Crypto

Episode 59: Investing in Pre-Publicly Traded and Synthetic Assets with Xavier Ekkel

Ben Lakoff, CFA
December 20, 2021
22
 MIN
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Crypto
December 20, 2021
22
 MIN

Episode 59: Investing in Pre-Publicly Traded and Synthetic Assets with Xavier Ekkel

Today’s interview is with Xavier Ekkel, founder of prePO. prePO is a decentralized exchange allowing anyone, anywhere, to speculate on the value of any pre‑IPO company or pre‑token project. The project is community driven and the markets listed on prePO will be decided by the users of the project. Enjoy this conversation on all things synthetic assets and learn a bit more about prePO and what they’re doing differently.

Today's interview is with Xavier Ekkel, founder of prePO.

prePO is a decentralized exchange allowing anyone, anywhere, to speculate on the value of any pre‑IPO company or pre‑token project. The project is community driven and the markets listed on prePO will be decided by the users of the project.

Enjoy this conversation on all things synthetic assets and learn a bit more about prePO and what they're doing differently.

Listen on your Platform of choice:

Check out https://anchor.fm/investinalts for all the listening options (Spotify, Apple, etc.)

Show Notes

0:00:00   Welcome and context

0:01:57   What is your background?

0:04:36   What would Canva.com get from PrePO?

0:06:25   How are pre publicly traded companies priced?

0:08:30   What synthetic asset platforms exist out there?

0:10:41   How is PrePO different from WeFunder?

0:12:04   How are syntetic assets created?

0:16:10   What do you get from holding PPO tokens?

0:18:40   What's on the PrePO roadmap?

0:20:30   What excites you the most about PrePO?

0:22:40   Where can people find out more about you?

Show Links

PrePO

CryptoZombies

PrePO on Twitter

Xavier on Twitter

Helpful other Alt Asset Articles

Episode Transcript

[00:00:00] Ben: Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here's your host Ben Lakoff.

Hello and welcome to the Ault asset allocation podcast. Today's interview is with Xavier Ekkel founder of PPO. PPO is a decentralized exchange, allowing anyone anywhere to speculate on the value of pre IPO companies.

So pre, publicly traded companies or pre token projects for our you Eve crypto DJ Anza. What's happening in the crypto market specifically within this decentralized world is very, very innovative and things are moving at breakneck speed. This project is community driven and the markets listed on creepier will be decided by the users of the project.

This is prelaunch by the way, but this means that private markets from all over the world can be listed on. PEO and access by anyone. These are synthetic versions of these companies important to know before you listen, please don't forget to like, or subscribe to the podcast or even better leave a review.

I love reviews. If you're watching this on YouTube, give it a little thumbs up and, or subscribe to the channel or leave. Those also are very great. Enjoy this conversation on all things, synthetic assets and learn a little bit more about Prebio and what they're doing differently. Enjoy

Xavier. Welcome to the show. Excited to have you on.

[00:01:33] Xavier: Yeah, thanks for asking me on the share. Absolutely.

[00:01:36] Ben: I'm pretty excited about this conversation at the show, like we talk about a lot of alternative investment opportunities and the inability for investors to invest pre publicly traded is a, is obviously something we've talked quite a bit about what we've had people like we funder on.

But it's part of this macro trend of moving towards. Retail investors having earlier and earlier access. So very excited to talk about this. But before we get into that things, the best probably to learn a little bit more about you and and who you are.

[00:02:10] Xavier: Cool. Yeah. So I guess. Back in university.

I studied economics and finance and computer science at the university of Melbourne. I didn't know it at the time, but I think that's like the perfect combo for studying a crypto startup. And around that same time as well, 2013, I was really drawn to the wild west nature of Bitcoin and various. But it wasn't until 2018 ish.

When I heard about Ethereum that it came back into the space. This time more in terms of the programming side of things I was also doing game development and game. At the time I was running my own experiments with. Startup. And when I was living in Korea, I found out about this blockchain game jam, which was hosted by loom network who created crypto zombies, which was how I was learning solidity.

And so when I came back to Australia I reached out to this web through studio called flex steps, and they're behind the MVPs for a number of projects, like M stable and maple and cloud land and block native. And so my first project was on the early smart contracts, but M stable. So I was also involved in defy very early on before I even knew that it would be a big thing.

But then I left to. Pursuing more traditional software engineering to build up my skills. So I worked at this graphic design company called Canva, which is Australia's largest Unico. Kind of learnt a lot about the best practices in software engineering. And while I would say I was really bullish on the longterm success of Canada, and so I wanted to get more exposure to the upside.

But there wasn't any way to do this. And I also noticed when. Our friends and colleagues, but facing this problem that they wanted to get him through all of these IPOs. But there was no way as a retail investor to get access. And basically most of the upside was when it was private. And when they finally get access, it's already through late to make most of the gains.

And so I wanted to solve this problem for many of my colleagues. And so that's how it all began really kind of started exploring how I could solve this problem for myself. And that's how I came up with previous.

[00:04:21] Ben: Awesome. Yeah. And a big fan of canvas. It makes a graphic design s things so simple, even for Luddites like me, which is always appreciated.

I think that's a good story. That makes a lot of sense. From Canva's perspective, like in this case why do you think it's incentivizing for somebody for the entity? To allow early exposure to the potential upside of their companies.

[00:04:53] Xavier: Yeah. So I guess it's important to note that pre pure is a synthetic asset platform.

So we're not dealing directly with the real shares or the real equity or the real total. Of a particular project by a nature that will be limited in who, how many people can access it. How many people get those opportunities? So what we're doing is having a synthetic asset platform where we just have representations of it.

And by doing that, we allow everyone to have unlimited access. To the upside or downside of these opportunities in that nature as well, it's permissionless. So you don't need the particular company or entities permission per se, to create a speculative market for those assets. But in terms of, you know, there would be two users, I guess, one who worked.

At the company or project, for example, and one who doesn't, if you work at the company or project, perhaps you could use Prebio as a bit of a hedging mechanism. Whereas if you're outside the project, it allows you to get exposure without actually having to work.

[00:05:57] Ben: Yeah. And I think the hedging aspect actually super interesting.

Presumably if I were an early employee with a ton of equity and then I see the company faltering from its longer-term strategy, I get bearish on it. I could effectively. Through something like Prebio and take the other side of that trade, right. To hedge my large equity stake. I'm I'm curious. I mean, the key question that comes up here well, one of them is pricing.

So I mean, with somebody, like, can. And we can use another one, another example, but any of these larger tech posts series D you know, you have a bit of valuation from those rounds, but how are these pre publicly traded market companies priced?

[00:06:47] Xavier: Yeah, that's a good question. So if you think about other Synthetic asset platforms.

What they have is an article that Bates in a continuous press that would be the latest public press that's available. And then you can peg it to that. Unfortunately for private markets there isn't a reliable price paid and it's not continuously updated. You might get the occasional, you know, here's the latest round of this valuation kind of bit of information.

But beyond that, you don't have this kind of information and you don't have this continuous press feed. So what we have to do. Allow for open speculation. So it's just the forces of supply and demand to determine any particular price. And we facilitate the market for that press discovery to occur.

And then when it does go public that's when we feed in one final settlement press, which is the class attended the first day of public trading for public companies. And for Perkins it's some time weighted average to prevent manipulation.

[00:07:45] Ben: Okay, that makes sense. Maybe backing up a bit for my listeners, like explained to me in general, like synthetic app asset platforms, which ones exist what they do well, what they can do better.

Like kind of paint the picture for me for synthetic asset platforms.

[00:08:04] Xavier: Yeah. So I guess with the idea with synthetic asset platforms is that it allows you to have. Upside or downside exposure without needing to earn the actual asset. And since you're not tied to the actual asset, you're also not tied to a particular size of a position.

So if you could only afford one. With a synthetic asset you could scale that or leverage that up in either direction. You could also mean to as many of them as you want. He needs a direction and so it allows everyone to get access and by the nature of it being a decentralized on the blockchain, it.

Everyone around the world to participate in it. Permissionlessly so in certain countries you might even not even have access to certain shares or equities from other countries, but through synthetic asset platforms, now you have access to what you previously didn't have before. So that's one of the key advantages which is accessed or.

[00:09:03] Ben: In general, like these synthetic asset providers are creators, what are kind of the biggest regulatory concerns for people like that?

[00:09:13] Xavier: Yeah. So I would say it's a bit of a gray area right now, because I think from a regulatory perspective, I think Ms. Still catching up to. Bitcoin is let to learn if you're him and everything that's being built on a theorem with decentralized finance, for example.

And so I think we'll take some time before anything particularly clear comes out of that. I'm not a lawyer, but that's just what I've observed. And so I think that'll be cleared up over the, over the coming. Okay.

[00:09:41] Ben: On this podcast, I've had people like we funder or other crowdfunding platforms.

The idea there is that you can invest in these private companies before there's public markets, I guess, for the average person, like, how are you different than these current platforms? What are the. Pros and cons of a more decentralized version, like pre

[00:10:07] Xavier: yeah. But with the decentralized version you know, there are a number of key advantages.

So one is that you can maintain your privacy in terms of the documents. You have to hand over to some centralized entity, which could, there could be a data breach, and then suddenly all of your private information is out there. You. I have no limits on what you can participate in. We have no limits on what markets we can create as well.

Cause this whole days token holders who are participating in governance to determine what new markets are created what, what assets listed, what the sentiment prices are, what the parameters are. So. Because this whole decentralized we don't face all these limits that you have when you try to shoehorn it into existing frameworks.

[00:10:54] Ben: Okay. That makes sense. Talk to me about the creation of these synthetic markets who creates them, how are they maintained? Presumably a key feature is liquidity so that you can buy and sell whenever you want. How has this incentivized and maintained? Just walk me through the process of what this.

[00:11:10] Xavier: Yeah. So I guess there are two key actors to traders and the liquidity providers that you talked about. So as a trader, we're trying to make it as simple as possible in terms of our UI. So we abstract away and most of the critical crypto aspects of it. So essentially as a trader, you're just going long or short with a particular size of a position.

And then it'll highlights what your maximum loss, maximum profit. We have three layers of rewards desks. So you have your profit or loss when your position, but then you also get token incentives. And you also get collateral what we called collateral funding, which is when you deposit, that's turned into some form of collateral for the whole system and in the background, that's your enemy and finding rewards regardless of how your position goes.

And so. Heavily incentivized from a trader perspective. And then similarly on the liquidity provider perspective you would make your whole fees. So the cut of all the coding piece but you also make those other two layers of rewards, which are the token incentives and the. You'll find the rewards, which we call collateral funny.

And so as an LP, you're making many more layers of incentive many more layers of rewards compared to if you just, for example, you would find stable coins directly. So anyone who is your family, stable coins directly, you would probably make more sense to go through PayPal because you get those additional layers of rewards.

Now in terms of the extra risk that Looked at a lot of the other architectures that are similar architecture is quite similar to a prediction market because you mean to long and short tokens, which are fully collateralized by this collateral token that we can make. But with a lot of the existing prediction markets, right.

As an LP, it's really, really risky. You can lose a hundred percent of what you put in and that's because there are no limits on the upper or lower bounds, which means as soon as the outcome is known one of the assets, so along with a short will be sold completely such that there's only two useless has been left in the pool.

And that means the LPs will essentially lose everything. And so what we've done is we've tied up. The creating bounds and that minimizes the maximum loss that LPs can paste. So with the parameters that we've kind of set up the maximum loss LPs typically face is like less than 10%. And then with all those three layers of rules on top of that it really makes a lot of sense to be an LP cause you don't face that huge disaster scenario of losing everything like on other platforms.

[00:13:38] Ben: Yeah, that makes sense. A big portion of the rewards for taking this additional risk, adding liquidity to these markets is in your native governments, token, which is, is it PPL?

[00:13:53] Xavier: Yeah, so, well, it's not the primary incentive mechanism. We, there are other synthetic asset platforms that rely a lot on incentivizing LPs through their native token.

And that is an additional aspect for us, but we don't rely on that because in a bear market that's not going to be a reliable, reliable, incentive mechanism, especially if like to compress this full we'll look. So we have to rely on a system that even if we didn't have those incentives, it was still make a lot of sense to do it by having the minimize downside, and by having the yield fund collateral family aspect as well.

If that alone makes sense, Phil piece.

[00:14:30] Ben: Okay. Talk to me about the benefits of holding PPO, the governance token itself. What does this get you as a token holder?

[00:14:38] Xavier: Yeah. So we're actually finalizing this right now. The PPO token gets you a number of utility benefits. So the PPO token itself can be used for various and empty purchases.

That's because that whole platform. Gamified. So you have your own social profiles, you have to advertise based on your actions on the trading platform. You cannot look achievements and had various aspects where you can improve your social profile and avatar, and then those things can be traded freely.

And so. For PPO is self. You can use those for pur purchases and those people's tokens will be banned. But the primary purpose of PPO is taking it and you would time lock those tokens in order to get a timeout version of PPR. And then with that time locked version of PPO, which is an NSC. So you have sending that to amount of paper.

Locked up for a certain amount of time, which will unlock it at a certain point in time. Those can then be further staked in order to get some sheriff, the future PPO, distributions, or sheriff, the training fees and other benefits like trading fee discounts. And so we have one aspect there where you can.

Time lock your PPO tokens for Highmark PPO NFPS, or you can stake your PPO tokens into a group call which is kind of like us building out or an in-house convex finance. So I guess the whole economics aspect of it is quite similar to per finance. But with COVID finance, finance was built on top, which allowed for more liquidity in these otherwise illiquid, timeless tokens.

And so we wanted to build that into our system from the get-go so that we don't have some other protocols taking some lodge kind of phase and taking value out of the system. So we've built that into our protocol from the beginning. So you can either go through the group pool where you can go through the traditional time-blocking approach.

You would go through the traditional time looking approach. You feel if you want to hold PPO and BLP, but if you just want to hold PPO, then you would just go through the group pool.

[00:16:47] Ben: Awesome. Another thing I have here, you have you're launching on main net.

Maybe just touch on a roadmap what's coming up from pre PO.

[00:16:57] Xavier: Yeah, so very, very soon we'll be launching a simulator. This will allow you to visualize different scenarios as a trader or an LP, so you can see how much you can make or lose in different scenarios, in different markets based on different parameters.

So it's a really sophisticated calculator. That'll really get you understanding how prepare works and all the different layers of awards. That's coming really soon. Shortly after that, we'll also have a NFTE game and this is too it's a bit of grill and marketing, cause we're trying to bring into a lot of the NFT gaming crowded because of our gamification aspects.

But I think there are some really unique aspects to this game. So it's. Based themed around mergers and acquisitions. And so you essentially have all these entities with the different traits and varieties but you can compete with other companies based on runaway points that you earned it.

And by competing them down to zero, then you can acquire those companies. You can also merge with companies that you are in to make more powerful, to earn more runway points every day. And so all these strategies will emerge and the number of remaining and of taste will decrease until there's only a small number of companies remaining.

And then these could be added to your social profiles. Once we launched that so that's the NFC game. And then after that later this year, we're launching a Testnet. So you'll be able to play around with that, but it's not the real thing yet. And also launching our governance token and then early next year, after we get out audits, we'll be launching on main net.

Awesome, awesome.

[00:18:34] Ben: Super excited. What aspect? I mean, you've got a bunch of really exciting things coming up. What, what excites you about.

[00:18:41] Xavier: Yeah, I'm really excited to see it to you get launched and see what kind of prices come out of each of these private markets that didn't previously have a price particularly on the pre token side.

So, you know, you can speculate on these pre IPO aspects and that's what we originally thought of. But I think even a bigger opportunity is the pre token site. So there are all these crypto projects for that K token yet. And typically the coupler project side of things, they move a lot faster and have a lot more volatility in the evaluation.

So I think it would be a lot more fun to speculate on that side of things. So for example, open, see I think they'll probably have the token. It'd be interesting to see what kind of valuation that would have before they actually go into the token and through Prebio, you'd be able to find that.

[00:19:31] Ben: Yeah, and will be interesting if they actually do a retroactive airdrop.

Cause I think we'll all be millionaires with the amount of fees we've paid. That's exciting. Is there anybody doing anything similar to this already that you can speculate on pre token companies?

[00:19:46] Xavier: No, no, no. Pre token companies haven't seen it before. I have seen some where, you know, you're dealing with the real, like fisting tokens of.

Project. But of course that has limited number of it's mint because there's only so many, you know, vesting tokens that you can offer as entities and do it. It depends completely on the seller, whether if they've been in one to list those names whereas with prepare, you can just speculate without permission.

[00:20:14] Ben: Awesome. Awesome savior, super, super fascinating. I'm really, really excited to see this thing launch and speculate on some pre token companies and if maybe some pre IPO companies as well. Where do you want to send my listeners? Where can they find out more about you about pre IPO? Where do you want to send them?

[00:20:32] Xavier: Yeah, sorry. I guess. Okay. Communities are on discord and. So you can follow us on Twitter at prepare under school. I R and we have a growing discord community. We even have a preachers program where if you do various actions to promote PPO and spread the good word, you can be marked as a preacher and then potentially a future PPO tokens.

And I'm personally on Twitter at Xavier echo.

[00:20:59] Ben: Awesome savior really appreciate you coming on today and best of luck with everything over the next little bit. That's for

[00:21:06] Xavier: sure. Awesome

[00:21:10] Ben: There you have it. Thank you for listening. Really appreciate your support. Show notes, transcript links, and more can be found on our [email protected]

If you'd be so kind, please share this with anyone you think might be interested or get some value from this conversation. If you have any questions or comments, please reach out. I'm always happy to hear. Lastly, if you're on YouTube, please like the video or subscribe to the channel. If you're listening to the audio version of this, please subscribe to the podcast and, or leave a review.

This really helps more people find the podcast. And I really appreciate it. Thanks again, and hope you have a fantastic day. Happy investing.

Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.