The Optimist - Introduction to Engtangle - Revelo Intel

The Optimist – Introduction to Engtangle

In the Optimist’s Twitter Spaces, which took place on October 31, 2023, Subli and Faisal discuss Entangle, other Oracle solutions, and future plans of Entangle. Read our notes below to learn more.

Background

Faisal’s Introduction and Background

  • Faisal introduces himself as the founder of Entangle. He says that he has been in crypto for six years, starting as an investor during the 2017 bull run. 
  • He also shares his experience in consulting at tier-one investment banks and attending the Oxford Blockchain Strategy program.
  • Faisal says that from 2018 to the end of 2021, Faisal runs a small crypto fund consisting of family and friend’s investments. He participated in yield farming, staking, airdrops, etc., gaining insights into projects from an investment perspective.

Building Entangle Protocol

  • Faisal says that the idea for Entangle started around 20 months ago when he saw possibilities for optimizing liquidity between applications on different connected chains. 
  • He adds that he realized the need to build their own customized infrastructure to support this novel use case.
  • Faisal says that as they built Entangle, they realized the need to create a refinancing market for liquidity assets and support the optimization and reuse of liquidity in DeFi.
  • Faisal says that Entangle is a messaging infrastructure that enables the transmission of data and messages between different blockchains. The master smart contract is located on the Entangle blockchain.
  • He adds that other Oracle Solutions in the market lacked flexibility, consensus flexibility, security parameter flexibility, and verifiable data. Entangle provides a customizable messaging infrastructure connecting both EVM and non-EVM chains.
  • Faisal says that The first use case being built natively on Entangle is an application called Liquid Vaults, which optimizes liquidity between different ecosystems using liquid stake derivatives. Users can deposit from one chain and use it as collateral or borrow on another chain where the deposit is accepted as collateral.

Reasons for Choosing Cosmos

  • Subli says that 20 months ago Cosmos was one of the few infrastructures promoting interoperability.
  • Faisal says that while interoperability was important, their main focus was building a system where data could be validated and authenticated on a blockchain with transparency in Oracle transmission.
  • He adds that the modularity and connectivity to IBC offered by Cosmos were advantageous. Deploying EVM in the core infrastructure was crucial for their needs in terms of speed, configurability, modularity, and working with Oracle Keepers. The ability to customize consensus and data authentication processes on the chain was essential.
  • Faisal says that although they appreciate what the OP Stack offers, Cosmos was a natural fit for their requirements. The OP Stack is suitable for hosting their needs and has recently matured as a solution. While it doesn’t make a significant difference in terms of speed or functionality, he appreciates what the OP Stack can offer.

Exploring Oracles

  • Faisal says that the security of the solution is customizable, unlike other solutions on the market. LayerZero provides the ability to deploy additional Keepers for high-value transactions or increased security.
  • He adds that this allows web2 companies to have their own systems in addition to the Oracle solution they are working with, enhancing security and agreement between systems. Having a blockchain that stores and authenticates data adds transparency to financial transactions.
  • Faisal says that other solutions like relayers and Oracles rely heavily on their infrastructure for functionality. In contrast, Entangle has its own Keepers that act as relays and collectors of information.
  • He adds that users can also deploy their own additional Keepers for added security or specific use cases. This flexibility allows web2 companies to bring assets on-chain while maintaining control over their systems.

Transparency and Use Cases Enabled by Blockchain Authentication

  • Faisal says that storing and authenticating data on a blockchain ensures a high degree of transparency in financial transactions. This transparency is crucial when dealing with financial transactions.
  • He adds that Entangle’s blockchain authentication allows for a broad range of use cases, including bringing real-world assets on-chain and having interoperable data from various off-chain sources. There is a growing demand for secondary and tertiary price feeds that are authenticated on the chain to prevent manipulation.

Centralization Concerns in Other Solutions

  • Faisal says that other solutions like Chainlink have faced criticism for their level of centralization. Entangle aims to provide a more decentralized approach to ensure the proper functioning of DeFi. By relying on validators and multi-sig, Chainlink’s decentralization has been questioned. Entangle offers a solution that addresses these concerns and provides a more decentralized infrastructure.

Tackling Liquidity and Scaling with Entangle

  • Faisal says that Entangle partners with lending/borrowing protocols to diversify liquidity sources beyond direct assets, allowing acceptance of LP assets. This unlocks capital optimization in the space.
  • He adds that Entangle enables the inclusion of real-world assets on-chain, facilitating interoperable data from various off-chain sources. There is also a demand for secondary and tertiary price feeds that are authenticated on the chain, ensuring no manipulation or front-running occurs.
  • Faisal says that Entangle sees itself as an infrastructure tool for cross-chain interoperability, scalability, communication, and solving liquidity challenges.

Partnerships and Value Creation in the Web3 Space

  • Faisal says that Entangle has successfully partnered with various protocols to provide price feeds and data feeds on their chain. Liquid Vaults offer capital optimization and efficiency.
  • He adds that Entangle is exploring potential partnerships for bringing real-world assets on-chain and creating interoperable synthetics that can be used as collateral, adding more value to the web3 ecosystem.
  • Faisal says that Entangle focuses on liquidity optimization and customizable security through their Oracle solution. They aim to connect with ecosystems like Optimism, enabling access to top DEXs, lending and borrowing solutions, and more.

Testnet Status and Future Plans

  • Faisal says that they are currently on testnet V3 with ongoing iterations. They plan for a mainnet launch in February.
  • He adds that audits are scheduled for November. Entangle continuously integrates partners and builds revenue sources for the protocol.
  • Faisal adds that they focus on building revenue sources rather than relying solely on inflationary models or token payments. Each partnership integration offers potential revenue opportunities such as lending/borrowing solutions or applications utilizing their data feeds.
  • Faisal explains that the ongoing testnet v3 is incentivized for participants. They have community validators involved, are opening up a keeper program, and encourage users to engage with the infrastructure connecting different use cases.
  • He adds that testnet v3 is not limited to validators; end users can also access it. The focus is on infrastructure and B2B applications, allowing trials of price feeds and other features.
  • Faisal says that Linea, Metis, MultiversX, Sei Network, Sui, and other chains are planned for integration before the main net launch.

Implementing a Real Yield Model and Revenue Distribution

  • Faisal says that they will implement a real yield model where the yield will be generated from liquid vaults, liquidations, partnerships, lending and borrowing solutions, idle asset usage, and Oracle system usage. 
  • He adds that the revenue generated will be distributed to key stakeholders including validators, Oracle Keepers, and delegators.

Moving Away from Reliance on Liquidity Provisioning

  • Faisal explains that their platform aims to move away from relying solely on liquidity provisioning. 
  • He adds that they plan to attract liquidity by unlocking the utility of idle assets already in the ecosystem. By unlocking their utility, a significant amount of liquidity can be attracted across multiple ecosystems.
  • Faisal says that as the platform grows and generates revenue, it will become easier to attract liquidity.
  • He adds that their focus is on proving the use case through liquid vaults and revenue generation. Once there is evidence of real revenue being generated and distributed to liquidity providers, attracting liquidity will become easier. Building a second application such as a leverage yield farming automated application will further enhance the attractiveness of the platform.

LP Token on Entangle

  • Faisal says that users stake their LP tokens via Entangle. LP tokens are staked into relevant farms using a subset of smart contracts.
  • He adds that users receive LSD in return, which can be exchanged back for underlying LP tokens if desired. LSD can also be used for borrowing on lending and borrowing platforms like Vendor Finance.

Partnerships

  • Faisal says that Entangle is working with partners and these partnerships have been established through investor connections and personal networks.
  • He adds that they aim to showcase Entangle’s success by diligently testing and implementing its solutions on various networks with different partners. There are plans to collaborate with lending and borrowing partners as well as protocols for perpetuals and options.

Use Cases for Future

  • Faisal says that Entangle is also building its own use cases for LSD holders to engage with in the future. The team is excited about demonstrating the benefits of their solutions in the crypto space.
  • Faisal adds that they have integrated with Velodrome and other decentralized exchanges.

Future Plans and Updates

  • Faisal says that the team has undertaken a complete update of their UX/UI, website, and front-end documentation for developers. They are gradually releasing these updates to showcase their new branding and messaging.
  • He adds that they initially focused on liquid vaults, and they realized the potential of Oracle infrastructure and cross-chain interoperability, which led to increased interest in applications. Efforts are being made to ensure consistent messaging across all documentation for developers, DEXs, money markets protocols, and DeFi users.

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Show Information

  • Medium: Twitter Spaces
  • Show: The Optimist
  • Show Title: Omnichain farming with Entangle <> The Optimist
  • Show Date: October 31, 2023