Monad Twitter Spaces with Zaros

In this episode of Monad Twitter Spaces on April 29, 2024, Bill hosted Gui, the CEO, and Pedro, the CTO, of Zaros to discuss the development and strategic positioning of Zaros, a perpetual DEX powered by Boosted (Re)Staking Vaults on Arbitrum and Monad. Read our notes below to learn more.

Background

Bill (Host) – Contributor at Monad

fitz (Guest) – Ecosystem growth at Monad

Danny (Guest) – Ecosystem growth at Monad

Gui (Guest) – CEO at Zaros

Pedro (Guest) – CTO at Zaros

Zaros – a perpetuals DEX powered by Boosted (Re)Staking Vaults that supercharge LST & LRT yield on Arbitrum and Monad

Monad – a layer-1 bringing parallel execution to EVM

Intro

Fitz mentions that the Southeast Asia blockchain event in Bangkok was impressive, and he enjoyed meeting community members and local developers.
Gui shares that he started in crypto in 2017 due to Pedro, initially focusing on trading and later shifting towards building in the crypto space. He mentions their process of product discovery which included attending hackathons and engaging with advisors.
Pedro recounts his early interest in Bitcoin and his transition to blockchain development, highlighting his focus on decentralized computation and smart contracts through Ethereum. He also shares his involvement with the Illuvium founding team and his return to his passion for DeFi with Gui to start what is now Zaros.

Zaros Architecture

Bill asks Gui about their location due to their accents. Gui says that they are based in the south of Brazil, on an island.
Bill asks about the crypto building community in Brazil. Gui describes it as active, especially in main cities like Sao Paulo and Rio de Janeiro. He mentions living in a smaller city with a larger concentration of Web3 builders, a FinTech hub, and other blockchain studios. Gui notes the presence of advisors like DeFi Dave and the growing recognition of Brazilian crypto community builders.
Pedro shares that they experimented with various ideas and chains, including building on Starknet, but eventually returned to building on EVM due to its early-stage advantages. He mentions a significant demand for home chain perpetuals and the pivotal moment during the Ethereum merge from proof of work to proof of stake, highlighting a strategic opportunity to intersect the large markets of Ethereum staking and perpetual revenues.
Fitz acknowledges the progress towards feature parity with centralized exchanges and asks Gui to explain the architecture of Zaros. Gui outlines the early vision influenced by the Ethereum merge and the demand for home chain perpetuals.
He discusses the potential and ongoing advancements like lower fees and new EVM features that facilitate decentralized exchanges reaching parity with centralized ones.
Gui highlights Zaros’s strategic positioning to exploit these opportunities, including account abstraction and social log-in for decentralized app usage, which aligns closely with user experiences on platforms like Binance.

Simplified Trading with Enhanced Safety

Pedro explains that they have been working to simplify the front-end complexity of Zaros, making it resemble a centralized exchange. The platform uses a low-latency Oracle provider, Chainlink, for accurate and timely price updates which enhances trading safety.
Pedro says that Zaros will support over 40 markets from its launch, with an emphasis on high-quality, reliable pricing for a safe trading experience. The platform will initially launch on Ethereum and aims to offer centralized exchange-grade functionalities. Zaros will also launch on Monad on day 1 of the launch.
Pedro mentions that Zaros requires liquidity providers (LPs) to act as market makers, and the design is tailored for those more accustomed to DeFi environments. The LPs can participate through single-sided vaults, exposing them directly to the assets they provide, optimizing capital efficiency, and minimizing risks.
Pedro describes a proprietary risk system they developed, inspired by existing models that aggregate correlated markets to share liquidity and risk parameters, aiming for capital efficiency without excessive risks for LPs.
Pedro talks about Zaros’s focus on integrating LSTs and LRTs, which allows users to earn additional yield on these assets while using them as collateral for trading positions, aiming to attract a specific audience within the DeFi community and planning to expand to other collateral types in the future.

Risk Management in Zaros Protocol

Fitz asks what considerations are taken to safely expand the types of collateral used in the protocol, emphasizing the excitement and potential risks involved.
Pedro responds that the protocol will start with modest caps like $5-10m on collateral to manage risks and ensure safety, even in volatile market conditions. He mentions the use of chain data streams for operational decisions.
Pedro explains that they set lower loan-to-value caps and rely on internal risk teams and external audits to ensure safety. He highlights ongoing efforts to secure economic audits and smart contract audits.
Pedro shares plans for launching v1 of Zaros, introducing a new governance token $ZRS, and managing future integrations through a DAO. He discusses the launch of a cross-margin module for modular, cross-chain deployments.
Pedro details upcoming announcements related to the DAO, including public documentation and an improvement proposal. He highlights the importance of a well-structured DAO with a balance of community members and experts to drive innovation and effective governance.

Empowering the Community

Danny says it is important to understand the users in the community, their expertise, and how they can be mobilized to help the project and community progress. He also appreciates the long-term mindset and the inclusion of the community in governance and core protocol decisions.
Pedro mentions several upcoming community excitements and highlights a short-term focus despite prior discussions of long-term goals. He hints at new partnerships, collaborative efforts, and updates to their point system, all set to be revealed soon. Gui also talks about adapting incentives seasonally to maintain interest and value long-term.
Pedro talks about various community interaction methods, like feedback forums and guided calls, which help focus on the right features and improve user experience. He stresses the importance of sustainable partnerships in maintaining long-term success.
Bill asks Gui and Pedro if they still experience losses in trading as they did in 2017, and how they are currently engaging with their product.
Gui says that he has been profitable, and discusses their strategy of using competitor platforms to improve their own offerings by identifying both positive and negative aspects. He highlights hands-on involvement with development and user experience improvements.
Gui shares his interest in EVM advancements, new financial technologies, and gaming in the context of crypto, highlighting potential growth areas.
Gui shares his bullish outlook on specialized service hubs for specific use cases, which he believes will shape the future of protocols and product offerings. He also shares his personal excitement for a crypto version of Maple Story, a game he has enjoyed since childhood.

Future of Web3 Gaming

Danny notes that despite the excitement around Web3 gaming starting in 2020, progress within the industry has been mixed. He highlights Illuvium and Maple Story as noteworthy games and queries the future direction of Web3 gaming, specifically which game types might lead to mainstream adoption.
Pedro highlights the role of Web3 games in introducing new users to crypto and DeFi, particularly through simple, accessible games alongside more complex ones like World of Warcraft. He suggests that games successful in traditional markets can guide successful models in Web3 gaming, advocating for seamless integration of blockchain where its presence is almost invisible to the player.
Gui advises newcomers to focus on networking and learning while filtering out the distracting ‘noise’ of the crypto world. He highlights building strong foundations and leveraging the knowledge of experienced peers, advocating for humility and purposeful building.
Pedro, offering advice specifically to developers, encourages continuous learning and utilizing newly available resources to enhance skills in blockchain development, highlighting the availability of open-source materials and advanced tools that simplify the learning process.

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Show Information

Medium: Twitter (Audio)
Show: Monad Twitter Spaces
Show Title: Monad Mondays x Zaros
Show Date: April 29, 2024