Colton Conley, Founder, Prime Protocol, Gavin McDermott, Founder, Nine Realms (THORChain), Manny Rincon-Cruz, Founder, Buttonwood (Moderator)
Cross-chain functionality continues to be a challenge in the crypto space. Exploits and hacks have questioned the viability of the cross-chain world. THORChain and Prime Protocol are two of the top cross-chain innovators that are smashing barriers and revolutionizing the way we think about a multi-chain future.
Cross-chain margin accounts give users increased flexibility and optionality, allowing them to access a wider range of trading opportunities. Although they are typically associated in the context of the DeFi ecosystem, cross-chain margin accounts emerged as a popular product for FTX. In 2022, we saw how dangerous it can be to store assets on centralized exchanges.
One north star for Colton (Prime) and Gavin (Nine Realms) is to attract volume off of centralized custodial providers and onto decentralized rails. Prime Protocol aims to reduce liquidation risk by cross-margining collateral so users can deposit and borrow on any chain with one account. THORChain focuses on cross-chain native asset settlement.
As Gavin remarked, “95% of industry volume is running through centralized rails, and there will be another FTX event. Over the past 12 months, we watched every large centralized bitcoin lender blow their heads off. If we don’t support large native asset classes and create UX that is at parity with centralized exchanges, people will keep doing these hops (bridging wrapped tokens).”
There are many ways to wrap and bridge assets, but THORChain is the only one that supports 8 chains natively. The most popular trades THORChain has seen in recent months have been native BTC to ETH, and BTC to USDT. Prime also supports 8 networks. The protocol runs liquidity checks to determine the health of the account. Users don’t notice whether they are on a satellite or a native chain.
In terms of risk management, there is room to grow, and innovations to be built. Colton stated, “DeFi to its credit, has been pretty safe.” The major protocols didn’t suffer major losses while many centralized ones did. Much of this has to do with the overcollateralized and conservative approach to collateralization ratios. Colton said, “In DeFi, playing the undercollateralized game is setting yourself up for failure. People still underestimate black swan events.”
Gavin alluded to the unquantifiable risk that is present throughout the whole tech stack, “Everyone just hand waves it.” One risk that is especially hard to quantity is platform risk. Centralized custodians are opaque, and as Colton commented, “You have no idea how comfortable you should feel.”
We are looking forward to watching the continued development of these protocols on their mission towards a trusted cross-chain future.
Colton Conley, Founder, Prime Protocol (@ColtonFConley)
Colton is the founder and CEO of Prime Protocol. Colton previously spent time in TradFi as a quantitative trader focused on interest rate volatility at Citadel.
About Prime: Prime Protocol is the first natively cross-chain prime brokerage. Prime is an interoperable DeFi hub offering unique ways to enable instant liquidity on any chain. Prime reduces friction and fragmentation between chains, allowing users to deposit anywhere and borrow anywhere. Learn more: primeprotocol.xyz
Gavin McDermott, Founder, Nine Realms (THORChain) (@GavinMcDermott)
Gavin is the founder and CEO of Nine Realms, a team focused on developing the THORChain ecosystem. Gavin was the first hire at BitGo, and is currently an investor at IDEO CoLab Ventures.
About THORChain: THORChain is pushing the boundaries of on-chain, native crypto-assets. THORChain is a decentralized cross-chain liquidity protocol that allows users to swap assets between blockchain networks. Nine Realms helps bring institutional liquidity to THORChain. Learn more: thorchain.org, ninerealms.co
Manny Rincon-Cruz, Founder, Buttonwood (@mrinconcruz)
Manny is a financial historian, and before Buttonwood specialized in the history of Chinese central banking. He advises various crypto projects, co-authored the Ampleforth white-paper, and publishes infrequent essays on protocol design and history at thinking.farm
About Buttonwood: The Buttonwood ecosystem currently includes stable value assets, programmable debt, and primary markets. Buttonwood’s is approaching the launch of the only AMM that can handle rebasing assets. Learn more: button.finance