolf Crypto
Apr 26 · 9 min read
DUO Network — Crypto Derivatives Market

We held an AMA with DUO Network in our public Telegram channel on April 25th.

The DUO Network helps market participants navigate volatile market conditions by using a decentralized platform named DUO Network, which enables issuance, trading, and settlement of tokenized crypto derivatives. It mainly consists of Collateralised Autonomous Tokens (CAT), Price Oracle, CAT Exchange, and the DUO Network Token.

The platform aims to reduce risks and barriers in traditional derivative transactions, through collateralised smart contracts and distributed price feeds, thereby creating a transparent and autonomous derivative marketplace.

DUO Network are holding an Presale/IEO at 8:00 am EDT on the 27th of April on Bitmax.io.

You can visit the DUO Network Telegram channel or DUO Network website for further details.

Here’s what DUO Network CEO Jerry Li had to say in the AMA.*

*This AMA has been edited for clarity.

WC (Wolf Crypto Telegram Member)

Welcome to another edition of Wolf Crypto AMA, this time with DUO Network.

Joining us from the DUO team is Jerry Li, the CEO of DUO Network.

JL

Hi I’m Jerry Li, the CEO of DUO Network, thanks for having me here.

TEAM & TEAM GOALS

WC

It’s our pleasure! To start off with can you please tell us a bit about yourself and what led you to being involved with DUO Network?

JL

I have been working in UBS and Citi on derivatives structuring, sales and valuation. I found an interesting structured financial product that can provide an unique stable asset solution based on volatile digital assets.

This idea brought me into crypto derivatives design and smart contracts, thus the inception of DUO.

WC

Can you give us an idea of what you’re trying to achieve with DUO long term?

JL

DUO started as a stable asset design based off derivatives and eventually grew into a systematic framework of tokenized derivatives. We believe wrapping derivatives positions into tokens is a ground-breaking innovation like ETF to portfolio investing.

While we might not be the first one to come out with derivatives-as-tokens idea, we intend to build an ecosystem that can power a significant portion of derivatives market using distributed ledger technologies.

WC

The majority of the team seem to be current employee’s of FinBook, can you please give us a overview of what FinBook is and how this relates to the DUO Network?

DUO Network — Core Team

JL

FinBook is a Singapore fintech company focusing on financial engineering application in blockchain. DUO Network is a project incubated by FinBook.

But we intended to have it grow as a community project in future.

WC

How long has Finbook existed for?

JL

It started in July 2017, but we have been planning the company since 2016.

WC

Considering most of the team come from the traditional finance world why did you choose to move over to the crypto space and how have you found the experience thus far?

JL

Coming from major banks we understand the hurdles and bureaucracy faced by internal innovations. Blockchain on the other hand is a great testing field for new ideas, especially for financial applications

We faced similar challenges like any startups but crypto world seems to be much more volatile than any other industry. It’s been a challenging but rewarding ride so far.

WC

Can you please give us a breakdown of your advisors, how involved are they in the project and what are their roles on the DUO project?

JL

We didn’t list the investors and friends who have been guiding and helping us along the journey. These advisors are those who bond themselves with the project.

Prof. Steven Kou and Prof. Dai are our academic advisors who co-authored an academic paper with the founders, which was the origin of DUO Network project. In fact as academics, they have a pretty hard-core journal on crypto market —

THE DUO NETWORK

WC

When was the base idea around DUO created?

JL

It’s an coincidence. On May 2017 Prof. Dai mentioned he was working on a paper of a Chinese structured ETF, which they call “dual-purpose fund”

On Feb 2018 I happened to have this inspiration of using that product to issue stable asset out from volatile cryptocurrencies, so I went to the profs with my co-founder and they approved the idea.

Thus the birth of the original whitepaper, now our academic paper —

WC

So how do these high level finance ideas work into an actual use case for DUO?

JL

Well we are actually bringing a market-tested derivatives structure into crypto space. The paper did a fancy work of explaining the idea in (more than enough) formulas. It wraps derivatives into tokens so that you can trade derivatives like trading ether.

WC

Here is a basic breakdown on derivatives for those not in the know —

So Jerry, in layman’s terms, what does DUO do?

JL

It wraps derivatives into tokens so that you can trade derivatives like trading ETH.

WC

This is the CAT token right?

JL

Yes we name it CAT (for now).

That’s our proposal of tokenized derivatives. There must be other approach. This area is just too new to call any competition.

WC

How does a Smart Contract work into this solution?

JL

The Smart contract does two things:
1. Determine the payoff given a price input
2. Keep records in tokens (ERC-20)

If you go to Vitalik’s original Ethereum whitepaper, his first use case of smart contract is derivatives, and he’s trying to use derivatives to reduce price volatility.

WC

The issue with crypto in other complex forms of instrument is the issue of counter parties, (having not gone thru the whole whitepaper) does DUO become the counter party then for the risks involved?

If not, who takes on that risk?

JL

There’re normally 2 classes of tokens in one CAT portfolio. the 2 classes are counter parties to each other.

WC

The problem in crypto derivatives is gamma…And not to mention exchanges inaccurate in statistics.

JL

Ok so to clear a derivative contract you only need to determine the payoff at maturity, the Greek calculation during trading shall be done by traders.

In an analogy: it’s like being a football player vs being the referee.

WC

So from what I understand, you’re using 0x protocol/ETH for this right? Why this solution and not your own blockchain or another existing solution?

JL

To build meaningful derivatives products we need:

1. A blockchain with various liquid assets
2. Turing-complete smart contract support

Ethereum was the best choice under these conditions and it still do. But we are also looking into other platforms, in case they fail in getting scaling sorted in time

WC

Do you see scaling as an issue for you? You have a testnet in action, hows that been performing?

JL

Testnet was mainly for functional tests as ETHs there have no market value. But we did attract quite some users when we run testnet bounty events.

WC

So once you move from testnet to mainnet, you’re going to run as a DEX right?

JL

DEX is part of the system. Users can also access the custodian contract directly to create and redeem CAT tokens.

WC

I am just a small time retail trader, is this solution something for me? Or for more hardcore finance guys?

JL

Yes there are, we can even bring you our version of Veil/Augur, stay tuned!

WC

So I can bet on derivatives using Augur and DUO?

JL

DUO’s derivatives can power (some) prediction markets.

WC

Ok so by its very nature, a DEX is decentralised (unless we’re talking about Binance’s DEX!). What makes DUO decentralised?

JL

I have to admit it’s a bit vague to determine whether something is “decentralized”. In a way 0x is more decentralized than IDEX, which in turn a bit more decentralized than Binance DEX.

I think DUO is as decentralized as 0x, but we will just start off with our version of Radar Relay, and we expect more to join us.

WC

Glad you brought up IDEX, since they’re now in the process of implementing KYC. Is this something that DUO will have?

I’d assume you’d have to dealing with real world financial instruments.

JL

Fortunately we are not based in the US. Our location give us much advantage over derivatives projects elsewhere.

They either don’t enjoy our friendly regulations, or don’t have as good fintech talent pools as we do.

WC

You’re 100% based in Singapore or are you running an offshore Cayman Islands/BVI etc entity somewhere along the line?

JL

The tech and operation team is mostly based in Singapore, but it wouldn’t prevent us from having BVI entities.

WC

DEX’s offer a lot of advantages over CEX, however one thing they suffer from is liquidity, how are you going to support this?

JL

Most of our tokens are derivatives which can be properly priced and hedged. This makes active market making easier than a regular ICO token (which is difficult to value).

We do have ex-pro derivatives traders who will be our market making partners.

PARTNERSHIPS

WC

I see Huawei, HSBC, CITI, Deloitte are mentioned as backers, can you explain what this relationships actually involve?

Are they your MM partners?

JL

That might be a misunderstanding. We have members who worked in these firms but there’re no partnership between DUO and these companies for now.

WC

I might back end this question with your investor list, you have some pretty heavy hitters like Bibox, Node Capital and LD Capital. Can you give a rundown on how they will be involved in the project or they are just purely investors?

JL

Yes LD Capital and Node Capital have been instrumental in the development of DUO, by providing multitudes of support in community, marketing and fund-raising

WC

LD Capital are huge in China right?

JL

They are one of the most active (if not the most active) crypto investors in 2018.

IEO & TOKEN SUPPLY

WC

When did DUO initially raise funds and how much was raised thus far and how much will be raised on the Bitmax platform?

JL

We raised our initial round in June 2018 for 6,000 ETH. We target to sell 10% of our tokens on BitMax. In total 22% for sale now.

WC

What is the initial token price? Or initial marketcap?

JL

The token price on BitMax presale is $0.15 per DUO.

DUO Network — Bitmax Presale/IEO Metrics

WC

When does trading start on Bitmax for DUO?

JL

Sunday 12pm UTC (8pm Singapore time).

CLOSING THOUGHTS

WC

Ok to wrap this one up as I know Jerry has to go and has been doing AMA’s all day long, what’s your timing to mainnet? And in a perfect world, where would you like to see DUO in a years time?

JL

We have been deploying our products on Ethereum mainnet and will release them over the next 6 months. In one year’s time, I’m looking to get DUO Staking Economy Model to go live, which is a big milestone.

We will release more information on staking economy in the next few months

WC

Lovely, I love stake networks, not just for the rewards, but for the involvement of the wider crypto community!

Thanks for much for your time here today Jerry. Wish you all the best with the sale on Saturday!

JL

Thanks Wolfe and guys! And great pleasure in answering your brilliant questions.

DUO Network Resources

Website: https://duo.network/
Telegram: https://t.me/duonetwork
Github: https://github.com/FinBook
Medium: https://medium.com/@duo.network
Whitepaper: https://duo.network/papers/duo_economic_white_paper.pdf
Technical Whitepaper: https://duo.network/papers/duo_technical_white_paper.pdf

Wolf Crypto Resources

Website: https://wolfcrypto.net/
Public Group: https://t.me/WolfCryptoPub
News Channel: https://t.me/WolfCryptoAnnounce
Blockchain Project Reviews: https://t.me/WolfCryptoICO
Twitter: https://twitter.com/WolfCryptoGroup

Wolf Crypto

Wolf Crypto is not only a place for ETH & BTC TA, ICO pools, altcoin roulette & memes. Our main activity is the management & promotion of ICO’s.

Wolf Crypto

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Wolf Crypto is a place for ETH & BTC TA, ICO discussion, altcoin roulette & memes.

Wolf Crypto

Wolf Crypto is not only a place for ETH & BTC TA, ICO pools, altcoin roulette & memes. Our main activity is the management & promotion of ICO’s.