🎧 Ajna Protocol: Automated Lending Markets
Round Table Recap: May 5th, 2023
This article recaps a Twitter Space with Greg, a commodities trader turned crypto enthusiast. He explores his evolution from traditional trading to crypto, including Bitcoin, BitShares, Ethereum, MakerDAO, and his project, Ajna Finance.
Greg shares his view on Bitcoin as a global reserve currency, the potential issues with Central Bank Digital Currencies, and the problems traditional lending markets face. His emphasis on the importance of decentralization and removing financial intermediaries is a consistent theme throughout the discussion.
You can listen to the full audio here.
Keep reading 🍿👇️
Greg started his career as a commodities futures trader in 2010.
Simultaneously, he became aware of BTC.
Greg did not know how the tech worked but knew its goal.
Over the next three years, he says he forgot about BTC because it was unpopular, and there needed to be options for non-developers.
He then got involved with the BitShares community.
This was a predecessor for ETH; BitShares had a fixed set of calls for dApps and a currency for BitUSD, the predecessor of DAI stablecoin.
In 2015, when ETH came about, he was convinced about the tech and told his boss to get into the industry.
They then started the first ETH ETF and were rejected by the SEC (as all subsequent attempts have).
They then started Distributed Capital, and after a year in ERC20 tokens, they saw good returns and joined MakerDAO in 2016, where Greg became head of business development.
Greg took a bunch of engineers in Maker and put together Ajna Finance.
What got you hooked on crypto?
Greg got into BTC because he believes BTC is a better reserve for the world. He says he sees BTC as ‘real money.’
Greg regularly traded on the CME in 2010.
He explains a story about how the CME commission overnight decided to raise fees which heavily affected Greg’s trades.
He questioned how a centralized eternity overnight knocked traders out of business.
He used BitShare to trade all these assets without the CME because the blockchain replaced these intermediaries.
🎧️ What was that thing which got Greg hooked on crypto 👇️
Money vs. Digital Oil analogy
Greg splits it into what gives BTC and ETH utility,
He explains how BTC is practical because Central Banks will hold it on their balance sheets and pump surplus into it in the future.
He explains how the USD will go into insolvency over time so that the reserve will be a complex money standard such as BTC or GOLD.
Greg further emphasizes how the US owns around 76% of Gold worldwide, which harms gold.
So he says a better geopolitically way to do it is through BTC.
🎧️ Utility of Bitcoin vs. Ethereum👇️
Thoughts on CBDCs?
Greg calls CBDCs “totalitarian terror currencies.”
Greg says that once CBDCs are out there, he believes the government will abuse power, and people will be pushed out of the dollar and possibly into crypto / BTC.
As a foreign citizen, Greg questions why you would accustom yourself to the USD if the FED can easily control and manipulate
Greg believes that the Central Bank level will be critical to crypto adoption over the long term.
🎧️ The Rise of CBDCs and Its Impact on Bitcoin 👇️
TradFi lending markets and their problems
Greg says that the issues in the banking sector are a combination of regulation, interest rates, and the bank's balance sheets.
Greg explains how changing the fundamentals of finance isn't vital for Ajna but instead changes the trusted intermediary.
He compared Ajna to UniSwap V3, which aggregates all preferences into a market maker.
Ajna does the same, but for lending, taking the price to lend against the asset and putting it into a common borrowing market.
Ajna offers a total lending market without oracles.
Greg talks about how it's not an immutable system where you cannot get rugged by governance.
He further talks about how they have run numerous audits on the code and constantly frozen the code.
Greg views Ajna as a backend tech where you will not know you’re using Ajna, the primitive under the hood covered by a UI.
Even though there is no governance, Ajna has a token where you can buy reserves from pools.
He explains that if you start a lending market for your token v USDC, whoever has your token can borrow against USDC.
Greg explains that as pools accumulate fees, they auction off this income in the form of Ajna tokens.
These are then irreparably burnt.
Greg further explains that the supply only goes down over time and that they have sidelined 30% of the supply into a community treasury exported quarterly through governance proposals.
Quadratic voting is how you encourage funding to broader users of proposals.
On the decentralization
Greg says that anyone building out there doesn't get encouraged by VCs wanting to keep more control or lack of decentralization.
Furthermore, he emphasises the premise of getting rid of intermediaries more.
🎧️ Exploring the Development of Decentralized Technologies 👇️
Problems when building the protocol?
Greg says that they had to implement an on-chain limit order book.
He reiterates how this is a process that has not been effective in the past.
He says Ajna works like a traditional exchange in this process where they used a binary index tree which takes the number of operations and turns it into the logarithm of the operation.
🎧️ Actionable Advice for New Decentralized Protocol Founders 👇️
Why the name Ajna?
Greg says Ajna in the Hindi Chakras represents the 3rd eye Chakra.
Greg says the protocol has no external price feeds or governance but can still navigate and see the world like a centralized protocol.